UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended July 31, 2009
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the
transition period from to
Commission
File Number: 001-09614
Vail
Resorts, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
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Delaware
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51-0291762
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(State
or Other Jurisdiction of Incorporation or Organization)
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(I.R.S.
Employer Identification No.)
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390
Interlocken Crescent
Broomfield,
Colorado
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80021
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(303)
404-1800
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(Registrant’s
Telephone Number, Including Area Code)
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class:
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Name
of each exchange on which registered:
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Common
Stock, $0.01 par value
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act:
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None.
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(Title
of Class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. x Yes No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes x No
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
x Yes No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
¨ Yes ¨ No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer x Accelerated
filer ¨
Non-accelerated filer
¨ (Do not check if
a smaller reporting company) Smaller reporting
company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes x No
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant, based on the closing price of $23.32 per share
as reported on the New York Stock Exchange Composite Tape on January 30, 2009
(the last business day of the Registrant's most recently completed second
quarter) was $700,131,580.
As of
September 18, 2009, 36,174,979 shares of Common Stock were
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
The Proxy
Statement for the Annual Meeting of Shareholders is incorporated by reference
herein into Part III, Items 10 through 14.
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Table
of Contents
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PART
I
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Item
1.
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3
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Item
1A.
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17
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Item
1B.
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25
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Item
2.
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25
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Item
3.
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27
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Item
4.
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27
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PART
II
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Item
5.
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28
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Item
6.
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29
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Item
7.
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32
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Item
7A.
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51
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Item
8.
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F-1
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Item
9.
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52
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Item
9A.
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52
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Item
9B.
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52
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Item
10.
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53
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Item
11.
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53
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Item
12.
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53
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Item
13.
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53
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Item
14.
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53
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Item
15.
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53
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FORWARD-LOOKING
STATEMENTS
Except
for any historical information contained herein, the matters discussed in this
Annual Report on Form 10-K (this “Form 10-K”) contain certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to analyses and other information,
which are based on forecasts of future results and estimates of amounts not yet
determinable. These statements also relate to our future prospects,
developments and business strategies.
These
forward-looking statements are identified by their use of terms and phrases such
as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“plan,” “predict,” “project,” “will” and similar terms and phrases, including
references to assumptions. Although we believe that our plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, we cannot assure you that such plans, intentions or
expectations will be achieved. Important factors that could cause
actual results to differ materially from our forward-looking statements include,
but are not limited to:
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prolonged
downturn in general economic conditions, including continued adverse
affects on the overall travel and leisure related
industries;
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unfavorable
weather conditions or natural
disasters;
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competition
in our mountain and lodging
businesses;
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our
ability to grow our resort and real estate
operations;
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our
ability to successfully complete real estate development projects and
achieve the anticipated financial benefits from such
projects;
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further
adverse changes in real estate
markets;
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continued
volatility in credit markets;
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our
ability to obtain financing on terms acceptable to us to finance our real
estate development, capital expenditures and growth
strategy;
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our
reliance on government permits or approvals for our use of Federal land or
to make operational improvements;
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adverse
consequences of current or future legal
claims;
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our
ability to hire and retain a sufficient seasonal
workforce;
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willingness
of our guests to travel due to terrorism, the uncertainty of military
conflicts or outbreaks of contagious diseases, and the cost and
availability of travel options;
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negative
publicity or unauthorized use of our trademarks which diminishes the value
of our brands;
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our
ability to integrate and successfully operate future acquisitions;
and
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implications
arising from new Financial Accounting Standards Board
(“FASB”)/governmental legislation, rulings or
interpretations.
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All
forward-looking statements attributable to us or any persons acting on our
behalf are expressly qualified in their entirety by these cautionary
statements.
If one or
more of these risks or uncertainties materialize, or if underlying assumptions
prove incorrect, our actual results may vary materially from those expected,
estimated or projected. Given these uncertainties, users of the
information included in this Form 10-K, including investors and prospective
investors, are cautioned not to place undue reliance on such forward-looking
statements. Actual results may differ materially from those suggested
by the forward-looking statements that the Company makes for a number of reasons
including those described in Part I, Item 1A, “Risk Factors” of this Form
10-K. All forward-looking statements are made only as of the date
hereof. Except as may be required by law, the Company does not intend to update
these forward-looking statements, even if new information, future events or
other circumstances have made them incorrect or misleading.
General
Vail
Resorts, Inc. was organized as a public holding company in 1997 and operates
through various subsidiaries (collectively, the “Company”). The
Company's operations are grouped into three business segments: Mountain, Lodging
and Real Estate, which represented approximately 63%, 18% and 19%, respectively,
of the Company's net revenue for the year ended July 31, 2009 (“Fiscal
2009”). The Company's Mountain segment owns and operates five
world-class ski resort properties as well as ancillary businesses, primarily
including ski school, dining and retail/rental operations, which provide a
comprehensive resort experience to a diverse clientele with an attractive
demographic profile. The Company's Lodging segment owns and/or
manages a collection of luxury hotels under its RockResorts brand, as well as
other strategic lodging properties and a large number of condominiums located in
proximity to the Company's ski resorts, the Grand Teton Lodge Company (“GTLC”),
which operates three destination resorts at Grand Teton National Park (the
“Park”), Colorado Mountain Express (“CME”), a resort ground transportation
company, and golf courses. Collectively, the Mountain and Lodging
segments are considered the Resort segment. The Company's Real Estate
segment owns and develops real estate in and around the Company's resort
communities. Financial information by segment is presented in Note
15, Segment Information, of the Notes to Consolidated Financial Statements
included in Part II, Item 8 of this Form 10-K.
Mountain
Segment
The
Company's portfolio of world-class ski resorts currently includes:
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Vail
Mountain (“Vail Mountain”) – the single most visited ski resort in the
United States for the 2008/2009 ski season and the single largest ski
mountain in the United States. Vail offers some of the most
expansive and varied terrain with approximately 5,300 skiable acres
including seven world renowned back bowls and the rustic Blue Sky Basin
area of the resort.
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Breckenridge
Ski Resort (“Breckenridge”) – the second most visited ski resort in the
United States for the 2008/2009 ski season and host of the highest
chairlift in North America, the Imperial Express Super Chair, reaching
12,840 feet and offering above tree line expert
terrain. Breckenridge is well known for its historic town,
vibrant night-life and progressive and award-winning pipes and
parks.
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Keystone
Resort (“Keystone”) – the fourth most visited ski resort in the United
States for the 2008/2009 ski season and home to the highly renowned A51
Terrain Park as well as the largest area of night skiing in
Colorado. Keystone also offers guests a unique skiing
opportunity through guided snow cat ski tours accessing five
bowls.
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Beaver
Creek Resort (“Beaver Creek”) – the seventh most visited ski resort in the
United States for the 2008/2009 ski season. Beaver Creek is a
European –style resort with multiple villages and also includes a world
renowned children’s ski school program focused on providing a first-class
experience with unique amenities such as a dedicated children’s
gondola.
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Heavenly
Mountain Resort (“Heavenly”) – the ninth most visited ski resort in the
United States for the 2008/2009 ski season and the second largest ski
resort in the United States with over 4,800 skiable
acres. Heavenly straddles the border of California and Nevada
and offers unique and spectacular views of Lake Tahoe. Heavenly
boasts the largest snowmaking capacity in the Lake Tahoe region and offers
great night life including its proximity to several
casinos.
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Vail
Mountain, Beaver Creek, Breckenridge and Keystone, all located in the Colorado
Rocky Mountains, and Heavenly, located in the Lake Tahoe area of
California/Nevada, are year-round mountain resorts. Each offers a
full complement of recreational activities, including skiing, snowboarding,
snowshoeing, sight-seeing, mountain biking, guided hiking, children’s activities
and other recreational activities.
The
Company's Mountain segment derives revenue through the sale of lift tickets and
season passes as well as a comprehensive offering of amenities available to
guests, including ski and snowboard lessons, equipment rentals and retail
merchandise sales, a variety of dining venues, private club operations and other
recreational activities. In addition to providing extensive guest
amenities, the Company also engages in, among other activities, the leasing out
of the Company’s owned commercial space around its base resorts for restaurants
and retail stores.
Ski
Industry/Market
There are
approximately 760 ski areas in North America and approximately 470 in the United
States, ranging from small ski area operations that service day skiers to large
resorts that attract both day skiers and destination resort guests looking for a
comprehensive vacation experience. One of the primary ski industry
statistics for measuring performance is “skier visit,” which represents a person
utilizing a ticket or pass to access a mountain resort for any part of one day,
and includes both paid and complimentary access. During the 2008/2009
ski season, combined skier visits for all the United States ski areas were
approximately 57.4 million and all North American skier visits were
approximately 76.1 million. The Company's ski resorts had 5.9 million
skier visits during the 2008/2009 ski season, or approximately 10.3% of United
States skier visits, and an approximate 7.8% share of the North American
market's skier visits.
The
Company's Colorado ski resorts appeal to both day skiers and destination guests
due to the resorts' proximity to Colorado's Front Range (Denver/Colorado
Springs/Boulder metropolitan areas), accessibility from several airports,
including Denver International Airport and Eagle County Airport, and the wide
range of amenities available at each resort. Colorado has 29 ski
areas, six of which are considered “Front Range Destination Resorts,” including
all of the Company's Colorado resorts, catering to both the Colorado Front Range
and destination-skier markets. All Colorado ski resorts combined
recorded approximately 11.9 million skier visits for the 2008/2009 ski season
with skier visits at the Company's Colorado ski resorts totaling 5.1 million, or
approximately 42.9% of all Colorado skier visits for the 2008/2009 ski
season.
Lake
Tahoe, which straddles the border of California and Nevada, is a major skiing
destination less than 100 miles from Sacramento and Reno and approximately 200
miles from San Francisco, making it a convenient destination for both day skiers
and destination guests. South Lake Tahoe, where Heavenly is located,
is also a popular year-round vacation destination, featuring extensive summer
attractions and casinos in addition to its winter sports
offerings. Heavenly is proximate to both the Reno/Tahoe International
Airport and the Sacramento International Airport. California and
Nevada have 33 ski areas. Heavenly had 802,000 skier visits for the
2008/2009 ski season, capturing approximately 11.8% of California's and Nevada's
6.8 million total skier visits for the 2008/2009 ski season.
Competition
There are
significant barriers to entry for new ski areas due to the limited private lands
on which ski areas could be built, the difficulty in getting the appropriate
governmental approvals to build on public lands and the significant capital
needed to construct the necessary infrastructure. As such, there has
been virtually no new supply of major resorts in North America for the past 25
years which has and should continue to allow the best positioned resorts,
including all of the Company’s resorts, to capture a majority of future industry
growth. The Company’s resorts compete with other major ski resorts,
including Aspen/Snowmass, Copper Mountain, Deer Valley, Mammoth Mountain,
Northstar-at-Tahoe, Park City Mountain Resort, Squaw Valley USA, Steamboat,
Whistler Blackcomb and Winter Park, as well as other ski areas in Colorado and
the Lake Tahoe area, other destination ski areas worldwide and non-ski related
vacation destinations.
While the
ski industry has performed well in recent years in terms of number of skier
visits, with the eight best seasons occurring in the past nine years for United
States visitation, a particular ski area's growth is also largely dependent on
either attracting skiers away from other resorts, generating more revenue per
skier visit and/or generating more visits from each skier. Better
capitalized ski resorts, including all five mountain resorts operated by the
Company, are expanding their offerings, as well as enhancing the quality and
experience by adding new high speed chairlifts, gondolas, terrain parks, state
of the art grooming machines, expanded terrain and amenities at the base areas
of the resorts, all of which are aimed at increasing guest visitation and
revenue per skier visit. The Company believes it invests more in
capital improvements than the vast majority of its competitors and can also
create synergies by operating multiple resorts thus enhancing the Company’s
profitability. Additionally, the Company through its sales of season
passes (including the new Epic Season Pass introduced in the 2008/2009 ski
season, which offers unrestricted and unlimited access to all five of its
resorts) provides its guests with a strong value option, in return for the guest
committing to ski at its resorts prior to, or very early into the ski season,
which the Company believes attracts more guests to its resorts. All
five of the Company’s resorts typically rank in the top ten most visited ski
resorts in the United States. Additionally, all of the Company's
resorts consistently rank in the top 25 ranked ski resorts in North America
according to industry surveys, which the Company attributes to its resorts'
ability to provide a high-quality experience.
The ski
industry statistics stated in this section have been derived from data published
by Colorado Ski Country USA, Canadian Ski Council, Kottke National End of Season
Survey 2008/2009 (the “Kottke Survey”) and other industry
publications.
All of
the Company's ski resorts maintain the unique distinction of competing
effectively as both market share leaders and quality leaders. The
following inherent and strategic factors contribute directly to each resort’s
success:
Exceptional mountain
experience --
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World-Class
Mountain Resorts and Integrated Base Resort
Areas
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All five
of the Company’s mountain resorts offer a multitude of skiing and snowboarding
experiences for the beginner, intermediate, advanced and expert
levels. Each resort is also fully integrated into expansive resort
areas offering a broad array of lodging, dining, retail, spas, nightlife and
other amenities to the resort’s guests, some of which are owned or managed by
the Company.
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Snow
Conditions
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The
Company's resorts are located in areas that receive significantly higher than
average snowfall compared to most other ski resort locations in the United
States. The Company’s resorts in the Colorado Rocky Mountains and
Heavenly in the Sierra Nevada Mountains all receive average yearly snowfall
between 20 and 30 feet. Even in these abundant snowfall areas, the
Company has significant snowmaking systems that can help provide a more
consistent experience, especially in the early season. Additionally,
the Company provides many acres of groomed terrain at its resorts with extensive
fleets of snow grooming equipment.
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Lift
Service
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The
Company systematically upgrades its lifts to streamline skier traffic and
maximize guest experience. For the 2008/2009 ski season, the Company
replaced its existing gondola at Keystone with an eight-passenger gondola
including a mid-station feature. In the past three fiscal years, the
Company has installed several high-speed chairlifts and gondolas across its
resorts, including an eight-passenger gondola at Breckenridge with two
mid-station features; an eight-passenger gondola at Beaver Creek; two
four-passenger high-speed chairlifts at Vail Mountain; and a four-passenger
high-speed chairlift at Heavenly.
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Terrain
Parks
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The
Company's resorts are committed to leading the industry in terrain park design,
education and events for the growing segment of freestyle skiers and
snowboarders. Each resort has multiple terrain parks that include
progressively-challenging features. This park structure, coupled with
new freestyle ski school programs, promotes systematic learning from basic to
professional skills.
Extraordinary
service and amenities --
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Commitment
to Guest Service
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The
Company’s mission is to provide quality service at every level of the guest
experience. Prior to arrival, guests can receive personal assistance
through the Company’s full-service, in-house travel center to book desired
lodging accommodations, lift tickets, ski school lessons, equipment rentals and
air and ground travel. On-mountain ambassadors engage guests and
answer questions and all personnel, from lift operators to ski patrol, convey a
guest-oriented culture. The Company solicits guest feedback through a
variety of surveys and results are utilized to ensure high levels of customer
satisfaction to understand trends and develop future resort programs and
amenities.
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Season
Pass Products
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The
Company offers a variety of season pass products for all of its ski resorts,
marketed towards both out-of-state and international guests (“Destination”) and
in-state and local guests (“In-State”). The Company’s season pass
products are available for purchase predominately during the period prior to the
start of the ski season. The Company’s season pass products provide a
value option to its guests and in turn develops a loyal customer base that
commit to ski at the Company’s resorts, ski multiple days each season at the
Company’s resorts and return to purchase season pass products year after
year. In addition, the Company’s season pass products attract new
guests to its resorts. Growth in sales of season pass products is a
key strategic factor for the Company and also creates strong synergies between
its resorts. In the 2008/2009 ski season the Company introduced a new
pass product, (the “Epic Season Pass”) primarily marketed to its Destination
guests (and also available to In-State guests) allowing pass holders unlimited
and unrestricted access to all five ski resorts. Season pass products
provided approximately 34% of the Company’s total lift ticket revenue for the
2008/2009 ski season.
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Premier
Ski Schools
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The
Company’s resorts are home to some of the finest and most recognized ski and
snowboard schools in the industry. Through a combination of
outstanding training and abundant work opportunities, the schools have become
home to many of the most experienced and credentialed professionals in the
business. The Company complements its instructor staff with
state-of-the-art facilities and extensive learning terrain, all with a keen
attention to guest needs, including offering a wide variety of adult and child
group and private lesson options with a goal of creating lifelong skiers and
riders.
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On-Mountain
Activities
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The
Company is a ski industry leader in providing comprehensive destination vacation
experiences, including on-mountain activities designed to appeal to a broad
range of interests. In addition to the Company’s exceptional ski
experiences, guests can choose from a variety of non-ski related activities
including snow tubing, snow shoeing, guided snowmobile and scenic cat tours,
horse-drawn sleigh rides and a year-round zip line in addition to high altitude
dining. During the summer, on-mountain recreational activities
provide guests with a wide array of options including scenic chairlift and
gondola rides, mountain biking, alpine slide and zip-line rides, horseback
riding and hiking.
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Dining
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The
Company’s resorts provide a variety of quality on-mountain and base village
dining venues, ranging from top-rated fine dining restaurants to trailside
express food service outlets. The Company operates over 90 of such
dining options at its five mountain resorts. Furthermore, the Company
is committed to serving healthy food options to its guests at these dining
venues through the Company’s “Appetite for Life” program.
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Retail/rental
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The
Company, through SSI Venture, LLC (“SSV”), has over 150 retail/rental locations
specializing in sporting goods including ski, snowboard, golf and cycling
equipment. In addition to providing a major retail/rental presence at
each of the Company's ski resorts, the Company also has retail/rental locations
throughout the Colorado Front Range and at other Colorado, California and Utah
ski resorts, as well as the San Francisco Bay Area and Salt Lake
City. Many of the locations in the Colorado Front Range and in the
San Francisco Bay Area also offer a prime venue for selling the Company’s season
pass products.
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Lodging
and Real Estate Development
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Quality
lodging options are an integral part of providing a complete resort
experience. The Company’s 14 owned and managed hotels proximate to
its five mountain resorts, including four RockResorts branded hotels, and a
significant inventory of managed condominium rooms provide numerous
accommodation options for the Company’s mountain resort guests. The
Company’s real estate development efforts provide the Company with the ability
to add profitability to the Company while expanding the destination bed base and
upgrading its resorts through the development of amenities such as luxury
hotels, private clubs, spas, parking and commercial space for restaurants and
retail shops. The Company’s Lodging and Real Estate segments have and
continue to invest in resort related assets as part of their initiatives which
enhance the overall resort experience. Examples include: the
Arrabelle at Vail Square hotel (the “Arrabelle”), a RockResort property which
opened in the 2007/2008 ski season; the major renovation of The Osprey at Beaver
Creek (formerly the Inn at Beaver Creek), a RockResort property that opened in
the 2008/2009 ski season; a new spa, guest rooms and renovated ballroom and
meeting spaces at The Lodge at Vail for the 2008/2009 ski season; the
Crystal Peak Lodge in Breckenridge which opened for the 2008/2009 ski season;
and the Vail Mountain and Arrabelle Clubs, private mountain clubs which opened
for the 2008/2009 ski season.
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Environmental
Stewardship
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As part
of the Company’s long-standing commitment to responsible stewardship of its
natural mountain settings, the Company has several initiatives in environmental
sustainability which transcend throughout all of the Company’s
operations. During Fiscal 2009, the Company announced an “energy
layoff” initiative aimed at reducing overall energy consumption by 10%, with a
goal of a 5% reduction in the first year and a 5% reduction in the second
year. The Company reduced its energy consumption by 6.1% in Fiscal
2009, exceeding its first year goal. In addition, the Company
recently introduced a “paperless” initiative with plans to substantially
eliminate the internal use of paper by the end of calendar year
2011. In Fiscal 2009, the Company has also offset approximately 100%
of its electrical usage by purchasing megawatt-hours of wind energy credits for
its five mountain resorts, its lodging properties including RockResorts, its
retail/rental locations and its corporate headquarters in Broomfield,
Colorado. The Company’s headquarters is LEED-certified and the
Company’s planned Ever Vail project is expected to be the largest LEED-certified
project for resort use in North America. Additionally, the Company
has partnered with the National Forest Foundation to raise funds for various
conservation projects in the White River National Forest in Colorado and the
National Forest of Tahoe Basin in California/Nevada where the Company operates
its five mountain resorts. As a result of these efforts, the Company
was honored by Conde Nast
Traveler as a leader in social responsibility in the travel industry as a
winner of the magazine’s 2008 World Savers Awards in the category of
environmental protection.
Accessibility from major
metropolitan areas --
The
Company’s ski resorts are well located and easily accessible by both Destination
and In-State guests.
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Colorado
resorts
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The
Colorado Front Range market, with a population of approximately 4.3 million, and
growing faster than the national average, is within approximately 100 miles from
each of the Company's Colorado resorts, with access via a major interstate
highway. Additionally, the Company's Colorado resorts are proximate
to both Denver International Airport and Eagle County Airport.
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Heavenly
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Heavenly
is proximate to two large California population centers, the Sacramento/Central
Valley and the San Francisco Bay Area. Heavenly is within 100 miles
of Sacramento/Central Valley and approximately 200 miles from the San Francisco
Bay area via major interstate highways. Heavenly is serviced by the
Reno/Tahoe International Airport, Sacramento International Airport and the San
Francisco International Airport.
Marketing and
Sales
The
Company promotes its resorts through extensive marketing and sales programs,
which include direct marketing to a targeted audience, promotional programs,
print media advertising in lifestyle and industry publications, loyalty programs
that reward frequent guests and sales and marketing directed at attracting
groups, corporate meetings and convention business. Additionally, the
Company markets directly to many of its guests through its websites and internet
presence, including using social media outlets, which provides guests with
information regarding each of the Company's resorts, including services and
amenities, reservations information and virtual tours (nothing contained on the
websites shall be deemed incorporated herein). The Company also
enters into strategic sponsorships with selected “name brand” companies to
increase its market exposure and create opportunities for
cross-marketing.
Seasonality
Ski
resort operations are highly seasonal in nature, with a typical ski season
beginning in mid-November and running through mid-April. In an effort
to partially counterbalance the concentration of revenue in the winter months,
the Company offers non-ski season attractions such as sight-seeing, mountain
biking, guided hiking, alpine slides and zip-line rides, children’s activities
and other recreational activities such as golf (included in the operations of
the Lodging segment). These activities also help attract destination
conference and group business to the Company's resorts.
Lodging
Segment
The
Company's Lodging segment includes the following operations:
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·
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RockResorts
-- a luxury hotel management company with a current portfolio of eight
properties, including four Company-owned and four managed third-party
owned resort hotels with locations in Colorado, Wyoming, New Mexico and
St. Lucia, West Indies as well as six properties currently under
development that the Company will
manage;
|
|
·
|
Six
additional independently flagged Company-owned hotels, management of the
Vail Marriott Mountain Resort & Spa (“Vail Marriott”), Mountain
Thunder Lodge, Crystal Peak Lodge and Austria Haus Hotel and condominium
management operations, all of which are in and around the Company's
Colorado ski resorts;
|
|
·
|
GTLC
-- a summer destination resort with three resort properties in the Grand
Teton National Park and the Jackson Hole Golf & Tennis Club
(“JHG&TC”) near Jackson,
Wyoming;
|
|
·
|
CME
-- a resort ground transportation company;
and
|
|
·
|
Five
Company-owned resort golf courses in Colorado and one in
Wyoming.
|
The
Lodging segment currently includes approximately 3,900 owned and managed hotel
and condominium rooms. The Company's resort hotels collectively
offer a wide range of services to guests.
The
Company's portfolio of owned or managed luxury resort hotels and other hotels
and resorts currently includes:
|
Name
|
Location
|
Own/Manage
|
Rooms
|
|
RockResorts:
|
|||
|
The
Lodge at Vail
|
Vail,
CO
|
Own
|
169*
|
|
The
Arrabelle at Vail Square
|
Vail,
CO
|
Own
|
88*
|
|
The
Pines Lodge
|
Beaver
Creek, CO
|
Own
|
68*
|
|
The
Osprey at Beaver Creek
|
Beaver
Creek, CO
|
Own
|
47*
|
|
La
Posada de Santa Fe
|
Santa
Fe, NM
|
Manage
|
157
|
|
Snake
River Lodge & Spa
|
Teton
Village, WY
|
Manage
|
153
|
|
Hotel
Jerome
|
Aspen,
CO
|
Manage
|
94
|
|
The
Landings St. Lucia
|
St.
Lucia, West Indies
|
Manage
|
71
|
|
Other
Hotels and Resorts:
|
|||
|
The
Great Divide Lodge
|
Breckenridge,
CO
|
Own
|
208
|
|
The
Keystone Lodge
|
Keystone,
CO
|
Own
|
152
|
|
Inn
at Keystone
|
Keystone,
CO
|
Own
|
103
|
|
Breckenridge
Mountain Lodge
|
Breckenridge,
CO
|
Own
|
71
|
|
Village
Hotel
|
Breckenridge,
CO
|
Own
|
60
|
|
Ski
Tip Lodge
|
Keystone,
CO
|
Own
|
10
|
|
Jackson
Lake Lodge
|
Grand
Teton Nat'l Pk., WY
|
Concessionaire
Contract
|
385
|
|
Colter
Bay Village
|
Grand
Teton Nat'l Pk., WY
|
Concessionaire
Contract
|
166
|
|
Jenny
Lake Lodge
|
Grand
Teton Nat'l Pk., WY
|
Concessionaire
Contract
|
37
|
|
Vail
Marriott Mountain Resort & Spa
|
Vail,
CO
|
Manage
|
344
|
|
Mountain
Thunder Lodge
|
Breckenridge,
CO
|
Manage
|
100
|
|
Crystal
Peak Lodge
|
Breckenridge,
CO
|
Manage
|
26
|
|
Austria
Haus Hotel
|
Vail,
CO
|
Manage
|
25
|
|
*Includes
individual owner units that are in a rental program managed by the
Company.
|
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Created
by Laurance S. Rockefeller in 1956, the portfolio of RockResorts properties was
purchased by the Company in December 2001. The RockResorts collection
includes luxury hotels influenced by a strong connection to the natural
surrounding environment and feature award-winning dining, and state-of-the-art
RockResorts spas and fitness centers. The properties incorporate the
indigenous environment into the guest experience and feature access to a variety
of year-round outdoor activities ranging from skiing to golf.
The
Company's lodging strategy seeks to complement and enhance its mountain resort
operations through the ownership or management of lodging properties and
condominiums in proximity to its mountain resorts and management of luxury
resorts in premier destination locations. Additionally, the Company
continues to pursue new management contracts, which may include, in addition to
management fees, marketing license fees and technical service fees in
conjunction with a project’s design, development and sales.
The
Company’s lodging strategy, through RockResorts, is focused on the resort hotel
niche within the luxury segment and competes for boutique full-service hotel
management contracts with other hotel management companies, including Rosewood
Hotels & Resorts, the KOR group and Auberge Resorts.
During
Fiscal 2009, RockResorts announced the addition of two luxury properties, which
are currently under development, to its managed hotel portfolio; Balcones Del
Atlantico, a beachfront resort in the village of Las Terrenas on the Samana
Peninsula of the Dominican Republic, and the Mansfield Inn at Stowe, a mountain
resort property located in the mountain resort community of Stowe,
Vermont. Additionally, current properties under development as
RockResorts managed resorts include: Tempo Miami, Miami, Florida; One Ski Hill
Place, Breckenridge; Rum Cay Resort Marina, Bahamas and the Third Turtle Club
& Spa, Turks & Caicos.
In
November 2008, the Company acquired CME, which represents the first point of
contact with many of the Company’s guests when they arrive by air to
Colorado. CME offers year-round ground transportation from Denver
International Airport and Eagle County Airport to the Vail Valley (locations in
and around Vail, Beaver Creek, Avon and Edwards), Aspen (locations in and around
Aspen and Snowmass) and Summit County (includes Keystone, Breckenridge, Copper
Mountain, Frisco and Silverthorne) for ski and snowboard and other mountain
resort experiences. CME offers four primary types of services;
including door-to-door shuttle business, point-to-point shuttle business with
centralized drop-off at transportation hubs, private chartered vans and premier
luxury charter vehicles. The vehicle fleet consists of approximately
250 vans and luxury SUV’s, and transported approximately 300,000 resort guests
over the past year.
Lodging
Industry/Market
Hotels
are categorized by Smith Travel Research, a leading lodging industry research
firm, as luxury, upper upscale, upscale, mid-price and economy. The
service quality and level of accommodations of the RockResorts’ hotels place
them in the luxury category, which represents hotels achieving the highest
average daily rates (“ADR”) in the industry, and includes such brands as the
Four Seasons, Ritz-Carlton and Starwood's Luxury Collection
hotels. The Company’s other hotels are categorized in the upper
upscale and upscale segments of the hotel market. The luxury and
upper upscale segments consist of approximately 695,000 rooms at approximately
1,950 properties in the United States as of July 2009. For Fiscal
2009, the Company's owned hotels, which includes a combination of certain
RockResorts, as well as other hotels in proximity to the Company’s ski resorts,
had an overall ADR of $183.59, a paid occupancy rate of 58.3% and revenue per
available room (“RevPAR”) of $107.06, as compared to the upper upscale segment’s
ADR of $149.49, a paid occupancy rate of 64.5% and RevPAR of $96.40. The Company
believes that this comparison to the upper upscale category is appropriate as
its mix of owned hotels include those in the luxury and upper upscale
categories, as well as certain of its hotels that fall in the upscale
category. The highly seasonal nature of the Company's lodging
properties generally results in lower average occupancy as compared to the upper
upscale segment of the lodging industry.
Competition
Competition
in the hotel industry is generally based on quality and consistency of rooms,
restaurant and meeting facilities and services, attractiveness of locations,
availability of a global distribution system, price and other
factors. The Company's properties compete within their geographic
markets with hotels and resorts that include locally owned independent hotels,
as well as facilities owned or managed by national and international chains,
including such brands as Four Seasons, Hilton, Hyatt, Marriott, Ritz-Carlton,
Starwood's Luxury Collection and Westin. The Company's properties
also compete for convention and conference business across the national
market. The Company believes it is highly competitive in the resort
hotel niche for the following reasons:
|
·
|
All
of the Company's hotels are located in unique highly desirable resort
destinations.
|
|
·
|
The
Company's hotel portfolio has achieved some of the most prestigious hotel
designations in the world, including seven properties and five hotel
restaurants in its portfolio that are currently rated as AAA
4-Diamond.
|
|
·
|
The
RockResorts brand is a historic brand name with a rich tradition
associated with high quality luxury resort
hotels.
|
|
·
|
Many
of the Company's hotels (both owned and managed) are designed to provide a
look that feels indigenous to their surroundings, enhancing the guest's
vacation experience.
|
|
·
|
Each
RockResorts hotel provides the same high level of quality and services,
while still providing unique characteristics which distinguish the resorts
from one another. This appeals to travelers looking for
consistency in quality and service offerings together with an experience
more unique than typically offered by larger luxury hotel
chains.
|
|
·
|
Many
of the hotels in the Company's portfolio provide a wide array of amenities
available to the guest such as access to world-class ski and golf resorts,
spa and fitness facilities, water sports and a number of other outdoor
activities as well as highly acclaimed dining
options.
|
|
·
|
Conference
space with the latest technology is available at most of the Company's
hotels. In addition, guests at Keystone can use the
Company-owned Keystone Conference Center, the largest conference facility
in the Colorado Rocky Mountain region with more than 100,000 square feet
of meeting, exhibit and function
space.
|
|
·
|
The
Company has a central reservations system that leverages off of its ski
resort reservations system and has a brand new online planning and booking
platform, offering guests a much more seamless and useful way to make
reservations at the Company’s
resorts.
|
|
·
|
The
Company actively upgrades the quality of the accommodations and amenities
available at its hotels through capital improvements. Capital
funding for third-party owned properties is provided by the owners of
those properties to maintain standards required by our management
contracts. Recently completed projects include a full
renovation of The Osprey at Beaver Creek (formerly known as the Inn at
Beaver Creek), extensive upgrades to The Lodge at Vail including a fully
renovated ballroom and meeting spaces, room upgrades and the addition of a
7,500 square foot spa and extensive room upgrades at GTLC’s historic
Jackson Lake Lodge.
|
National Park
Concession
The
Company owns GTLC, which is based in the Jackson Hole area in Wyoming and
operates within the Grand Teton National Park under a 15 year concessionaire
agreement (that expires December 31, 2021) with the National Park Service
(“NPS”). GTLC also owns JHG&TC, which is located outside of the
Grand Teton National Park near Jackson, Wyoming. GTLC's operations
within the Grand Teton National Park and JHG&TC have operating seasons that
generally run from mid-May to mid-October.
There are
391 areas within the National Park System covering approximately 85 million
acres across the United States and its territories. Of the 391 areas,
58 are classified as National Parks. While there are more than 500
NPS concessionaires, ranging from small privately-held businesses to large
corporate conglomerates, the Company primarily competes with such companies as
Aramark Parks & Resorts, Delaware North Companies Parks & Resorts,
Forever Resorts and Xanterra Parks & Resorts in retaining and obtaining
National Park Concessionaire agreements. The NPS uses “recreation
visits” to measure visitation within the National Park System. In
calendar 2008, areas designated as National Parks received approximately 61.2
million recreation visits. The Grand Teton National Park, which spans
approximately 310,000 acres, had 2.5 million recreation visits during calendar
2008, or approximately 4% of total National Park recreation
visits. Four concessionaires provide accommodations within the Grand
Teton National Park, including GTLC. GTLC offers three lodging
options within the Grand Teton National Park: Jackson Lake Lodge, a
full-service, 385-room resort with 17,000 square feet of conference facilities
which can accommodate up to 600 people; the Jenny Lake Lodge, a small,
rustically elegant retreat with 37 cabins; and Colter Bay Village, a facility
with 166 log cabins, 66 tent cabins, 361 campsites and a 112-space RV
park. GTLC offers dining options as extensive as its lodging options,
with cafeterias, casual eateries and fine dining
establishments. GTLC's resorts provide a wide range of activities for
guests to enjoy, including cruises on Jackson Lake, boat rentals, horseback
riding, guided fishing, float trips, golf and guided Grand Teton National Park
tours. As a result of the extensive amenities offered as well as the
tremendous popularity of the National Park System, GTLC's accommodations within
the Grand Teton National Park operate near full capacity during their operating
season.
Marketing and
Sales
The
Company promotes its luxury and resort hotels and seeks to maximize lodging
revenue by using its marketing network established at the Company's ski
resorts. This network includes local, national and international
travel relationships which provide the Company's central reservation systems
with a significant volume of transient guests. The Company also
promotes a comprehensive vacation experience through various package offerings
and promotions (combining lodging, lift tickets, transportation and
dining). Additionally, the individual hotels and the Company have
active sales forces to generate conference and group business.
Seasonality
The
Company's lodging business is highly seasonal in nature, with peak seasons
primarily in the winter months (with the exception of GTLC, certain managed
properties and golf operations). In recent years, the Company has
grown its business by promoting its extensive conference facilities and offering
more off-season activities to help offset the seasonality of the Company's
lodging business. The Company owns and operates six golf courses: The
Beaver Creek Golf Club, The Keystone Ranch Golf Course, The River Course at
Keystone, JHG&TC and the Tom Fazio and Greg Norman courses at Red Sky Ranch
near the Beaver Creek Resort. JHG&TC was ranked the fourth best
course in Wyoming for 2009 by Golf Digest, the Tom Fazio
course was ranked the fourth best course in Colorado in the State by State
ranking for 2009 by Golfweek and ranked the
fourteenth best course in Colorado for 2009 by Golf Digest, and the Greg
Norman course was ranked the eighth best course in Colorado in the State by
State ranking for 2009 by Golfweek and ranked the tenth
best course in Colorado for 2009 by Golf Digest. Red
Sky Ranch was ranked one of America’s Top 100 Golf Communities in 2009 by Travel & Leisure
Golf.
Real
Estate Segment
The
Company has extensive holdings of real property at its resorts throughout Summit
and Eagle Counties in Colorado. The Company's real estate operations,
through Vail Resorts Development Company (“VRDC”), a wholly owned subsidiary of
the Company, include the planning, oversight, infrastructure improvement,
development, marketing and sale of the Company's real property
holdings. In addition to the cash flow generated from real estate
development sales, these development activities benefit the Company's Mountain
and Lodging segments through (i) the creation of additional resort lodging and
other resort related facilities and venues (primarily restaurants, spas,
commercial space, private mountain clubs, skier services facilities and parking
structures) which provide the Company with the opportunity to create new sources
of recurring revenue, enhance the guest experience at the resort and expand the
destination bed base; (ii) the ability to control the architectural themes of
the Company's resorts; and (iii) the expansion of the Company's property
management and commercial leasing operations. Additionally, in order
to facilitate the sale of real estate development projects, these projects have
included the construction of resort assets benefiting the development, such as
chairlifts, gondolas, ski trails or golf courses. While these
improvements enhance the value of the real estate held for sale (for example, by
providing ski-in/ski-out accessibility), they also benefit the Mountain and
Lodging segments’ operations.
In recent
years the Company has primarily focused on projects that involve significant
vertical development. In addition to recently completed projects
including the Arrabelle, Vail’s Front Door and Crystal Peak Lodge at
Breckenridge, the Company has two vertical development projects currently under
construction: One Ski Hill Place at Breckenridge and The Ritz-Carlton
Residences, Vail. The Company attempts to mitigate the risk of
vertical development by often utilizing guaranteed maximum price construction
contracts (although certain construction costs may not be covered by contractual
limitations), pre-selling all or a portion of the project, requiring significant
non-refundable deposits, and potentially obtaining non-recourse financing for
certain projects. In some instances as warranted by the Company’s
business model, VRDC occasionally attempts to minimize the Company's exposure to
development risks and maximize the long-term value of the Company's real
property holdings by selling improved and entitled land to third-party
developers while often retaining the right to approve the development plans, as
well as an interest in the developer's profit. The Company also
typically retains the option to purchase, at cost, any retail/commercial space
created in a development.
VRDC's
principal activities include (i) the vertical development of certain residential
mixed-use projects that consist of both the sales of real estate units to third
parties and the construction of resort depreciable assets such as hotels,
restaurants, spas, private clubs, commercial space, skier service facilities,
parking structures and other amenities that the Company will own and operate and
that will benefit the Company’s Mountain and Lodging segments; (ii) the sale of
single-family homesites to individual purchasers; (iii) the sale of certain land
parcels to third-party developers for condominium, townhome, cluster home,
single family home, lodge and mixed use developments; (iv) the zoning, planning
and marketing of resort communities; (v) arranging for the construction of the
necessary roads, utilities and resort infrastructure for new resort communities;
and (vi) the purchase of selected strategic land parcels for future
development.
VRDC’s
current construction activities include the following major
projects:
|
·
|
One Ski Hill Place at
Breckenridge -- This development consists of 88
ski-in/ski-out residences and certain amenities which include a slopeside
skiers' plaza, a skier restaurant, après-ski bar, owner's ski lounge,
parking garage, conference space and retail space, all of which are
located at the base of Peak 8 and will connect to the Town of Breckenridge
via the BreckConnect gondola. This development will be branded
a RockResorts property upon
completion.
|
|
·
|
The Ritz-Carlton Residences,
Vail -- Located in the western part of Vail, this project consists
of 71 whole ownership luxury residences and 45 Ritz-Carlton Club
fractional ownership units. This development will offer
exclusive amenities, including a great room with bar, fitness facility and
a heated parking garage with valet
service.
|
Additionally,
VRDC continues to plan for numerous projects at all five of its mountain
resorts, including the Ever Vail project in Vail.
Employees
The
Company, through certain operating subsidiaries, currently employs approximately
3,500 year-round employees and during the height of its operating season employs
approximately 10,600 seasonal employees. In addition, the Company
manages approximately 700 year-round and 160 seasonal employees on behalf of the
owners of the managed hotel properties. None of the Company's
employees are unionized. The Company considers employee relations to
be good.
Regulation
and Legislation
Federal
Regulation
The 1986
Ski Area Permit Act (the “1986 Act”) allows the USDA Forest Service (the “Forest
Service”) to grant Term Special Use Permits (each, an “SUP”) for the operation
of ski areas and construction of related facilities on National Forest
lands. In addition, the 1986 Act requires a Master Development Plan
for each ski area that is granted an SUP. Each of the Company’s
five ski resorts operates under an SUP.
Each
distinct area of National Forest lands is required by the National Forest
Management Plan to develop and maintain a Land and Resource Management Plan (a
“Forest Plan”), which establishes standards and guidelines for the Forest
Service to follow and consider in reviewing and approving proposed actions by
the Company.
Under the
1986 Act, the Forest Service has the right to review and approve the location,
design and construction of improvements in the permit area and many operational
matters. Virtually all of the skiable terrain on Vail Mountain,
Breckenridge, Heavenly and Keystone is located on Forest Service
land. While Beaver Creek also operates on Forest Service land, a
significant portion of the skiable terrain, primarily in the lower main
mountain, Western Hillside, Bachelor Gulch and Arrowhead Mountain areas, is
located on Company-owned land.
Special Use
Permits
Vail
Mountain operates under an SUP for the use of 12,226 acres that expires October
31, 2031. Breckenridge operates under an SUP for the use of 5,702
acres that expires December 31, 2029. Keystone operates under an SUP
for the use of 8,376 acres that expires December 31, 2032. Beaver
Creek operates under an SUP for the use of 3,849 acres that expires December 31,
2038. Heavenly operates under an SUP for the use of 7,050 acres that
expires May 1, 2042.
Each SUP
contains a number of requirements, including that the Company indemnify the
Forest Service from third-party claims arising out of its operation under the
SUP and that it comply with applicable laws, such as those relating to water
quality and endangered or threatened species.
For use
of the SUPs, the Company pays a fee to the Forest Service ranging from 1.5% to
4.0% of sales for services occurring on Forest Service land. Included
in the calculation are sales from, among other things, lift tickets, season
passes, ski school lessons, food and beverages, equipment rentals and retail
merchandise.
The SUPs
may be amended by the Company or by the Forest Service to change the permit area
or permitted uses. The Forest Service may amend an SUP if it
determines that such amendment is in the public interest to do
so. While the Forest Service is required to seek the permit-holders
consent to any amendment, an amendment can be finalized over permit-holder
objections. Permit amendments must be consistent with the Forest Plan
and are subject to the provisions of the National Environmental Policy Act
(“NEPA”), both of which are discussed below.
The
Forest Service can also terminate a SUP if it determines that termination is
required in the public interest. However, to the Company's knowledge,
no SUP has ever been terminated by the Forest Service over the opposition of the
permitee.
Master Development
Plans
All
improvements that the Company proposes to make on National Forest lands under
any of its SUPs must be included in a Master Development Plan. Master
Development Plans describe the existing and proposed facilities, developments
and area of activity within the permit area. Master Development Plans
are prepared by the Company and set forth a conceptual overview of all potential
projects at each resort. The Master Development Plans are reviewed by
the Forest Service for compliance with the Forest Plan and other applicable law
and, if found to be compliant, are accepted by the Forest
Service. Notwithstanding acceptance by the Forest Service of the
conceptual Master Development Plans, individual projects still require separate
applications to be submitted evidencing compliance with NEPA and other
applicable laws before the Forest Service will approve such
projects. The Company updates or amends its Master Development Plans
for Vail Mountain, Beaver Creek, Keystone, Breckenridge and Heavenly from time
to time.
White River National Forest
Plan
Operational
and development activities on National Forest System lands at the Company's four
Colorado ski resorts are subject to the additional regulatory and planning
requirements set forth in the April 2002 Record of Decision (“ROD”) for the
White River National Forest Land and Resources Management Plan (the “White River
Forest Plan”).
When
approving Company applications for development, area expansion and other
activities on National Forest lands in Colorado, the Forest Service must adhere
to the White River Forest Plan and ROD. Any such decision may be
subject to judicial review in Federal court if a party, with standing,
challenges a Forest Service decision that applies the ROD at one of the
Company’s four Colorado ski resorts.
National Environmental
Policy Act; California Environmental Quality Act
NEPA
requires an assessment of the environmental impacts of “major” proposed actions
of the Company on National Forest land, such as expansion of a ski area,
installation of new lifts or snowmaking facilities, or construction of new
trails or buildings. The Company must comply with NEPA when seeking
Forest Service approval of such improvements. The Forest Service is responsible
for preparing and compiling the required environmental studies, usually through
third-party consultants. NEPA allows for different types of
environmental studies, depending on the scope and size of the expected impact of
the proposed project. An Environmental Assessment (“EA”) is typically
used for projects where the environmental impact is expected to be
limited. For projects with more significant expected impacts, an
Environmental Impact Statement (“EIS”) is more commonly required. An
EIS is more detailed and broader in scope than an EA. The Forest
Service usually takes more time to compile, review and issue an
EIS. Consequently, projects that require an EIS typically take longer
to approve.
During
the requisite environmental study, the Forest Service is required to analyze
alternatives to the proposed action (including not taking the proposed action)
as well as impacts that may be unavoidable. Following completion of
the requisite environmental study, the Forest Service may decide not to approve
the proposed action or may decide to approve an alternative. In
either case the Company may be forced to abandon or alter its development or
expansion plans.
In
limited cases, projects can be subject to a Categorical Exclusion, which allows
approval by the Forest Service without preparation of an environmental study
required by NEPA. The Forest Service has a list of available
Categorical Exclusions, which typically are only available for projects that are
not expected to have an environmental impact, such as certain utilities
installed in an existing, previously disturbed corridor.
Proposed
actions at Heavenly may also be subject to the California Environmental Quality
Act (“CEQA”), which is similar to NEPA in that it requires that the California
governmental entity approving any proposed action on the California portion of
Heavenly study potential environmental impacts. Projects with
significant expected impacts require an Environmental Impact Report while more
limited projects may be approved based on a Mitigated Negative
Declaration.
Breckenridge Regulatory
Matters
The
Company submitted an updated Master Development Plan for Breckenridge, which was
accepted by the Forest Service in January 2008. The Master
Development Plan was updated to include, among other things, additional skiable
area, snowmaking and lift improvements.
In
January 2008, the Forest Service commenced public scoping of the Company’s
proposal to develop a portion of Peak 6, which adjoins the Breckenridge Ski Area
to the north. Approval of the Peak 6 development requires the
preparation of an EIS, in compliance with NEPA. The initial round of
public scoping has been completed and the Forest Service is preparing the
EIS. It is not possible at this time to determine whether the
expansion will be approved as proposed.
Keystone Regulatory
Matters
In
November 2007, the Forest Service approved the extension and replacement of the
River Run Gondola, as contemplated by the Keystone Ski Area Master Development
Plan. This approval did not require extensive review under NEPA as it
qualified for a Categorical Exclusion. The new gondola was installed
during summer 2008 and was operational for the 2008/2009 ski
season.
The
Company has submitted an updated Keystone Ski Area Master Development Plan which
includes, among other things, ski area expansion, construction of new lifts,
trails and snowmaking systems, and construction or redevelopment of skier
buildings and other facilities. The Company anticipates acceptance of
the updated Master Development Plan by the Forest Service prior to the beginning
of the 2009/2010 ski season.
Vail Regulatory
Matters
In
September 2007, the updated Vail Master Development Plan was accepted by the
Forest Service. The Vail Master Development Plan includes, among
other things, additional snowmaking on Vail Mountain, additional lifts, and a
race facility expansion at Vail's Golden Peak. In October 2007, the
Company submitted to the Forest Service its first proposal under the updated
Master Development Plan to install a new chair lift in Vail's Sundown Bowl and
to upgrade the existing chair 5 to a high-speed, detachable quad chair
lift. NEPA requires that an EIS be prepared in connection with the
approval of this proposal. Due to proposed project changes, the
Forest Service is preparing a supplement to the EIS, which the Company
anticipates will be issued in September 2009, with the final EIS and approval of
the projects anticipated by November 2009.
In March
2006, the Forest Service approved a proposal to construct a chairlift to service
existing and potential future residential and commercial development in the
proposed Ever Vail area. However, since receiving approval, the
Company has modified the plans for the chairlift and has requested approval from
the Forest Service of the modified plans. The Company anticipates
approval by May 2010.
Beaver Creek Regulatory
Matters
The
Company is in the final stages of updating the Beaver Creek Master Development
Plan to include, among other things, certain chairlift and snowmaking upgrades
and adjustments to visitor capacity parameters in light of prior lift and trail
upgrades contemplated in the Master Development Plan. The Company
intends to submit the updated Master Development Plan to the Forest Service in
December 2009.
Heavenly Regulatory
Matters
During
summer 2007, an amendment to the Heavenly Master Plan (the “Master Plan
Amendment”) to include new and upgraded trails, lifts, snowmaking, lodges and
other facilities was accepted by the Forest Service and approved by the Tahoe
Regional Planning Agency (“TRPA”) and the underlying units of local government
with jurisdiction. Portions of the Master Plan Amendment applying to
the California side of the resort were subject to the approval of TRPA and El
Dorado County, which required compliance with CEQA. The Master Plan
Amendment was approved by TRPA and El Dorado County after completion of a joint
TRPA/Forest Service EIS/Environmental Impact Report to comply with both CEQA and
NEPA. Approval of the Master Plan Amendment included approval by the
Forest Service and TRPA of the Phase I projects contemplated in the Master Plan
Amendment. The Company has begun planning for the implementation of
the next phase of projects contemplated in the Master Plan Amendment, which will
require compliance with NEPA, CEQA and TRPA regulations and other local
laws.
The
Company has been conducting ongoing monitoring of groundwater contamination
levels using three existing monitoring wells and a seasonal, downstream seep as
required by the State of California Regional Water Quality Control Board,
Lahontan Region (“Lahontan”), and the El Dorado County Department of
Environmental Management. This requirement was imposed in response to
an accidental release of waste oil at a vehicle maintenance shop in 1998 by the
prior owner/operator of Heavenly. All cleanup work has been completed
in accordance with the approved work plan. The Company has filed its final
monitoring report and closure request and is waiting for a decision from
Lahontan.
In July
2003, Heavenly received updated waste discharge requirements ("WDRs") relating
to storm runoff on the California portions of the resort. WDRs are
normally valid for ten years. The approved WDRs will permit Heavenly
to continue year round operations and to continue with implementation of the
approved Master Plan Amendment. The WDRs required the retrofit of
certain existing facilities within California. All of the required
work has been completed.
GTLC Concession
Contract
GTLC
operates three lodging properties, food and beverage services, retail, camping
and other services within the Grand Teton National Park under a concession
contract with the NPS. The Company’s concession contract with the NPS
for GTLC expires on December 31, 2021. Upon expiration of the
concession contract, the Company will have to bid against other prospective
concessionaires for award of a new contract.
The NPS
may suspend operation under the concession contract at any time if the NPS
determines it is necessary to protect visitors or resources within the National
Park. NPS also has the right to terminate the contract for breach,
following notice and a 15 day cure period or if it believes termination is
necessary to protect visitors or resources within the National
Park.
The
Company pays a fee to the NPS of 8.01% on the majority of sales occurring in the
Grand Teton National Park.
Water
The
Company relies on a supply of water for operation of its ski areas for domestic
and snowmaking purposes and for real estate development. Availability
of water depends on existence of adequate water rights as well as physical
delivery of the water when and where it is needed.
Snowmaking
To
provide a level of predictability in dates of operation of its ski areas, the
Company relies on snowmaking. Snowmaking requires a significant
volume of water, which is viewed as a non-consumptive use – approximately 80% of
the water is returned to the watershed at spring runoff.
In
Colorado, the Company owns or has ownership interest in water rights in
reservoir companies, reservoirs, groundwater wells, and other
sources. The primary source of water for Keystone and Breckenridge is
the Clinton Reservoir, in which the Company owns a non-controlling
interest. For Vail Mountain and Beaver Creek, the primary water
source is Eagle Park Reservoir, in which the Company owns a controlling
interest. The Company believes that it has rights to sufficient
quantities of water for the operation of the Company’s four Colorado resorts for
the foreseeable future.
Delivery
of the water to each resort is typically by stream, from which the water is
diverted by the Company to on-site storage facilities or directly into the
snowmaking system. The streams that deliver the water are subject to
minimum stream flows, freezing and other limitations that may prevent or reduce
the amount of water physically available to the resort.
Unlike
the Company’s other Colorado resorts, Keystone does not have on-site storage for
snowmaking water and so is more vulnerable to interruptions in delivery of a
physical supply of water.
Heavenly’s
primary sources of water are the South Tahoe Public Utility District and
Kingsbury General Improvement District, which are California and Nevada public
utilities, respectively. Heavenly has short term contracts with both
utility companies and pays prevailing rates. While the Company
believes that both sources of water will be available long term, the Company has
no contractual guaranty of service, delivery or future
pricing. Further, the delivery systems of each utility are limited
and may not be able to provide the immediate physical supply of water needed for
optimal snowmaking.
Available
Information
The
Company reports to the Securities and Exchange Commission (“SEC”) information,
including its annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Act”) that are
available free of charge on the Company's corporate website
(www.vailresorts.com) as soon as reasonably practicable after the information is
electronically filed with or furnished to the SEC. In addition, the
Company's Code of Ethics and Business Conduct is available on its
website. None of the content of the Company's corporate website is
incorporated by reference herein. Copies of any materials the Company
files with the SEC can be obtained at www.sec.gov or at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Information on the operation of the Public Reference Room is
available by calling the SEC at 1-800-SEC-0330.
The risks
described below should carefully be considered together with the other
information contained in this report. The risks described below are
not the only risks facing us. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial may also
materially affect our business, financial condition and results of
operations.
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Risks
Related to Our Business
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We are subject to the risk of a
prolonged economic downturn including continued adverse affects on the overall
travel and leisure related industries. The economic recession
that has affected the U.S. and global economies, the tightened credit markets
and eroded consumer confidence had a negative impact on overall trends in the
travel and leisure industries and on our results of operations for Fiscal
2009. As a result of the economic downturn we experienced, among
other items: a decrease in overall visitation at our resorts, primarily as a
result of decreased visitation from Destination guests; a significant decrease
in overall guest spending on ancillary services including ski school, dining and
retail/rental; and a change in booking trends such that guest reservations were
made much closer to the actual date of stay. We cannot predict at
what level these negative trends will continue, worsen or improve and the
ultimate impact it will have on our future results of operations. The actual or perceived
fear of the extent of the recession could also lead to continued decreased
spending by our guests. Skiing, travel and tourism are discretionary
recreational activities that can entail a relatively high cost of participation
and is adversely affected by economic slowdown or recession. This could further
be exacerbated by the fact that we charge some of the highest prices for our
lift tickets and ancillary services in the ski industry. In the event
of a further decrease in visitation and overall guest spending we may be
required to offer a higher amount of discounts and incentives than we have
historically.
Leisure and business travel are
particularly susceptible to various factors outside of our control, including
terrorism, the uncertainty of military conflicts, outbreaks of contagious
diseases and the cost and availability of travel options. Our
business is sensitive to the willingness of our guests to
travel. Acts of terrorism, the spread of contagious diseases,
regional political events and developments in military conflicts in areas of the
world from which we draw our guests could depress the public’s propensity to
travel and cause severe disruptions in both domestic and international air
travel and consumer discretionary spending, which could reduce the number of
visitors to our resorts and have an adverse affect on our results of
operations. Many of our guests travel by air and the impact of higher
prices for commercial airline services and availability of air services could
cause a decrease in visitation by Destination guests to our
resorts. Also, many of our guests travel by vehicle and higher
gasoline prices could adversely impact our guests’ willingness to travel to our
resorts. Higher cost of travel may also affect the amount that guests
are willing to spend at our resorts and could negatively impact our revenue
particularly for lodging, ski school, dining and retail/rental.
Our business is highly
seasonal. Our mountain and lodging operations are highly
seasonal in nature. In particular, revenue and profits from our
mountain and most of our lodging operations are substantially lower and
historically result in losses from late spring to late
fall. Conversely, peak operating seasons for GTLC, certain managed
hotel properties and our golf courses occur during the summer months while the
winter season generally results in operating losses. Revenue and
profits generated by GTLC's summer operations, management fees from certain
managed properties, certain other lodging properties and golf operations are not
nearly sufficient to fully offset our off-season losses from our mountain and
other lodging operations. For Fiscal 2009, 79% of total combined
Mountain and Lodging segment net revenue was earned during our fiscal second and
third quarters. In addition, the timing of major holidays can impact
vacation patterns and therefore visitation at our ski resorts. If we were to
experience an adverse event or realized a significant deterioration in our
operating results during our peak periods (our fiscal second and third quarters)
we would be unable to fully recover any significant declines due to the
seasonality of our business. Operating results for any
three-month period are not necessarily indicative of the results that may be
achieved for any subsequent quarter or for a full fiscal year (see Note 16,
Selected Quarterly Financial Data, of the Notes to Consolidated Financial
Statements).
We are vulnerable to the risk of
unfavorable weather conditions and the impact of natural
disasters. The ability to attract visitors to our resorts is
influenced by weather conditions and by the amount and timing of snowfall during
the ski season. Unfavorable weather conditions can adversely affect
skier visits and our revenue and profits. Unseasonably warm weather
may result in inadequate natural snowfall and reduce skiable terrain which
increases the cost of snowmaking and could render snowmaking wholly or partially
ineffective in maintaining quality skiing conditions, including in areas which
are not accessible by snowmaking equipment. In addition, a severe and
prolonged drought could affect our otherwise adequate snowmaking water supplies
or increase the cost of snowmaking. Excessive natural snowfall may
materially increase the costs incurred for grooming trails and may also make it
difficult for visitors to obtain access to our mountain resorts. In
the past 20 years, our ski resorts have averaged between 20 and 30 feet of
annual snowfall which is significantly in excess of the average for United
States ski resorts. However, there is no assurance that our resorts
will receive seasonal snowfalls near the historical average in the
future. Also, the early season snow conditions and skier perceptions
of early season snow conditions influence the momentum and success of the
overall season. Unfavorable weather conditions can adversely affect
our resorts and lodging properties as vacationers tend to delay or postpone
vacations if conditions differ from those that typically prevail at such resorts
for a given season. There is no way for us to predict future weather
patterns or the impact that weather patterns may have on our results of
operations or visitation.
A severe
natural disaster, such as a forest fire, may interrupt our operations, damage
our properties and reduce the number of guests who visit our resorts in affected
areas. Damage to our properties could take a long time to repair and
there is no guarantee that we would have adequate insurance to cover the costs
of repair. Furthermore, such a disaster may interrupt or impede
access to our affected properties or require evacuations and may cause visits to
our affected properties to decrease for an indefinite period. The
ability to attract visitors to our resorts is also influenced by the aesthetics
and natural beauty of the outdoor environment where our resorts are
located. A severe forest fire or other severe impacts from naturally
occurring events could negatively impact the natural beauty of our resorts and
have a long-term negative impact on our overall guest visitation as it would
take several years for the environment to recover.
We face significant
competition. The ski resort and lodging industries are highly
competitive. The number of people who ski in the United States (as
measured in skier visits) has generally ranged between 52 million and 61 million
annually over the last decade, with approximately 57.4 million visits for the
2008/2009 ski season. The factors that we believe are important to
customers include:
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proximity
to population centers;
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availability
and cost of transportation to ski
areas;
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ease
of travel to ski areas (including direct flights by major
airlines);
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pricing
of lift tickets and/or season passes and the number, quality and price of
related ancillary services (ski school, dining and retail/rental),
amenities and lodging;
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snowmaking
facilities;
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type
and quality of skiing and snowboarding
offered;
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duration
of the ski season;
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weather
conditions; and
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reputation.
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We have
many competitors for our ski vacationers, including other major resorts in
Colorado, the Lake Tahoe area and other major destination ski areas
worldwide. Our guests can choose from any of these alternatives, as
well as non-skiing vacation destinations around the world. In
addition, other forms of leisure such as sporting events and participation in
other competing indoor and outdoor recreational activities are available to
potential guests.
RockResorts
hotels and our other hotels compete with numerous other hotel companies that may
have greater financial resources than we do and they may be able to adapt more
quickly to changes in customer requirements or devote greater resources to
promotion of their offerings than us. We believe that developing and
maintaining a competitive advantage will require us to make continued capital
investment in our resorts. We cannot assure that we will have
sufficient resources to make the necessary capital investments to do so, and we
cannot assure that we will be able to compete successfully in this market or
against such competitors.
The high fixed cost structure of ski
resort operations can result in significantly lower margins if revenues decline.
The cost structure of ski resort operations is primarily fixed, with
variable expenses including, but not limited to, Forest Service fees, other
resort related fees, credit card fees, retail/rental operations, ski school
labor and dining operations. Any material declines in the economy,
elevated geopolitical uncertainties and/or significant changes in historical
snowfall patterns, as well as other risk factors discussed herein could
adversely affect revenue. As such, our margins, profits and cash
flows may be materially reduced due to declines in revenue given our high fixed
cost structure. In addition, increases in wages and other labor
costs, energy, healthcare, insurance, transportation and fuel, and other
expenses included in our fixed cost structure may also reduce our margin,
profits and cash flows.
Our future real estate development
projects might not be successful. We have significant
development plans for our properties and/or operations. We could
experience significant difficulties in initiating or completing these projects,
due to among other things:
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sustained
deterioration in real estate
markets;
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escalation
in construction costs due to price increases in commodities, unforeseen
conditions, inadequate design or drawings, or other
causes;
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difficulty
in selling units or the ability of buyers to obtain necessary funds to
close on units;
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work
stoppages;
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weather
interferences;
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shortages
in obtaining materials;
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difficulty
in financing real estate development
projects;
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difficulty
in receiving the necessary regulatory
approvals;
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difficulty
in obtaining qualified contractors or subcontractors;
and
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unanticipated
incremental remediation costs related to design and construction
issues.
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Our real
estate development projects are designed to make our resorts attractive to our
guests and to maintain competitiveness. If these projects are not
successful, in addition to not realizing intended profits from the real estate
developments, our guests may choose to go to other resorts that they perceive
have better amenities and our results of operations could be materially
adversely affected.
There are significant risks associated with our
current real estate projects under development, which could adversely affect our
financial condition, results of operations or anticipated cash flows from these
projects. We currently have two real estate projects under
development, One Ski Hill Place in Breckenridge and The Ritz-Carlton Residences,
Vail. We have increased risk associated with selling and closing
units for these projects as a result of the instability in the capital and
credit markets and a slowdown in the overall real estate market. For
instance, we may have difficulty selling units due to a reduction in demand or
oversupply and, as a result we may not be able to sell such properties for a
profit or at the prices or selling pace we anticipate. Furthermore,
given the current economic climate, certain buyers may be unable to close on
their units due to a reduction in funds available to buyers and/or decreases in
mortgage availability, or certain buyers who have entered into purchase and
sales contracts with us may attempt to challenge the legality of the contracts
in an effort to invalidate their purchase commitment and obtain a refund of
their deposit. We are currently self funding the development for
these two projects and estimate to incur between $190 million and $210 million
in cash expenditures subsequent to July 31, 2009 to complete these projects
which will cause a decline in future cash being generated from operating
activities, potentially requiring us to borrow under the revolver component of
our senior credit facility (the “Credit Facility”) from time to time,
which would increase our leverage until we close and receive proceeds
from the sale of units from these projects. As such, due to the
overall macro-economic environment, the ensuing deterioration in real estate
markets and the tightening of credit markets, among other factors, there is no
assurance that units will be sold and/or closed upon completion of these
projects which could increase our leverage, including related interest costs,
for a prolonged period of time which could have an adverse effect on our results
of operations.
We may not be able to fund resort
capital expenditures and investment in real estate. In
addition to the self funding of real estate under development, we currently
anticipate resort capital expenditures (primarily related to the Mountain and
Lodging segments) will be approximately $50 million to $60 million for calendar
year 2009. Our ability to fund these investments will depend on our
ability to generate sufficient cash flow from operations, obtain pre-sale
deposits and/or to borrow from third parties. We cannot provide
assurances that our operations will be able to generate sufficient cash flow to
fund such development costs, or that we will be able to obtain sufficient
financing on adequate terms, or at all. Our ability to generate cash
flow and to obtain third-party financing will depend upon many factors,
including:
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our
future operating performance;
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general
economic conditions and economic conditions affecting the resort industry,
the ski industry and the general capital
markets;
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our
ability to meet our pre-sell targets on our vertical real estate
development projects;
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competition;
and
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legislative
and regulatory matters affecting our operations and
business.
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We could
finance future expenditures from any combination of the following
sources:
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cash
flow from operations;
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construction
financing, including non-recourse or other
financing;
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bank
borrowings;
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public
offerings of debt or equity; and
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private
placements of debt or equity.
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Any
inability to generate sufficient cash flows from operations or to obtain
adequate third-party financing could cause us to delay or abandon certain
development projects and/or plans.
We rely on government
permits. Our resort operations require permits and approvals
from certain Federal, state, and local authorities, including the Forest Service
and U.S. Army Corps of Engineers. Virtually all of our ski trails and
related activities at Vail Mountain, Breckenridge, Keystone and Heavenly and a
majority of Beaver Creek are located on Federal land. The Forest
Service has granted us permits to use these lands, but maintains the right to
review and approve many operational matters, as well as the location, design and
construction of improvements in these areas. Currently, our permits
expire December 31, 2029 for Breckenridge, October 31, 2031 for Vail Mountain,
December 31, 2032 for Keystone, December 31, 2038 for Beaver Creek and May 1,
2042 for Heavenly. The Forest Service can terminate or amend these permits if,
in its opinion, such termination is required in the public
interest. A termination or amendment of any of our permits could have
a materially adverse affect on our business and operations.
In order
to undertake improvements and new development, we must apply for permits and
other approvals. These efforts, if unsuccessful, could impact our
expansion efforts. Furthermore, Congress may materially increase the
fees we pay to the Forest Service for use of these Federal lands.
We are subject to extensive
environmental laws and regulations in the ordinary course of
business. Our operations are subject to a variety of Federal,
state and local environmental laws and regulations including those relating to
emissions to the air, discharges to water, storage, treatment and disposal of
wastes, land use, remediation of contaminated sites and protection of natural
resources such as wetlands. For example, future expansions of certain of our ski
facilities must comply with applicable forest plans approved under the National
Forest Management Act or local zoning requirements. In addition, most
projects to improve, upgrade or expand our ski areas are subject to
environmental review under the NEPA and, for California projects at Heavenly,
the CEQA. Both acts require that the Forest Service study any proposal for
potential environmental impacts and include in its analysis various
alternatives. Our ski area improvement proposals may not be approved
or may be approved with modifications that substantially increase the cost or
decrease the desirability of implementing the project. Our facilities
are subject to risks associated with mold and other indoor building
contaminants. From time to time our operations are subject to
inspections by environmental regulators or other regulatory agencies. We are
also subject to worker health and safety requirements. We believe our
operations are in substantial compliance with applicable material environmental,
health and safety requirements. However, our efforts to comply do not eliminate
the risk that we may be held liable, incur fines or be subject to claims for
damages, and that the amount of any liability, fines, damages or remediation
costs may be material for, among other things, the presence or release of
regulated materials at, on or emanating from properties we now or formerly owned
or operated, newly discovered environmental impacts or contamination at or from
any of our properties, or changes in environmental laws and regulations or their
enforcement.
Failure to maintain the integrity of
guest data could result in damages of reputation and/or subject us to costs,
fines or lawsuits. We collect personally identifiable
information relating to our guests for various business purposes, including
marketing and promotional purposes. The integrity and privacy of our
guest’s information is important to us and our guests have a high expectation
that we will adequately protect their personal information. The
regulatory environment governing privacy laws is increasingly demanding and
privacy laws continue to evolve and on occasion may be inconsistent from one
jurisdiction to another. Maintaining compliance with applicable
privacy regulations may increase our operating costs and/or adversely impact our
ability to market our products, properties and services to our
guests. Furthermore, non-compliance with applicable privacy
regulations by us (or in some circumstances non-compliance by third parties
engaged by us), breach of security on systems storing our guest data, a loss of
guest data or fraudulent use of guest data could adversely impact our reputation
or result in fines or other damages and litigation.
We are subject to litigation in the
ordinary course of business. We are, from time to time,
subject to various asserted or unasserted legal proceedings and
claims. Any such claims, regardless of merit, could be time-consuming
and expensive to defend and could divert management’s attention and
resources. While we believe we have adequate insurance coverage
and/or accrue for loss contingencies for all known matters that are probable and
can be reasonably estimated, we cannot assure that the outcome of all current or
future litigation will not have a material adverse effect on us and our results
of operations. For a more detailed discussion of our legal
proceedings see Legal Proceedings under Item 3 and Note 14, Commitments and
Contingencies, of the Notes to Consolidated Financial Statements.
Any failure to protect our trademarks
could have a negative impact on the value of our brand names and adversely
affect our business. Our trademarks are an important component
of our business and the continued success of our business depends in part upon
our continued ability to use our trademarks to increase brand awareness and
further develop our brand in both domestic and international markets. The
unauthorized use of our trademarks could diminish the value of our brand and its
market acceptance, competitive advantages or goodwill, which could adversely
affect our business. Litigation has been and may continue to be
necessary to enforce our intellectual property rights or to determine the
validity and scope of the proprietary rights of others. Additionally,
negative public image or other adverse events which become associated with one
of our brands could adversely affect our revenue and profitability.
We depend on a seasonal
workforce. Our mountain and lodging operations are highly
dependent on a large seasonal workforce. We recruit year-round to
fill thousands of seasonal staffing needs each season and work to manage
seasonal wages and the timing of the hiring process to ensure the appropriate
workforce is in place. We cannot guarantee that material increases in
the cost of securing our seasonal workforce will not be necessary in the
future. Furthermore, we cannot guarantee that we will be able to
recruit and hire adequate seasonal personnel as the business
requires. Increased seasonal wages or an inadequate workforce could
have an adverse impact on our results of operations.
If we do not retain our key
personnel, our business may suffer. The success of our
business is heavily dependent on the leadership of key management personnel,
including our Chief Executive Officer, Chief Financial Officer, Co- Presidents
of our Mountain Division, President of VRDC, General Counsel and each of our
Senior Vice Presidents. If any of these persons were to leave, it
could be difficult to replace them, and our business could be
harmed. We do not maintain “key-man” life insurance on any of our
employees.
Our future acquisitions might not be
successful. Historically, we have acquired certain ski
resorts, other destination resorts, hotel properties and businesses
complementary to our own, as well as developable land in proximity to our
resorts. We cannot make assurances that we will be able to
successfully integrate and manage acquired properties and businesses and
increase our profits from these operations. We continually evaluate
potential acquisitions and intend to actively pursue acquisition opportunities,
some of which could be significant. We could face various risks from
additional acquisitions, including:
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inability
to integrate acquired businesses into our
operations;
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diversion
of our management’s attention;
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potential
increased debt leverage;
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litigation
arising from acquisition activity;
and
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unanticipated
problems or liabilities.
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In
addition, we run the risk that any new acquisitions may fail to perform in
accordance with expectations, and that estimates of the costs of improvements
for such properties may prove inaccurate.
We may be required to write-off a
portion of our goodwill and/or indefinite lived intangible asset balances as a
result of a more prolonged and severe economic
recession. Under accounting principles generally accepted in
the United States of America (“GAAP”), we are required to test goodwill for
impairment annually as well as on an interim basis to the extent factors or
indicators become apparent that could reduce the fair value of our goodwill or
indefinite lived intangible assets below book value. We evaluate the
recoverability of goodwill by estimating the future discounted cash flows of our
reporting units and terminal values of the businesses using projected future
levels of income as well as business trends, prospects and market and economic
conditions. We evaluate the recoverability of indefinite lived
intangible assets using the income approach based upon estimated future revenue
streams (see Critical Accounting Policies in Item 7 of this Form
10-K). If a more severe prolonged economic downturn were to occur it
could cause less than expected growth and/or reduction in terminal values of our
reporting units and could result in a goodwill and/or indefinite lived
intangible asset impairment charge attributable to certain goodwill and/or
indefinite lived intangible assets, negatively impacting our results of
operations and stockholders’ equity.
We are subject to accounting
regulations and use certain accounting estimates and judgments that may differ
significantly from actual results. Implementation of existing
and future legislation, rulings, standards and interpretations from the FASB or
other regulatory bodies could affect the presentation of our financial
statements and related disclosures. Future regulatory requirements
could significantly change our current accounting practices and
disclosures. Such changes in the presentation of our financial
statements and related disclosures could change an investor’s interpretation or
perception of our financial position and results of operations.
We use
many methods, estimates and judgments in applying our accounting policies (see
Critical Accounting Policies in Item 7 of this Form 10-K). Such
methods, estimates and judgments are, by their nature, subject to substantial
risks, uncertainties and assumptions, and factors may arise over time that lead
us to change our methods, estimates and judgments. Changes in those methods,
estimates and judgments could significantly affect our results of
operations.
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Risks
Relating to Our Capital Structure
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Our stock price is highly
volatile. The market price of our stock is highly volatile and
subject to wide fluctuations in response to factors such as the following, some
of which are beyond our control:
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quarterly
variations in our operating
results;
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operating
results that vary from the expectations of securities analysts and
investors;
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change
in valuations, including our future real estate
developments;
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changes
in the overall travel, gaming, hospitality and leisure
industries;
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changes
in expectations as to our future financial performance, including
financial estimates by securities analysts and investors or such guidance
provided by us;
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announcements
by us or companies in the travel, gaming, hospitality and leisure
industries of significant contracts, acquisitions, dispositions, strategic
partnerships, joint ventures, capital commitments, plans, prospects,
service offerings or operating
results;
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additions
or departures of key personnel;
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future
sales of our securities;
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trading
and volume fluctuations;
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|
other
risk factors as discussed above;
and
|
|
·
|
other
unforeseen events.
|
Stock
markets in the United States have and often experience extreme price and volume
fluctuations. Market fluctuations, as well as general political and
economic conditions such as acts of terrorism, a recession or interest rate or
currency rate fluctuations, could adversely affect the market price of our
stock.
We have not historically paid cash
dividends to our common stockholders. We have not declared or
paid any cash dividends on our common shares since becoming publicly traded in
1997. Payment of any future dividends on our common stock will depend
upon our earnings and capital requirements, the terms of our debt instruments
and other factors the Board of Directors considers appropriate.
Anti-takeover provisions affecting us
could prevent or delay a change of control that is beneficial to our
shareholders. Provisions of our certificate of incorporation
and bylaws, provisions of our debt instruments and other agreements and
provisions of applicable Delaware law and applicable Federal and state
regulations may discourage, delay or prevent a merger or other change of control
that holders of our securities may consider favorable. These
provisions could:
|
·
|
delay,
defer or prevent a change in control of the
Company;
|
|
·
|
discourage
bids for our securities at a premium over the market
price;
|
|
·
|
adversely
affect the market price of, and the voting and other rights of the holders
of our securities; or
|
|
·
|
impede
the ability of the holders of our securities to change our
management.
|
Our indebtedness could adversely
affect our financial health and prevent us from fulfilling our
obligations. Our level of indebtedness could have important
consequences even though principal payments on the vast majority of our
long-term debt are not due until fiscal 2014 and beyond. For example,
it could:
|
·
|
make
it more difficult for us to satisfy our
obligations;
|
|
·
|
increase
our vulnerability to general adverse economic and industry
conditions;
|
|
·
|
require
us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing the availability of our
cash flow to fund working capital, capital expenditures, real estate
developments, marketing efforts and other general corporate
purposes;
|
|
·
|
limit
our flexibility in planning for, or reacting to, changes in our business
and the industry in which we
operate;
|
|
·
|
place
us at a competitive disadvantage compared to our competitors that have
less debt; and
|
|
·
|
limit
our ability to borrow additional
funds.
|
We may be
able to incur substantial additional indebtedness in the future. The
terms of our Indenture
(as
defined below) do not fully prohibit us from doing so. Our Credit
Facility permits additional borrowings of up to $304.7 million as of July 31,
2009. If new debt is added to our current debt levels, the related
risks that we face could intensify.
There are restrictions imposed by the
terms of our indebtedness. The operating and financial
restrictions and covenants in our Credit Facility and the Indenture, dated as of
January 29, 2004 among us, the guarantors therein and the Bank of New York
Mellon Trust Company, N.A., as Trustee (“Indenture”), governing the 6.75% Senior
Subordinated Notes due 2014 (“6.75% Notes”) may adversely affect our ability to
finance future operations or capital needs or to engage in other business
activities that may be in our long-term best interests. For example,
the Indenture and the Credit Facility contain a number of restrictive covenants
that impose significant operating and financial restrictions on us, including
restrictions on our ability to, among other things:
|
·
|
incur
additional debt;
|
|
·
|
pay
dividends, repurchase our stock and make other restricted
payments;
|
|
·
|
create
liens;
|
|
·
|
make
investments;
|
|
·
|
engage
in sales of assets and subsidiary
stock;
|
|
·
|
enter
into sale-leaseback transactions;
|
|
·
|
enter
into transactions with affiliates;
|
|
·
|
transfer
all or substantially all of our assets or enter into merger or
consolidation transactions; and
|
|
·
|
make
capital expenditures.
|
In
addition, there can be no assurance that we will meet the financial covenants
contained in our Credit Facility. If we breach any of these
restrictions or covenants, or suffer a material adverse change which restricts
our borrowing ability under our Credit Facility, we would not be able to borrow
funds thereunder without a waiver, which inability could have an adverse effect
on our business, financial condition and results of operations. In
addition, a breach, if uncured, could cause a default under the 6.75% Notes and
our other debt. Our indebtedness may then become immediately due and
payable. We may not have or be able to obtain sufficient funds to
make these accelerated payments, including payments on the 6.75%
Notes.
Our Credit Facility is scheduled to
mature in 2012 and our 6.75% Notes are due in 2014. Recent
events in the financial markets have had an adverse impact on the credit markets
and, as a result, credit has become significantly more expensive and difficult
to obtain, if available at all. We currently have no borrowings under
our Credit Facility, which is scheduled to mature in 2012; however, a sustained
economic recession and its potential impact on our cash flows from operating
activities, combined with our plan to self-fund our current real estate under
development could require us to borrow significant funds under the revolver
component of our Credit Facility. In addition to our Credit Facility, we have
outstanding $390.0 million of 6.75% Notes due in 2014. The credit
markets are volatile and may pose challenges and have an adverse effect on our
ability to re-finance or obtain new financing on terms that are acceptable to
us. There is no assurance that we will be able to obtain new
financing or financing on acceptable terms.
ITEM
1B. UNRESOLVED STAFF COMMENTS.
None.
The
following table sets forth the principal properties owned or leased by the
Company for use in its operations:
|
Location
|
Ownership
|
Use
|
||
|
Arrowhead
Mountain, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements, commercial space and real estate held for sale or
development
|
||
|
BC
Housing Riveredge, CO
|
26%
Owned
|
Employee
housing facilities
|
||
|
Bachelor
Gulch Village, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements and commercial space
|
||
|
Beaver
Creek Resort, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements, commercial space and real estate held for sale or
development
|
||
|
Beaver
Creek Mountain, CO (3,849 acres)
|
Special
Use Permit
|
Ski
trails, ski lifts, buildings and other improvements
|
||
|
Beaver
Creek Mountain Resort, CO
|
Owned
|
Golf
course, clubhouse, commercial space and residential
spaces
|
||
|
Breckenridge
Ski Resort, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements, commercial space and real estate held for sale or
development
|
||
|
Breckenridge
Mountain, CO (5,702 acres)
|
Special
Use Permit
|
Ski
trails, ski lifts, buildings and other improvements
|
||
|
Breckenridge
Mountain Lodge
|
Owned
|
Lodging
|
||
|
Breckenridge
Terrace, CO
|
50%
Owned
|
Employee
housing facilities
|
||
|
Broomfield,
CO
|
Leased
|
Corporate
offices
|
||
|
Colter
Bay Village, WY
|
Concessionaire
contract
|
Lodging
and dining facilities
|
||
|
Eagle-Vail,
CO
|
Owned
|
Warehouse
facility
|
||
|
Edwards,
CO
|
Leased
|
Administrative
offices
|
||
|
Great
Divide Lodge, CO
|
Owned
|
Lodging,
dining and conference facilities
|
||
|
Heavenly
Mountain Resort, CA & NV
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements and commercial space
|
||
|
Heavenly
Mountain Resort, CA & NV (7,050 acres)
|
Special
Use Permit
|
Ski
trails, ski lifts, buildings and other improvements
|
||
|
Inn
at Keystone, CO
|
Owned
|
Lodging,
dining and conference facilities
|
||
|
Jackson
Hole Golf & Tennis Club, WY
|
Owned
|
Golf
course, clubhouse, tennis facilities, dining and real estate held for sale
or development
|
||
|
Jackson
Lake Lodge, WY
|
Concessionaire
contract
|
Lodging,
dining and conference facilities
|
||
|
Jenny
Lake Lodge, WY
|
Concessionaire
contract
|
Lodging
and dining facilities
|
||
|
Keystone
Conference Center, CO
|
Owned
|
Conference
facility
|
||
|
Keystone
Lodge, CO
|
Owned
|
Lodging,
spa, dining and conference facilities
|
||
|
Keystone
Resort, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements, commercial space, dining and real estate held for sale or
development
|
||
|
Keystone
Mountain, CO (8,376 acres)
|
Special
Use Permit
|
Ski
trails, ski lifts, buildings and other improvements
|
||
|
Keystone
Ranch, CO
|
Owned
|
Golf
course, clubhouse and dining facilities
|
||
|
Red
Sky Ranch, CO
|
Owned
|
Golf
courses, clubhouses, dining facilities and real estate held for sale or
development
|
||
|
River
Course at Keystone, CO
|
Owned
|
Golf
course and clubhouse
|
||
|
Seasons
at Avon, CO
|
Leased/50%
Owned
|
Administrative
offices
|
||
|
Ski
Tip Lodge, CO
|
Owned
|
Lodging
and dining facilities
|
||
|
The
Arrabelle at Vail Square, CO
|
Owned
|
Lodging,
spa, dining and conference facilities
|
||
|
The
Lodge at Vail, CO
|
Owned
|
Lodging,
spa, dining and conference facilities
|
||
|
The
Osprey at Beaver Creek, CO
|
Owned
|
Lodging,
dining and conference facilities
|
||
|
The
Tarnes at Beaver Creek, CO
|
31%
Owned
|
Employee
housing facilities
|
||
|
Tenderfoot
Housing, CO
|
50%
Owned
|
Employee
housing facilities
|
||
|
The
Pines Lodge at Beaver Creek, CO
|
Owned
|
Lodging,
dining and conference facilities
|
||
|
Vail
Mountain, CO
|
Owned
|
Ski
resort operations, including ski lifts, ski trails, buildings and other
improvements, commercial space and real estate held for sale or
development
|
||
|
Vail
Mountain, CO (12,226 acres)
|
Special
Use Permit
|
Ski
trails, ski lifts, buildings and other improvements
|
||
|
Village
at Breckenridge, CO
|
Owned
|
Lodging,
dining, conference facilities and commercial space
|
||
|
SSV
Properties
|
69.3%
Owned
|
Over
150 retail stores (of which 71 stores are currently held under lease) for
recreational products including
rental
|
The
Forest Service SUPs are encumbered under certain debt instruments of the
Company. Many of the Company's properties are used across all
segments in complementary and interdependent ways.
The
Company is a party to various lawsuits arising in the ordinary course of
business, including Resort (Mountain and Lodging) related cases and contractual
and commercial litigation that arises from time to time in connection with the
Company's real estate and other business operations. Management
believes the Company has adequate insurance coverage and/or has accrued for loss
contingencies for all known matters and that, although the ultimate outcome of
such claims cannot be ascertained, current pending and threatened claims are not
expected to have a material, individually and in the aggregate, adverse impact
on the financial position, results of operations and cash flows of the
Company.
The Canyons Ski Resort
Litigation
During
the fourth quarter of the year ended July 31, 2007 (“Fiscal 2007”), the Company
entered into an agreement with Peninsula Advisors, LLC (“Peninsula”) for the
negotiation and mutual acquisition of The Canyons and the land underlying The
Canyons. On July 15, 2007, American Skiing Company (“ASC”) entered
into an agreement to sell The Canyons to Talisker Corporation and Talisker
Canyons Finance Company, LLC (together “Talisker”). On July 27, 2007,
the Company filed a complaint in the District Court in Colorado against
Peninsula and Talisker claiming, among other things, breach of contract by
Peninsula and intentional interference with contractual relations and
prospective business relations by Talisker and seeking damages, specific
performance and injunctive relief. On October 19, 2007, the Company’s
request for a preliminary injunction to prevent the closing of the acquisition
by Talisker of The Canyons from ASC was denied. On November 8, 2007,
Talisker filed an answer to the Company’s complaint along with three
counterclaims. On November 12, 2007, Peninsula filed a motion to
dismiss and for partial summary judgment, which was heard on March 21, 2009 and
denied. The matter has been set for trial commencing July 19,
2010. The Company is unable to predict the ultimate outcome of the above
described actions.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART
II
The
Company's common stock is traded on the New York Stock Exchange under the symbol
“MTN”. As of September 18, 2009, 36,174,979 shares of common stock
were outstanding, held by approximately 392 holders of record.
The
declaration of cash dividends in the future will depend on the Company's
earnings, financial condition, capital needs, restrictions under debt
instruments and on other factors deemed relevant by the Board of Directors at
that time. It is the current policy of the Company's Board of
Directors to retain earnings to finance the operations and expansion of the
Company's business.
The
following table sets forth, for Fiscal 2009 and the year ended July 31, 2008
(“Fiscal 2008”), and quarters indicated (ended October 31, January 31, April 30,
and July 31) the range of high and low per share sales prices of the Company’s
common stock as reported on the New York Stock Exchange Composite
Tape.
|
Vail
Resorts
|
||||||
|
Common
Stock
|
||||||
|
High
|
Low
|
|||||
|
Year
Ended July 31, 2009
|
||||||
|
1st
Quarter
|
$
|
52.00
|
$
|
21.67
|
||
|
2nd
Quarter
|
33.43
|
14.79
|
||||
|
3rd
Quarter
|
30.42
|
14.76
|
||||
|
4th
Quarter
|
31.10
|
23.71
|
||||
|
Year
Ended July 31, 2008
|
||||||
|
1st
Quarter
|
$
|
66.25
|
$
|
48.41
|
||
|
2nd
Quarter
|
60.15
|
40.94
|
||||
|
3rd
Quarter
|
51.65
|
39.32
|
||||
|
4th
Quarter
|
51.38
|
30.03
|
||||
Repurchase
of Equity Securities
The
following table summarizes the purchase of the Company’s equity securities
during the fourth quarter of Fiscal 2009:
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or Programs
(1)
|
||||||||
|
May
1, 2009 – May 31, 2009
|
--
|
$
|
--
|
--
|
2,399,765
|
|||||||
|
June
1, 2009 – June 30, 2009
|
278,300
|
26.93
|
278,300
|
2,121,465
|
||||||||
|
July
1, 2009 – July 31, 2009
|
--
|
--
|
--
|
2,121,465
|
||||||||
|
Total
|
278,300
|
$
|
26.93
|
278,300
|
|
(1)
|
On
March 9, 2006, the Company’s Board of Directors approved the repurchase of
up to 3,000,000 shares of common stock and on July 16, 2008 approved an
increase of the Company’s common stock repurchase authorization by an
additional 3,000,000 shares. Acquisitions under the share
repurchase program may be made from time to time at prevailing prices as
permitted by applicable laws, and subject to market conditions and other
factors. The stock repurchase program may be discontinued at
any time.
|
Performance
Graph
The total return graph is presented for the period from the end of the Company’s 2004 fiscal year through the end of Fiscal 2009. The comparison assumes that $100 was invested at the beginning of the period in the common stock of the Company (“MTN”), The Russell 2000, The Standard & Poor’s 500 Stock Index and the Dow Jones U.S. Travel and Leisure Stock Index. The Company included the Dow Jones U.S. Travel and Leisure Index as the Company believes it competes in the travel and leisure industry.
The
performance graph is not deemed filed with the SEC and is not to be incorporated
by reference into any of the Company’s filings under the Securities Act of 1933
or the Exchange Act of 1934, unless it specifically incorporates the performance
graph by reference therein.
The
following table presents selected historical consolidated financial data of the
Company derived from the Company's Consolidated Financial Statements for the
periods indicated. The financial data for Fiscal 2009, Fiscal 2008
and Fiscal 2007 and as of July 31, 2009 and 2008 should be read in conjunction
with the Consolidated Financial Statements, related notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere in this Form 10-K. The table presented
below is unaudited. The data presented below are in thousands, except
for diluted net income per share, effective ticket price (“ETP”), ADR and RevPAR
amounts.
|
Year
Ended July 31,
|
|||||||||||||||||||
|
2009(1)
|
2008(1)
|
2007(1)
|
2006(1)
|
2005 (1)
|
|||||||||||||||
|
Statement
of Operations Data:
|
|||||||||||||||||||
|
Revenue:
|
|||||||||||||||||||
|
Mountain
|
$
|
614,597
|
$
|
685,533
|
$
|
665,377
|
$
|
620,441
|
$
|
540,855
|
|||||||||
|
Lodging
|
176,241
|
170,057
|
162,451
|
155,807
|
196,351
|
||||||||||||||
|
Real
estate
|
186,150
|
296,566
|
112,708
|
62,604
|
72,781
|
||||||||||||||
|
Total
net revenue
|
976,988
|
1,152,156
|
940,536
|
838,852
|
809,987
|
||||||||||||||
|
Segment
operating expense:
|
|||||||||||||||||||
|
Mountain
|
451,025
|
470,362
|
462,708
|
443,116
|
391,889
|
||||||||||||||
|
Lodging
|
169,482
|
159,832
|
144,252
|
142,693
|
177,469
|
||||||||||||||
|
Real
estate
|
142,070
|
251,338
|
115,190
|
56,676
|
58,254
|
||||||||||||||
|
Total
segment operating expense
|
762,577
|
881,532
|
722,150
|
642,485
|
627,612
|
||||||||||||||
|
Depreciation
and amortization
|
(107,213
|
)
|
(93,794
|
)
|
(87,664
|
)
|
(86,098
|
)
|
(89,968
|
)
|
|||||||||
|
Gain
on sale of real property
|
--
|
709
|
--
|
--
|
--
|
||||||||||||||
|
Mountain
equity investment income, net
|
817
|
5,390
|
5,059
|
3,876
|
2,303
|
||||||||||||||
|
Lodging
equity investment loss, net
|
--
|
--
|
--
|
--
|
(2,679
|
)
|
|||||||||||||
|
Real
estate equity investment income, net
|
--
|
--
|
--
|
791
|
(102
|
)
|
|||||||||||||
|
Investment
income, net
|
1,793
|
8,285
|
12,403
|
7,995
|
2,066
|
||||||||||||||
|
Interest
expense, net
|
(27,548
|
)
|
(30,667
|
)
|
(32,625
|
)
|
(36,478
|
)
|
(40,298
|
)
|
|||||||||
|
Contract
dispute credit (charges), net
|
--
|
11,920
|
(4,642
|
)
|
(3,282
|
)
|
--
|
||||||||||||
|
Income
before provision for income taxes
|
79,594
|
166,013
|
100,651
|
75,010
|
37,623
|
||||||||||||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
$
|
45,756
|
$
|
23,138
|
|||||||||
|
Diluted
net income per share
|
$
|
1.33
|
$
|
2.64
|
$
|
1.56
|
$
|
1.19
|
$
|
0.64
|
|||||||||
|
Other
Data:
|
|||||||||||||||||||
|
Mountain
|
|||||||||||||||||||
|
Skier
visits(2)
|
5,864
|
6,195
|
6,219
|
6,288
|
5,940
|
||||||||||||||
|
ETP
(3)
|
$
|
47.16
|
$
|
48.74
|
$
|
46.15
|
$
|
41.83
|
$
|
39.30
|
|||||||||
|
Lodging
|
|||||||||||||||||||
|
ADR(4)
|
$
|
225.12
|
$
|
230.17
|
$
|
216.83
|
$
|
202.27
|
$
|
196.26
|
|||||||||
|
RevPAR(5)
|
$
|
93.10
|
$
|
106.43
|
$
|
99.58
|
$
|
92.41
|
$
|
90.98
|
|||||||||
|
Real
Estate
|
|||||||||||||||||||
|
Real
estate held for sale and investment(6)
|
$
|
311,485
|
$
|
249,305
|
$
|
357,586
|
$
|
259,384
|
$
|
154,874
|
|||||||||
|
Other
Balance Sheet Data
|
|||||||||||||||||||
|
Cash
and cash equivalents(7)
|
$
|
69,298
|
$
|
162,345
|
$
|
230,819
|
$
|
191,794
|
$
|
136,580
|
|||||||||
|
Total
assets
|
$
|
1,884,480
|
$
|
1,925,954
|
$
|
1,909,123
|
$
|
1,687,643
|
$
|
1,525,921
|
|||||||||
|
Long-term
debt (including long-term debt due within one year)
|
$
|
491,960
|
$
|
556,705
|
$
|
594,110
|
$
|
531,228
|
$
|
521,710
|
|||||||||
|
Net
debt(8)
|
$
|
422,662
|
$
|
394,360
|
$
|
363,291
|
$
|
339,434
|
$
|
385,130
|
|||||||||
|
Stockholders'
equity
|
$
|
765,295
|
$
|
728,756
|
$
|
714,039
|
$
|
642,777
|
$
|
540,529
|
|||||||||
(footnotes
to selected financial data appear on following page)
Footnotes
to Selected Financial Data:
|
(1)
|
The
Company has made several acquisitions and dispositions which impact
comparability between years during the past five years. The
more significant of those include the acquisitions of: Colorado Mountain
Express (“CME”) (acquired in November 2008), 18 retail/rental locations
(acquired by SSV in June 2007), two licensed Starbucks stores (acquired in
June 2007) and six retail locations (acquired by SSV in August
2006). Additionally, the Company sold its majority interest in
RTP, LLC (“RTP”) (sold in April 2007), Snake River Lodge & Spa
(“SRL&S”) (sold in January 2006), The Lodge at Rancho Mirage (“Rancho
Mirage”) (sold in July 2005), Vail Marriott (sold in June 2005) and its
minority interest in Ritz-Carlton, Bachelor Gulch (“BG Resort”) (sold in
December 2004). Effective August 1, 2005, the Company adopted Statement of
Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment”
(“SFAS 123R”). See Note 2, Summary of Significant Accounting
Policies, of the Notes to Consolidated Financial Statements in Item 8 of
this Form 10-K for the impact to the Consolidated Statements of Operations
as a result of the adoption of SFAS
123R.
|
|
(2)
|
A
skier visit represents a person utilizing a ticket or pass to access a
mountain resort for any part of one day, and includes both paid and
complimentary access.
|
|
(3)
|
ETP
is calculated by dividing lift ticket revenue by total skier visits during
the respective periods.
|
|
(4)
|
ADR
is calculated by dividing total room revenue (includes both owned and
managed condominium room revenue) by the number of occupied rooms during
the respective periods.
|
|
(5)
|
RevPAR
is calculated by dividing total room revenue (includes both owned and
managed condominium room revenue) by the number of rooms that are
available to guests during the respective
periods.
|
|
(6)
|
Real
estate held for sale and investment includes all land, development costs
and other improvements associated with real estate held for sale and
investment, as well as investments in real estate joint
ventures.
|
|
(7)
|
Cash
and cash equivalents excludes restricted
cash.
|
|
(8)
|
Net
debt is defined as long-term debt plus long-term debt due within one year
less cash and cash equivalents.
|
The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations of the Company should be read in conjunction with the
Consolidated Financial Statements and notes related thereto included in this
Form 10-K. To the extent that the following Management's Discussion
and Analysis contains statements which are not of a historical nature, such
statements are forward-looking statements which involve risks and
uncertainties. These risks include, but are not limited to, those
discussed in Item 1A, “Risk Factors” in this Form 10-K. The following
discussion and analysis should be read in conjunction with the Forward-Looking
Statements and Item 1A, “Risk Factors” each included in this Form
10-K.
Management’s
Discussion and Analysis includes discussion of financial performance within each
of the Company’s segments. The Company has chosen to specifically
include Reported EBITDA (defined as segment net revenue less segment operating
expense, plus or minus segment equity investment income or loss and for the Real
Estate segment, plus gain on sale of real property) and Net Debt (defined as
long-term debt plus long-term debt due within one year less cash and cash
equivalents), in the following discussion because management considers these
measurements to be significant indications of the Company’s financial
performance and available capital resources. Reported EBITDA and Net
Debt are not measures of financial performance or liquidity under
GAAP. The Company utilizes Reported EBITDA in evaluating performance
of the Company and in allocating resources to its
segments. Refer to the end of the Results of Operations section
for a reconciliation of Reported EBITDA to net income. Management
also believes that Net Debt is an important measurement as it is an indicator of
the Company’s ability to obtain additional capital resources for its future cash
needs. Refer to the end of the Results of Operations section for a
reconciliation of Net Debt.
Items
excluded from Reported EBITDA and Net Debt are significant components in
understanding and assessing financial performance or
liquidity. Reported EBITDA and Net Debt should not be considered in
isolation or as an alternative to, or substitute for, net income, net change in
cash and cash equivalents or other financial statement data presented in the
Consolidated Financial Statements as indicators of financial performance or
liquidity. Because Reported EBITDA and Net Debt are not measurements
determined in accordance with GAAP and are thus susceptible to varying
calculations, Reported EBITDA and Net Debt as presented may not be comparable to
other similarly titled measures of other companies.
Overview
The
Company's operations are grouped into three integrated and interdependent
segments: Mountain, Lodging and Real Estate. Resort is the
combination of the Mountain and Lodging segments. Revenue from the
Mountain, Lodging and Real Estate segments represented 63%, 18% and 19%,
respectively, of the Company’s net revenue for Fiscal 2009.
Mountain Segment
The
Mountain segment is comprised of the operations of five ski resort properties as
well as ancillary businesses, primarily including ski school, dining and
retail/rental operations. The Company's five ski resorts were open
for business for the 2008/2009 ski season from mid-November through mid-April,
which is the peak operating season for the Mountain segment. The
Company’s single largest source of Mountain segment revenue is the sale of lift
tickets (including season passes), which represented approximately 45%, 44% and
43% of Mountain segment net revenue for Fiscal 2009, Fiscal 2008 and Fiscal
2007, respectively.
Lift
ticket revenue is driven by volume and pricing. Pricing is impacted
by both absolute pricing as well as the demographic mix of guests, which impacts
the price points at which various products are purchased. The
demographic mix of guests is divided into two primary categories: (i)
Destination guests and (ii) In-State guests. For the 2008/2009 ski
season, Destination guests comprised approximately 57% of the Company's skier
visits, while In-State guests comprised approximately 43% of the Company's skier
visits, which compares to approximately 63% and 37%, respectively, for the
2007/2008 ski season and 64% and 36%, respectively, for the 2006/2007 ski
season.
Destination
guests generally purchase the Company's higher-priced lift ticket products and
utilize more ancillary services such as ski school, dining and retail/rental, as
well as the lodging at or around the Company’s resorts. Destination
guest visitation is less likely to be impacted by changes in the weather due to
the advance planning generally required for vacation trips, but can be more
impacted by adverse economic conditions or the global geopolitical
climate. In-State guests tend to be more value-oriented and weather
sensitive. Prior to the 2008/2009 ski season, the Company primarily
marketed season passes to In-State guests in an effort to offer a value option
in turn for a commitment predominately prior to the beginning of the ski season
by In-State guests to ski at the Company’s resorts. This in turn has
developed a loyal customer base that generally skis multiple days each season at
the Company’s resorts and provides a more stabilized stream of lift revenue to
the Company. Given the success of In-State pass products, the Company
introduced a new season pass product (the “Epic Season Pass”) for the 2008/2009
ski season, marketed to its Destination guests (and also marketed to In-State
guests) allowing pass holders unlimited and unrestricted access to all five of
its ski resorts during the entire ski season. All of the Company’s
season pass products, including the Epic Season Pass, are sold predominately
prior to the start of the ski season. Season pass revenue, although
primarily collected prior to the ski season, is recognized in the Consolidated
Condensed Statement of Operations ratably over the ski season. For
the 2008/2009, 2007/2008 and 2006/2007 ski season approximately 34%, 26% and
25%, respectively, of total lift revenue recognized was comprised of season pass
revenue.
The cost
structure of ski resort operations is primarily fixed, with variable expenses
including, but not limited to, USDA Forest Service (“Forest Service”) fees,
credit card fees, retail/rental cost of goods sold and labor, ski school labor
and dining operations; as such, profit margins can fluctuate greatly based on
the level of revenues.
Lodging
Segment
Operations
within the Lodging segment include (i) ownership/management of a group of luxury
hotels through the RockResorts brand, including several proximate to the
Company's ski resorts; (ii) ownership/management of non-RockResorts branded
hotels and condominiums proximate to the Company's ski resorts; (iii) Grand
Teton Lodge Company (“GTLC”); (iv) Colorado Mountain Express (“CME”), a resort
ground transportation company acquired in November 2008; and (v) golf
courses.
Lodging
properties (including managed condominium rooms) at or around the Company’s ski
resorts, and CME, are closely aligned with the performance of the Mountain
segment, particularly with respect to visitation by Destination guests and
represented approximately 68%, 63% and 61% of Lodging segment revenue for Fiscal
2009, Fiscal 2008 and Fiscal 2007, respectively. Revenue of the
Lodging segment during the Company's first and fourth fiscal quarters is
generated primarily by the operations of GTLC (as GTLC's operating season
generally occurs from mid-May to mid-October), golf operations and seasonally
low operations from the Company's other owned and managed properties as well as
CME.
Real
Estate Segment
The Real
Estate segment owns and develops real estate in and around the Company's resort
communities and primarily engages in the vertical development of projects, as
well as, occasionally the sale of land to third-party developers which often
includes a contingent revenue structure based on the ultimate sale of the
developed units. Revenue from vertical development projects is not
recognized until closing of individual units within a project which occurs after
substantial completion of the project. Contingent future profits from land
sales, if any, are recognized only when received. The Company
attempts to mitigate the risk of vertical development by often utilizing
guaranteed maximum price construction contracts (although certain construction
costs may not be covered by contractual limitations), pre-selling a portion of
the project, requiring significant non-refundable deposits, and potentially
obtaining non-recourse financing for certain projects. The Company's
real estate development projects also may result in the creation of certain
resort assets that provide additional benefit to the Mountain and Lodging
segments. The Company’s revenue from the Real Estate segment, and
associated expense, fluctuate based upon the timing of closings and the type of
real estate being sold, causing volatility in the Real Estate segment’s
operating results from period to period.
Recent
Trends, Risks and Uncertainties
The data
provided in this section should be read in conjunction with the risk factors
identified in Item 1A and elsewhere in this Form 10-K. The Company's
management has identified the following important factors (as well as
uncertainties associated with such factors) that could impact the Company's
future financial performance:
|
·
|
The
economic recession that has affected the U.S. and global economies, the
tightened credit markets and eroded consumer confidence had a negative
impact on overall trends in the travel and leisure industries and on the
Company’s results of operations for Fiscal 2009. In this
environment, the Company experienced a 5.3% decrease in overall skier
visitation for the 2008/2009 ski season and a 4.5 percentage point
decrease in occupancy at the Company’s owned hotels and managed
condominium properties (all proximate to the Company’s ski resorts) for
Fiscal 2009. Additionally, the Company experienced, a decrease
in overall guest spending on ancillary services, including ski school,
dining and retail/rental. Furthermore, the Company experienced
a change in booking trends such that guest reservations were made much
closer to the actual date of stay. The Company cannot predict
the extent to which these negative trends will continue, worsen or improve
or the timing and nature of any changes to the macroeconomic environment,
including the impact it may have on the Company’s future results of
operations, in particular on the 2009/2010 ski
season.
|
|
·
|
The
timing and amount of snowfall can have an impact on Mountain and Lodging
revenue particularly in regards to skier visits and the duration and
frequency of guest visitation. To mitigate this impact, the
Company focuses efforts on the sale of season passes prior to the
beginning of the season to In-State guests and Destination
guests. Additionally, the Company has invested in snowmaking
upgrades in an effort to address the inconsistency of early season
snowfall where possible. During the past two ski seasons, early
season snowfall has been significantly lower than average, which the
Company believes had a negative impact on early season
visitation.
|
|
·
|
The
Company’s season pass products provide a value option to its guests which
in turn provides a guest commitment predominately prior to the start of
the ski season resulting in a more stabilized stream of lift revenue for
the Company. The Company introduced the Epic Season Pass for
the 2008/2009 ski season, which largely contributed to season pass revenue
as a percentage of total lift revenue increasing from 26% for the
2007/2008 ski season to 34% for the 2008/2009 ski season. In
March 2009, the Company began its pass sales campaign for the 2009/2010
ski season, including the Epic Season Pass, and as of July 31, 2009 season
pass sales have increased $10.0 million, or 32.2%, compared to season pass
sales as of July 31, 2008 for the 2008/2009 ski season. The
Company cannot predict if this trend will continue through the fall 2009
pass sales campaign or the impact that season pass sales may have on total
lift revenue or ETP for the 2009/2010 ski
season.
|
|
·
|
The
Company has historically implemented annual price
increases. However, the Company held prices flat for most
multi-day lift ticket and certain other products and services for the
2008/2009 ski season. Prices for the 2009/2010 ski season have
not yet been finalized; and as such there are no assurances as to the
level of price increases, if any, which will occur or the impact that
pricing may have on visitation or
revenue.
|
|
·
|
The
Company operates its ski areas under various Forest Service permits, and
many of the Company's operations require permits and approval from
governmental authorities; therefore many of the Company’s on-mountain
capital improvements must go through an approval
process. Changes or impacts to the applicable regulatory
environment may have detrimental effects on the
Company.
|
|
·
|
Real
Estate Reported EBITDA is highly dependent on, among other things, the
timing of closings on real estate under contract, which determines when
revenue and associated cost of sales is recognized. Changes to
the anticipated timing or mix of closing on one or more real estate
projects, or unit closings within a real estate project, could materially
impact Real Estate Reported EBITDA for a particular quarter or fiscal
year. The Company has two real estate projects currently under development
which are scheduled to be completed in the spring/summer of 2010 (One Ski
Hill Place in Breckenridge) and the fall of 2010 (The Ritz-Carlton
Residences, Vail) and has entered into definitive sales contracts with a
value of approximately $324.3 million, which represents approximately 68%
of the total current estimated sales value for these two
projects. The Company has increased risk associated with
selling and closing real estate as a result of the continued instability
in the capital and credit markets and slowdown in the overall real estate
market. In April 2009, in response to current market
conditions, the Company announced a reduction of approximately 20% to the
listed selling prices of its Ritz-Carlton Residences, Vail, as well as
price reductions of approximately 15% for purchasers currently under
contract. The Company cannot predict the ultimate number of
units that it will sell, the ultimate price it will receive, or when the
units will sell. Additionally, if a more severe prolonged
economic downturn were to occur the Company may have to further adjust its
selling prices in an effort to sell and close on units currently under
development, although it currently has no plans to do
so.
|
|
·
|
The
Company had $69.3 million in cash and cash equivalents as of July 31, 2009
as well as $304.7 million available under the revolver component of its
Credit Facility. The Company’s plan to continue to self-fund its
current real estate projects under construction (the Company estimates to
incur between $190 million and $210 million in cash expenditures
subsequent to July 31, 2009) combined with historically low operating cash
flows during the Company’s first fiscal quarter will likely require the
Company to borrow under the revolver component of its Credit Facility from
time to time beginning in the first quarter of fiscal 2010. The
Company currently believes it has adequate capacity under its revolver to
address potential borrowing needs, even in the event of a more sustained
negative economic environment.
|
|
·
|
Under
GAAP, the Company is required to test goodwill for impairment annually,
which the Company does so during the fourth quarter of each fiscal
year. The Company evaluates the recoverability of its goodwill
by estimating the future discounted cash flows of its reporting units and
terminal values of the businesses using projected future levels of income
as well as business trends, prospects and market and economic
conditions. The Company evaluates the recoverability of
indefinite-lived intangible assets using the income approach based upon
estimated future revenue streams. The Company’s 2009 annual
impairment test did not result in a goodwill or indefinite-lived
intangible asset impairment (see Critical Accounting Policies in this
section of this Form 10-K). However, if a more severe prolonged
economic downturn were to occur it could cause less than expected growth
and/or reduction in terminal values of the Company’s reporting units which
may result in a goodwill and/or indefinite-lived intangible asset
impairment charge attributable to certain goodwill and/or indefinite
lived-intangible assets, particularly related to its lodging and
retail/rental operations.
|
Results
of Operations
Summary
Shown
below is a summary of operating results for Fiscal 2009, Fiscal 2008 and Fiscal
2007 (in thousands):
|
Year
Ended July 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Mountain
Reported EBITDA
|
$
|
164,389
|
$
|
220,561
|
$
|
207,728
|
||||||
|
Lodging
Reported EBITDA
|
6,759
|
10,225
|
18,199
|
|||||||||
|
Resort
Reported EBITDA
|
171,148
|
230,786
|
225,927
|
|||||||||
|
Real
Estate Reported EBITDA
|
44,080
|
45,937
|
(2,482
|
)
|
||||||||
|
Income
before provision for income taxes
|
79,594
|
166,013
|
100,651
|
|||||||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
||||||
Mountain
Segment
Mountain
segment operating results for Fiscal 2009, Fiscal 2008 and Fiscal 2007 are
presented by category as follows (in thousands, except ETP):
|
Percentage
|
|||||||||||||||
|
Year
Ended July 31,
|
Increase/(Decrease)
|
||||||||||||||
|
2009
|
2008
|
2007
|
2009/2008
|
2008/2007
|
|||||||||||
|
Net
Mountain revenue:
|
|||||||||||||||
|
Lift
tickets
|
$
|
276,542
|
$
|
301,914
|
$
|
286,997
|
(8.4
|
)
%
|
5.2
|
%
|
|||||
|
Ski
school
|
65,336
|
81,384
|
78,848
|
(19.7
|
)
%
|
3.2
|
%
|
||||||||
|
Dining
|
52,259
|
62,506
|
59,653
|
(16.4
|
)
%
|
4.8
|
%
|
||||||||
|
Retail/rental
|
147,415
|
168,765
|
160,542
|
(12.7
|
)
%
|
5.1
|
%
|
||||||||
|
Other
|
73,045
|
70,964
|
79,337
|
2.9
|
%
|
(10.6
|
)%
|
||||||||
|
Total
Mountain net revenue
|
$
|
614,597
|
$
|
685,533
|
$
|
665,377
|
(10.3
|
)
%
|
3.0
|
%
|
|||||
|
Mountain
operating expense:
|
|||||||||||||||
|
Labor
and labor-related benefits
|
$
|
165,550
|
$
|
175,674
|
$
|
167,442
|
(5.8
|
)
%
|
4.9
|
%
|
|||||
|
Retail
cost of sales
|
66,022
|
72,559
|
69,218
|
(9.0
|
)
%
|
4.8
|
%
|
||||||||
|
Resort
related fees
|
33,102
|
36,335
|
34,943
|
(8.9
|
)
%
|
4.0
|
%
|
||||||||
|
General
and administrative
|
83,117
|
81,220
|
81,983
|
2.3
|
%
|
(0.9
|
)%
|
||||||||
|
Other
|
103,234
|
104,574
|
109,122
|
(1.3
|
)
%
|
(4.2
|
)%
|
||||||||
|
Total
Mountain operating expense
|
$
|
451,025
|
$
|
470,362
|
$
|
462,708
|
(4.1
|
)
%
|
1.7
|
%
|
|||||
|
Mountain
equity investment income, net
|
817
|
5,390
|
5,059
|
(84.8
|
)
%
|
6.5
|
%
|
||||||||
|
Total
Mountain Reported EBITDA
|
$
|
164,389
|
$
|
220,561
|
$
|
207,728
|
(25.5
|
)
%
|
6.2
|
%
|
|||||
|
Total
skier visits
|
5,864
|
6,195
|
6,219
|
(5.3
|
)
%
|
(0.4
|
)%
|
||||||||
|
ETP
|
$
|
47.16
|
$
|
48.74
|
$
|
46.15
|
(3.2
|
)
%
|
5.6
|
%
|
|||||
Total Mountain Reported EBITDA includes $4.8 million, $3.8 million and $3.8 million of stock-based compensation expense for Fiscal 2009, Fiscal 2008 and Fiscal 2007, respectively.
Fiscal
2009 compared to Fiscal 2008
Lift
revenue decreased $25.4 million, or 8.4%, for Fiscal 2009 compared to Fiscal
2008, primarily as a result of a $42.2 million, or 18.8%, decline in lift
revenue excluding season pass revenue, partially offset by an increase in season
pass revenue of $16.8 million, or 21.7%. The increase in season pass
revenue was driven by higher season pass sales resulting primarily from the
introduction of the Epic Season Pass in the 2008/2009 ski
season. Additionally, a portion of the decline in lift revenue
excluding season pass revenue was caused by a shift in Destination guests
purchasing the Epic Season Pass instead of other lift ticket
products.
Total
skier visitation was down 5.3% in the 2008/2009 ski season compared to the
2007/2008 ski season, with overall visitation for the four Colorado resorts
(excluding Heavenly) being down 3.5%. The overall visitation decline
was primarily as a result of an estimated 15% decrease in visitation from
Destination guests, partially offset by strong visitation from season pass
holders, especially from the new Epic Season Pass holders, who on average skied
more in the current year per pass than holders of our other pass
products. ETP decreased 3.2%, driven by an increase in average season
pass holder visitation per pass sold, partially offset by a 2.9% increase in ETP
excluding season pass products, driven by price increases on certain lift ticket
products.
Revenues
for the Company's ski school, dining and retail/rental operations, were all
negatively impacted by the severe downturn in the economic environment which
resulted from the decrease in Destination guest visitation as well as overall
spending per guest. Ski school revenue decreased $16.0 million, or
19.7%, in Fiscal 2009 compared to Fiscal 2008, as ski school revenue is
primarily driven by Destination guests. Dining revenue decreased
$10.2 million, or 16.4%, in Fiscal 2009 compared to Fiscal 2008, due to an
approximate 11% decrease in the number of total on-mountain food and beverage
transactions, coupled with an even greater decline in fine
dining. Revenue from retail/rental operations decreased $21.4
million, or 12.7%, in Fiscal 2009 compared to Fiscal 2008 primarily due to lower
sales and rental volumes at the Company’s mountain resort stores.
Other
revenue mainly consists of private club revenue (which includes both club dues
and amortization of initiation fees), summer visitation and other mountain
activities revenue, allocated strategic alliance revenue, commercial leasing
revenue, employee housing revenue, municipal services revenue and other
recreation activity revenue. For Fiscal 2009 other revenues
increased $2.1 million, or 2.9%, compared to Fiscal 2008, primarily due to
private club operations (which revenue increased $4.1 million) resulting from
the opening of the Vail Mountain Club in November 2008.
Operating
expense decreased $19.3 million, or 4.1%, during Fiscal 2009 compared to Fiscal
2008. This decrease primarily resulted from a decrease in labor and
labor-related benefits expense of $10.1 million, or 5.8%, due to decreased
staffing levels driven by lower volume in ski school, dining and retail/rental
operations as well as the impacts of cost reduction initiatives including the
suspension of the Company’s matching contribution to its 401(k) program
effective January 2009 and a company-wide wage reduction plan implemented in
April 2009 and a $6.5 million, or 9.0%, decrease in retail cost of sales
(commensurate with the decrease in retail revenue). Additionally, resort related
fees (including Forest Service fees, other resort-related fees, credit card fees
and commissions) decreased $3.2 million, or 8.9%, compared to Fiscal 2008 due to
overall declines in revenue that those fees are calculated on and other expenses
decreased $1.3 million, or 1.3%, due primarily to lower food and beverage cost
of sales, supplies and fuel expense, partially offset by higher property taxes,
utilities and repairs and maintenance expense. All of the above
decreases were slightly offset by a $1.9 million, or 2.3%, increase in general
and administrative expenses primarily due to higher allocated corporate
expenses.
Mountain
equity investment income primarily includes the Company's share of income from
the operations of a real estate brokerage joint venture. The decrease
in equity investment income for Fiscal 2009 compared to Fiscal 2008 is primarily
due to decreased commissions earned by the brokerage due to a lower level of
real estate closures compared to Fiscal 2008.
Fiscal
2008 compared to Fiscal 2007
Lift
ticket revenue increased $14.9 million, or 5.2%, for Fiscal 2008 compared to
Fiscal 2007, primarily as a result of a 7.6% increase in ETP excluding season
pass products, which was driven by an increase in absolute
pricing. Season pass revenue increased $5.5 million, or 7.7%, for
Fiscal 2008 compared to Fiscal 2007. This increase in season pass
revenue was due to an increase in pricing, with season pass holders’ average
visitation per pass increasing for the 2007/2008 ski season compared to the
2006/2007 ski season which offset the increase in ETP resulting from price
increases. Skier visits excluding season pass holders decreased 3.0%
for the 2007/2008 ski season compared to the 2006/2007 ski season as a result of
lower skier visitation excluding season pass holders in non-peak periods,
including the early season (prior to December 24) due to below average snow
conditions, and early March and April due in part to the timing of Easter which
was in March for Fiscal 2008 versus April for Fiscal 2007. The
decrease in skier visits excluding season pass holders was offset by significant
increases in international visitation which was higher by an estimated 26% for
Fiscal 2008.
Revenue
for the Company’s ski school and dining increased $2.5 million, or 3.2%, and
$2.9 million, or 4.8%, respectively, for Fiscal 2008 compared to Fiscal 2007,
primarily as a result of absolute price increases. The increase in
ski school revenue was impacted by a decline in skier visitation excluding
season pass holders (as discussed above) as these guests have a higher
participation rate in ski school. The increase in dining revenue was
favorably impacted by the acquisition of two licensed Starbucks stores in June
2007. Retail/rental revenue increased $8.2 million, or 5.1%, for
Fiscal 2008 compared to Fiscal 2007, primarily due to increased operations
related to the 18 Breeze Ski Rental locations that were acquired in June
2007.
Other
revenues decreased $8.4 million, or 10.6%, in Fiscal 2008 compared to Fiscal
2007, due to the disposition of the Company’s investment in RTP in April
2007. Excluding RTP, other revenue would have increased $0.6 million,
or 0.8%, for Fiscal 2008 compared to Fiscal 2007.
Operating
expense increased $7.7 million, or 1.7%, during Fiscal 2008 compared to Fiscal
2007. This increase primarily resulted from an increase in labor and
labor-related benefits expense of $8.2 million, or 4.9%, due to wage increases,
increased staffing in retail/rental due to the acquisition of 18 Breeze stores
and higher workers’ compensation costs and a $3.3 million, or 4.8%, increase in
retail cost of sales (which was commensurate with the increase in retail
revenue). Additionally, resort related fees (including Forest Service
fees, other resort-related fees, credit card fees and commissions) increased
$1.4 million, or 4.0%, in Fiscal 2008 compared to Fiscal 2007 and was due to
overall increases in revenue that those fees are calculated
on. These increases were partially offset by a decrease in other
expenses of $4.5 million, or 4.2%, due to the sale of RTP (April 2007), which
incurred $8.8 million in expenses (included in other operating expenses) for
Fiscal 2007. Excluding the impact of RTP, other operating expenses
increased $4.3 million, or 4.3%, due primarily to higher food and beverage cost
of sales, property taxes, utilities and fuel expense, partially offset by lower
repairs and maintenance expense.
Mountain
equity investment income primarily includes the Company’s share of income from
operations of a real estate brokerage joint venture. The increase in
equity investment income in Fiscal 2008 compared to Fiscal 2007 is due primarily
to increased commissions earned by the brokerage associated with increased real
estate closures surrounding the Company’s Colorado resorts, both from
residential and multi-unit projects.
Lodging
Segment
Lodging
segment operating results for Fiscal 2009, Fiscal 2008 and Fiscal 2007 are
presented by category as follows (in thousands, except ADR and
RevPAR):
|
Percentage
|
|||||||||||||
|
Year
Ended July 31,
|
Increase/(Decrease)
|
||||||||||||
|
2009
|
2008
|
2007
|
2009/2008
|
2008/2007
|
|||||||||
|
Lodging
net revenue:
|
|||||||||||||
|
Owned
hotel rooms
|
$
|
43,153
|
$
|
46,806
|
$
|
42,179
|
(7.8
|
)
|
%
|
11.0
|
%
|
||
|
Managed
condominium rooms
|
34,571
|
37,132
|
36,657
|
(6.9
|
)
|
%
|
1.3
|
%
|
|||||
|
Dining
|
30,195
|
31,763
|
28,191
|
(4.9
|
)
|
%
|
12.7
|
%
|
|||||
|
Transportation
|
17,975
|
--
|
--
|
--
|
%
|
--
|
%
|
||||||
|
Golf
|
15,000
|
16,224
|
15,185
|
(7.5
|
)
|
%
|
6.8
|
%
|
|||||
|
Other
|
35,347
|
38,132
|
40,239
|
(7.3
|
)
|
%
|
(5.2
|
)
|
%
|
||||
|
Total
Lodging net revenue
|
$
|
176,241
|
$
|
170,057
|
$
|
162,451
|
3.6
|
%
|
4.7
|
|
%
|
||
|
Lodging
operating expense
|
|||||||||||||
|
Labor
and labor-related benefits
|
$
|
81,290
|
$
|
75,746
|
$
|
67,224
|
7.3
|
%
|
12.7
|
%
|
|||
|
General
and administrative
|
27,823
|
26,877
|
26,408
|
3.5
|
%
|
1.8
|
%
|
||||||
|
Other
|
60,369
|
57,209
|
50,620
|
5.5
|
%
|
13.0
|
%
|
||||||
|
Total
Lodging operating expense
|
$
|
169,482
|
$
|
159,832
|
$
|
144,252
|
6.0
|
%
|
10.8
|
%
|
|||
|
Total
Lodging Reported EBITDA
|
$
|
6,759
|
$
|
10,225
|
$
|
18,199
|
(33.9
|
)
|
%
|
(43.8
|
)
|
%
|
|
|
Owned
hotel statistics:
|
|||||||||||||
|
ADR
|
$
|
183.59
|
$
|
184.42
|
$
|
167.15
|
(0.5
|
)
|
%
|
10.3
|
%
|
||
|
RevPar
|
$
|
107.06
|
$
|
118.97
|
$
|
108.10
|
(10.0
|
)
|
%
|
10.1
|
%
|
||
|
Managed
condominium statistics:
|
|||||||||||||
|
ADR
|
$
|
273.38
|
$
|
280.37
|
$
|
268.83
|
(2.5
|
)
|
%
|
4.3
|
%
|
||
|
RevPar
|
$
|
84.50
|
$
|
98.68
|
$
|
94.50
|
(14.4
|
)
|
%
|
4.4
|
%
|
||
|
Owned
hotel and managed condominium statistics (combined):
|
|||||||||||||
|
ADR
|
$
|
225.12
|
$
|
230.17
|
$
|
216.83
|
(2.2
|
)
|
%
|
6.2
|
%
|
||
|
RevPar
|
$
|
93.10
|
$
|
106.43
|
$
|
99.58
|
(12.5
|
)
|
%
|
6.9
|
%
|
||
Total
Lodging Reported EBITDA includes $1.8 million, $1.3 million and $1.1 million of
stock-based compensation expense for Fiscal 2009, Fiscal 2008 and Fiscal 2007,
respectively.
Fiscal
2009 compared to Fiscal 2008
Total
Lodging net revenue for Fiscal 2009 increased $6.2 million, or 3.6%, compared to
Fiscal 2008, primarily due to the acquisition of CME on November 1, 2008 and a
full year of operations at The Arrabelle at Vail Square hotel (the “Arrabelle”)
which opened in January 2008. CME operations contributed $18.0
million in net revenue for Fiscal 2009 and the full year operations of the
Arrabelle contributed $11.3 million in revenue for Fiscal 2009 compared to net
revenue of $5.2 million for the partial year of operations of the Arrabelle in
Fiscal 2008.
Revenue
from owned hotel rooms, including the Arrabelle, decreased $3.7 million, or
7.8%, for Fiscal 2009 compared to Fiscal 2008, which was driven by a decrease in
occupancy of 6.2 percentage points which primarily occurred at the lodging
properties proximate to the Company’s ski resorts. This was due to a
decline in Destination visitation as discussed in the Company’s Mountain segment
and declines in group business (including a decrease in GTLC’s room revenue of
$0.8 million in the fourth quarter of Fiscal 2009 compared to the fourth quarter
of Fiscal 2008 primarily due to a decline in group business) as well as
decreases in ADR of 0.5%, partially offset by the full year of operations at the
Arrabelle (the Arrabelle generated $0.8 million of incremental owned hotel room
revenue for Fiscal 2009 compared to Fiscal 2008). Revenue from
managed condominium rooms decreased $2.6 million, or 6.9%, for Fiscal 2009, due
to decreases in visitation as noted above, declines in group business primarily
at Keystone and decreases in ADR of 2.5%, partially offset by the full year of
operations at the Arrabelle which includes condominium property management (the
Arrabelle generated $2.1 million of incremental revenue from managed properties
for Fiscal 2009 compared to Fiscal 2008).
Dining
revenue for Fiscal 2009 decreased $1.6 million, or 4.9%, as compared to Fiscal
2008 mainly due to decreased overall guest and group visitation as well as
decreases in guest spending per visit (GTLC’s dining revenue decreased $1.0
million in the fourth quarter of Fiscal 2009 compared to the fourth quarter of
Fiscal 2008 primarily due to a decline in group business). The
decline in dining revenue was partially offset by a full year of dining
operations at the Arrabelle (the Arrabelle generated $1.2 million of incremental
dining revenue for Fiscal 2009 compared to Fiscal 2008).
Golf
revenues decreased $1.2 million, or 7.5%, for Fiscal 2009 compared to Fiscal
2008, primarily resulting from a 6.0% decrease in the number of golf rounds
played. Other revenue decreased $2.8 million, or 7.3%, in Fiscal 2009
compared to Fiscal 2008 primarily due to a reduction in commissions earned from
reservations booked through the Company’s central reservation system, which were
partially offset by a full year of spa operations at the Arrabelle (the
Arrabelle generated $0.9 million of incremental spa revenue for Fiscal 2009
compared to Fiscal 2008).
Operating
expense increased $9.7 million, or 6.0%, for Fiscal 2009 compared to Fiscal
2008. Operating expenses for Fiscal 2009 included $12.8 million of
CME operating expenses as well as an increase in operating expenses at the
Arrabelle of $6.8 million as a result of a full year of operations in Fiscal
2009, which was partially offset by $3.1 million of start-up and pre-opening
expenses associated with the Arrabelle recorded in Fiscal 2008. Excluding the
impact of CME operating expenses and operating expenses for the Arrabelle due to
a full year of operations (net of start-up and pre-opening expenses recorded in
Fiscal 2008), total operating expenses decreased $6.9 million, or 4.6%, in
Fiscal 2009 compared to Fiscal 2008, primarily due to (i) a decrease in labor
and labor-related benefits of $4.9 million, or 6.9%, due primarily to lower
staffing levels associated with decreased occupancy and wage decreases as a
result of a company-wide wage reduction plan and (ii) a decrease in other
expenses of $3.0 million, or 5.6%, primarily due to decreased variable operating
costs associated with lower revenue resulting in lower food and beverage cost of
sales and credit card fees, offset by an increase in general and administrative
expenses of $1.0 million due to higher allocated corporate
expenses.
Fiscal
2008 compared to Fiscal 2007
Total
Lodging net revenue for Fiscal 2008 increased $7.6 million, or 4.7%, as compared
to Fiscal 2007. Included in net revenue for Fiscal 2007 was the
recognition of $5.4 million in termination fees (included in other revenue)
primarily associated with the termination of the management agreements at The
Equinox and The Lodge at Rancho Mirage (pursuant to the terms of the management
agreements). Excluding these termination fees, Lodging net revenue
would have increased $13.0 million, or 8.3% for Fiscal 2008, compared to Fiscal
2007.
Lodging
net revenue was positively impacted by revenue from owned hotel rooms which
increased $4.6 million, or 11.0%, for Fiscal 2008 compared to Fiscal
2007. ADR for owned hotel rooms increased 10.3% for the same period
due to high demand during peak periods in the year (partially offset by lower
visitation during non-peak periods, including the early season and the timing of
Easter as described in the Mountain segment discussion) and as a result of the
addition of the Arrabelle (which generated $2.0 million in room revenue from its
opening in January 2008 through July 31, 2008). Owned hotel room
RevPAR increased 10.1% for Fiscal 2008 compared to Fiscal 2007, which, in
addition to increases in ADR, was driven by an increase in conference and group
room nights, occurring primarily at GTLC during the Company’s fourth quarter of
Fiscal 2008. Revenue from managed condominium rooms remained
relatively flat for Fiscal 2008 compared to Fiscal 2007 mainly due to a RevPAR
increase of 4.4% which was driven by an increase in ADR of 4.3% due to high
demand during peak periods as noted above and an increase in group room nights
occurring primarily at Keystone, all of which was offset by a 3.4% reduction in
managed condominium available room nights primarily at Keystone.
Dining
revenue for Fiscal 2008 increased $3.6 million, or 12.7%, as compared to Fiscal
2007 mainly due to the addition of the Arrabelle (which generated $2.2 million
in dining revenue from its opening in January 2008 through July 31, 2008) and
group visitation at GTLC. Golf revenues increased $1.0 million, or
6.8%, for Fiscal 2008 compared to Fiscal 2007, primarily resulting from an
increase in the number of golf rounds due to improvements made at the Company’s
Jackson Hole Golf & Tennis Club (“JHG&TC”) and Beaver Creek Golf Club,
which caused the golf courses to be shut down for a portion of the season in
Fiscal 2007. Excluding the $5.4 million in termination fees, other
revenues increased $3.3 million, or 9.3% for Fiscal 2008 compared to Fiscal
2007, due to higher resort amenity fees charged to guests and increases in spa
and retail revenue.
Operating
expense increased $15.6 million, or 10.8%, for Fiscal 2008 compared to Fiscal
2007. Operating expenses for Fiscal 2008 included approximately $3.1
million of start-up and pre-opening expenses for the Arrabelle (recorded in
labor and labor-related benefits and other expenses) and incremental fees paid
to the National Park Service by GTLC of $1.0 million (recorded in other
expenses) resulting from a new concession contract which became effective
January 2007. Excluding the Fiscal 2008 start-up and pre-opening
expenses of the Arrabelle, and the increase in fees paid to the National Park
Service, total operating expenses increased by approximately $11.4 million, or
8.0%, for Fiscal 2008 compared to Fiscal 2007, which primarily includes (i) an
increase in labor and labor-related benefits of $6.5 million, or 9.7%, due
primarily to wage increases, increases in labor hours to support the higher
Lodging segment revenues, as well as increased staffing levels due to the
opening of the Arrabelle in January 2008, and (ii) an increase in other expenses
of $4.4 million, or 9.1%, due to variable operating costs associated with
incremental revenue resulting in higher food and beverage cost of sales and
credit card fees, and higher operating costs associated with the Arrabelle after
its opening, primarily in property taxes and utilities.
Real
Estate Segment
Real
Estate segment operating results for Fiscal 2009, Fiscal 2008 and Fiscal 2007
are presented by category as follows (in thousands):
|
Percentage
|
||||||||||||||||||
|
Year
Ended July 31,
|
Increase/(Decrease)
|
|||||||||||||||||
|
2009
|
2008
|
2007
|
2009/2008
|
2008/2007
|
||||||||||||||
|
Total
Real Estate net revenue
|
$
|
186,150
|
$
|
296,566
|
$
|
112,708
|
(37.2
|
)
|
%
|
163.1
|
%
|
|||||||
|
Total
Real Estate operating expense
|
142,070
|
251,338
|
115,190
|
(43.5
|
)
|
%
|
118.2
|
%
|
||||||||||
|
Gain
on sale of real property
|
--
|
709
|
--
|
(100.0
|
)
|
%
|
--
|
%
|
||||||||||
|
Total
Real Estate Reported EBITDA
|
$
|
44,080
|
$
|
45,937
|
$
|
(2,482
|
)
|
(4.0
|
)
|
%
|
1,950.8
|
%
|
||||||
Total
Real Estate Reported EBITDA includes $4.1 million, $3.1 million and $2.1 million
of stock-based compensation expense for Fiscal 2009, Fiscal 2008 and Fiscal
2007, respectively.
The
Company’s Real Estate operating revenue is primarily determined by the timing of
closings and the mix of real estate sold in any given
period. Different types of projects have different revenue and
expense volumes and margins; therefore, as the real estate inventory mix changes
it can greatly impact Real Estate segment net revenue, operating expense and
Real Estate Reported EBITDA.
Fiscal
2009
Real
Estate net revenue for Fiscal 2009 was driven primarily by the closings of eight
Chalets units ($111.5 million of revenue with an average selling price per unit
of $13.9 million and an average price per square foot of $2,860), 42 residences
at Crystal Peak Lodge ($54.9 million of revenue with an average selling price
per unit of $1.3 million and an average price per square foot of $1,038) and two
condominium units at the Arrabelle ($16.7 million of revenue with an average
selling price per unit of $8.4 million and an average price per square foot of
$1,623). The higher average price per square foot for the Chalet
units was driven by their premier location at the base of Vail mountain in Vail
Village and the fact that this development consisted of only 13 exclusive
chalets. The Arrabelle average price per square foot is driven by its
ski-in/ski-out location in Vail, and the comprehensive offering of amenities
resulting from this project. The Crystal Peak Lodge average price per
square foot though significantly lower than the Vail project real estate sales,
is significantly higher than historical Breckenridge project real estate sales
and is primarily driven by its ski-in/ski-out location at the base of Peak 7 in
Breckenridge and close proximity to the BreckConnect Gondola.
Operating expense for Fiscal 2009 included cost of sales of $101.1 million
commensurate with revenue recognized, primarily driven by the closing on eight
Chalets units ($54.1 million in cost of sales with an average cost per square
foot of $1,387), 42 residences at Crystal Peak Lodge ($34.2 million in cost of
sales with an average cost per square foot of $654) and two units at the
Arrabelle ($12.4 million in cost of sales with an average cost per square foot
of $1,204). The cost per square foot for the Arrabelle and Chalets are
reflective of the high-end features and amenities associated with these projects
and the relatively high construction costs associated with mountain resort
development. The cost per square foot for Crystal Peak Lodge is reflective
of its less complicated design features and fewer amenities associated with this
project relative to the Arrabelle and Chalets. Operating expenses also
included sales commissions of approximately $10.6 million commensurate with
revenue recognized and general and administrative costs of approximately $27.6
million (including $4.1 million of stock-based compensation
expense). General and administrative costs were primarily comprised
of marketing expenses for the major real estate projects under development
(including those that have not yet closed), overhead costs such as labor and
labor-related benefits and allocated corporate costs. In addition,
included in segment operating expense for Fiscal 2009, the Company recorded $2.8
million of estimated costs in excess of anticipated sales proceeds for an
affordable housing commitment resulting from the cancellation of a contract by a
third party developer related to its JHG&TC development.
Fiscal
2008
Real
Estate net revenue for Fiscal 2008 was driven primarily by the closings
of 64 condominium units at the Arrabelle ($213.6 million of revenue
with an average selling price per unit of $3.3 million and an average price per
square foot of $1,220), the closings of five Chalet units ($58.8 million of
revenue with an average selling price per unit of $11.8 million and an average
price per square foot of $2,336), the closings of the remaining JHG&TC
cabins ($9.0 million of revenue with an average selling price per unit of $0.8
million and an average price per square foot of $360) and contingent gains of
$13.0 million on development parcel sales that closed in previous
periods. The higher average price per square foot for the Chalet
units was driven by the premier location at the base of Vail mountain in Vail
Village and the fact that this development consisted of only 13 exclusive
chalets. The Arrabelle average price per square foot is driven by its
ski-in/ski-out location in Vail, and the comprehensive offering of amenities
resulting from this project. The JHG&TC cabins yielded a lower
price per square foot as its location is proximate to golf and tennis facilities
which does not have as strong of a demand compared to real estate featuring
ski-in/ski-out locations proximate to our ski resorts.
Operating
expense for Fiscal 2008 included cost of sales of $208.8 million commensurate
with revenue recognized, primarily driven by the closing on 64 units at the
Arrabelle ($171.2 million in cost of sales with an average cost per square foot
of $978), the closing on five Chalet units ($27.7 million in cost of sales with
an average cost per square foot of $1,100) and the closing of the remaining
JHG&TC cabins ($8.9 million in cost of sales with an average cost per square
foot of $355). The cost per square foot for the Arrabelle and Chalets are
reflective of the high-end features and amenities associated with these projects
and the relatively high construction costs associated with mountain resort
development. The average cost per square foot for the JHG&TC was
significantly lower than for other projects closed during the period due to the
fact that this project did not include the typical high-end features of our
projects that are in close proximity to our mountain resorts; however, the cost
of sales for the JHG&TC cabins were relatively high compared to the revenue
earned due to unanticipated incremental design and construction related
costs. Operating expenses also included sales commissions of
approximately $17.1 million commensurate with revenue recognized and general and
administrative costs of approximately $25.4 million (including $3.1 million of
stock-based compensation expense). General and administrative costs
were primarily comprised of marketing expenses for the major real estate
projects under development (including those that have not yet closed), overhead
costs such as labor and labor-related benefits and allocated corporate
costs.
Fiscal
2007
Real
Estate net revenue for Fiscal 2007 was driven primarily by the closings of ten
residences at Gore Creek Place ($42.9 million of revenue with an average selling
price per unit of $4.3 million and an average price per square foot of $1,081),
34 residences at Mountain Thunder ($24.1 million of revenue with an average
selling price per unit of $0.7 million and an average price per square foot of
$515) and 12 cabins at JHG&TC ($14.2 million of revenue with an average
selling price per unit of $1.2 million and an average price per square foot of
$502). The higher average price per square foot for the Gore Creek
Place units was driven by its location in Vail’s Lionshead Village and the fact
that this development consisted of only 16 exclusive townhomes. The
Mountain Thunder average price per square foot is reflective of its location
(not at the base area of the ski mountain) in Breckenridge. The
JHG&TC cabins yielded a lower price per square foot as its location is
proximate to golf and tennis facilities which does not have as strong of a
demand compared to real estate featuring ski-in/ski-out locations proximate to
our ski resorts. In addition, Real Estate net revenue included the
sale of land together with certain related infrastructure improvements in Red
Sky Ranch and Breckenridge to third-party developers of $12.1 million, the sale
of the sole asset in the FFT Investment Partners real estate joint venture of
$6.7 million and contingent gains on development parcel sales that closed in
previous periods of $7.2 million.
Operating
expense for Fiscal 2007 included cost of sales of $77.9 million commensurate
with revenue recognized, primarily driven by the closing on ten
residences at Gore Creek Place ($29.1 million in cost of sales with an average
cost per square foot of $733), 34 residences at Mountain Thunder ($19.2 million
in cost of sales with an average cost per square foot of $409), and 12 cabins at
JHG&TC ($13.8 million in cost of sales with an average cost per square foot
of $486). The cost per square foot for the Gore Creek Place is
reflective of the high-end features associated with the projects and the
relatively high construction costs associated with mountain resort
development. The average cost per square foot for the Mountain
Thunder and JHG&TC was significantly lower than for other projects closed
during the period due to the fact that the projects did not include the typical
high-end features of our projects that are at the base of our mountain
resorts. In addition, the cost of sales for the JHG&TC cabins
were relatively high compared to the revenue earned due to unanticipated
incremental design and construction related costs, which resulted in a $7.6
million charge for estimated total project costs in excess of anticipated sales
proceeds which was recorded during Fiscal 2007. Operating expenses
also included sales commissions of approximately $5.6 million commensurate with
revenue recognized and general and administrative costs of approximately $24.0
million (including $2.1 million of stock-based compensation
expense). General and administrative costs were primarily comprised
of marketing expenses for the major real estate projects under development
(including those that have not yet closed), overhead costs such as labor and
labor-related benefits and allocated corporate costs.
Other
Items
In
addition to segment operating results, the following material items contribute
to the Company's overall financial position.
Depreciation and
amortization. Depreciation and amortization expense for Fiscal
2009 and Fiscal 2008 increased primarily due to a higher level of capital
expenditures and the timing of placing in service significant resort assets,
which included, among other assets, the Arrabelle (including amenities such as a
private club, spa, commercial leasing space, and other skier services
facilities), a new skier services building, a private club (the Vail Mountain
Club) in Vail Village and multiple gondolas and lifts within the last two
years.
Investment
income. The decrease in investment income for Fiscal 2009
compared to Fiscal 2008 is primarily due to a reduction in the average interest
earned on investments (the average annualized interest rate earned decreased by
approximately 2.5 percentage points in Fiscal 2009 versus Fiscal 2008), as well
as a decrease in average invested cash during Fiscal 2009 compared to Fiscal
2008. The decrease in investment income for Fiscal 2008 compared
to Fiscal 2007 is primarily due to a reduction in the average interest earned on
investments, a decrease in average invested cash during the period and a $1.0
million impairment on a short-term investment resulting from a commercial paper
write-down.
Interest expense,
net. The reduction in interest expense, net for Fiscal 2009
compared to Fiscal 2008, is attributable to the payoff of a scheduled debt
maturity in the current year and capitalized interest on self-funded real estate
projects. The decrease in interest expense for Fiscal 2008 compared
to Fiscal 2007 is primarily due to a reduction in the average variable borrowing
rate of the employee housing bonds and an increase in capitalized interest
associated with real estate and related resort development.
Contract dispute credit,
net. On October 19, 2007, RockResorts received payment of the
final settlement from Cheeca Holdings, LLC (the “Cheeca settlement”), related to
the disputed contract termination of the formerly managed RockResorts Cheeca
Lodge & Spa property, in the amount of $13.5 million, of which $11.9 million
(net of final attorney’s fees) is recorded in “Contract dispute credit, net” in
the Consolidated Condensed Statement of Operations for Fiscal 2008.
Income
taxes. The Company's tax provision and effective tax
rate are driven primarily by the amount of pre-tax income, which is adjusted for
items that are deductible/non-deductible for tax purposes only (i.e. permanent
items), and taxable income generated by state jurisdictions that varies from the
consolidated pre-tax income. The effective tax rate was 38.5%, 38.0%
and 39.0% in Fiscal 2009, Fiscal 2008 and Fiscal 2007,
respectively. The income tax provision recorded for Fiscal 2008
reflects the impact of a favorable tax settlement with state tax authorities of
$1.0 million.
In 2005,
the Company amended previously filed tax returns (for the tax years from 1997
through 2002) in an effort to remove restrictions under Section 382 of the
Internal Revenue Code on approximately $73.8 million of net operating losses
(“NOLs”) relating to fresh start accounting from the Company’s reorganization in
1992. As a result, the Company requested a refund related to the
amended returns in the amount of $6.2 million and has reduced its Federal tax
liability in the amount of $19.6 million in subsequent tax
returns. In 2006, the Internal Revenue Service (“IRS”) completed its
examination of the Company’s filing position in its amended returns and
disallowed the Company’s request for refund and its position to remove the
restriction on the NOLs. The Company appealed the examiner’s
disallowance of the NOLs to the Office of Appeals. In December 2008,
the Office of Appeals denied the Company’s appeal, as well as a request for
mediation. The Company disagrees with the IRS interpretation
disallowing the utilization of the NOLs and in August 2009, filed a complaint in
the United States District Court for the District of Colorado seeking recovery
of $6.2 million in over payments that were previously denied by the IRS, plus
interest. Due to the uncertainty surrounding the utilization of the
NOLs, the Company has not reflected any of the benefits of the utilization of
the NOLs within its financial statements; thus if the Company is unsuccessful in
its action regarding this matter it will not negatively impact the Company’s
results of operations.
Reconciliation
of Non-GAAP Measures
The
following table reconciles from segment Reported EBITDA to net income (in
thousands):
|
Year
Ended July 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Mountain
Reported EBITDA
|
$
|
164,389
|
$
|
220,561
|
$
|
207,728
|
||||||
|
Lodging
Reported EBITDA
|
6,759
|
10,225
|
18,199
|
|||||||||
|
Resort
Reported EBITDA
|
171,148
|
230,786
|
225,927
|
|||||||||
|
Real
Estate Reported EBITDA
|
44,080
|
45,937
|
(2,482
|
)
|
||||||||
|
Total
Reported EBITDA
|
215,228
|
276,723
|
223,445
|
|||||||||
|
Depreciation
and amortization
|
(107,213
|
)
|
(93,794
|
)
|
(87,664
|
)
|
||||||
|
Relocation
and separation charges
|
--
|
--
|
(1,433
|
)
|
||||||||
|
Loss
on disposal of fixed assets, net
|
(1,064
|
)
|
(1,534
|
)
|
(1,083
|
)
|
||||||
|
Investment
income, net
|
1,793
|
8,285
|
12,403
|
|||||||||
|
Interest
expense, net
|
(27,548
|
)
|
(30,667
|
)
|
(32,625
|
)
|
||||||
|
Loss
on sale of business, net
|
--
|
--
|
(639
|
)
|
||||||||
|
Contract
dispute credit (charges), net
|
--
|
11,920
|
(4,642
|
)
|
||||||||
|
Gain
on put option, net
|
--
|
690
|
||||||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
(1,602
|
)
|
(4,920
|
)
|
(7,801
|
)
|
||||||
|
Income
before provision for income taxes
|
79,594
|
166,013
|
100,651
|
|||||||||
|
Provision
for income taxes
|
(30,644
|
)
|
(63,086
|
)
|
(39,254
|
)
|
||||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
||||||
The
following table reconciles Net Debt (defined as long-term debt plus long-term
debt due within one year less cash and cash equivalents) (in
thousands):
|
July
31,
|
||||||
|
2009
|
2008
|
|||||
|
Long-term
debt
|
$
|
491,608
|
$
|
541,350
|
||
|
Long-term
debt due within one year
|
352
|
15,355
|
||||
|
Total
debt
|
491,960
|
556,705
|
||||
|
Less:
cash and cash equivalents
|
69,298
|
162,345
|
||||
|
Net
Debt
|
$
|
422,662
|
$
|
394,360
|
||
Liquidity
and Capital Resources
Significant
Sources of Cash
Historically,
the Company has lower cash available as of its fiscal year end (as well as at
the end of its first fiscal quarter of each year) as compared to its second and
third fiscal quarters end primarily due to the seasonality of its Mountain
segment operations. Additionally, cash provided by operating
activities can be significantly impacted by the timing or mix of closings on and
investment in real estate development projects. The Company had $69.3
million of cash and cash equivalents as of July 31, 2009, compared to $162.3
million as of July 31, 2008. The Company generated $134.3 million of
cash from operating activities during Fiscal 2009 compared to $217.0 million and
$118.4 million generated during Fiscal 2008 and Fiscal 2007,
respectively. The Company currently anticipates that Resort Reported
EBITDA will continue to provide a significant source of future operating cash
flows. Additionally, anticipated closings of real estate projects
currently under development will provide a source of future cash flows from
operations in fiscal year 2010 and beyond, partially offset by further
investments in real estate to complete these projects (as further discussed
below within Significant Uses of Cash).
In
addition to the Company’s $69.3 million of cash and cash equivalents at July 31,
2009, the Company has available $304.7 million under its Credit Facility (which
represents the total commitment of $400.0 million less certain letters of credit
outstanding of $95.3 million). The Company’s plan to self-fund its current real
estate under development (the Company estimates to incur between $190 million
and $210 million in cash expenditures subsequent to July 31, 2009 for projects
under development) combined with historically lower operating cash flows during
the Company’s first fiscal quarter will likely require the Company to borrow
under the revolver component of its Credit Facility from time to time beginning
in the first quarter of fiscal 2010. The Company expects that its
liquidity needs in the near term will be met by continued utilization of
operating cash flows (primarily those generated in its second and third fiscal
year quarters) and borrowings under the Credit Facility. The Company
believes the Credit Facility, which matures in 2012, provides adequate
flexibility and is priced favorably with any new borrowings currently being
priced at LIBOR plus 0.75%.
Fiscal
2009 compared to Fiscal 2008
Net cash
provided by operating activities decreased $82.7 million for Fiscal 2009
compared to Fiscal 2008 and was primarily impacted by the timing and mix of real
estate closings as proceeds from Real Estate sales decreased $105.7 million and
deposits received on projects under development decreased $43.7 million,
partially offset by a reduction in investments in real estate of $55.9
million. Further contributing to the decrease in cash provided by
operating activities was a decrease in cash generated by resort operations
including a decrease in Resort Reported EBITDA of $59.6 million for Fiscal 2009
compared to Fiscal 2008 and a decline in accounts payable and other accrued
liabilities of $25.5 million primarily as a result of a decline in real estate
investment activity and lower trade payables associated with lower operating
volume, as well as the receipt of $11.9 million in cash (net of legal costs) for
the Cheeca settlement in Fiscal 2008. Offsetting the above items was
the receipt of $40.8 million in proceeds for the final installment related to
private club initiation fees to the Vail Mountain Club that opened in November
2008 and a reduction in restricted cash of $51.1 million which became available
for general purpose use due to the payoff of the Company’s non-recourse real
estate financings.
Cash used
in investing activities decreased by $3.5 million for Fiscal 2009 due to a
decrease in resort capital expenditures of $44.4 million offset by the
acquisition of CME for $38.2 million.
Cash used
in financing activities decreased $54.6 million primarily due to a decrease in
repurchased common stock of $77.3 million in Fiscal 2009 compared to Fiscal
2008, which was partially offset by an increase in net payments of debt related
to non-recourse real estate financings of $11.9 million and the payment of $15.0
million for a scheduled debt maturity during Fiscal 2009.
Fiscal
2008 compared to Fiscal 2007
Net cash
provided by operating activities increased $98.6 million for Fiscal 2008
compared to Fiscal 2007 and was impacted by the timing and mix of real estate
closings as proceeds from Real Estate sales increased $144.1 million which was
partially offset by a decrease in deposits received on projects under
development of $27.6 million and an increase in investments in real estate of
$38.3 million. Additionally, the Company received $11.9 million in
cash (net of legal costs) for the Cheeca settlement in Fiscal
2008. Further contributing to the increase in cash provided by
operating activities was an increase in cash generated by resort operations
including an increase in Resort Reported EBITDA of $4.9 million for Fiscal 2008
compared to Fiscal 2007.
Cash used
in investing activities increased by $16.0 million for Fiscal 2008 due to an
increase in resort capital expenditures of $31.7 million partially offset by the
purchase of an additional interest in the Company’s retail/rental operations,
SSI Venture LLC, during Fiscal 2007 for $8.4 million.
Net cash
provided by financing activities for Fiscal 2008 decreased by $190.1 million
compared to Fiscal 2007 due to the decrease in net non-recourse borrowings of
$111.0 million as well as an $84.6 million increase in repurchases of the
Company’s common stock during Fiscal 2008. Additionally, cash
proceeds from the exercise of stock options decreased by $14.6 million
(including tax benefits) for Fiscal 2008 compared to Fiscal
2007.
Significant
Uses of Cash
The
Company’s cash needs currently include providing for operating expenditures as
well as capital expenditures for both assets to be used in operations and real
estate projects under construction.
The
Company expects to spend approximately $160 million to $180 million in calendar
year 2009 for real estate under development, including the construction of
associated resort-related depreciable assets, of which approximately $90 million
was spent as of July 31, 2009, leaving approximately $70 million to $90 million
to spend in the remainder of the calendar year 2009. The Company has
entered into contracts with third parties to provide services to the Company
throughout the course of project development; commitments for future services to
be performed under such current contracts total approximately $164 million and
are expected to be performed primarily over the next two years.
The
Company has historically invested significant cash in capital expenditures for
its resort operations, and expects to continue to invest in the future; however,
plans for such investment in the near term have been reduced given the
significant level of capital expenditures made in the past few years including
individually significant projects that do not annually re-occur including
gondolas and major hotel renovations coupled with the current economic
recession. Current capital expenditure levels will primarily include
investments that allow the Company to maintain its high quality standards, as
well as certain incremental discretionary improvements at the Company’s five ski
resorts and throughout its owned hotels. The Company evaluates
additional capital improvements based on expected strategic impacts and/or
expected return on investment. The Company currently anticipates it
will spend approximately $50 million to $60 million of resort capital
expenditures for calendar year 2009, excluding resort depreciable assets arising
from real estate activities noted above, of which approximately $20 million was
spent as of July 31, 2009, leaving approximately $30 million to $40 million to
spend in the remainder of the calendar year 2009. Included in these
capital expenditures are approximately $32 million to $37 million which are
necessary to maintain appearance and level of service appropriate to the
Company’s resort operations, including routine replacement of snow grooming
equipment and rental fleet equipment. The Company currently plans to
utilize cash on hand, borrowing available under its Credit Facility and/or cash
flow from future operations to provide the cash necessary to execute its capital
plans.
Principal
payments on the vast majority of the Company’s long-term debt ($489.2 million of
the total $492.0 million debt outstanding as of July 31, 2009) are not due until
fiscal 2014 and beyond. As of July 31, 2009 and 2008, total long-term
debt (including long-term debt due within one year) was $492.0 million and
$556.7 million, respectively, with the decrease at July 31, 2009 being primarily
due to the pay-off of the non-recourse real estate financings related to the
Company’s vertical development projects and the payment of a scheduled debt
maturity. Net Debt (defined as long-term debt plus long-term debt due
within one year less cash and cash equivalents) increased from $394.4 million as
of July 31, 2008 to $422.7 million as of July 31, 2009 due primarily to the
decrease in cash and cash equivalents partially offset by the pay-off of the
Company’s non-recourse real estate financings.
The
Company’s debt service requirements can be impacted by changing interest rates
as the Company had $52.6 million of variable-rate debt outstanding as of July
31, 2009. A 100-basis point change in LIBOR would cause the Company’s
annual interest payments to change by approximately $0.5 million. The
fluctuation in the Company’s debt service requirements, in addition to interest
rate changes, may be impacted by future borrowings under its Credit Facility or
other alternative financing arrangements, including non-recourse real estate
financings, it may enter into. The Company’s long term liquidity
needs are dependent upon operating results that impact the borrowing capacity
under the Credit Facility, which can be mitigated by adjustments to capital
expenditures, flexibility of investment activities and the ability to obtain
favorable future financing. The Company can respond to liquidity
impacts of changes in the business and economic environment by managing its
capital expenditures and the timing of new real estate development
activity.
On March
9, 2006, the Company’s Board of Directors approved the repurchase of up to
3,000,000 shares of common stock and on July 16, 2008 approved an increase of
the Company’s common stock repurchase authorization by an additional 3,000,000
shares. During Fiscal 2009 the Company repurchased 874,427 shares of
common stock at a cost of $22.4 million. Since inception of this
stock repurchase plan through July 31, 2009, the Company has repurchased
3,878,535 shares at a cost of approximately $147.8 million. As of
July 31, 2009, 2,121,465 shares remained available to repurchase under the
existing repurchase authorization. Shares of common stock purchased
pursuant to the repurchase program will be held as treasury shares and may be
used for the issuance of shares under the Company’s employee share award
plans. Acquisitions under the stock repurchase program may be made
from time to time at prevailing prices as permitted by applicable laws, and
subject to market conditions and other factors. The timing as well as
the number of shares that may be repurchased under the program will depend on a
number of factors, including the Company’s future financial performance, the
Company’s available cash resources and competing uses for cash that may arise in
the future, the restrictions in the Company’s Fourth Amended and Restated Credit
Agreement, dated as of January 28, 2005, as amended, between The Vail
Corporation (a wholly-owned subsidiary of the Company), Bank of America, N.A. as
administrative agent and the Lenders party thereto (the “Credit Agreement”)
governing the Company’s Credit Facility and the Indenture, governing the 6.75%
Notes, prevailing prices of the Company’s common stock and the number of shares
that become available for sale at prices that the Company believes are
attractive. The stock repurchase program may be discontinued at any
time.
Covenants
and Limitations
The
Company must abide by certain restrictive financial covenants under its Credit
Facility and the Indenture. The most restrictive of those covenants
include the following Credit Facility covenants: Net Funded Debt to Adjusted
EBITDA ratio, Interest Coverage ratio and the Minimum Net Worth (each as defined
in the Credit Agreement). In addition, the Company’s financing
arrangements, including the Indenture, limit its ability to incur certain
indebtedness, make certain restricted payments, enter into certain investments,
make certain affiliate transfers and may limit its ability to enter into certain
mergers, consolidations or sales of assets. The Company’s borrowing
availability under the Credit Facility is primarily determined by the Net Funded
Debt to Adjusted EBITDA ratio, which is based on the Company’s segment operating
performance, as defined in the Credit Agreement.
The
Company was in compliance with all restrictive financial covenants in its debt
instruments as of July 31, 2009. The Company expects it will meet all
applicable financial maintenance covenants in its Credit Agreement, including
the Net Funded Debt to Adjusted EBITDA ratio throughout the year ending July 31,
2010. However, there can be no assurance that the Company will meet
such financial covenants. If such covenants are not met, the Company
would be required to seek a waiver or amendment from the banks participating in
the Credit Facility. While the Company anticipates that it would
obtain such waiver or amendment, if any were necessary, there can be no
assurance that such waiver or amendment would be granted, which could have a
material adverse impact on the liquidity of the Company.
Contractual
Obligations
As part
of its ongoing operations, the Company enters into arrangements that obligate
the Company to make future payments under contracts such as debt agreements,
construction agreements in conjunction with the Company’s development activities
and lease agreements. Debt obligations, which total $492.0 million as
of July 31, 2009, are recognized as liabilities in the Company's Consolidated
Balance Sheet as of July 31, 2009. Obligations under construction contracts are
not recognized as liabilities in the Company’s Consolidated Balance Sheet until
services and/or goods are received which is in accordance with
GAAP. Additionally, operating lease and service contract obligations,
which total $81.6 million as of July 31, 2009, are not recognized as liabilities
in the Company's Consolidated Balance Sheet, which is in accordance with
GAAP. A summary of the Company's contractual obligations as of July
31, 2009 is as follows (in thousands):
|
Payments
Due by Period
|
|||||||||||||||
|
Fiscal
|
2-3
|
4-5
|
More
than
|
||||||||||||
|
Contractual
Obligations
|
Total
|
2010
|
years
|
years
|
5
years
|
||||||||||
|
Long-Term
Debt (1)
|
$
|
491,960
|
$
|
352
|
$
|
2,132
|
$
|
390,538
|
$
|
98,938
|
|||||
|
Fixed
Rate Interest (1)
|
165,958
|
29,634
|
59,073
|
58,975
|
18,276
|
||||||||||
|
Operating
Leases and Service Contracts
|
81,608
|
17,350
|
23,710
|
16,847
|
23,701
|
||||||||||
|
Purchase
Obligations (2)
|
380,884
|
309,812
|
71,072
|
--
|
--
|
||||||||||
|
Other
Long-Term Obligations (3)
|
1,882
|
340
|
132
|
106
|
1,304
|
||||||||||
|
Total
Contractual Cash Obligations
|
$
|
1,122,292
|
$
|
357,488
|
$
|
156,119
|
$
|
466,466
|
$
|
142,219
|
|||||
(1) The fixed-rate interest payments, as
well as long-term debt payments, included in the table above assume that all
fixed-rate debt outstanding as of July 31, 2009 will be held to
maturity. Interest payments associated with variable-rate debt have
not been included in the table. Assuming that the amounts outstanding
under variable-rate long-term debt as of July 31, 2009 are held to maturity, and
utilizing interest rates in effect at July 31, 2009, the Company’s annual
interest payments (including commitment fees and letter of credit fees) on
variable rate long-term debt as of July 31, 2009 is anticipated to be
approximately $1.0 million for at least each of the next five
years. The future annual interest obligations noted herein are
estimated only in relation to debt outstanding as of July 31, 2009, and do not
reflect interest obligations on potential future debt.
(2) Purchase
obligations include amounts which are classified as trade payables, real estate
development payables, accrued payroll and benefits, accrued fees and
assessments, accrued taxes (including taxes for uncertain tax positions),
liabilities to complete real estate projects on the Company's Consolidated
Balance Sheet as of July 31, 2009 and other commitments for goods and services
not yet received, including construction contracts not included on the Company’s
balance sheet as of July 31, 2009 in accordance with GAAP.
(3) Other long-term obligations include
amounts which become due based on deficits in underlying cash flows of the
metropolitan district as described in Note 14, Commitments and Contingencies, of
the Notes to Consolidated Financial Statements.
Off
Balance Sheet Arrangements
The
Company does not have off balance sheet transactions that are expected to have a
material effect on the Company's financial condition, revenue, expenses, results
of operations, liquidity, capital expenditures or capital
resources.
Critical
Accounting Policies
The
preparation of Consolidated Financial Statements in conformity with GAAP
requires the Company to select appropriate accounting policies and to make
judgments and estimates affecting the application of those accounting
policies. In applying the Company's accounting policies, different
business conditions or the use of different assumptions may result in materially
different amounts reported in the Consolidated Financial
Statements.
The
Company has identified the most critical accounting policies which were
determined by considering accounting policies that involve the most complex or
subjective decisions or assessments. The Company also has other
policies considered key accounting policies; however, these policies do not meet
the definition of critical accounting policies because they do not generally
require the Company to make estimates or judgments that are complex or
subjective. The Company has reviewed these critical accounting
policies and related disclosures with the Company’s Audit Committee of the Board
of Directors.
Real Estate
Revenue and Cost of Sales.
Description
The
Company utilizes the relative sales value method to determine cost of sales for
individual parcels of real estate and/or condominium units sold within a
project, when specific identification of costs cannot be reasonably
determined. The determination of cost of sales may utilize estimates
for the fair value of resort depreciable assets that may be part of a mixed-use
real estate development project and total costs to be incurred on a real estate
development project.
Judgments
and Uncertainties
Changes
to either the relative sales values of the components of a project, which may
include resort depreciable assets, or the total projected costs to be incurred
to determine cost of sales may cause significant variances in the profit margins
recognized on individual parcels of real estate and/or condominium units within
a project.
Effect
if Actual Results Differ From Assumptions
A 10%
change in the estimates of either the relative sales values of the components of
a project or remaining costs to be incurred for projects utilizing the relative
sales value method would have changed the profit margin recognized by
approximately $7.7 million for Fiscal 2009.
Goodwill
and Intangible Assets.
Description
The
carrying value of goodwill and indefinite-lived intangible assets are evaluated
for possible impairment on an annual basis or between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair
value of a reporting unit or indefinite-lived intangible asset below its
carrying value. Other intangible assets are evaluated for impairment
when there is evidence that events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable. The Company
is required to determine goodwill impairment using a two-step
process. The first step is used to identify potential impairment by
comparing the fair value of a reporting unit with its carrying
amount. If the carrying amount of a reporting unit exceeds its fair
value, the second step of the impairment test is performed to measure the amount
of impairment loss, if any. If the carrying amount of the reporting
unit’s goodwill exceeds the implied fair value of that goodwill, an impairment
loss is recognized in an amount equal to that excess. The impairment
test for indefinite-lived intangible assets consists of a comparison of the
estimated fair value of the intangible asset with its carrying
value. If the carrying value of the intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to that
excess.
Judgments
and Uncertainties
Application
of the goodwill and indefinite-lived intangible asset impairment test requires
judgment, including the identification of reporting units, assignment of assets
and liabilities to reporting units, assignment of goodwill to reporting units
and determination of the fair value of reporting units and indefinite-lived
intangible assets. The Company determines the estimated fair value of
its reporting units using a discounted cash flow analysis. The
estimated fair value of indefinite-lived intangible assets is primarily
determined using the income approach based upon estimated future revenue
streams. These analyses require significant judgments, including
estimation of future cash flows, which is dependent on internal forecasts,
available industry/market data, estimation of the long-term rate of growth for
the Company’s business, estimation of the useful life over which cash flows will
occur (including terminal multiples), and determination of the respective
weighted average cost of capital. Changes in these estimates and
assumptions could materially affect the determination of fair value and
impairment for each reporting unit and indefinite-lived intangible
asset. The Company evaluates its reporting units on an annual basis
and allocates goodwill to its reporting units based on the reporting
units expected to benefit from the acquisition generating the
goodwill.
Effect
if Actual Results Differ From Assumptions
Goodwill
and indefinite-lived intangible assets are at least tested for impairment
annually as of May 1st of
each year. Based upon the Company’s annual impairment test during the
fourth fiscal quarter of 2009 the estimated fair value of the Company’s
reporting units and indefinite-lived intangible assets were in excess of their
respective carrying values. As such, no impairment of goodwill or
indefinite-lived intangible assets was recorded.
In order
to evaluate the sensitivity of the estimated fair value calculations of the
Company’s reporting units and indefinite-lived intangible assets, the Company
applied a hypothetical 10% decrease to the estimated fair values of the
Company's reporting units and indefinite-lived intangible
assets. This hypothetical decrease of 10% would not have had an
impact on the conclusion that the estimated fair value of the Company’s
reporting units and significant indefinite-lived intangible assets were in
excess of their respective carrying values.
Tax
Contingencies.
Description
The
Company must make certain estimates and judgments in determining income tax
expense for financial statement purposes. These estimates and
judgments occur in the calculation of tax credits and deductions and in the
calculation of certain tax assets and liabilities, which arise from differences
in the timing of recognition of revenue and expense for tax and financial
statement purposes, as well as the interest and penalties relating to uncertain
tax positions. The calculation of the Company’s tax liabilities
involves dealing with uncertainties in the application of complex tax
regulations. The Company recognizes liabilities for uncertain tax
positions based on a two-step process. The first step is to evaluate
the tax position for recognition by determining if the weight of available
evidence indicates that it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step requires the Company to estimate
and measure the tax benefit as the largest amount that is more than 50% likely
of being realized upon ultimate settlement. It is inherently
difficult and subjective to estimate such amounts, as this requires the Company
to determine the probability of various possible outcomes. This
evaluation is based on factors including, but not limited to, changes in facts
or circumstances, changes in tax law, effectively settled issues under audit and
new audit activity. A significant amount of
time may pass before a particular matter, for which the Company may have
established a reserve, is audited and fully
resolved.
Judgments
and Uncertainties
The
estimates of the Company's tax contingencies reserve contains uncertainty
because management must use judgment to estimate the potential exposure
associated with the Company's various filing positions.
Effect
if Actual Results Differ From Assumptions
Although
management believes that the estimates and judgments discussed herein are
reasonable and it has adequate reserves for its tax contingencies, actual
results could differ, and the Company may be exposed to increases or decreases
in those reserves and tax provisions that could be material.
An
unfavorable tax settlement could require the use of cash and could possibly
result in an increased tax expense and effective tax rate in the year of
resolution. A favorable tax settlement could possibly result in a
reduction in the Company's tax expense, effective tax rate, income taxes
payable, other long-term liabilities and/or adjustments to its deferred tax
assets, deferred tax liabilities or intangible assets in the year of settlement
or in future years.
Depreciable
Lives of Assets.
Description
Mountain
and lodging operational assets, furniture and fixtures, computer equipment,
software, vehicles and leasehold improvements are primarily depreciated using
the straight-line method over the estimated useful life of the
asset. Assets may become obsolete or require replacement before the
end of their useful life in which the remaining book value would be written-off
or the Company could incur costs to remove or dispose of assets no longer in
use.
Judgments
and Uncertainties
The
estimates of the Company’s useful life of the assets contain uncertainty because
management must use judgment to estimate the useful life of the
asset.
Effect
if Actual Results Differ From Assumptions
Although
management believes that the estimates and judgments discussed herein are
reasonable, actual results could differ, and the Company may be exposed to
increased expense related to depreciable assets disposed of, removed or taken
out of service prior to its originally estimated useful life, which may be
material. A 10% decrease in the estimated useful lives of depreciable
assets would have increased depreciation expense by approximately $11.3 million
for Fiscal 2009.
New
Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”), which defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value
measurements. SFAS 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy which prioritizes the inputs to valuation techniques used
to measure fair value. In February 2008, the FASB issued Staff
Position (“FSP”) 157-2, “Effective Date of FASB Statement No.
157.” This FSP delayed the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually),
to fiscal years beginning after November 15, 2008 (the Company's fiscal year
ending July 31, 2010) and interim periods within the fiscal year of
adoption. The adoption of SFAS 157 for financial assets and
liabilities was effective for the Company on August 1, 2008 and did not have a
material impact on the Company’s financial position or results of
operations. The Company does not anticipate that the adoption of the
provisions of SFAS 157 for nonfinancial assets and liabilities will have a
material impact on the Company’s financial position or results of
operations.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations”
(“SFAS 141R”), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS 141R also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. SFAS 141R
will be applicable prospectively to business combinations consummated after July
31, 2009 (the Company’s fiscal year ending July 31, 2010).
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS 160”), which will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity within the balance
sheet. Currently, noncontrolling interests (minority interests) are
reported as a liability in the Company’s consolidated balance sheet and the
related income (loss) attributable to minority interests is reflected as an
expense (credit) in arriving at net income. Upon adoption of SFAS
160, the Company will be required to report its minority interests as a separate
component of stockholders’ equity and present net income allocable to the
minority interests along with net income attributable to the stockholders of the
Company separately in its consolidated statement of operations. SFAS
160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements
of SFAS 160 shall be applied prospectively. The requirements of
SFAS 160 are effective for the Company beginning August 1, 2009 (the
Company’s fiscal year ending July 31, 2010).
In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation
of Other-Than-Temporary Impairments” (“FSP 115-2”) which establishes a new model
for measuring other-than-temporary impairments for debt securities, including
establishing criteria for when to recognize a write-down through earnings versus
other comprehensive income. The FSP also requires additional interim
and annual disclosures for impaired securities. The requirements of
the FSP were effective for the Company as of July 31, 2009 and did not have a
material impact on the Company’s financial position or results of
operations.
In May
2009, the FASB issued SFAS 165, “Subsequent Events” (“SFAS 165”) which
establishes the general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 requires entities to
recognize in their financial statements the effects of all subsequent events
that provide additional evidence about conditions that existed at the date of
the balance sheet, including the estimates inherent in the process of preparing
financial statements. Entities shall not recognize subsequent events
that provide evidence about conditions that did not exist at the date of the
balance sheet but arose subsequent to that date. In addition,
entities are required to disclose the period through which subsequent events
have been evaluated. The provisions of SFAS 165 were effective for
the Company as of July 31, 2009.
In June
2009, the FASB issued SFAS 167, “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”) which amends the consolidation guidance under FASB Interpretation
No. 46R, “Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51” (“FIN 46R”). SFAS 167 requires entities to perform a
qualitative assessment in determining the primary beneficiary of a variable
interest entity. The qualitative assessment includes, among other
things, consideration as to whether a variable interest holder has the power to
direct the activities that most significantly impact the economic performance of
the variable interest entity and the obligation to absorb losses or the right to
receive benefits of the variable interest entity that could potentially be
significant to the variable interest entity. Pursuant to SFAS 167,
the requirement to assess whether an entity should be deemed the primary
beneficiary is an on-going reconsideration. The provisions of SFAS
167 are effective for the Company beginning August 1, 2011 (the Company’s fiscal
year ending July 31, 2012). The Company is currently evaluating the
impacts, if any, the adoption of the provisions of SFAS 167 will have
on the Company’s financial position or results of operations.
Inflation
Although
the Company cannot accurately determine the precise effect of inflation on its
operations, management does not believe inflation has had a material effect on
the results of operations in the last three fiscal years. When the
costs of operating resorts increase, the Company generally has been able to pass
the increase on to its customers. However, there can be no assurance
that increases in labor and other operating costs due to inflation will not have
an impact on the Company's future profitability.
Seasonality
and Quarterly Results
The
Company's mountain and lodging operations are seasonal in nature. In
particular, revenue and profits for the Company's mountain and most of its
lodging operations are substantially lower and historically result in losses
from late spring to late fall. Conversely, peak operating seasons for
GTLC, certain managed hotel properties and the Company's owned golf courses
occur during the summer months while the winter season results in operating
losses. Revenue and profits generated by GTLC's summer operations,
management fees from certain managed properties, certain other lodging
properties and golf operations are not nearly sufficient to fully offset the
Company's off-season losses from its mountain and other lodging
operations. During Fiscal 2009, 79% of total combined Mountain and
Lodging segment net revenue was earned during the second and third fiscal
quarters. Therefore, the operating results for any three-month period
are not necessarily indicative of the results that may be achieved for any
subsequent quarter or for a full year (see Note 16, Selected Quarterly Financial
Data, of the Notes to Consolidated Financial Statements).
Interest Rate
Risk. The Company's exposure to market risk is limited
primarily to the fluctuating interest rates associated with variable rate
indebtedness. At July 31, 2009, the Company had $52.6 million of
variable rate indebtedness, representing 10.7% of the Company's total debt
outstanding, at an average interest rate during Fiscal 2009 of
2.8%. Based on variable-rate borrowings outstanding as of July 31,
2009, a 100-basis point (or 1.0%) change in LIBOR would result in the Company's
annual interest payments to change by $0.5 million. The Company's
market risk exposure fluctuates based on changes in underlying interest
rates.
Vail
Resorts, Inc.
Consolidated
Financial Statements for the Years Ended July 31, 2009, 2008 and
2007
|
F-2
|
|
|
F-3
|
|
|
Consolidated
Financial Statements
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7
|
|
|
F-8
|
|
|
Financial
Statement Schedule:
|
|
|
The
following consolidated financial statement schedule of the Company is
filed as part of this Report on Form 10-K and should be read in
conjunction with the Company's Consolidated Financial
Statements:
|
|
|
60
|
Management
of Vail Resorts, Inc. (the “Company”) is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of
1934. The Company's internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the United States of
America.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of the effectiveness of internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Management,
including the Company's Chief Executive Officer and Chief Financial Officer,
assessed the effectiveness of the Company's internal control over financial
reporting as of July 31, 2009. In making this assessment, management
used the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, management concluded
that, as of July 31, 2009, the Company's internal control over financial
reporting was effective.
The
Company’s independent registered public accounting firm, PricewaterhouseCoopers
LLP, has issued an audit report on the Company’s internal control over financial
reporting as of July 31, 2009, as stated in the Report of Independent Registered
Public Accounting Firm on the following page.
To the
Shareholders and Board of Directors
of Vail
Resorts, Inc.:
In our
opinion, the consolidated financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Vail
Resorts, Inc. and its subsidiaries at July 31, 2009 and 2008, and the results of
their operations and their cash flows for each of the three years in the period
ended July 31, 2009 in conformity with accounting principles generally accepted
in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also
in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of July 31, 2009, based on criteria
established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements and financial statement
schedule, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express opinions
on these financial statements, on the financial statement schedule, and on the
Company's internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our
opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/
PricewaterhouseCoopers LLP
Denver,
Colorado
September
23, 2009
Vail
Resorts, Inc.
(In
thousands, except share and per share amounts)
|
July
31,
|
||||||
|
2009
|
2008
|
|||||
|
Assets
|
||||||
|
Current
assets:
|
||||||
|
Cash
and cash equivalents
|
$
|
69,298
|
$
|
162,345
|
||
|
Restricted
cash
|
11,065
|
58,437
|
||||
|
Trade
receivables, net of allowances of $1,877 and $1,666,
respectively
|
58,063
|
50,185
|
||||
|
Inventories,
net of reserves of $1,455 and $1,211, respectively
|
48,947
|
49,708
|
||||
|
Deferred
income taxes (Note 12)
|
21,297
|
15,142
|
||||
|
Other
current assets
|
20,318
|
23,078
|
||||
|
Total
current assets
|
228,988
|
358,895
|
||||
|
Property,
plant and equipment, net (Note 5)
|
1,057,658
|
1,056,837
|
||||
|
Real
estate held for sale and investment
|
311,485
|
249,305
|
||||
|
Deferred
charges and other assets
|
31,976
|
38,054
|
||||
|
Notes
receivable
|
6,994
|
8,051
|
||||
|
Goodwill,
net (Note 5)
|
167,950
|
142,282
|
||||
|
Intangible
assets, net (Note 5)
|
79,429
|
72,530
|
||||
|
Total
assets
|
$
|
1,884,480
|
$
|
1,925,954
|
||
|
Liabilities
and Stockholders' Equity
|
||||||
|
Current
liabilities:
|
||||||
|
Accounts
payable and accrued expenses (Note 5)
|
$
|
245,536
|
$
|
294,182
|
||
|
Income
taxes payable
|
5,460
|
57,474
|
||||
|
Long-term
debt due within one year (Note 4)
|
352
|
15,355
|
||||
|
Total
current liabilities
|
251,348
|
367,011
|
||||
|
Long-term
debt (Note 4)
|
491,608
|
541,350
|
||||
|
Other
long-term liabilities (Note 5)
|
233,169
|
183,643
|
||||
|
Deferred
income taxes (Note 12)
|
112,234
|
75,279
|
||||
|
Commitments
and contingencies (Note 14)
|
||||||
|
Minority
interest in net assets of consolidated subsidiaries
|
30,826
|
29,915
|
||||
|
Stockholders’
equity:
|
||||||
|
Preferred
stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and
outstanding
|
--
|
--
|
||||
|
Common
stock, $0.01 par value, 100,000,000 shares authorized, and 40,049,988 and
39,926,496 shares issued, respectively
|
400
|
399
|
||||
|
Additional
paid-in capital
|
555,728
|
545,773
|
||||
|
Retained
earnings
|
356,995
|
308,045
|
||||
|
Treasury
stock, at cost; 3,878,535 and 3,004,108 shares, respectively (Note
17)
|
(147,828
|
)
|
(125,461
|
)
|
||
|
Total
stockholders’ equity
|
765,295
|
728,756
|
||||
|
Total
liabilities and stockholders’ equity
|
$
|
1,884,480
|
$
|
1,925,954
|
||
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands, except per share amounts)
|
Year
ended July 31,
|
||||||||||
|
2009
|
2008
|
2007
|
||||||||
|
Net
revenue:
|
||||||||||
|
Mountain
|
$
|
614,597
|
$
|
685,533
|
$
|
665,377
|
||||
|
Lodging
|
176,241
|
170,057
|
162,451
|
|||||||
|
Real
estate
|
186,150
|
296,566
|
112,708
|
|||||||
|
Total
net revenue
|
976,988
|
1,152,156
|
940,536
|
|||||||
|
Segment
operating expense (exclusive of depreciation and amortization shown
separately below):
|
||||||||||
|
Mountain
|
451,025
|
470,362
|
462,708
|
|||||||
|
Lodging
|
169,482
|
159,832
|
144,252
|
|||||||
|
Real
estate
|
142,070
|
251,338
|
115,190
|
|||||||
|
Total
segment operating expense
|
762,577
|
881,532
|
722,150
|
|||||||
|
Other
operating (expense) income:
|
||||||||||
|
Gain
on sale of real property
|
--
|
709
|
--
|
|||||||
|
Depreciation
and amortization
|
(107,213
|
)
|
(93,794
|
)
|
(87,664
|
)
|
||||
|
Relocation
and separation charges (Note 9)
|
--
|
--
|
(1,433
|
)
|
||||||
|
Loss
on disposal of fixed assets, net
|
(1,064
|
)
|
(1,534
|
)
|
(1,083
|
)
|
||||
|
Income
from operations
|
106,134
|
176,005
|
128,206
|
|||||||
|
Mountain
equity investment income, net
|
817
|
5,390
|
5,059
|
|||||||
|
Investment
income, net
|
1,793
|
8,285
|
12,403
|
|||||||
|
Interest
expense, net
|
(27,548
|
)
|
(30,667
|
)
|
(32,625
|
)
|
||||
|
Loss
on sale of business, net (Note 10)
|
--
|
--
|
(639
|
)
|
||||||
|
Contract
dispute credit (charges), net (Note 14)
|
--
|
11,920
|
(4,642
|
)
|
||||||
|
Gain
on put option, net (Note 10)
|
--
|
--
|
690
|
|||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
(1,602
|
)
|
(4,920
|
)
|
(7,801
|
)
|
||||
|
Income
before provision for income taxes
|
79,594
|
166,013
|
100,651
|
|||||||
|
Provision
for income taxes (Note 12)
|
(30,644
|
)
|
(63,086
|
)
|
(39,254
|
)
|
||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
||||
|
Per
share amounts (Note 3):
|
||||||||||
|
Basic
net income per share
|
$
|
1.34
|
$
|
2.67
|
$
|
1.58
|
||||
|
Diluted
net income per share
|
$
|
1.33
|
$
|
2.64
|
$
|
1.56
|
||||
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands, except share amounts)
|
Additional
|
Total
|
|||||||||||||||||||||||
|
Common
Stock
|
Paid-in
|
Retained
|
Treasury
|
Stockholders’
|
||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Equity
|
|||||||||||||||||||
|
Balance,
July 31, 2006
|
39,036,282
|
$
|
390
|
$
|
509,505
|
$
|
143,721
|
$
|
(10,839
|
)
|
$
|
642,777
|
||||||||||||
|
Net
income
|
--
|
--
|
--
|
61,397
|
--
|
61,397
|
||||||||||||||||||
|
Stock-based
compensation
|
||||||||||||||||||||||||
|
(Note
18)
|
--
|
--
|
6,965
|
--
|
--
|
6,965
|
||||||||||||||||||
|
Issuance
of shares
|
||||||||||||||||||||||||
|
under
share
|
||||||||||||||||||||||||
|
award
plans (Note 18)
|
711,694
|
7
|
10,975
|
--
|
--
|
10,982
|
||||||||||||||||||
|
Tax
benefit from share
|
||||||||||||||||||||||||
|
award
plans
|
--
|
--
|
6,925
|
--
|
--
|
6,925
|
||||||||||||||||||
|
Repurchases
of common stock
|
||||||||||||||||||||||||
|
(Note
17)
|
--
|
--
|
--
|
--
|
(15,007
|
)
|
(15,007
|
)
|
||||||||||||||||
|
Balance,
July 31, 2007
|
39,747,976
|
397
|
534,370
|
205,118
|
(25,846
|
)
|
714,039
|
|||||||||||||||||
|
Net
income
|
--
|
--
|
--
|
102,927
|
--
|
102,927
|
||||||||||||||||||
|
Stock-based
compensation
|
||||||||||||||||||||||||
|
(Note
18)
|
--
|
--
|
8,414
|
--
|
--
|
8,414
|
||||||||||||||||||
|
Issuance
of shares
|
||||||||||||||||||||||||
|
under
share
|
||||||||||||||||||||||||
|
award
plans (Note 18)
|
178,520
|
2
|
1,122
|
--
|
--
|
1,124
|
||||||||||||||||||
|
Tax
benefit from share
|
||||||||||||||||||||||||
|
award
plans
|
--
|
--
|
1,867
|
--
|
--
|
1,867
|
||||||||||||||||||
|
Repurchases
of common stock
|
||||||||||||||||||||||||
|
(Note
17)
|
--
|
--
|
--
|
--
|
(99,615
|
)
|
(99,615
|
)
|
||||||||||||||||
|
Balance,
July 31, 2008
|
39,926,496
|
399
|
545,773
|
308,045
|
(125,461
|
)
|
728,756
|
|||||||||||||||||
|
Net
income
|
--
|
--
|
--
|
48,950
|
--
|
48,950
|
||||||||||||||||||
|
Stock-based
compensation
|
||||||||||||||||||||||||
|
(Note
18)
|
--
|
--
|
10,741
|
--
|
--
|
10,741
|
||||||||||||||||||
|
Issuance
of shares
|
||||||||||||||||||||||||
|
under
share
|
||||||||||||||||||||||||
|
award
plans (Note 18)
|
123,492
|
1
|
(550
|
)
|
--
|
--
|
(549
|
)
|
||||||||||||||||
|
Tax
benefit from share
|
||||||||||||||||||||||||
|
award
plans
|
--
|
--
|
(236
|
)
|
--
|
--
|
(236
|
)
|
||||||||||||||||
|
Repurchases
of common stock
|
||||||||||||||||||||||||
|
(Note
17)
|
--
|
--
|
--
|
--
|
(22,367
|
)
|
(22,367
|
)
|
||||||||||||||||
|
Balance,
July 31, 2009
|
40,049,988
|
$
|
400
|
$
|
555,728
|
$
|
356,995
|
$
|
(147,828
|
)
|
$
|
765,295
|
||||||||||||
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands)
|
Year
Ended July 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
||||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
|
Depreciation
and amortization
|
107,213
|
93,794
|
87,664
|
|||||||||
|
Cost
of real estate sales
|
103,893
|
208,820
|
81,176
|
|||||||||
|
Stock-based
compensation expense
|
10,741
|
8,414
|
6,998
|
|||||||||
|
Loss
on sale of business, net
|
--
|
--
|
639
|
|||||||||
|
Deferred
income taxes, net
|
30,767
|
2,980
|
(3,968
|
)
|
||||||||
|
Minority
interest in net income of consolidated subsidiaries, net
|
1,602
|
4,920
|
7,801
|
|||||||||
|
Other
non-cash (income) expense, net
|
(5,300
|
)
|
(7,268
|
)
|
720
|
|||||||
|
Changes
in assets and liabilities:
|
||||||||||||
|
Restricted
cash
|
47,372
|
(3,688
|
)
|
(34,427
|
)
|
|||||||
|
Accounts
receivable, net
|
(7,833
|
)
|
(12,173
|
)
|
(4,496
|
)
|
||||||
|
Inventories,
net
|
761
|
(1,643
|
)
|
(5,171
|
)
|
|||||||
|
Investments
in real estate
|
(161,608
|
)
|
(217,482
|
)
|
(179,234
|
)
|
||||||
|
Accounts
payable and accrued expenses
|
(19,568
|
)
|
5,946
|
30,691
|
||||||||
|
Income
taxes payable
|
(27,297
|
)
|
20,033
|
19,924
|
||||||||
|
Deferred
real estate deposits
|
(46,011
|
)
|
(2,308
|
)
|
25,330
|
|||||||
|
Private
club deferred initiation fees and deposits
|
41,591
|
15,867
|
21,438
|
|||||||||
|
Other
assets and liabilities, net
|
9,003
|
(2,143
|
)
|
1,960
|
||||||||
|
Net
cash provided by operating activities
|
134,276
|
216,996
|
118,442
|
|||||||||
|
Cash
flows from investing activities:
|
||||||||||||
|
Capital
expenditures
|
(106,491
|
)
|
(150,892
|
)
|
(119,232
|
)
|
||||||
|
Acquisition
of business
|
(38,170
|
)
|
--
|
--
|
||||||||
|
Cash
received from sale of business
|
--
|
--
|
3,544
|
|||||||||
|
Purchase
of minority interests
|
--
|
--
|
(8,387
|
)
|
||||||||
|
Other
investing activities, net
|
36
|
2,757
|
(8,071
|
)
|
||||||||
|
Net
cash used in investing activities
|
(144,625
|
)
|
(148,135
|
)
|
(132,146
|
)
|
||||||
|
Cash
flows from financing activities:
|
||||||||||||
|
Repurchases
of common stock
|
(22,367
|
)
|
(99,615
|
)
|
(15,007
|
)
|
||||||
|
Proceeds
from borrowings under non-recourse real estate financings
|
9,013
|
136,519
|
75,019
|
|||||||||
|
Payments
of non-recourse real estate financings
|
(58,407
|
)
|
(174,008
|
)
|
(1,493
|
)
|
||||||
|
Proceeds
from borrowings under other long-term debt
|
67,280
|
77,641
|
64,612
|
|||||||||
|
Payments
of other long-term debt
|
(82,632
|
)
|
(78,121
|
)
|
(75,284
|
)
|
||||||
|
Other
financing activities, net
|
4,415
|
249
|
4,882
|
|||||||||
|
Net
cash (used in) provided by financing activities
|
(82,698
|
)
|
(137,335
|
)
|
52,729
|
|||||||
|
Net
(decrease) increase in cash and cash equivalents
|
(93,047
|
)
|
(68,474
|
)
|
39,025
|
|||||||
|
Cash
and cash equivalents:
|
||||||||||||
|
Beginning
of period
|
162,345
|
230,819
|
191,794
|
|||||||||
|
End
of period
|
$
|
69,298
|
$
|
162,345
|
$
|
230,819
|
||||||
|
Cash
paid for interest, net of amounts capitalized
|
$
|
25,556
|
$
|
34,298
|
$
|
23,573
|
||||||
|
Taxes
paid, net
|
$
|
25,545
|
$
|
35,483
|
$
|
16,357
|
||||||
The
accompanying Notes are an integral part of these consolidated financial
statements.
1. Organization
and Business
Vail
Resorts, Inc. (“Vail Resorts” or the “Parent Company”) is organized as a holding
company and operates through various subsidiaries. Vail Resorts and
its subsidiaries (collectively, the “Company”) currently operate in three
business segments: Mountain, Lodging and Real Estate. In the Mountain
segment, the Company owns and operates five world-class ski resort properties at
the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado
and the Heavenly Mountain Resort (“Heavenly”) in the Lake Tahoe area of
California and Nevada, as well as ancillary businesses, primarily including ski
school, dining and retail/rental operations. These resorts operate
primarily on Federal land under the terms of Special Use Permits granted by the
USDA Forest Service (the “Forest Service”). The Company holds a 69.3%
interest in SSI Venture, LLC (“SSV”), a retail/rental company. In the
Lodging segment, the Company owns and/or manages a collection of luxury hotels
under its RockResorts brand, as well as other strategic lodging properties and a
large number of condominiums located in proximity to the Company’s ski resorts,
the Grand Teton Lodge Company (“GTLC”), which operates three destination resorts
at Grand Teton National Park (under a National Park Service concessionaire
contract), Colorado Mountain Express (“CME”), a resort ground transportation
company, and golf courses. Vail Resorts Development Company (“VRDC”),
a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate
segment, which owns and develops real estate in and around the Company’s resort
communities. The Company’s mountain business and its lodging
properties at or around the Company’s ski resorts are seasonal in nature with
peak operating seasons from mid-November through mid-April. The
Company’s operations at GTLC and its golf courses generally operate from mid-May
through mid-October. The Company also has non-majority owned
investments in various other entities, some of which are consolidated (see Note
6, Investments in Affiliates and Note 7, Variable Interest
Entities).
2. Summary
of Significant Accounting Policies
Principles of Consolidation--
The accompanying Consolidated Financial Statements include the accounts of the
Company, its majority-owned subsidiaries and all variable interest entities for
which the Company is the primary beneficiary. Investments in which
the Company does not have a controlling interest or is not the primary
beneficiary are accounted for under the equity method. All
significant intercompany transactions have been eliminated in
consolidation.
Cash and Cash Equivalents--
The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash
equivalents.
Restricted Cash-- Restricted
cash primarily represents certain deposits received from real estate development
related transactions, amounts held as state-regulated reserves for self-insured
workers' compensation claims and owner and guest advance deposits held in escrow
for lodging reservations.
Trade Receivables-- The
Company records trade accounts receivable in the normal course of business
related to the sale of products or services. The Company generally
charges interest on past due accounts at a rate of 18% per annum. The
allowance for doubtful accounts is based on a specific reserve analysis and on a
percentage of accounts receivable, and takes into consideration such factors as
historical write-offs, the economic climate and other factors that could affect
collectability. Write-offs are evaluated on a case by case
basis.
Inventories-- The Company's
inventories consist primarily of purchased retail goods, food and beverage items
and spare parts. Inventories are stated at the lower of cost or fair
value, determined using primarily an average weighted cost
method. The Company records a reserve for estimated shrinkage and
obsolete or unusable inventory.
Property, Plant and Equipment--
Property, plant and equipment is carried at cost net of accumulated
depreciation. Repairs and maintenance are expensed as
incurred. Expenditures that improve the functionality of the related
asset or extend the useful life are capitalized. When property, plant
and equipment is retired or otherwise disposed of, the related gain or loss is
included in operating income. Depreciation is calculated on the
straight-line method generally based on the following useful lives:
|
Estimated
Life
|
|
|
in
Years
|
|
|
Land
improvements
|
10-35
|
|
Buildings
and building improvements
|
7-30
|
|
Machinery
and equipment
|
2-30
|
|
Furniture
and fixtures
|
3-10
|
|
Software
|
3
|
|
Vehicles
|
3-4
|
The
Company capitalizes interest on non-real estate construction projects expected
to take longer than one year to complete and cost more than $1.0
million. The Company records capitalized interest once construction
activities commence and capitalized $0.8 million, $1.6 million and $1.1 million
of interest on non-real estate projects during the years ended July 31, 2009,
2008 and 2007, respectively.
The
Company has certain assets being used in resort operations that were constructed
as amenities in conjunction with real estate development and included in project
costs and expensed as the real estate was sold. Accordingly, there is
no carrying value and no depreciation expense related to these assets in the
Company's Consolidated Financial Statements. These assets were
primarily placed in service from 1995 to 1997 with an original cost of
approximately $33.0 million and an average estimated useful life of 15
years.
Real Estate Held for Sale and
Investment-- The Company capitalizes as real estate held for sale and
investment the original land acquisition cost, direct construction and
development costs, property taxes, interest incurred on costs related to real
estate under development and other related costs, including costs that will be
capitalized as resort depreciable assets associated with mixed-use real estate
development projects for which the Company cannot specifically identify the
components at the time of incurring such cash outflows until the property
reaches its intended use. Sales and marketing expenses are charged
against income in the period incurred. Sales commission expenses are
charged against income in the period that the related revenue is
recorded. The Company records capitalized interest once construction
activities commence and real estate deposits have been utilized in
construction. Interest capitalized on real estate development
projects during the years ended July 31, 2009, 2008 and 2007 was $6.8 million,
$11.8 million and $8.2 million, respectively.
Deferred Financing Costs--
Costs incurred with the issuance of debt securities are included in
deferred charges and other assets, net of accumulated
amortization. Amortization is charged to interest expense over the
respective term of the applicable debt issues.
Goodwill and Intangible
Assets-- The Company has classified as goodwill the cost in excess of
fair value of the net assets of companies acquired in purchase
transactions. The Company's major intangible asset classes are
trademarks, water rights, customer lists, property management contracts, Forest
Service permits and excess reorganization value. Goodwill and certain
indefinite-lived intangible assets, including trademarks, water rights and
excess reorganization value, are not amortized, but are subject to at least
annual impairment testing. The Company tests annually (or more often,
if necessary) for impairment as of May 1. Amortizable intangible
assets are amortized over the shorter of their contractual terms or estimated
useful lives.
The
testing for impairment consists of a comparison of the fair value of the asset
with its carrying value. If the carrying amount of the asset exceeds
its fair value, an impairment will be recognized in an amount equal to that
excess. If the carrying amount of the asset does not exceed the fair
value, no impairment is recognized. The Company determines the
estimated fair value of its reporting units using a discounted cash flow
analysis. The fair value of indefinite-lived intangible assets is
estimated using an income approach. The Company determined that there
was no impairment to goodwill or intangible assets during the years ended July
31, 2009, 2008 and 2007.
Long-lived Assets-- The
Company evaluates potential impairment of long-lived assets and long-lived
assets to be disposed of whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be fully recoverable. If
the sum of the expected cash flows, undiscounted and without interest, is less
than the carrying amount of the asset, an impairment loss is recognized as the
amount by which the carrying amount of the asset exceeds its fair
value. The Company does not believe any events or changes in
circumstances indicating an impairment of the carrying amount of an asset
occurred during the years ended July 31, 2009, 2008 and 2007.
Revenue Recognition--
Mountain and Lodging revenue is derived from a wide variety of sources,
including, among other things, sales of lift tickets (including season passes),
ski school operations, dining operations, retail sales, equipment rentals, hotel
operations, property management services, private club dues and golf course
greens fees, and are recognized as products are delivered or services are
performed. Revenue from arrangements with multiple deliverables is
bifurcated into units of accounting based on relative fair values and revenue is
separately recognized for each unit of accounting. If fair market
value cannot be established for an arrangement, revenue is deferred until all
deliverables have been performed. Revenues from private club
initiation fees are recognized over the estimated life of the club facilities on
a straight-line basis upon inception of the club. As of July 31,
2009, the weighted average remaining period over which the private club
initiation fees will be recognized is approximately 23 years. Certain
club initiation fees are refundable in 30 years after the date of acceptance of
a member. Under these memberships, the difference between the amount
paid by the member and the present value of the refund obligation is recorded as
deferred initiation fee revenue in the Company’s Consolidated Balance Sheet and
recognized as revenue on a straight-line basis over 30 years. The
present value of the refund obligation is recorded as an initiation deposit
liability and accretes over the nonrefundable term using the effective interest
method. The accretion is included in interest expense.
Revenue
from real estate primarily involves the sale of condominium/townhome units and
land parcels (including related improvements). Recognition of revenue
from all condominium unit sales are recorded using the full accrual method and
occurs only upon the following: (i) substantial completion of the entire
development project, (ii) receipt of certificates of occupancy or temporary
certificates of occupancy from local governmental agencies, if applicable, (iii)
closing of the sales transaction including receipt of all, or substantially all,
of sales proceeds (including any deposits previously received), and (iv)
transfer of ownership. The percentage-of-completion method is used
for sales of land parcels where the Company has a commitment to complete certain
improvements or amenities (i.e. access roads, utilities, and site improvements)
at the time of consummation of the sales transaction. The Company
recorded revenue under the percentage-of-completion method of approximately $1.5
million, $1.4 million and $7.1 million for the years ended July 31, 2009, 2008
and 2007, respectively. Contingent future profits, including future
profits from land sales, if any, are recognized only when
received. Additionally, the Company uses the deposit method for sales
that have not been completed for which payments have been received from buyers
(reflected as deferred real estate deposits in the Company’s Consolidated
Balance Sheets), and as such no profit is recognized until the sale is
consummated.
Real Estate Cost of Sales--
Costs of real estate transactions include direct project costs, common cost
allocations (primarily determined on relative sales value) and may include
accrued liabilities for costs to be incurred subsequent to the sales
transaction. The Company utilizes the relative sales value method to
determine cost of sales for individual parcels of real estate or condominium
units sold within a project, when specific identification of costs cannot be
reasonably determined. Estimates of project costs and cost
allocations are reviewed at the end of each financial reporting period until a
project is substantially completed and available for sale. Costs are
revised and reallocated as necessary for material changes on the basis of
current estimates and are reported as a change in estimate in the current
period. The Company recorded changes in estimates that (decreased)
increased real estate cost of sales by approximately $(0.4) million, $0.1
million and $(0.6) million for the years ended July 31, 2009, 2008 and 2007,
respectively. Additionally, for the year ended July 31, 2009 the
Company recorded a $2.8 million charge for an affordable housing commitment
related to the Jackson Hole Golf & Tennis Club (“JHG&TC”) development;
and, for the year ended July 31, 2007 recorded a $7.6 million charge for
incremental remediation costs to complete the JHG&TC cabins that had design
and construction issues.
Deferred Revenue-- In
addition to deferring certain revenue related to private club initiation fees
and the real estate sales as noted above, the Company records deferred revenue
related to the sale of season ski passes. The number of season pass
holder visits is estimated based on historical data and the deferred revenue is
recognized throughout the season based on this estimate, or on a straight-line
basis if usage patterns cannot be determined based on available historical
data.
Reserve Estimates-- The
Company uses estimates to record reserves for certain liabilities, including
medical claims, workers' compensation, third-party loss contingencies,
liabilities for the completion of real estate sold by the Company, property
taxes and loyalty reward programs among other items. The Company
estimates the potential costs related to these liabilities that will be incurred
and records that amount as a liability in its financial
statements. These estimates are reviewed and adjusted as the facts
and circumstances related to the liabilities change. The Company
records legal costs related to defending claims as incurred.
Advertising Costs--
Advertising costs are expensed at the time such advertising
commences. Advertising expense for the years ended July 31, 2009,
2008 and 2007 was $17.9 million, $17.6 million and $17.5 million,
respectively. At both July 31, 2009 and 2008, prepaid advertising
costs of $0.4 million is reported as “other current assets” in the Company's
Consolidated Balance Sheets.
Income Taxes-- The Company’s
provision for income taxes is based on current pre-tax income, changes in
deferred tax assets and liabilities and changes in estimates with regard to
uncertain tax positions. Deferred tax assets and liabilities are
recorded for the estimated future tax effects of temporary differences between
the tax bases of assets and liabilities and amounts reported in the accompanying
Consolidated Balance Sheets and for operating loss and tax credit
carryforwards. The change in deferred tax assets and liabilities for
the period measures the deferred tax provision or benefit for the
period. Effects of changes in enacted tax laws on deferred tax assets
and liabilities are reflected as adjustments to the tax provision or benefit in
the period of enactment. The Company's deferred tax assets have been
reduced by a valuation allowance to the extent it is deemed to be more likely
than not that some or all of the deferred tax assets will not be realized (see
Note 12, Income Taxes, for more information related to deferred tax assets and
liabilities).
On August
1, 2007, the Company adopted the Financial Accounting Standards Board’s (“FASB”)
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
prescribes a two-step process to determine the amount of tax benefit to be
recognized. However, the tax position must be evaluated to determine
the likelihood that it will be sustained upon examination. If the tax
position is deemed “more-likely-than-not” to be sustained, the tax position is
then valued to determine the amount of benefit to be recognized in the financial
statements (see Note 12, Income Taxes, for more information related to the
application of FIN 48).
Fair Value of Financial
Instruments-- The recorded amounts for cash and cash equivalents,
receivables, other current assets, and accounts payable and accrued expenses
approximate fair value due to their short-term nature. The fair value
of amounts outstanding under the Employee Housing Bonds (as defined in Note 4,
Long-Term Debt) approximate book value due to the variable nature of the
interest rate associated with that debt. The fair value of the 6.75%
Notes (as defined in Note 4, Long-Term Debt) is based on quoted market
price. The fair value of the Company's Industrial Development Bonds
(as defined in Note 4, Long-Term Debt) and other long-term debt have been
estimated using discounted cash flow analyses based on current borrowing rates
for debt with similar remaining maturities and ratings. The estimated
fair value of the 6.75% Notes, Industrial Development Bonds and other long-term
debt as of July 31, 2009 and 2008 is presented below (in
thousands):
|
July
31, 2009
|
July
31, 2008
|
|||||||||||
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||
|
Value
|
Value
|
Value
|
Value
|
|||||||||
|
6.75%
Notes
|
$
|
390,000
|
$
|
374,400
|
$
|
390,000
|
$
|
362,700
|
||||
|
Industrial
Development Bonds
|
$
|
42,700
|
$
|
43,702
|
$
|
57,700
|
$
|
57,556
|
||||
|
Other
long-term debt
|
$
|
6,685
|
$
|
6,651
|
$
|
7,036
|
$
|
6,590
|
||||
Stock-Based Compensation--
Stock-based compensation expense is measured at the grant date based upon
the fair value of the portion of the award that are ultimately expected to vest
and is recognized as expense over the applicable vesting period of the award
generally using the straight-line method (see Note 18, Stock Compensation Plan
for more information). The following table shows total stock-based
compensation expense for the years ended July 31, 2009, 2008 and 2007 included
in the Consolidated Statements of Operations (in thousands):
|
Year
Ended July 31,
|
|||||||||||
|
2009
|
2008
|
2007
|
|||||||||
|
Mountain
operating expense
|
$
|
4,826
|
$
|
3,834
|
$
|
3,824
|
|||||
|
Lodging
operating expense
|
1,778
|
1,294
|
1,091
|
||||||||
|
Real
estate operating expense
|
4,129
|
3,136
|
2,083
|
||||||||
|
Pre-tax
stock-based compensation expense
|
10,733
|
8,264
|
6,998
|
||||||||
|
Less:
benefit for income taxes
|
4,071
|
3,134
|
2,628
|
||||||||
|
Net
stock-based compensation expense
|
$
|
6,662
|
$
|
5,130
|
$
|
4,370
|
|||||
Concentration of Credit Risk--
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents and restricted
cash. The Company places its cash and temporary cash investments in
high quality credit institutions, but these investments may be in excess of FDIC
insurance limits. The Company does not enter into financial
instruments for trading or speculative purposes. Concentration of
credit risk with respect to trade and notes receivables is limited due to the
wide variety of customers and markets in which the Company transacts business,
as well as their dispersion across many geographical areas. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral, but does require advance deposits on certain
transactions.
Use of Estimates-- The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the balance
sheet date and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those
estimates.
New Accounting
Pronouncements-- In September 2006, the FASB issued SFAS No. 157,
“Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 does not require any new fair
value measurements, but provides guidance on how to measure fair value by
providing a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value. In February 2008, the FASB
issued Staff Position (“FSP”) 157-2, “Effective Date of FASB Statement No.
157.” This FSP delayed the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually),
to fiscal years beginning after November 15, 2008 (the Company's fiscal year
ending July 31, 2010) and interim periods within the fiscal year of
adoption. The adoption of SFAS 157 for financial assets and
liabilities was effective for the Company on August 1, 2008 and did not have a
material impact on the Company’s financial position or results of
operations. The Company does not anticipate that the adoption of the
provisions of SFAS 157 for nonfinancial assets and liabilities will have a
material impact on the Company’s financial position or results of
operations.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations”
(“SFAS 141R”), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS 141R also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. SFAS 141R
will be applicable prospectively to business combinations consummated after July
31, 2009 (the Company’s fiscal year ending July 31, 2010).
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS 160”), which will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity within the balance
sheet. Currently, noncontrolling interests (minority interests) are
reported as a liability in the Company’s consolidated balance sheet and the
related income (loss) attributable to minority interests is reflected as an
expense (credit) in arriving at net income. Upon adoption of SFAS
160, the Company will be required to report its minority interests as a separate
component of stockholders’ equity and present net income allocable to the
minority interests along with net income attributable to the stockholders of the
Company separately in its consolidated statement of operations. SFAS
160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements
of SFAS 160 shall be applied prospectively. The requirements of
SFAS 160 are effective for the Company beginning August 1, 2009 (the
Company’s fiscal year ending July 31, 2010).
In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation
of Other-Than-Temporary Impairments” (“FSP 115-2”) which establishes a new model
for measuring other-than-temporary impairments for debt securities, including
establishing criteria for when to recognize a write-down through earnings versus
other comprehensive income. The FSP also requires additional interim
and annual disclosures for impaired securities. The requirements of
the FSP were effective for the Company as of July 31, 2009 and did not have a
material impact on the Company’s financial position or results of
operations.
In May
2009, the FASB issued SFAS 165, “Subsequent Events” (“SFAS 165”) which
establishes the general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 requires entities to
recognize in their financial statements the effects of all subsequent events
that provide additional evidence about conditions that existed at the date of
the balance sheet, including the estimates inherent in the process of preparing
financial statements. Entities shall not recognize subsequent events
that provide evidence about conditions that did not exist at the date of the
balance sheet but arose subsequent to that date. In addition,
entities are required to disclose the period through which subsequent events
have been evaluated. The provisions of SFAS 165 were effective for the Company
as of July 31, 2009. Accordingly, the Company evaluated events and
transactions occurring after July 31, 2009 through September 23, 2009, the date
these financial statements were available to be issued.
In June
2009, the FASB issued SFAS 167, “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”) which amends the consolidation guidance under FASB Interpretation
No. 46R, “Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51” (“FIN 46R”). SFAS 167 requires entities to perform a
qualitative assessment in determining the primary beneficiary of a variable
interest entity. The qualitative assessment includes, among other
things, consideration as to whether a variable interest holder has the power to
direct the activities that most significantly impact the economic performance of
the variable interest entity and the obligation to absorb losses or the right to
receive benefits of the variable interest entity that could potentially be
significant to the variable interest entity. Pursuant to SFAS 167,
the requirement to assess whether an entity should be deemed the primary
beneficiary is an on-going reconsideration. The provisions of SFAS
167 are effective for the Company beginning August 1, 2011 (the Company’s fiscal
year ending July 31, 2012). The Company is currently evaluating the
impacts, if any, the adoption of the provisions of SFAS 167 will have
on the Company’s financial position or results of operations.
3. Net
Income Per Common Share
Basic
earnings per share (“EPS”) excludes dilution and is computed by dividing net
income available to holders of common stock by the weighted-average shares
outstanding. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised,
resulting in the issuance of shares of common stock that would then share in the
earnings of the Company. Presented below is basic and diluted EPS for
the years ended July 31, 2009, 2008 and 2007 (in thousands, except per share
amounts):
|
Year
Ended July 31,
|
||||||||||||||||||||||||
|
2009
|
2008
|
2007
|
||||||||||||||||||||||
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||||||||
|
Net
income per share:
|
||||||||||||||||||||||||
|
Net
income
|
$
|
48,950
|
$
|
48,950
|
$
|
102,927
|
$
|
102,927
|
$
|
61,397
|
$
|
61,397
|
||||||||||||
|
Weighted-average
shares outstanding
|
36,546
|
36,546
|
38,616
|
38,616
|
38,849
|
38,849
|
||||||||||||||||||
|
Effect
of dilutive securities
|
--
|
127
|
--
|
318
|
--
|
525
|
||||||||||||||||||
|
Total
shares
|
36,546
|
36,673
|
38,616
|
38,934
|
38,849
|
39,374
|
||||||||||||||||||
|
Net
income per share
|
$
|
1.34
|
$
|
1.33
|
$
|
2.67
|
$
|
2.64
|
$
|
1.58
|
$
|
1.56
|
||||||||||||
The
number of shares issuable on the exercise of share based awards that were
excluded from the calculation of diluted net income per share because the effect
of their inclusion would have been anti-dilutive totaled 795,000, 63,000 and
18,000 for the years ended July 31, 2009, 2008 and 2007,
respectively.
4. Long-Term
Debt
Long-term
debt as of July 31, 2009 and 2008 is summarized as follows (in
thousands):
|
Fiscal
Year
|
July
31,
|
July
31,
|
|||||
|
Maturity
(i)
|
2009
|
2008
|
|||||
|
Credit
Facility Revolver (a)
|
2012
|
$
|
--
|
$
|
--
|
||
|
SSV
Facility (b)
|
2011
|
--
|
--
|
||||
|
Industrial
Development Bonds (c)
|
2011-2020
|
42,700
|
57,700
|
||||
|
Employee
Housing Bonds (d)
|
2027-2039
|
52,575
|
52,575
|
||||
|
Non-Recourse
Real Estate Financings (e)
|
--
|
--
|
49,394
|
||||
|
6.75%
Senior Subordinated Notes (f)
|
2014
|
390,000
|
390,000
|
||||
|
Other
(g)
|
2010-2029
|
6,685
|
7,036
|
||||
|
Total
debt
|
491,960
|
556,705
|
|||||
|
Less: Current
maturities (h)
|
352
|
15,355
|
|||||
|
Long-term
debt
|
$
|
491,608
|
$
|
541,350
|
|
(a)
|
On
March 20, 2008, The Vail Corporation (“Vail Corp.”), a wholly-owned
subsidiary of the Company, exercised the accordion feature under the
revolver component of its senior credit facility (the “Credit Facility”)
as provided in the existing Fourth Amended and Restated Credit Agreement,
dated as of January 28, 2005, as amended, between The Vail Corp., Bank of
America, N.A. as administrative agent and the Lenders party thereto (the
“Credit Agreement”) governing the Company’s Credit Facility and the
Indenture, dated as of January 29, 2004 among the Company, the guarantors
therein and The Bank of New York Mellon Trust Company, N.A. as Trustee
(“Indenture”), governing the 6.75% Senior Subordinated Notes due 2014
(“6.75% Notes”), which expanded the borrowing capacity from $300.0 million
to $400.0 million at the same terms existing in the Credit
Agreement.
Vail
Corp. obligations under the Credit Agreement are guaranteed by the Company
and certain of its subsidiaries and are collateralized by a pledge of all
of the capital stock of Vail Corp., substantially all of its subsidiaries
and the Company's interest in SSV. The proceeds of loans made
under the Credit Agreement may be used to fund the Company's working
capital needs, capital expenditures, investment in real estate,
acquisitions and other general corporate purposes, including the issuance
of letters of credit. Borrowings under the Credit Agreement
bear interest annually at the Company's option currently at the rate of
(i) LIBOR plus 0.5% (0.78% at July 31, 2009) or (ii) the Agent's prime
lending rate plus, in certain circumstances, a margin (3.25% at July 31,
2009). Interest rate margins fluctuate based upon the ratio of
the Company's Net Funded Debt to Adjusted EBITDA (as defined in the Credit
Agreement) on a trailing twelve-month basis. The Credit
Agreement also includes a quarterly unused commitment fee, which is equal
to a percentage determined by the Net Funded Debt to Adjusted EBITDA
ratio, as defined in the Credit Agreement, times the daily amount by which
the Credit Agreement commitment exceeds the total of outstanding loans and
outstanding letters of credit. The unused amounts are
accessible to the extent that the Net Funded Debt to Adjusted EBITDA ratio
does not exceed the maximum ratio allowed at quarter-end. The
unused amount available for borrowing under the Credit Agreement was
$304.7 million as of July 31, 2009, net of certain letters of credit of
$95.3 million outstanding under the Credit Agreement. The
Credit Agreement provides for affirmative and negative covenants that
restrict, among other things, the Company's ability to incur indebtedness,
dispose of assets, make capital expenditures, make distributions and make
investments. In addition, the Credit Agreement includes the
following restrictive financial covenants: Net Funded Debt to Adjusted
EBITDA ratio, Interest Coverage ratio, and Minimum Net Worth (each as
defined in the Credit Agreement).
|
|
(b)
|
The
SSV Credit Facility (“SSV Facility”) provides for financing up to an
aggregate $33.0 million consisting of (i) an $18.0 million working capital
revolver, (ii) a $10.0 million reducing revolver and (iii) a $5.0 million
acquisition revolver. Obligations under the SSV Facility are
collateralized by a first priority security interest in all the assets of
SSV ($91.6 million at July 31, 2009). Availability under the
SSV Facility is based on the book values of accounts receivable,
inventories and rental equipment of SSV. Borrowings bear
interest annually at SSV's option of (i) LIBOR plus 0.875% (1.15% at July
31, 2009) or (ii) U.S. Bank's prime rate minus 1.75% (1.50% at July 31,
2009). Proceeds under the working capital revolver are for
SSV's seasonal working capital needs. No principal payments are
due until maturity, and principal may be drawn and repaid at any
time. Principal under the reducing revolver may be drawn and
repaid at any time. The reducing revolver commitments decrease
by $0.3 million on January 31, April 30, July 31 and October 31 of each
year beginning January 31, 2006 ($5.3 million available at July 31,
2009). Any outstanding balance in excess of the reduced
commitment amount is due on the day of each commitment
reduction. The acquisition revolver is to be utilized to make
acquisitions subject to U.S. Bank's approval. Principal under
the acquisition revolver may be drawn and repaid at any
time. The acquisition revolver commitments decrease by $0.2
million on January 31, April 30, July 31 and October 31 of each year
beginning January 31, 2007 ($3.3 million available at July 31,
2009). Any outstanding balance in excess of the reduced
commitment amount is due on the day of each commitment
reduction. The SSV Facility contains certain restrictive
financial covenants, including a Consolidated Leverage Ratio and a Minimum
Fixed Charge Coverage Ratio (each as defined in the underlying credit
agreement).
|
|
(c)
|
The
Company has outstanding $42.7 million of industrial development bonds
(collectively, the “Industrial Development Bonds”), of which $41.2 million
were issued by Eagle County, Colorado (the “Eagle County Bonds”) and
mature, subject to prior redemption, on August 1, 2019. These
bonds accrue interest at 6.95% per annum, with interest being payable
semi-annually on February 1 and August 1. The promissory note
with respect to the Eagle County Bonds between Eagle County and the
Company is collateralized by the Forest Service permits for Vail and
Beaver Creek. The Series 1991 Sports Facilities Refunding
Revenue Bonds, issued by Summit County, Colorado, have an aggregate
outstanding principal amount of $1.5 million maturing in the year ending
July 31, 2011 and bear interest at 7.375%. The promissory note
with respect to the Summit County Bonds between Summit County and the
Company is pledged and endorsed to the Bank of New York as Trustee under
the Indenture of Trust underlying the Summit County Bonds. The
promissory note is also collateralized in accordance with a guaranty from
Ralston Purina Company (subsequently assumed by Vail Corp. to the Trustee
for the benefit of the registered owners of the bonds). On
August 29, 2008, $15.0 million of borrowings under the Series 1990 Sports
Facilities Refunding Revenue Bonds, issued by Summit County, Colorado was
paid in full.
|
|
(d)
|
The
Company has recorded for financial reporting purposes the outstanding debt
of four Employee Housing Entities (each an “Employee Housing Entity” and
collectively the “Employee Housing Entities”): Breckenridge Terrace,
Tarnes, BC Housing and Tenderfoot. The proceeds of the Employee
Housing Bonds were used to develop apartment complexes designated
primarily for use by the Company's seasonal employees at its mountain
resorts. The Employee Housing Bonds are variable rate,
interest-only instruments with interest rates tied to LIBOR plus 0% to
0.05% (0.28% to 0.33% at July 31, 2009). Interest on the
Employee Housing Bonds is paid monthly in arrears and the interest rate is
adjusted weekly. No principal payments are due on the Employee
Housing Bonds until maturity. Each Employee Housing Entity’s
bonds were issued in two series. The bonds for each Employee
Housing Entity are backed by letters of credit issued under the Credit
Facility. The table below presents the principal amounts
outstanding for the Employee Housing Bonds as of July 31, 2009 (in
thousands):
|
|
Maturity
(i)
|
Tranche
A
|
Tranche
B
|
Total
|
|||||||
|
Breckenridge
Terrace
|
2039
|
$
|
14,980
|
$
|
5,000
|
$
|
19,980
|
|||
|
Tarnes
|
2039
|
8,000
|
2,410
|
10,410
|
||||||
|
BC
Housing
|
2027
|
9,100
|
1,500
|
10,600
|
||||||
|
Tenderfoot
|
2035
|
5,700
|
5,885
|
11,585
|
||||||
|
Total
|
$
|
37,780
|
$
|
14,795
|
$
|
52,575
|
|
(e)
|
In
March 2007, The Chalets at The Lodge at Vail, LLC (“Chalets”), a
wholly-owned subsidiary of the Company, entered into a construction loan
agreement (“Chalets Facility”) in the amount of up to $123.0 million with
Wells Fargo, as administrative agent, book manager, and joint lead
arranger, U.S. Bank as joint lead arranger and syndication agent, and the
lenders party thereto. Borrowings under the Chalets Facility
were non-revolving and had to be used for the payment of certain costs
associated with the construction and development of The Lodge at Vail
Chalets, a residential development consisting of 13 luxury condominium
units, as well as a private mountain club, a spa, skier services building
and parking structure. As of July 31, 2008
borrowings under the Chalets Facility were $49.4
million. The Chalets Facility was paid in full during the year
ended July 31, 2009.
|
|
(f)
|
The
Company has outstanding $390.0 million of 6.75% Notes issued in January
2004. The 6.75% Notes have a fixed annual interest rate of
6.75% with interest due semi-annually on February 15 and August
15. No principal payments are due to be paid until
maturity. The Company has certain early redemption options
under the terms of the 6.75% Notes. The premium for early
redemption of the 6.75% Notes ranges from 0% to 3.375%, depending on the
date of redemption. The 6.75% Notes are subordinated to certain
of the Company's debts, including the Credit Facility. The
Company's payment obligations under the 6.75% Notes are jointly and
severally guaranteed by substantially all of the Company's current and
future domestic subsidiaries (see Note 20, Guarantor Subsidiaries and
Non-Guarantor Subsidiaries). The Indenture governing the 6.75%
Notes contains restrictive covenants which, among other things, limit the
ability of the Company and its Restricted Subsidiaries (as defined in the
Indenture) to (i) borrow money or sell preferred stock, (ii) create liens,
(iii) pay dividends on or redeem or repurchase stock, (iv) make certain
types of investments, (v) sell stock in the Restricted Subsidiaries, (vi)
create restrictions on the ability of the Restricted Subsidiaries to pay
dividends or make other payments to the Company, (vii) enter into
transactions with affiliates, (viii) issue guarantees of debt and (ix)
sell assets or merge with other
companies.
|
|
(g)
|
Other
obligations primarily consist of a $6.2 million note outstanding to the
Colorado Water Conservation Board, which matures in the year ending July
31, 2029, and capital leases totaling $0.5 million. Other
obligations, including the Colorado Water Conservation Board note and the
capital leases, bear interest at rates ranging from 3.5% to 6.0% and have
maturities ranging from in the year ending July 31, 2010 to the year
ending July 31, 2029.
|
|
(h)
|
Current
maturities represent principal payments due in the next 12
months.
|
|
(i)
|
Maturities
are based on the Company's July 31 fiscal year
end.
|
Aggregate
maturities for debt outstanding as of July 31, 2009 reflected by fiscal year are
as follows (in thousands):
|
Total
|
||
|
2010
|
$
|
352
|
|
2011
|
1,827
|
|
|
2012
|
305
|
|
|
2013
|
319
|
|
|
2014
|
390,219
|
|
|
Thereafter
|
98,938
|
|
|
Total
debt
|
$
|
491,960
|
The
Company recorded gross interest expense of $35.2 million, $44.1 million and
$41.9 million for the years ended July 31, 2009, 2008 and 2007, respectively, of
which $2.0 million, $2.5 million and $1.9 million was amortization of deferred
financing costs. The Company capitalized $7.6 million, $13.4 million
and $9.3 million of interest during the years ended July 31, 2009, 2008 and
2007, respectively. The Company was in compliance with all of its
financial and operating covenants required to be maintained under its debt
instruments for all periods presented.
5. Supplementary
Balance Sheet Information
The
composition of property, plant and equipment follows (in
thousands):
|
July
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Land
and land improvements
|
$
|
261,263
|
$
|
265,123
|
||||
|
Buildings
and building improvements
|
750,063
|
685,393
|
||||||
|
Machinery
and equipment
|
496,963
|
457,825
|
||||||
|
Furniture
and fixtures
|
174,770
|
149,251
|
||||||
|
Software
|
44,584
|
39,605
|
||||||
|
Vehicles
|
33,991
|
28,829
|
||||||
|
Construction
in progress
|
40,724
|
80,601
|
||||||
|
Gross
property, plant and equipment
|
1,802,358
|
1,706,627
|
||||||
|
Accumulated
depreciation
|
(744,700
|
)
|
(649,790
|
)
|
||||
|
Property,
plant and equipment, net
|
$
|
1,057,658
|
$
|
1,056,837
|
||||
Depreciation
expense for the years ended July 31, 2009, 2008 and 2007 totaled $106.6 million,
$93.3 million and $84.0 million, respectively.
The
composition of intangible assets follows (in thousands):
|
July
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Indefinite
lived intangible assets
|
||||||||
|
Trademarks
|
$
|
66,013
|
$
|
61,714
|
||||
|
Water
rights
|
10,684
|
10,684
|
||||||
|
Excess
reorganization value
|
14,145
|
14,145
|
||||||
|
Other
intangible assets
|
6,200
|
6,200
|
||||||
|
Gross
indefinite-lived intangible assets
|
97,042
|
92,743
|
||||||
|
Accumulated
amortization
|
(24,713
|
)
|
(24,713
|
)
|
||||
|
Indefinite-lived
intangible assets, net
|
72,329
|
68,030
|
||||||
|
Goodwill
|
||||||||
|
Goodwill
|
185,304
|
159,636
|
||||||
|
Accumulated
amortization
|
(17,354
|
)
|
(17,354
|
)
|
||||
|
Goodwill,
net
|
167,950
|
142,282
|
||||||
|
Amortizable
intangible assets
|
||||||||
|
Customer
lists
|
19,414
|
17,814
|
||||||
|
Property
management contracts
|
4,412
|
4,412
|
||||||
|
Forest
Service permits
|
5,902
|
5,905
|
||||||
|
Other
intangible assets
|
16,759
|
15,159
|
||||||
|
Gross
amortizable intangible assets
|
46,487
|
43,290
|
||||||
|
Accumulated
amortization
|
||||||||
|
Customer
lists
|
(17,934
|
)
|
(17,814
|
)
|
||||
|
Property
management contracts
|
(3,809
|
)
|
(3,726
|
)
|
||||
|
Forest
Service permits
|
(2,348
|
)
|
(2,174
|
)
|
||||
|
Other
intangible assets
|
(15,296
|
)
|
(15,076
|
)
|
||||
|
Accumulated
amortization
|
(39,387
|
)
|
(38,790
|
)
|
||||
|
Amortizable
intangible assets, net
|
7,100
|
4,500
|
||||||
|
Total
gross intangible assets
|
328,833
|
295,669
|
||||||
|
Total
accumulated amortization
|
(81,454
|
)
|
(80,857
|
)
|
||||
|
Total
intangible assets, net
|
$
|
247,379
|
$
|
214,812
|
||||
Amortization
expense for intangible assets subject to amortization for the years ended July
31, 2009, 2008 and 2007 totaled $0.6 million, $0.5 million and $3.7 million,
respectively, and is estimated to be approximately $0.7 million annually, on
average, for the next five fiscal years.
The
changes in the net carrying amount of goodwill allocated between the Company’s
segments for the years ended July 31, 2009 and 2008 are as follows (in
thousands):
|
Mountain
|
Lodging
|
Goodwill,
net
|
|||||||
|
Balance
at July 31, 2007
|
$
|
107,139
|
$
|
34,560
|
$
|
141,699
|
|||
|
Acquisition
|
583
|
--
|
583
|
||||||
|
Balance
at July 31, 2008
|
107,722
|
34,560
|
142,282
|
||||||
|
Acquisition
|
--
|
25,668
|
25,668
|
||||||
|
Balance
at July 31, 2009
|
$
|
107,722
|
$
|
60,228
|
$
|
167,950
|
On
November 1, 2008, the Company acquired substantially all of the assets of CME, a
resort ground transportation business, for a total consideration of $38.2
million, as well as $0.9 million to reimburse the seller for certain new capital
expenditures as provided for in the purchase agreement. The
acquisition was accounted for as a business purchase combination using the
purchase method of accounting. The purchase price was allocated to
tangible and identifiable intangible assets acquired based on their estimated
fair values at the acquisition date. The Company has completed its
preliminary purchase price allocation and has recorded $25.7 million in
goodwill, $4.3 million in indefinite- lived intangible assets, $6.1 million of
fixed assets and $3.2 million of other intangibles (with a weighted-average
amortization period of 8.3 years) on the date of acquisition. The
operating results of CME are reported within the Lodging segment. In
December 2007, the Company acquired a retail/rental business, resulting in $0.6
million of goodwill.
The
composition of accounts payable and accrued expenses follows (in
thousands):
|
July
31,
|
||||||
|
2009
|
2008
|
|||||
|
Trade
payables
|
$
|
42,591
|
$
|
53,187
|
||
|
Real
estate development payables
|
45,681
|
52,574
|
||||
|
Deferred
revenue
|
57,171
|
45,805
|
||||
|
Deferred
real estate and other deposits
|
21,576
|
58,421
|
||||
|
Accrued
salaries, wages and deferred compensation
|
15,202
|
22,397
|
||||
|
Accrued
benefits
|
23,496
|
22,777
|
||||
|
Accrued
interest
|
14,002
|
14,552
|
||||
|
Liability
to complete real estate projects, short term
|
3,972
|
4,199
|
||||
|
Other
accruals
|
21,845
|
20,270
|
||||
|
Total
accounts payable and accrued expenses
|
$
|
245,536
|
$
|
294,182
|
||
The
composition of other long-term liabilities follows (in thousands):
|
July
31,
|
||||||
|
2009
|
2008
|
|||||
|
Private
club deferred initiation fee revenue and deposits
|
$
|
153,265
|
$
|
121,947
|
||
|
Deferred
real estate deposits
|
32,792
|
45,775
|
||||
|
Other
long-term liabilities
|
47,112
|
15,921
|
||||
|
Total
other long-term liabilities
|
$
|
233,169
|
$
|
183,643
|
||
6. Investments
in Affiliates
The
Company held the following investments in equity method affiliates as of July
31, 2009:
|
Equity
Method Affiliates
|
Ownership
Interest
|
||
|
Slifer,
Smith, and Frampton/Vail Associates Real Estate, LLC
(“SSF/VARE”)
|
50
|
%
|
|
|
KRED
|
50
|
%
|
|
|
Clinton
Ditch and Reservoir Company
|
43
|
%
|
|
The
Company had total net investments in equity method affiliates of $7.8 million
and $8.6 million as of July 31, 2009 and 2008, respectively, classified as
“deferred charges and other assets” in the accompanying Consolidated Balance
Sheets. The amount of retained earnings that represent undistributed
earnings of 50-percent-or-less-owned entities accounted for by the equity method
was $4.6 million and $5.5 million as of July 31, 2009 and 2008,
respectively. During the years ended July 31, 2009, 2008 and 2007,
distributions in the amounts of $1.7 million, $2.3 million and $5.8 million,
respectively, were received from equity method affiliates.
7. Variable
Interest Entities
The
Company is the primary beneficiary of the Employee Housing Entities, which are
Variable Interest Entities (“VIEs”), and has consolidated them in its
Consolidated Financial Statements. As a group, as of July 31, 2009,
the Employee Housing Entities had total assets of $36.2 million (primarily
recorded in property, plant and equipment, net) and total liabilities of $70.0
million (primarily recorded in long-term debt as “Employee Housing
Bonds”). The Company has issued under its Credit Facility $53.4
million letters of credit related to Employee Housing Bonds. The
letters of credit would be triggered in the event that one of the entities
defaults on required payments. The letters of credit have no default
provisions.
The
Company is the primary beneficiary of Avon Partners II, LLC (“APII”), which is a
VIE. APII owns commercial space and the Company currently leases
substantially all of that space. APII had total assets of $5.3
million (primarily recorded in property, plant and equipment) and no debt as of
July 31, 2009.
The
Company, through various lodging subsidiaries, manages hotels in which the
Company has no ownership interest in the entities that own such
hotels. The Company has extended a $2.0 million note receivable to
one of these entities. These entities were formed by unrelated third
parties to acquire, own, operate and realize the value in resort hotel
properties. The Company managed the day-to-day operations of six
hotel properties as of July 31, 2009. The Company has determined that
the entities that own the hotel properties are VIEs, and the management
contracts are significant variable interests in these VIEs. The
Company has also determined that it is not the primary beneficiary of these
entities and, accordingly, is not required to consolidate any of these
entities. Based upon the latest information provided by these third
parties, these VIEs had estimated total assets of approximately $229 million
(unaudited) and total liabilities of approximately $151 million
(unaudited). The Company's maximum exposure to loss as a result of
its involvement with these VIEs is limited to the note receivable and accrued
interest of approximately $2.3 million and the net book value of the intangible
asset associated with a management agreement in the amount of $0.6 million as of
July 31, 2009.
8. Fair
Value Measurements
SFAS 157
establishes how reporting entities should measure fair value for measurement and
disclosure purposes. SFAS 157 does not require any new fair value
measurements but rather establishes a common definition of fair value applicable
to all assets and liabilities measured at fair value. SFAS 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value hierarchy established by SFAS
157 prioritizes the inputs into valuation techniques used to measure fair
value. Accordingly, the Company uses valuation techniques which
maximize the use of observable inputs and minimize the use of unobservable
inputs when determining fair value. The three levels of the hierarchy
are as follows:
Level 1:
Inputs that reflect unadjusted quoted prices in active markets that are
accessible to the Company for identical assets or liabilities;
Level 2:
Inputs include quoted prices for similar assets and liabilities in active and
inactive markets or that are observable for the asset or liability either
directly or indirectly; and
Level 3:
Unobservable inputs which are supported by little or no market
activity.
The table
below summarizes the Company’s financial assets and liabilities measured at fair
value in accordance with SFAS 157 as of July 31, 2009 (all other financial
assets and liabilities applicable to SFAS 157 are immaterial) (in
thousands):
|
Fair
Value Measurements at Reporting Date Using
|
||||||||||||
|
Balance
at
|
||||||||||||
|
July
31,
|
||||||||||||
|
Description
|
2009
|
Level
1
|
Level
2
|
Level
3
|
||||||||
|
Cash
equivalents
|
$
|
61,215
|
$
|
47,915
|
$
|
13,300
|
$
|
--
|
||||
The
Company’s cash equivalents include money market funds and time deposits which
are measured using Level 1 and Level 2 inputs utilizing quoted market prices or
pricing models whereby all significant inputs are either observable or
corroborated by observable market data.
9. Relocation
and Separation Charges
In
February 2006, the Company announced a plan to relocate its corporate
headquarters; the plan was formally approved by the Company’s Board of Directors
in April 2006. The relocation process (which also included the
consolidation of certain other operations of the Company) was completed by July
31, 2007. Charges associated with the relocation for the year ended
July 31, 2007 were $1.4 million. This amount excludes any of the
benefits realized from the relocation and consolidation of offices.
10. Sale
of Business
On April
30, 2007, the Company sold its 54.5% interest in RTP to RTP’s minority
shareholder for approximately $3.5 million. As part of this
transaction the Company retained source code rights to its internal use software
and internet solutions. The net impact to income before provision for
income taxes in the accompanying Consolidated Statement of Operations for the
year ended July 31, 2007 from this transaction was a gain of $0.1 million
comprised of (i) a net loss of $0.6 million on the sale of its investment in
RTP, which was recorded in “loss on sale of business, net” and (ii) a net gain
of $0.7 million related to the elimination of the put option liability to RTP’s
minority shareholder and the write-off of the associated put option intangible
asset which was recorded in “gain on put option, net”.
11. Put
and Call Option
On March
31, 2007, the Company acquired 20% of GSSI LLC’s (“GSSI”), the minority
shareholder in SSV, ownership interest in SSV for $8.4 million. As a
result of this transaction, the Company holds an approximate 69.3% ownership
interest in SSV. In addition, the put and call rights for GSSI’s
remaining interest in SSV were extended to begin August 1, 2010, as discussed
below, and the existing management agreement was extended to coincide with the
exercise of the remaining put and call rights.
The
Company’s and GSSI’s remaining put and call rights are as follows: (i) beginning
August 1, 2010 and each year thereafter, each of the Company and GSSI have the
right to call or put, respectively, 100% of GSSI's ownership interest in SSV to
the Company during certain periods each year and (ii) GSSI has the right to put
to the Company 100% of its ownership interest in SSV at any time after GSSI has
been removed as manager of SSV or after an involuntary transfer of the Company's
ownership interest in SSV has occurred. The put and call pricing is
generally based on the trailing twelve month EBITDA (as defined in the operating
agreement) of SSV for the fiscal period ended prior to the commencement of the
put or call period, as applicable. As of July 31, 2009, the estimated
price at which the put/call option for the remaining interest could be expected
to be settled was $15.4 million.
12. Income
Taxes
As of
July 31, 2009, the Company had utilized all available Federal net operating loss
(“NOL”) carryforwards. These NOL carryforwards expired in the year
ended July 31, 2008 and were limited in deductibility each year under Section
382 of the Internal Revenue Code. The Company had only been able to
use these NOL carryforwards to the extent of approximately $8.0 million per year
through December 31, 2007 (the “Section 382 Amount”). However, during
the year ended July 31, 2005, the Company amended previously filed tax returns
(for tax years 1997-2002) in an effort to remove the restrictions under Section
382 of the Internal Revenue Code on approximately $73.8 million of NOL
carryforwards to reduce future taxable income. As a result, the
Company requested a refund related to the amended returns in the amount of $6.2
million and has reduced its federal tax liability in the amount of $19.6 million
in subsequent returns. These NOL carryforwards relate to fresh start
accounting from the Company's reorganization in 1992. During the year
ended July 31, 2006, the Internal Revenue Service (“IRS”) completed its
examination of the Company’s filing position in these amended returns and
disallowed the Company’s request for refund and its position to remove the
restrictions under Section 382 of the Internal Revenue
Code. Consequently, the accompanying financial statements and table
of deferred items and components of the tax provision have only recognized
benefits related to the NOL carryforwards to the extent of the Section 382
Amount reported in its tax returns prior to its amendments. The
Company appealed the examiner's disallowance of these NOL carryforwards to the
Office of Appeals. In December 2008, the Office of Appeals denied the
Company’s appeal, as well as a request for mediation. The Company
disagrees with the IRS interpretation disallowing the utilization of the NOL’s
and in August 2009 filed a complaint in the United States District Court for the
District of Colorado seeking recovery of $6.2 million in over payments that were
previously denied by the IRS, plus interest. The Company cannot
predict the ultimate outcome of this matter or when this matter will be
resolved. If the Company is unsuccessful in this matter, it will not
negatively impact the Company’s results of operations.
The
Company has state NOL carryforwards (primarily California) totaling $25.1
million which expire by the year ending July 31, 2015. As of July 31,
2009, the Company has recorded a valuation allowance of $1.6 million, primarily
due to California NOL carryforwards generated in prior years, as the Company has
determined that it is more likely than not that these NOL carryforwards will not
be realized.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
income tax purposes. Significant components of the Company's deferred
tax liabilities and assets are as follows (in thousands):
|
July
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Deferred
income tax liabilities:
|
||||||||
|
Fixed
assets
|
$
|
108,417
|
$
|
89,343
|
||||
|
Intangible
assets
|
27,878
|
26,542
|
||||||
|
Real
estate and other investments
|
944
|
--
|
||||||
|
Other,
net
|
2,647
|
2,455
|
||||||
|
Total
|
139,886
|
118,340
|
||||||
|
Deferred
income tax assets:
|
||||||||
|
Deferred
membership revenue
|
28,722
|
30,807
|
||||||
|
Real
estate and other investments
|
652
|
11,007
|
||||||
|
Deferred
compensation and other accrued expenses
|
18,315
|
14,083
|
||||||
|
Net
operating loss carryforwards other tax credits
|
1,444
|
2,775
|
||||||
|
Other,
net
|
1,404
|
1,119
|
||||||
|
Total
|
50,537
|
59,791
|
||||||
|
Valuation
allowance for deferred income taxes
|
(1,588
|
)
|
(1,588
|
)
|
||||
|
Deferred
income tax assets, net of valuation allowance
|
48,949
|
58,203
|
||||||
|
Net
deferred income tax liability
|
$
|
90,937
|
$
|
60,137
|
||||
The net
current and non-current components of deferred income taxes recognized in the
Consolidated Balance Sheets are as follows (in thousands):
|
July
31,
|
|||||||
|
2009
|
2008
|
||||||
|
Net
current deferred income tax asset
|
$
|
21,297
|
$
|
15,142
|
|||
|
Net
non-current deferred income tax liability
|
112,234
|
75,279
|
|||||
|
Net
deferred income tax liability
|
$
|
90,937
|
$
|
60,137
|
|||
Significant
components of the provision (benefit) for income taxes are as follows (in
thousands):
|
Year
Ended July 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Current:
|
||||||||||||
|
Federal
|
$
|
(242
|
)
|
$
|
50,169
|
$
|
37,962
|
|||||
|
State
|
119
|
6,710
|
5,566
|
|||||||||
|
Total
current
|
(123
|
)
|
56,879
|
43,528
|
||||||||
|
Deferred:
|
||||||||||||
|
Federal
|
27,358
|
5,533
|
(4,125
|
)
|
||||||||
|
State
|
3,409
|
674
|
(149
|
)
|
||||||||
|
Total
deferred
|
30,767
|
6,207
|
(4,274
|
)
|
||||||||
|
Provision
for income taxes
|
$
|
30,644
|
$
|
63,086
|
$
|
39,254
|
||||||
A
reconciliation of the income tax provision from continuing operations and the
amount computed by applying the United States Federal statutory income tax rate
to income before income taxes is as follows:
|
Year
Ended July 31,
|
|||||||||||
|
2009
|
2008
|
2007
|
|||||||||
|
At
U.S. Federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
|||||
|
State
income tax, net of Federal benefit
|
2.9
|
%
|
2.9
|
%
|
3.5
|
%
|
|||||
|
Nondeductible
compensation
|
--
|
%
|
--
|
%
|
0.4
|
%
|
|||||
|
Nondeductible
meals or entertainment
|
0.2
|
%
|
0.1
|
%
|
0.2
|
%
|
|||||
|
General
business credits
|
(0.8
|
)
|
%
|
(0.4
|
)
|
%
|
(0.6
|
)
|
%
|
||
|
Other
|
1.2
|
%
|
0.4
|
%
|
0.5
|
%
|
|||||
|
38.5
|
%
|
38.0
|
%
|
39.0
|
%
|
||||||
The
Company adopted the provisions of FIN 48 on August 1, 2007. As of the
date of adoption, the accrual for uncertain tax positions was $13.1
million. The adoption of FIN 48 did not impact the amount of the
Company’s unrecognized tax benefits. However, the adoption did result
in a reclassification of $2.8 million of liabilities for unrecognized tax
benefits from deferred income tax liabilities to other long-term liabilities to
conform to the balance sheet presentation requirements of FIN 48. A
reconciliation of the beginning and ending amount of unrecognized tax benefits
associated with uncertain tax positions, excluding associated deferred tax
benefits and accrued interest and penalties, if applicable, is as follows (in
thousands):
|
Unrecognized
Tax Benefits
|
|||
|
Balance
as of August 1, 2007
|
$
|
12,257
|
|
|
Additions
based on tax positions related to the current year
|
--
|
||
|
Additions
for tax positions of prior years
|
6,331
|
||
|
Reductions
for tax positions of prior years
|
(237
|
)
|
|
|
Settlements
|
(555
|
)
|
|
|
Balance
as of July 31, 2008
|
$
|
17,796
|
|
|
Additions
based on tax positions related to the current year
|
--
|
||
|
Additions
for tax positions of prior years
|
9,524
|
||
|
Reductions
for tax positions of prior years
|
--
|
||
|
Settlements
|
--
|
||
|
Balance
as of July 31, 2009
|
$
|
27,320
|
|
As of
July 31, 2009, the amount of unrecognized tax benefits recorded in other
long-term liabilities was $27.3 million, of which $1.5 million would, if
recognized, decrease the Company’s effective tax rate. The Company’s
policy is to accrue income tax related interest and penalties, if applicable,
within income tax expense. As of July 31, 2009 and 2008, accrued
interest and penalties, net of tax, is $2.4 million and $1.9 million,
respectively. For the years ended July 31, 2009, 2008 and 2007, the
Company recognized $0.5 million, $1.1 million and $0.8 million of interest
expense and penalties, net of tax, respectively.
The
Company files income tax returns in the U.S. federal jurisdiction and various
state jurisdictions. The IRS has completed its examination of the Company’s tax
returns for tax years 2001 through 2003 and has issued a report of its
findings. As discussed above, the examiner’s primary finding is the
disallowance of the Company’s position to remove the restrictions under Section
382 of the Internal Revenue Code of approximately $73.8 million of NOL
carryforwards; however, the Company has filed a complaint in Federal
court. With the exception of the utilization of NOL carryforwards as
discussed above, the Company is no longer subject to U.S. Federal examinations
for tax years prior to 2006. With few exceptions, the Company is no
longer subject to examination by various state jurisdictions for tax years prior
to 2004.
13. Related
Party Transactions
The
Company has the right to appoint 4 of 9 directors of the Beaver Creek Resort
Company of Colorado (“BCRC”), a non-profit entity formed for the benefit of
property owners and certain others in Beaver Creek. The Company has a
management agreement with the BCRC, renewable for one-year periods, to provide
management services on a fixed fee basis. Management fees and
reimbursement of operating expenses paid to the Company under its agreement with
the BCRC during the years ended July 31, 2009, 2008 and 2007 totaled $8.0
million, $7.5 million and $7.1 million, respectively.
SSF/VARE
is a real estate brokerage with multiple locations in Eagle and Summit Counties,
Colorado in which the Company has a 50% ownership interest. SSF/VARE
is the broker for several of the Company's developments. The Company
recorded net real estate commissions expense of approximately $9.6 million,
$14.7 million and $3.4 million for payments made to SSF/VARE during the years
ended July 31, 2009, 2008 and 2007, respectively. SSF/VARE leases
space for real estate offices from the Company. The Company
recognized approximately $0.5 million, $0.4 million and $0.4 million in revenue
related to these leases for the years ended July 31, 2009, 2008 and 2007,
respectively.
In
December 2008, Robert A. Katz, Chairman of the Board of Directors and Chief
Executive Officer of the Company, purchased a unit at The Lodge at Vail Chalets
project located near the Vista Bahn at the base of Vail Mountain for a total
purchase price of $14.0 million. The sale of the unit by the Company
to Mr. Katz was approved by the Board of Directors of the Company in accordance
with the Company's related party transactions policy.
In
December 2004, Adam Aron, the former Chairman of the Board of Directors and
Chief Executive Officer of the Company, and Ronald Baron, an affiliate of a
significant shareholder in the Company, reserved the purchase of condominium
units at the Arrabelle at Vail Square project. In July 2008, Mr. Aron
and Mr. Baron each purchased a condominium unit for $4.6 million and $15.6
million, respectively. The sale of the condominiums was approved by
the Board of Directors of the Company in accordance with the Company's related
party transactions policy.
14. Commitments
and Contingencies
Metropolitan
Districts
The
Company credit-enhances $8.5 million of bonds issued by Holland Creek
Metropolitan District (“HCMD”) through an $8.6 million letter of credit issued
against the Company's Credit Facility. HCMD's bonds were issued and
used to build infrastructure associated with the Company's Red Sky Ranch
residential development. The Company has agreed to pay capital
improvement fees to Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD's
revenue streams from property taxes are sufficient to meet debt service
requirements under HCMD's bonds, and the Company has recorded a liability of
$1.9 million and $1.6 million, primarily within “other long-term liabilities” in
the accompanying Consolidated Balance Sheets as of July 31, 2009 and 2008,
respectively, with respect to the estimated present value of future RSRMD
capital improvement fees. The Company estimates that it will make
capital improvement fee payments under this arrangement through the year ending
July 31, 2016.
Guarantees
As of
July 31, 2009, the Company had various other guarantees, primarily in the form
of letters of credit in the amount of $88.6 million, consisting primarily of
$53.4 million in support of the Employee Housing Bonds, $28.7 million of
construction and development related guarantees and $6.1 million for workers’
compensation and general liability deductibles related to construction and
development activities.
In
addition to the guarantees noted above, the Company has entered into contracts
in the normal course of business which include certain indemnifications under
which it could be required to make payments to third parties upon the occurrence
or non-occurrence of certain future events. These indemnities include
indemnities to licensees in connection with the licensees’ use of the Company’s
trademarks and logos, indemnities for liabilities associated with the
infringement of other parties’ technology and software products, indemnities
related to liabilities associated with the use of easements, indemnities related
to employment of contract workers, the Company’s use of trustees, indemnities
related to the Company’s use of public lands and environmental
indemnifications. The duration of these indemnities generally is
indefinite and generally do not limit the future payments the Company could be
obligated to make.
As
permitted under applicable law, the Company and certain of its subsidiaries
indemnify their directors and officers over their lifetimes for certain events
or occurrences while the officer or director is, or was, serving the Company or
its subsidiaries in such a capacity. The maximum potential amount of
future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company has a director and
officer insurance policy that should enable the Company to recover a portion of
any future amounts paid.
Unless
otherwise noted, the Company has not recorded any significant liabilities for
the letters of credit, indemnities and other guarantees noted above in the
accompanying Consolidated Financial Statements, either because the Company has
recorded on its Consolidated Balance Sheets the underlying liability associated
with the guarantee, the guarantee is with respect to the Company’s own
performance and is therefore not subject to the measurement requirements as
prescribed by GAAP, or because the Company has calculated the fair value of the
indemnification or guarantee to be immaterial based upon the current facts and
circumstances that would trigger a payment under the indemnification
clause. In addition, with respect to certain indemnifications it is
not possible to determine the maximum potential amount of liability under these
guarantees due to the unique set of facts and circumstances that are likely to
be involved in each particular claim and indemnification
provision. Historically, payments made by the Company under these
obligations have not been material.
As noted
above, the Company makes certain indemnifications to licensees in connection
with their use of the Company’s trademarks and logos. The Company
does not record any product warranty liability with respect to these
indemnifications.
Commitments
The
Company has executed as lessee operating leases for the rental of office and
commercial space, employee residential units, office equipment and vehicles
through fiscal 2024. Certain of these leases have renewal terms at
the Company's option, escalation clauses, rent holidays and leasehold
improvement incentives. Rent holidays and rent escalation clauses are
recognized on a straight-line basis over the lease term. Leasehold
improvement incentives are recorded as leasehold improvements and amortized over
the shorter of their economic lives or the term of the lease. For the
years ended July 31, 2009, 2008 and 2007, the Company recorded lease expense
related to these agreements of $28.8 million, $24.8 million and $22.3 million,
respectively, which is included in the accompanying Consolidated Statements of
Operations.
Future
minimum lease payments under these leases as of July 31, 2009 are as follows (in
thousands):
|
2010
|
$
|
16,550
|
|
2011
|
13,120
|
|
|
2012
|
10,583
|
|
|
2013
|
9,269
|
|
|
2014
|
7,578
|
|
|
Thereafter
|
23,701
|
|
|
Total
|
$
|
80,801
|
Self
Insurance
The
Company is self-insured for claims under its health benefit plans and for
workers’ compensation claims, subject to a stop loss policy. The
self-insurance liability related to workers' compensation is determined
actuarially based on claims filed. The self-insurance liability
related to claims under the Company’s health benefit plans is determined based
on analysis of actual claims. The amounts related to these claims are
included as a component of accrued benefits in accounts payable and accrued
expenses (see Note 5, Supplementary Balance Sheet Information).
Legal
The
Company is a party to various lawsuits arising in the ordinary course of
business, including Resort (Mountain and Lodging) related cases and contractual
and commercial litigation that arises from time to time in connection with the
Company’s real estate operations. Management believes the Company has
adequate insurance coverage and/or has accrued for loss contingencies for all
known matters that are deemed to be probable losses and estimable. As
of July 31, 2009 and 2008, the accrual for the above loss contingencies was not
material individually and in the aggregate.
Cheeca Lodge & Spa
Contract Dispute
On
October 19, 2007, RockResorts received payment of the final settlement from
Cheeca Holdings, LLC, related to the disputed contract termination of the
formerly managed RockResorts Cheeca Lodge & Spa property, in the amount of
$13.5 million, of which $11.9 million (net of final attorney’s fees) is recorded
in “Contract dispute credit, net” in the Consolidated Condensed Statement of
Operations for the year ended July 31, 2008.
15. Segment
Information
The
Company has three reportable segments: Mountain, Lodging and Real
Estate. The Mountain segment includes the operations of the Company’s
ski resorts and related ancillary activities. The Lodging segment
includes the operations of all of the Company’s owned hotels, RockResorts, GTLC,
condominium management, CME and golf operations. The Real Estate
segment owns and develops real estate in and around the Company’s resort
communities. The Company’s reportable segments, although integral to
the success of the others, offer distinctly different products and services and
require different types of management focus. As such, these segments
are managed separately.
The
Company reports its segment results using Reported EBITDA (defined as segment
net revenue less segment operating expenses, plus or minus segment equity
investment income or loss, and for the Real Estate segment, plus gain on sale of
real property) which is a non-GAAP financial measure. The Company
reports segment results in a manner consistent with management’s internal
reporting of operating results to the chief operating decision maker (Chief
Executive Officer) for purposes of evaluating segment performance.
Reported
EBITDA is not a measure of financial performance under GAAP. Items
excluded from Reported EBITDA are significant components in understanding and
assessing financial performance. Reported EBITDA should not be
considered in isolation or as an alternative to, or substitute for, net income,
net change in cash and cash equivalents or other financial statement data
presented in the consolidated financial statements as indicators of financial
performance or liquidity. Because Reported EBITDA is not a
measurement determined in accordance with GAAP and thus is susceptible to
varying calculations, Reported EBITDA as presented may not be comparable to
other similarly titled measures of other companies.
The
Company utilizes Reported EBITDA in evaluating performance of the Company and in
allocating resources to its segments. Mountain Reported EBITDA
consists of Mountain net revenue less Mountain operating expense plus or minus
Mountain equity investment income or loss. Lodging Reported EBITDA
consists of Lodging net revenue less Lodging operating expense. Real
Estate Reported EBITDA consists of Real Estate net revenue less Real Estate
operating expense plus gain on sale of real property. All segment
expenses include an allocation of corporate administrative
expense. Assets are not allocated between segments, or used to
evaluate performance, except as shown in the table below. The
accounting policies specific to each segment are the same as those described in
Note 2, Summary of Significant Accounting Policies.
Following
is key financial information by reportable segment which is used by management
in evaluating performance and allocating resources (in thousands):
|
Year
Ended July 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Net
revenue:
|
||||||||||||
|
Lift
tickets
|
$
|
276,542
|
$
|
301,914
|
$
|
286,997
|
||||||
|
Ski
school
|
65,336
|
81,384
|
78,848
|
|||||||||
|
Dining
|
52,259
|
62,506
|
59,653
|
|||||||||
|
Retail/rental
|
147,415
|
168,765
|
160,542
|
|||||||||
|
Other
|
73,045
|
70,964
|
79,337
|
|||||||||
|
Total
Mountain net revenue
|
614,597
|
685,533
|
665,377
|
|||||||||
|
Lodging
|
176,241
|
170,057
|
162,451
|
|||||||||
|
Resort
|
790,838
|
855,590
|
827,828
|
|||||||||
|
Real
estate
|
186,150
|
296,566
|
112,708
|
|||||||||
|
Total
net revenue
|
$
|
976,988
|
$
|
1,152,156
|
$
|
940,536
|
||||||
|
Segment
operating expense:
|
||||||||||||
|
Mountain
|
$
|
451,025
|
$
|
470,362
|
$
|
462,708
|
||||||
|
Lodging
|
169,482
|
159,832
|
144,252
|
|||||||||
|
Resort
|
620,507
|
630,194
|
606,960
|
|||||||||
|
Real
estate
|
142,070
|
251,338
|
115,190
|
|||||||||
|
Total
segment operating expense
|
$
|
762,577
|
$
|
881,532
|
$
|
722,150
|
||||||
|
Gain
on sale of real property
|
$
|
--
|
$
|
709
|
$
|
--
|
||||||
|
Mountain
equity investment income, net
|
$
|
817
|
$
|
5,390
|
$
|
5,059
|
||||||
|
Reported
EBITDA:
|
||||||||||||
|
Mountain
|
$
|
164,389
|
$
|
220,561
|
$
|
207,728
|
||||||
|
Lodging
|
6,759
|
10,225
|
18,199
|
|||||||||
|
Resort
|
171,148
|
230,786
|
225,927
|
|||||||||
|
Real
estate
|
44,080
|
45,937
|
(2,482
|
)
|
||||||||
|
Total
Reported EBITDA
|
$
|
215,228
|
$
|
276,723
|
$
|
223,445
|
||||||
|
Real
estate held for sale and investment
|
$
|
311,485
|
$
|
249,305
|
$
|
357,586
|
||||||
|
Reconciliation
to net income:
|
||||||||||||
|
Total
Reported EBITDA
|
$
|
215,228
|
$
|
276,723
|
$
|
223,445
|
||||||
|
Depreciation
and amortization
|
(107,213
|
)
|
(93,794
|
)
|
(87,664
|
)
|
||||||
|
Relocation
and separation charges
|
--
|
--
|
(1,433
|
)
|
||||||||
|
Loss
on disposal of fixed assets, net
|
(1,064
|
)
|
(1,534
|
)
|
(1,083
|
)
|
||||||
|
Investment
income, net
|
1,793
|
8,285
|
12,403
|
|||||||||
|
Interest
expense, net
|
(27,548
|
)
|
(30,667
|
)
|
(32,625
|
)
|
||||||
|
Loss
from sale of business, net
|
--
|
--
|
(639
|
)
|
||||||||
|
Contact
dispute credit (charges), net
|
--
|
11,920
|
(4,642
|
)
|
||||||||
|
Gain
on put option, net
|
--
|
--
|
690
|
|||||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
(1,602
|
)
|
(4,920
|
)
|
(7,801
|
)
|
||||||
|
Income
before provision for income taxes
|
79,594
|
166,013
|
100,651
|
|||||||||
|
Provision
for income taxes
|
(30,644
|
)
|
(63,086
|
)
|
(39,254
|
)
|
||||||
|
Net
income
|
$
|
48,950
|
$
|
102,927
|
$
|
61,397
|
||||||
16. Selected
Quarterly Financial Data (Unaudited--in thousands, except per share
amounts)
|
2009
|
||||||||||||||||||||
|
Year
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||||||
|
July
31,
|
July
31,
|
April
30,
|
January
31,
|
October
31,
|
||||||||||||||||
|
2009
|
2009
|
2009
|
2009
|
2008
|
||||||||||||||||
|
Mountain
revenue
|
$
|
614,597
|
$
|
36,150
|
$
|
279,180
|
$
|
258,489
|
$
|
40,778
|
||||||||||
|
Lodging
revenue
|
176,241
|
44,942
|
44,896
|
41,150
|
45,253
|
|||||||||||||||
|
Real
estate revenue
|
186,150
|
20,836
|
9,407
|
89,157
|
66,750
|
|||||||||||||||
|
Total
net revenue
|
976,988
|
101,928
|
333,483
|
388,796
|
152,781
|
|||||||||||||||
|
Income
(loss) from operations
|
106,134
|
(58,014
|
)
|
107,580
|
106,543
|
(49,975
|
)
|
|||||||||||||
|
Net
income (loss)
|
$
|
48,950
|
$
|
(38,730
|
)
|
$
|
61,639
|
$
|
60,545
|
$
|
(34,504
|
)
|
||||||||
|
Basic
net income (loss) per common share
|
$
|
1.34
|
$
|
(1.07
|
)
|
$
|
1.69
|
$
|
1.66
|
$
|
(0.93
|
)
|
||||||||
|
Diluted
net income (loss) per common share
|
$
|
1.33
|
$
|
(1.07
|
)
|
$
|
1.68
|
$
|
1.65
|
$
|
(0.93
|
)
|
||||||||
|
2008
|
||||||||||||||||||||
|
Year
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||||||
|
July
31,
|
July
31,
|
April
30,
|
January
31,
|
October
31,
|
||||||||||||||||
|
2008
|
2008
|
2008
|
2008
|
2007
|
||||||||||||||||
|
Mountain
revenue
|
$
|
685,533
|
$
|
37,549
|
$
|
325,726
|
$
|
279,722
|
$
|
42,536
|
||||||||||
|
Lodging
revenue
|
170,057
|
48,323
|
43,590
|
34,827
|
43,317
|
|||||||||||||||
|
Real
estate revenue
|
296,566
|
184,587
|
54,474
|
45,471
|
12,034
|
|||||||||||||||
|
Total
net revenue
|
1,152,156
|
270,459
|
423,790
|
360,020
|
97,887
|
|||||||||||||||
|
Income
(loss) from operations
|
176,005
|
(15,824
|
)
|
151,461
|
92,572
|
(52,204
|
)
|
|||||||||||||
|
Contract
dispute credit, net
|
11,920
|
--
|
--
|
--
|
11,920
|
|||||||||||||||
|
Net
income (loss)
|
$
|
102,927
|
$
|
(11,123
|
)
|
$
|
87,341
|
$
|
51,319
|
$
|
(24,610
|
)
|
||||||||
|
Basic
net income (loss) per common share
|
$
|
2.67
|
$
|
(0.29
|
)
|
$
|
2.26
|
$
|
1.32
|
$
|
(0.63
|
)
|
||||||||
|
Diluted
net income (loss) per common share
|
$
|
2.64
|
$
|
(0.29
|
)
|
$
|
2.24
|
$
|
1.31
|
$
|
(0.63
|
)
|
||||||||
17. Stock
Repurchase Plan
On March
9, 2006, the Company’s Board of Directors approved the repurchase of up to
3,000,000 shares of common stock and on July 16, 2008 approved an increase of
the Company’s common stock repurchase authorization by an additional 3,000,000
shares. During the year ended July 31, 2009, the Company repurchased
874,427 shares of common stock at a cost of $22.4 million. Since
inception of this stock repurchase plan through July 31, 2009, the Company has
repurchased 3,878,535 shares at a cost of approximately $147.8
million. As of July 31, 2009, 2,121,465 shares remained available to
repurchase under the existing repurchase authorization. Shares of
common stock purchased pursuant to the repurchase program will be held as
treasury shares and may be used for the issuance of shares under the Company's
employee share award plans.
18. Stock
Compensation Plan
The
Company has a share award plan (the “Plan”) which has been approved by the
Company's shareholders. Under the Plan, 5 million shares of common
stock could be issued in the form of options, stock appreciation rights,
restricted shares, restricted share units, performance shares, performance share
units, dividend equivalents or other share-based awards to employees, directors
or consultants of the Company or its subsidiaries or affiliates. The
terms of awards granted under the Plan, including exercise price, vesting period
and life, are set by the Compensation Committee of the Board of
Directors. All share-based awards (except for restricted shares and
restricted share units) granted under these plans have a life of ten
years. Most awards vest ratably over three years; however some have
been granted with different vesting schedules. To date, no awards
have been granted to non-employees (except those granted to non-employee members
of the Board of Directors of the Company and of a consolidated subsidiary) under
the Plan. At July 31, 2009, approximately 1.3 million share-based
awards were available to be granted under the Plan.
The fair
value of stock-settled stock appreciation rights (“SARs”) granted in the years
ended July 31, 2009, 2008 and 2007 were estimated on the date of grant using a
lattice-based option valuation model that applies the assumptions noted in the
table below. A lattice-based model considers factors such as exercise
behavior, and assumes employees will exercise equity awards at different times
over the contractual life of the equity awards. As a lattice-based
model considers these factors, and is more flexible, the Company considers it to
be a better method of valuing equity awards than a closed-form Black-Scholes
model. Because lattice-based option valuation models incorporate
ranges of assumptions for inputs, those ranges are
disclosed. Expected volatility is based on historical volatility of
the Company's stock. The Company uses historical data to estimate
equity award exercises and employee terminations within the valuation model;
separate groups of employees that have similar historical exercise behavior are
considered separately for valuation purposes. The expected term of
equity awards granted is derived from the output of the option valuation model
and represents the period of time that equity awards granted are expected to be
outstanding; the range given below results from certain groups of employees
exhibiting different behavior. The risk-free rate for periods within
the contractual life of the equity award is based on the United States Treasury
yield curve in effect at the time of grant.
|
Year
Ended July 31,
|
||||||||
|
2009
|
2008
|
2007
|
||||||
|
Expected
volatility
|
37.1-
41.0
|
%
|
36.6
|
%
|
37.4
|
%
|
||
|
Expected
dividends
|
--
|
%
|
--
|
%
|
--
|
%
|
||
|
Expected
term (average in years)
|
5.4
– 5.7
|
5.4
|
5.3
|
|||||
|
Risk-free
rate
|
2.1-4.9
|
%
|
4.0-5.1
|
%
|
4.3-4.8
|
%
|
||
The
Company has estimated forfeiture rates that range from 12.4% to 16.1% in its
calculation of stock-based compensation expense for the year ended July 31,
2009. These estimates are based on historical forfeiture behavior
exhibited by employees of the Company.
A summary
of aggregate option and SARs award activity under the share-based compensation
plan as of July 31, 2007, 2008 and 2009, and changes during the years then ended
is presented below (in thousands, except exercise price and contractual
term):
|
Weighted-Average
|
Weighted-Average
|
Aggregate
|
|||||||||||
|
Exercise
|
Remaining
|
Intrinsic
|
|||||||||||
|
Awards
|
Price
|
Contractual
Term
|
Value
|
||||||||||
|
Outstanding
at July 31, 2006
|
1,783
|
$
|
22.18
|
||||||||||
|
Granted
|
227
|
42.37
|
|||||||||||
|
Exercised
|
(649
|
)
|
17.71
|
||||||||||
|
Forfeited
or expired
|
(165
|
)
|
28.63
|
||||||||||
|
Outstanding
at July 31, 2007
|
1,196
|
$
|
27.55
|
||||||||||
|
Granted
|
221
|
59.56
|
|||||||||||
|
Exercised
|
(117
|
)
|
20.40
|
||||||||||
|
Forfeited
or expired
|
(81
|
)
|
45.71
|
||||||||||
|
Outstanding
at July 31, 2008
|
1,219
|
$
|
32.83
|
||||||||||
|
Granted
|
1,055
|
27.88
|
|||||||||||
|
Exercised
|
(31)
|
17.54
|
|||||||||||
|
Forfeited
or expired
|
(60)
|
38.97
|
|||||||||||
|
Outstanding
at July 31, 2009
|
2,183
|
$
|
30.49
|
7.8
years
|
$
|
9,438
|
|||||||
|
Exercisable
at July 31, 2009
|
999
|
$
|
29.23
|
6.0
years
|
$
|
3,555
|
|||||||
The
weighted-average grant-date fair value of SARs granted during the years ended
July 31, 2009, 2008 and 2007 was $10.34, $21.64 and $16.18,
respectively. The total intrinsic value of options exercised during
the years ended July 31, 2009, 2008 and 2007 was $0.3 million, $4.1 million and
$19.8 million, respectively. The Company had 315,000, 308,000 and
508,000 options and SARs that vested during the years ended July 31, 2009, 2008
and 2007, respectively. These awards had a total fair value of $1.5
million, $9.5 million and $10.9 million at the date of vesting for the years
ended July 31, 2009, 2008 and 2007, respectively. The Company granted 397,000
restricted share units during the year ended July 31, 2009 with a
weighted-average grant-date fair value of $26.83. The Company granted
97,000 restricted share units during the year ended July 31, 2008 with a
weighted-average grant-date fair value of $57.72. The Company granted
102,000 restricted share units during the year ended July 31, 2007 with a
weighted-average grant-date fair value of $41.76. The Company had
137,000, 79,000 and 75,000 restricted share awards/units that vested during the
years ended July 31, 2009, 2008 and 2007, respectively. These
awards/units had a total fair value of $3.1 million, $4.8 million and $3.0
million at the date of vesting for the years ended July 31, 2009, 2008 and 2007,
respectively.
A summary
of the status of the Company's nonvested options and SARs as of July 31, 2009,
and changes during the year then ended, is presented below (in thousands, except
fair value amounts):
|
Weighted-Average
|
||||||
|
Grant-Date
|
||||||
|
Awards
|
Fair
Value
|
|||||
|
Outstanding
at August 1, 2008
|
497
|
$
|
16.98
|
|||
|
Granted
|
1,055
|
10.34
|
||||
|
Vested
|
(315)
|
15.22
|
||||
|
Forfeited
|
(53)
|
14.60
|
||||
|
Nonvested
at July 31, 2009
|
1,184
|
$
|
11.64
|
|||
A summary
of the status of the Company's nonvested restricted share units as of July 31,
2009, and changes during the year then ended, is presented below (in thousands,
except fair value amounts):
|
Weighted-Average
|
||||||
|
Grant-Date
|
||||||
|
Awards
|
Fair
Value
|
|||||
|
Outstanding
at August 1, 2008
|
186
|
$
|
43.32
|
|||
|
Granted
|
397
|
28.63
|
||||
|
Vested
|
(137)
|
36.62
|
||||
|
Forfeited
|
(23)
|
38.29
|
||||
|
Nonvested
at July 31, 2009
|
423
|
$
|
30.29
|
|||
As of
July 31, 2009, there was $16.9 million of total unrecognized compensation
expense related to nonvested share-based compensation arrangements granted under
the share-based compensation plan, of which $8.9 million, $6.6 million and $1.4
million of expense is expected to be recognized in the years ending July 31,
2010, 2011 and 2012, respectively, assuming no future share-based awards are
granted.
Cash
received from options exercised under all share-based payment arrangements was
$0.6 million, $2.0 million and $11.5 million for the years ended July 31, 2009,
2008 and 2007, respectively. The tax benefit realized or to be
realized for the tax deductions from options/SARs exercised and restricted stock
awards/units vested was $1.6 million, $3.1 million and $8.3 million for the
years ended July 31, 2009, 2008 and 2007, respectively.
The
Company has a policy of using either authorized and unissued shares or treasury
shares, including shares acquired by purchase in the open market or in private
transactions, to satisfy equity award exercises.
19. Retirement
and Profit Sharing Plans
The
Company maintains a defined contribution retirement plan (the “Retirement
Plan”), qualified under Section 401(k) of the Internal Revenue Code, for its
employees. Under this Retirement Plan, employees are eligible to make
before-tax contributions on the first day of the calendar month following the
later of: (i) their employment commencement date or (ii) the date they turn
21. Participants may contribute up to 100% of their
qualifying annual compensation up to the annual maximum specified by the
Internal Revenue Code. Prior to January 1, 2009, the Company matched
an amount equal to 50% of each participant's contribution up to 6% of a
participant's bi-weekly qualifying compensation upon obtaining the later
of: (i) 12 consecutive months of employment and 1,000 service hours or (ii)
1,500 service hours since the employment commencement date. On
January 1, 2009, the Company suspended making matching contributions to the
Retirement Plan for an indefinite period of time. The Company's
matching contribution is entirely discretionary and may be reinstated, reduced
or eliminated at any time.
Total
Retirement Plan expense recognized by the Company for the years ended July 31,
2009, 2008 and 2007 was $1.3 million, $2.9 million and $2.8 million,
respectively.
20. Guarantor
Subsidiaries and Non-Guarantor Subsidiaries
The
Company’s payment obligations under the 6.75% Notes (see Note 4, Long-Term Debt)
are fully and unconditionally guaranteed on a joint and several, senior
subordinated basis by substantially all of the Company’s consolidated
subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined
below), the “Guarantor Subsidiaries”) except for Eagle Park Reservoir Company,
Gros Ventre Utility Company, Mountain Thunder, Inc., SSV, Larkspur Restaurant
& Bar, LLC, Gore Creek Place, LLC and certain other insignificant entities
(together, the “Non-Guarantor Subsidiaries”). APII and the Employee
Housing Entities are included with the Non-Guarantor Subsidiaries for purposes
of the consolidated financial information, but are not considered subsidiaries
under the Indenture governing the 6.75% Notes.
Presented
below is the consolidated financial information of the Parent Company, the
Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Financial
information for the Non-Guarantor subsidiaries is presented in the column titled
“Other Subsidiaries.” Balance sheets are presented as of July 31,
2009 and 2008. Statements of operations and statements of cash flows
are presented for the years ended July 31, 2009, 2008 and 2007.
Investments
in subsidiaries are accounted for by the Parent Company and Guarantor
Subsidiaries using the equity method of accounting. Net income (loss)
of Guarantor and Non-Guarantor Subsidiaries is, therefore, reflected in the
Parent Company's and Guarantor Subsidiaries' investments in and advances to
(from) subsidiaries. Net income (loss) of the Guarantor and
Non-Guarantor Subsidiaries is reflected in Guarantor Subsidiaries and Parent
Company as equity in consolidated subsidiaries. The elimination
entries eliminate investments in Other Subsidiaries and intercompany balances
and transactions for consolidated reporting purposes.
Supplemental
Condensed Consolidating Balance Sheet
As
of July 31, 2009
(in
thousands)
|
100%
Owned
|
|||||||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
Eliminating
|
||||||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
|||||||||||||||||
|
Current
assets:
|
|||||||||||||||||||||
|
Cash
and cash equivalents
|
$
|
--
|
$
|
66,364
|
$
|
2,934
|
$
|
--
|
$
|
69,298
|
|||||||||||
|
Restricted
cash
|
--
|
11,065
|
--
|
--
|
11,065
|
||||||||||||||||
|
Trade
receivables, net
|
--
|
56,834
|
1,229
|
--
|
58,063
|
||||||||||||||||
|
Inventories,
net
|
--
|
11,895
|
37,052
|
--
|
48,947
|
||||||||||||||||
|
Other
current assets
|
21,333
|
18,407
|
1,875
|
--
|
41,615
|
||||||||||||||||
|
Total
current assets
|
21,333
|
164,565
|
43,090
|
--
|
228,988
|
||||||||||||||||
|
Property,
plant and equipment, net
|
--
|
991,027
|
66,631
|
--
|
1,057,658
|
||||||||||||||||
|
Real
estate held for sale and investment
|
--
|
311,485
|
--
|
--
|
311,485
|
||||||||||||||||
|
Goodwill,
net
|
--
|
148,702
|
19,248
|
--
|
167,950
|
||||||||||||||||
|
Intangible
assets, net
|
--
|
63,580
|
15,849
|
--
|
79,429
|
||||||||||||||||
|
Other
assets
|
3,226
|
30,710
|
5,034
|
--
|
38,970
|
||||||||||||||||
|
Investments
in subsidiaries and advances to (from) parent
|
1,290,532
|
307,124
|
(15,179
|
)
|
(1,582,477
|
)
|
--
|
||||||||||||||
|
Total
assets
|
$
|
1,315,091
|
$
|
2,017,193
|
$
|
134,673
|
$
|
(1,582,477
|
)
|
$
|
1,884,480
|
||||||||||
|
Current
liabilities:
|
|||||||||||||||||||||
|
Accounts
payable and accrued expenses
|
$
|
12,412
|
$
|
214,021
|
$
|
19,103
|
$
|
--
|
$
|
245,536
|
|||||||||||
|
Income
taxes payable
|
5,460
|
--
|
--
|
--
|
5,460
|
||||||||||||||||
|
Long-term
debt due within one year
|
--
|
9
|
343
|
--
|
352
|
||||||||||||||||
|
Total
current liabilities
|
17,872
|
214,030
|
19,446
|
--
|
251,348
|
||||||||||||||||
|
Long-term
debt
|
390,000
|
42,716
|
58,892
|
--
|
491,608
|
||||||||||||||||
|
Other
long-term liabilities
|
29,690
|
200,974
|
2,505
|
--
|
233,169
|
||||||||||||||||
|
Deferred
income taxes
|
112,234
|
--
|
--
|
--
|
112,234
|
||||||||||||||||
|
Minority
interest in net assets of consolidated subsidiaries
|
--
|
--
|
--
|
30,826
|
30,826
|
||||||||||||||||
|
Total
stockholders’ equity
|
765,295
|
1,559,473
|
53,830
|
(1,613,303
|
)
|
765,295
|
|||||||||||||||
|
Total
liabilities and stockholders’ equity
|
$
|
1,315,091
|
$
|
2,017,193
|
$
|
134,673
|
$
|
(1,582,477
|
)
|
$
|
1,884,480
|
||||||||||
Supplemental
Condensed Consolidating Balance Sheet
As
of July 31, 2008
(in
thousands)
|
100%
Owned
|
|||||||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
Eliminating
|
||||||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
|||||||||||||||||
|
Current
assets:
|
|||||||||||||||||||||
|
Cash
and cash equivalents
|
$
|
--
|
$
|
156,782
|
$
|
5,563
|
$
|
--
|
$
|
162,345
|
|||||||||||
|
Restricted
cash
|
--
|
10,526
|
47,911
|
--
|
58,437
|
||||||||||||||||
|
Trade
receivables, net
|
--
|
47,953
|
2,232
|
--
|
50,185
|
||||||||||||||||
|
Inventories,
net
|
--
|
11,786
|
37,922
|
--
|
49,708
|
||||||||||||||||
|
Other
current assets
|
15,142
|
19,205
|
3,873
|
--
|
38,220
|
||||||||||||||||
|
Total
current assets
|
15,142
|
246,252
|
97,501
|
--
|
358,895
|
||||||||||||||||
|
Property,
plant and equipment, net
|
--
|
806,696
|
250,141
|
--
|
1,056,837
|
||||||||||||||||
|
Real
estate held for sale and investment
|
--
|
204,260
|
45,045
|
--
|
249,305
|
||||||||||||||||
|
Goodwill,
net
|
--
|
123,034
|
19,248
|
--
|
142,282
|
||||||||||||||||
|
Intangible
assets, net
|
--
|
56,650
|
15,880
|
--
|
72,530
|
||||||||||||||||
|
Other
assets
|
3,936
|
34,922
|
7,247
|
--
|
46,105
|
||||||||||||||||
|
Investments
in subsidiaries and advances to (from) parent
|
1,248,019
|
599,199
|
(61,968
|
)
|
(1,785,250
|
)
|
--
|
||||||||||||||
|
Total
assets
|
$
|
1,267,097
|
$
|
2,071,013
|
$
|
373,094
|
$
|
(1,785,250
|
)
|
$
|
1,925,954
|
||||||||||
|
Current
liabilities:
|
|||||||||||||||||||||
|
Accounts
payable and accrued expenses
|
$
|
12,446
|
$
|
196,360
|
$
|
85,376
|
$
|
--
|
$
|
294,182
|
|||||||||||
|
Income
taxes payable
|
57,474
|
--
|
--
|
--
|
57,474
|
||||||||||||||||
|
Long-term
debt due within one year
|
--
|
15,022
|
333
|
--
|
15,355
|
||||||||||||||||
|
Total
current liabilities
|
69,920
|
211,382
|
85,709
|
--
|
367,011
|
||||||||||||||||
|
Long-term
debt
|
390,000
|
42,722
|
108,628
|
--
|
541,350
|
||||||||||||||||
|
Other
long-term liabilities
|
3,142
|
149,557
|
30,944
|
--
|
183,643
|
||||||||||||||||
|
Deferred
income taxes
|
75,279
|
--
|
--
|
--
|
75,279
|
||||||||||||||||
|
Minority
interest in net assets of consolidated subsidiaries
|
--
|
--
|
--
|
29,915
|
29,915
|
||||||||||||||||
|
Total
stockholders’ equity
|
728,756
|
1,667,352
|
147,813
|
(1,815,165
|
)
|
728,756
|
|||||||||||||||
|
Total
liabilities and stockholders’ equity
|
$
|
1,267,097
|
$
|
2,071,013
|
$
|
373,094
|
$
|
(1,785,250
|
)
|
$
|
1,925,954
|
||||||||||
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2009
(in
thousands)
|
100%
Owned
|
||||||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
|
Total
net revenue
|
$
|
--
|
$
|
828,300
|
$
|
158,016
|
$
|
(9,328
|
)
|
$
|
976,988
|
|||||||||
|
Total
operating expense
|
498
|
724,985
|
154,547
|
(9,176
|
)
|
870,854
|
||||||||||||||
|
(Loss)
income from operations
|
(498
|
)
|
103,315
|
3,469
|
(152
|
)
|
106,134
|
|||||||||||||
|
Other
(expense) income, net
|
(27,035
|
)
|
3,813
|
(2,685
|
)
|
152
|
(25,755
|
)
|
||||||||||||
|
Equity
investment income, net
|
--
|
817
|
--
|
--
|
817
|
|||||||||||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
--
|
(1,602
|
)
|
(1,602
|
)
|
|||||||||||||
|
(Loss)
income before income taxes
|
(27,533
|
)
|
107,945
|
784
|
(1,602
|
)
|
79,594
|
|||||||||||||
|
Benefit
(provision) for income taxes
|
10,600
|
(41,244
|
)
|
--
|
--
|
(30,644
|
)
|
|||||||||||||
|
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(16,933
|
)
|
66,701
|
784
|
(1,602
|
)
|
48,950
|
|||||||||||||
|
Equity
in income (loss) of consolidated subsidiaries
|
65,883
|
(818
|
)
|
--
|
(65,065
|
)
|
--
|
|||||||||||||
|
Net
income
|
$
|
48,950
|
$
|
65,883
|
$
|
784
|
$
|
(66,667
|
)
|
$
|
48,950
|
|||||||||
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2008
(in
thousands)
|
100%
Owned
|
||||||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
|
Total
net revenue
|
$
|
--
|
$
|
709,572
|
$
|
453,741
|
$
|
(11,157
|
)
|
$
|
1,152,156
|
|||||||||
|
Total
operating expense
|
127
|
599,954
|
387,075
|
(11,005
|
)
|
976,151
|
||||||||||||||
|
(Loss)
income from operations
|
(127
|
)
|
109,618
|
66,666
|
(152
|
)
|
176,005
|
|||||||||||||
|
Other
(expense) income, net
|
(27,015
|
)
|
20,740
|
(4,339
|
)
|
152
|
(10,462
|
)
|
||||||||||||
|
Equity
investment income, net
|
--
|
5,390
|
--
|
--
|
5,390
|
|||||||||||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
--
|
(4,920
|
)
|
(4,920
|
)
|
|||||||||||||
|
(Loss)
income before income taxes
|
(27,142
|
)
|
135,748
|
62,327
|
(4,920
|
)
|
166,013
|
|||||||||||||
|
Benefit
(provision) for income taxes
|
10,341
|
(73,401
|
)
|
(26
|
)
|
--
|
(63,086
|
)
|
||||||||||||
|
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(16,801
|
)
|
62,347
|
62,301
|
(4,920
|
)
|
102,927
|
|||||||||||||
|
Equity
in income of consolidated subsidiaries
|
119,728
|
46,449
|
--
|
(166,177
|
)
|
--
|
||||||||||||||
|
Net
income
|
$
|
102,927
|
$
|
108,796
|
$
|
62,301
|
$
|
(171,097
|
)
|
$
|
102,927
|
|||||||||
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2007
(in
thousands)
|
100%
Owned
|
||||||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
|
Total
net revenue
|
$
|
--
|
$
|
719,258
|
$
|
234,780
|
$
|
(13,502
|
)
|
$
|
940,536
|
|||||||||
|
Total
operating expense
|
510
|
612,972
|
210,301
|
(11,453
|
)
|
812,330
|
||||||||||||||
|
(Loss)
income from operations
|
(510
|
)
|
106,286
|
24,479
|
(2,049
|
)
|
128,206
|
|||||||||||||
|
Other
(expense) income, net
|
(27,037
|
)
|
5,950
|
(3,929
|
)
|
152
|
(24,864
|
)
|
||||||||||||
|
Equity
investment income, net
|
--
|
5,059
|
--
|
--
|
5,059
|
|||||||||||||||
|
Loss
on sale of business, net
|
--
|
(639
|
)
|
--
|
--
|
(639
|
)
|
|||||||||||||
|
Gain
on put option, net
|
--
|
690
|
--
|
--
|
690
|
|||||||||||||||
|
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
--
|
(7,801
|
)
|
(7,801
|
)
|
|||||||||||||
|
(Loss)
income before income taxes
|
(27,547
|
)
|
117,346
|
20,550
|
(9,698
|
)
|
100,651
|
|||||||||||||
|
Benefit
(provision) for income taxes
|
10,743
|
(50,124
|
)
|
127
|
--
|
(39,254
|
)
|
|||||||||||||
|
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(16,804
|
)
|
67,222
|
20,677
|
(9,698
|
)
|
61,397
|
|||||||||||||
|
Equity
in income of consolidated subsidiaries
|
78,201
|
--
|
--
|
(78,201
|
)
|
--
|
||||||||||||||
|
Net
income
|
$
|
61,397
|
$
|
67,222
|
$
|
20,677
|
$
|
(87,899
|
)
|
$
|
61,397
|
|||||||||
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2009
(in
thousands)
|
100%
Owned
|
||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
|||||||||||||
|
Net
cash provided by operating activities
|
$
|
(11,385
|
)
|
$
|
137,693
|
$
|
7,968
|
$
|
134,276
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||||||||
|
Capital
expenditures
|
--
|
(97,215
|
)
|
(9,276
|
)
|
(106,491
|
)
|
|||||||||
|
Acquisition
of business
|
--
|
(38,170
|
)
|
--
|
(38,170
|
)
|
||||||||||
|
Other
investing activities, net
|
--
|
(496
|
)
|
532
|
36
|
|||||||||||
|
Net
cash used in investing activities
|
--
|
(135,881
|
)
|
(8,744
|
)
|
(144,625
|
)
|
|||||||||
|
Cash
flows from financing activities:
|
||||||||||||||||
|
Repurchase
of common stock
|
(22,367
|
)
|
--
|
--
|
(22,367
|
)
|
||||||||||
|
Proceeds
from borrowings under Non-Recourse Real Estate
Financings
|
--
|
9,013
|
--
|
9,013
|
||||||||||||
|
Payments
of Non-Recourse Real Estate Financings
|
--
|
(58,407
|
)
|
--
|
(58,407
|
)
|
||||||||||
|
Proceeds
from borrowings under other long-term debt
|
--
|
--
|
67,280
|
67,280
|
||||||||||||
|
Payments
of other long-term debt
|
--
|
(15,019
|
)
|
(67,613
|
)
|
(82,632
|
)
|
|||||||||
|
Advances
from (to) affiliates
|
33,010
|
(32,032
|
)
|
(978
|
)
|
--
|
||||||||||
|
Other
financing activities, net
|
742
|
4,215
|
(542
|
)
|
4,415
|
|||||||||||
|
Net
cash provided by (used in) financing activities
|
11,385
|
(92,230
|
)
|
(1,853
|
)
|
(82,698
|
)
|
|||||||||
|
Net
decrease in cash and cash equivalents
|
--
|
(90,418
|
)
|
(2,629
|
)
|
(93,047
|
)
|
|||||||||
|
Cash
and cash equivalents
|
||||||||||||||||
|
Beginning
of period
|
--
|
156,782
|
5,563
|
162,345
|
||||||||||||
|
End
of period
|
$
|
--
|
$
|
66,364
|
$
|
2,934
|
$
|
69,298
|
||||||||
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2008
(in
thousands)
|
100%
Owned
|
||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
|||||||||||||
|
Net
cash provided by operating activities
|
$
|
9,792
|
$
|
103,610
|
$
|
103,594
|
$
|
216,996
|
||||||||
|
Cash
flows from investing activities:
|
||||||||||||||||
|
Capital
expenditures
|
--
|
(95,291
|
)
|
(55,601
|
)
|
(150,892
|
)
|
|||||||||
|
Other
investing activities, net
|
--
|
2,956
|
(199
|
)
|
2,757
|
|||||||||||
|
Net
cash used in investing activities
|
--
|
(92,335
|
)
|
(55,800
|
)
|
(148,135
|
)
|
|||||||||
|
Cash
flows from financing activities:
|
||||||||||||||||
|
Repurchase
of common stock
|
(99,615
|
)
|
--
|
--
|
(99,615
|
)
|
||||||||||
|
Proceeds
from borrowings under Non-Recourse Real Estate
Financings
|
--
|
--
|
136,519
|
136,519
|
||||||||||||
|
Payments
of Non-Recourse Real Estate Financings
|
--
|
--
|
(174,008
|
)
|
(174,008
|
)
|
||||||||||
|
Proceeds
from borrowings under other long-term debt
|
--
|
--
|
77,641
|
77,641
|
||||||||||||
|
Payments
of other long-term debt
|
--
|
(65
|
)
|
(78,056
|
)
|
(78,121
|
)
|
|||||||||
|
Advances
from (to) affiliates
|
85,962
|
(85,048
|
)
|
(914
|
)
|
--
|
||||||||||
|
Other
financing activities, net
|
3,861
|
4,668
|
(8,280
|
)
|
249
|
|||||||||||
|
Net
cash used in financing activities
|
(9,792
|
)
|
(80,445
|
)
|
(47,098
|
)
|
(137,335
|
)
|
||||||||
|
Net
(decrease) increase in cash and cash equivalents
|
--
|
(69,170
|
)
|
696
|
(68,474
|
)
|
||||||||||
|
Cash
and cash equivalents
|
||||||||||||||||
|
Beginning
of period
|
--
|
225,952
|
4,867
|
230,819
|
||||||||||||
|
End
of period
|
$
|
--
|
$
|
156,782
|
$
|
5,563
|
$
|
162,345
|
||||||||
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2007
(in
thousands)
|
100%
Owned
|
|||||||||||||||||
|
Parent
|
Guarantor
|
Other
|
|||||||||||||||
|
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
||||||||||||||
|
Net
cash (used in) provided by operating activities
|
$
|
(41,046
|
)
|
$
|
191,441
|
$
|
(31,953
|
)
|
$
|
118,442
|
|||||||
|
Cash
flows from investing activities:
|
|||||||||||||||||
|
Capital
expenditures
|
--
|
(76,563
|
)
|
(42,669
|
)
|
(119,232
|
)
|
||||||||||
|
Cash
received from sale of businesses
|
--
|
3,544
|
--
|
3,544
|
|||||||||||||
|
Purchase
of minority interest
|
--
|
(8,387
|
)
|
--
|
(8,387
|
)
|
|||||||||||
|
Other
investing activities, net
|
--
|
(2,561
|
)
|
(5,510
|
)
|
(8,071
|
)
|
||||||||||
|
Net
cash used in investing activities
|
--
|
(83,967
|
)
|
(48,179
|
)
|
(132,146
|
)
|
||||||||||
|
Cash
flows from financing activities:
|
|||||||||||||||||
|
Repurchase
of common stock
|
(15,007
|
)
|
--
|
--
|
(15,007
|
)
|
|||||||||||
|
Net
proceeds (payments) from borrowings under
long-term
debt
|
--
|
(9,898
|
)
|
72,752
|
62,854
|
||||||||||||
|
Advances
from (to) affiliates
|
38,926
|
(53,384
|
)
|
14,458
|
--
|
||||||||||||
|
Other
financing activities, net
|
17,127
|
1,762
|
(14,007
|
)
|
4,882
|
||||||||||||
|
Net
cash provided by (used in) financing activities
|
41,046
|
(61,520
|
)
|
73,203
|
52,729
|
||||||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
--
|
45,954
|
(6,929
|
)
|
39,025
|
||||||||||||
|
Cash
and cash equivalents
|
|||||||||||||||||
|
Beginning
of period
|
--
|
179,998
|
11,796
|
191,794
|
|||||||||||||
|
End
of period
|
$
|
--
|
$
|
225,952
|
$
|
4,867
|
$
|
230,819
|
|||||||||
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
Disclosure
Controls and Procedures
Management
of the Company, including the Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), have evaluated the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by this
Form 10-K. The term “disclosure controls and procedures” means
controls and other procedures established by the Company that are designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Act is accumulated and communicated to the Company's management, including its
CEO and CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Based
upon their evaluation of the Company's disclosure controls and procedures, the
CEO and the CFO concluded that the disclosure controls are effective to provide
reasonable assurance that information required to be disclosed by the Company in
the reports that it files or submits under the Act is accumulated and
communicated to management, including the CEO and CFO, as appropriate, to allow
timely decisions regarding required disclosure and are effective to provide
reasonable assurance that such information is recorded, processed, summarized
and reported within the time periods specified by the SEC's rules and
forms.
The
Company, including its CEO and CFO, does not expect that the Company's internal
controls and procedures will prevent or detect all error and all
fraud. A control system, no matter how well conceived or operated,
can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.
Management's
Annual Report on Internal Control Over Financial Reporting
The
report of management required under this Item 9A is contained in Item 8 of this
Form 10-K under the caption “Management's Report on Internal Control over
Financial Reporting.”
Attestation
Report of the Independent Registered Public Accounting Firm
The
attestation report required under this Item 9A is contained in Item 8 of this
Form 10-K under the caption “Report of Independent Registered Public Accounting
Firm.”
Changes in Internal Control Over
Financial Reporting
There
were no changes in the Company's internal control over financial reporting
during the quarter ended July 31, 2009 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
None.
PART
III
Code of Ethics and Business
Conduct. The Company has adopted a code of ethics that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions. The code of ethics and business conduct is posted in the
corporate governance section of the Company's website at
www.vailresorts.com. The Company will post any waiver to the code of
ethics and business conduct granted to any of its officers on its
website.
The New
York Stock Exchange requires chief executive officers of listed corporations to
certify that they are not aware of any violations by their company of the
exchange’s corporate governance listing standards. Following the 2008
annual meeting of stockholders, the Company submitted the annual certification
by the Chief Executive Officer to the New York Stock Exchange.
The
Company has filed with the Securities and Exchange Commission, as an exhibit to
this Form 10-K for the year ended July 31, 2009, the Sarbanes-Oxley Act Section
302 certification regarding the quality of the Company’s public
disclosure.
The
additional information required by this item is incorporated herein by reference
from the Company's proxy statement for the 2009 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2009 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2009 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2009 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2009 annual meeting of
stockholders.
PART
IV
a) Index
to Financial Statements and Financial Statement Schedules.
|
|
(1)
|
See
“Item 8. Financial Statements and Supplementary Data” for the
index to the Financial Statements.
|
|
|
(2)
|
All
other schedules have been omitted because the required information is not
applicable or because the information required has been included in the
financial statements or notes
thereto.
|
(3) Index
to Exhibits.
The
following exhibits are either filed herewith or, if so indicated, incorporated
by reference to the documents indicated in parentheses, which have previously
been filed with the Securities and Exchange Commission.
|
Posted
Exhibit Number
|
Description
|
Sequentially
Numbered Page
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Vail Resorts, Inc., dated
January 5, 2005. (Incorporated by reference to Exhibit 3.1 on
Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2005.)
|
|
|
3.2
|
Amended
and Restated By-Laws. (Incorporated by reference to Exhibit 3.1 on Form
8-K of Vail Resorts, Inc. filed February 6, 2009.)
|
|
|
4.1(a)
|
Indenture,
dated as of January 29, 2004, among Vail Resorts, Inc., the guarantors
therein and the Bank of New York as Trustee (Including Exhibit A, Form of
Global Note). (Incorporated by reference to Exhibit 4.1 on Form
8-K of Vail Resorts, Inc. filed on February 2, 2004.)
|
|
|
4.1(b)
|
Supplemental
Indenture, dated as of March 10, 2006 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York, as Trustee. (Incorporated
by reference to Exhibit 10.34 on Form 10-Q of Vail Resorts, Inc. for the
quarter ended January 31, 2006.)
|
|
|
4.1(c)
|
Form
of Global Note. (Incorporated by reference to Exhibit 4.1 on
Form 8-K of Vail Resorts, Inc. filed February 2, 2004.)
|
|
|
4.1(d)
|
Supplemental
Indenture, dated as of April 26, 2007 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York, as Trustee. (Incorporated
by reference to Exhibit 4.1(d) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2008.)
|
|
|
4.1(e)
|
Supplemental
Indenture, dated as of July 11, 2008 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York Mellon Trust Company, N.A., as
Trustee. (Incorporated by reference to Exhibit 4.1(e) on Form
10-K of Vail Resorts, Inc. for the year ended July 31,
2008.)
|
|
|
4.1(f)
|
Supplemental
Indenture, dated as of January 29, 2009 to Indenture dated as of January
29, 2004 among Vail Resorts, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York Mellon Trust Company,
N.A., as Trustee. (Incorporated by reference to Exhibit
4.1(f) on Form 10-Q of Vail Resorts, Inc. for the quarter ended January
31, 2009.)
|
|
|
4.1(g)
|
Supplemental
Indenture, dated as of August 24, 2009 to Indenture dated as of January
29, 2004 among Vail Resorts, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York Mellon Trust Company,
N.A., as Trustee.
|
63
|
|
10.1
|
Forest
Service Unified Permit for Heavenly ski area, dated April 29,
2002. (Incorporated by reference to Exhibit 99.13 of the report
on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30,
2002.)
|
|
|
10.2(a)
|
Forest
Service Unified Permit for Keystone ski area, dated December 30,
1996. (Incorporated by reference to Exhibit 99.2(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.2(b)
|
Amendment
No. 2 to Forest Service Unified Permit for Keystone ski
area. (Incorporated by reference to Exhibit 99.2(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.2(c)
|
Amendment
No. 3 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.2(d)
|
Amendment
No. 4 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.2(e)
|
Amendment
No. 5 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (e) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.3(a)
|
Forest
Service Unified Permit for Breckenridge ski area, dated December 30,
1996. (Incorporated by reference to Exhibit 99.3(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.3(b)
|
Amendment
No. 1 to Forest Service Unified Permit for Breckenridge ski
area. (Incorporated by reference to Exhibit 99.3(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.3(c)
|
Amendment
No. 2 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.3(d)
|
Amendment
No. 3 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.3(e)
|
Amendment
No. 4 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (e) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.3(f)
|
Amendment
No. 5 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4(f) on Form 10-Q of Vail
Resorts, Inc. for the quarter ended January 31, 2006.)
|
|
|
10.4(a)
|
Forest
Service Unified Permit for Beaver Creek ski area. (Incorporated
by reference to Exhibit 99.4(a) on Form 10-Q of Vail Resorts, Inc. for the
quarter ended October 31, 2002.)
|
|
|
10.4(b)
|
Exhibits
to Forest Service Unified Permit for Beaver Creek ski
area. (Incorporated by reference to Exhibit 99.4(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.4(c)
|
Amendment
No. 1 to Forest Service Unified Permit for Beaver Creek ski area.
(Incorporated by reference to Exhibit 10.5(c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.4(d)
|
Amendment
No. 2 to Forest Service Unified Permit for Beaver Creek ski area.
(Incorporated by reference to Exhibit 10.5(d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
|
10.4(e)
|
Amendment
to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated
by reference to Exhibit 10.5(e) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
|
10.4(f)
|
Amendment
No. 3 to Forest Service Unified Permit for Beaver Creek ski
area. (Incorporated by reference to Exhibit 10.4(f) on Form
10-K of Vail Resorts, Inc. for the year ended July 31,
2008.)
|
|
|
10.5(a)
|
Forest
Service Unified Permit for Vail ski area, dated November 23,
1993. (Incorporated by reference to Exhibit 99.5(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.5(b)
|
Exhibits
to Forest Service Unified Permit for Vail ski
area. (Incorporated by reference to Exhibit 99.5(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.5(c)
|
Amendment
No. 2 to Forest Service Unified Permit for Vail ski
area. (Incorporated by reference to Exhibit 99.5(c) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
|
10.5(d)
|
Amendment
No. 3 to Forest Service Unified Permit for Vail ski area. (Incorporated by
reference to Exhibit 10.6 (d) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
|
10.5(e)
|
Amendment
No. 4 to Forest Service Unified Permit for Vail ski area. (Incorporated by
reference to Exhibit 10.6 (e) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
|
10.6(a)
|
Purchase
and Sale Agreement by and between VAHMC, Inc. and DiamondRock Hospitality
Limited Partnership, dated May 3, 2005. (Incorporated by
reference to Exhibit 10.18(a) on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2005.)
|
|
|
10.6(b)
|
First
Amendment to Purchase and Sale Agreement by and between VAHMC, Inc. and
DiamondRock Hospitality Limited Partnership, dated May 10,
2005. (Incorporated by reference to Exhibit 10.18(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended April 30,
2005.)
|
|
|
10.7(a)
|
Sports
and Housing Facilities Financing Agreement between the Vail Corporation
(d/b/a “Vail Associates, Inc.”) and Eagle County, Colorado, dated April 1,
1998. (Incorporated by reference to Exhibit 10 on Form 10-Q of Vail
Resorts, Inc. for the quarter ended April 30, 1998.)
|
|
|
10.7(b)
|
Trust
Indenture, dated as of April 1, 1998 securing Sports and Housing
Facilities Revenue Refunding Bonds by and between Eagle County, Colorado
and U.S. Bank, N.A., as Trustee. (Incorporated by reference to
Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended
April 30, 1998.)
|
|
|
10.8(a)
|
Fourth
Amended and Restated Credit Agreement, dated as of January 28, 2005 among
The Vail Corporation (d/b/a Vail Associates, Inc.), as borrower, Bank of
America, N.A., as Administrative Agent, U.S. Bank National Association and
Wells Fargo Bank, National Association as Co-Syndication Agents, Deutsche
Bank Trust Company Americas and LaSalle Bank National Association as
Co-Documentation Agents the Lenders party thereto and Banc of America
Securities LLC, as Sole Lead Arranger and Sole Book
Manager.
|
69
|
|
10.8(b)
|
First
Amendment to Fourth Amended and Restated Credit Agreement, dated as of
June 29, 2005 among The Vail Corporation (d/b/a Vail Associates, Inc.), as
borrower and Bank of America, N.A., as Administrative
Agent. (Incorporated by reference to Exhibit 10.16(b) on Form
10-K of Vail Resorts, Inc. for the year ended July 31,
2005.)
|
|
|
10.8(c)
|
Second
Amendment to Fourth Amended and Restated Credit Agreement among The Vail
Corporation, the Required Lenders and Bank of America, as Administrative
Agent. (Incorporated by reference to Exhibit 10.3 of Form 8-K
of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
|
10.8(d)
|
Limited
Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit
Agreement, dated March 13, 2007.
|
196
|
|
10.8(e)
|
Fourth
Amendment to Fourth Amended and Restated Credit Agreement, dated April 30,
2008, among The Vail Corporation (d/b/a Vail Associates, Inc.) as
borrower, the lenders party thereto and Bank of America, N.A., as
Administrative Agent. (Incorporated by reference to Exhibit
10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter
ended April 30, 2008.)
|
|
|
10.9(a)
|
Construction
Loan Agreement, dated January 31, 2006 among Arrabelle at Vail Square,
LLC, U.S. Bank National Association and Wells Fargo Bank,
N.A.. (Incorporated by reference to Exhibit 10.33(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2006.)
|
|
|
10.9(b)
|
Completion
Guaranty Agreement by and between The Vail Resorts Corporation and U.S.
Bank National Association, dated January 31,
2006. (Incorporated by reference to Exhibit 10.33(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2006.)
|
|
|
10.9(c)
|
Completion
Guaranty Agreement by and between Vail Resorts, Inc. and U.S. Bank
National Association dated January 31, 2006. (Incorporated by reference to
Exhibit 10.33(c) on Form 10-Q of Vail Resorts, Inc. for the quarter ended
January 31, 2006.)
|
|
|
10.10(a)**
|
Construction
Loan Agreement, dated March 19, 2007 among The Chalets at The Lodge at
Vail, LLC, and Wells Fargo Bank, N.A. (Incorporated by
reference to Exhibit 10.3 of the report on Form 10-Q of Vail Resorts, Inc.
for the quarter ended April 30, 2007.)
|
|
|
10.10(b)
|
Completion
Guaranty Agreement by and between The Vail Corporation and Wells Fargo
Bank, N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.4 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
|
10.10(c)
|
Completion
Guaranty Agreement by and between Vail Resorts, Inc. and Wells Fargo Bank,
N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.5 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
|
10.10(d)
|
Development
Agreement Guaranty by and between The Vail Corporation and Wells Fargo
Bank, N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.6 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
|
10.10(e)
|
Development
Agreement Guaranty by and between Vail Resorts, Inc. and Wells Fargo Bank,
N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.7 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
|
10.11
|
Amended
and Restated Revolving Credit and Security Agreement between SSI Venture,
LLC and U.S. Bank National Association, dated September 23, 2005.
(Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts,
Inc. filed on September 29, 2005.)
|
|
|
10.12*
|
Vail
Resorts, Inc. 1993 Stock Option Plan (Incorporated by reference to Exhibit
4.A of the registration statement on Form S-8 of Vail Resorts, Inc., dated
October 21, 1997, File No. 333-38321.)
|
|
|
10.13*
|
Vail
Resorts, Inc. 1996 Long Term Incentive and Share Award Plan (Incorporated
by reference to the Exhibit 4.B of the registration statement on Form S-8
of Vail Resorts, Inc., dated October 21, 1997, File No.
333-38321.)
|
|
|
10.14*
|
Vail
Resorts, Inc. 1999 Long Term Incentive and Share Award
Plan. (Incorporated by reference to Exhibit 4.1 of the
registration statement on Form S-8 of Vail Resorts, Inc., dated September
7, 2007, File No. 333-145934.)
|
|
|
10.15*
|
Vail
Resorts, Inc. Amended and Restated 2002 Long Term Incentive and Share
Award Plan. (Incorporated by reference to Exhibit 4.2 of the
registration statement on Form S-8 of Vail Resorts, Inc., dated September
7, 2007, File No. 333-145934.)
|
|
|
10.16*
|
Form
of Stock Option Agreement. (Incorporated by reference to
Exhibit 10.20 of Form 10-K of Vail Resorts, Inc. for the year ended July
31, 2007.)
|
|
|
10.17*
|
Form
of Restricted Share [Unit] Agreement. (Incorporated by
reference to Exhibit 10.17 on Form 10-K of Vail Resorts, Inc. for the year
ended July 31, 2008.)
|
|
|
10.18*
|
Form
of Share Appreciation Rights Agreement. (Incorporated by
reference to Exhibit 10.18 on Form 10-K of Vail Resorts, Inc. for the year
ended July 31, 2008.)
|
|
|
10.19*
|
Stock
Option Agreement between Vail Resorts, Inc. and Jeffrey W. Jones, dated
September 30, 2005. (Incorporated by reference to Exhibit 10.6
on Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
|
10.20*
|
Summary
of Vail Resorts, Inc. Director Compensation, effective March 10,
2009.
|
231
|
|
10.21*
|
Vail
Resorts Deferred Compensation Plan, effective as of October 1,
2000. (Incorporated by reference to Exhibit 10.23 on Form 10-K
of Vail Resorts, Inc. for the year ended July 31, 2000.)
|
|
|
10.22
|
Vail
Resorts Deferred Compensation Plan, effective as of January 1,
2005.
|
232
|
|
10.23*
|
Vail
Resorts, Inc. Executive Perquisite Fund Program. (Incorporated by
reference to Exhibit 10.27 on Form 10-K of Vail Resorts, Inc. for the year
ended July 31, 2007.)
|
|
|
10.24*
|
Vail
Resorts, Inc. Management Incentive Plan. (Incorporated by reference to
Exhibit 10.7 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended October 31, 2008.)
|
|
|
10.25*
|
Agreement,
dated January 7, 2008, by and among Vail Associates, Inc., William A.
Jensen and Intrawest ULC. (Incorporated by reference to Exhibit
10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter
ended January 31, 2008.)
|
|
|
10.26*
|
Executive
Employment Agreement made and entered into October 15, 2008 by and between
Vail Resorts, Inc. and Robert A. Katz. (Incorporated by
reference to Exhibit 10.1 of the report on Form 10-Q of Vail Resorts, Inc.
for the quarter ended October 31, 2008.)
|
|
|
10.27(a)*
|
Executive
Employment Agreement made and entered into October 15, 2008 by and between
Jeffrey W. Jones and Vail Resorts, Inc. (Incorporated by reference to
Exhibit 10.2 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended October 31, 2008.)
|
|
|
10.27(b)*
|
Restated
First Amendment to Amended and Restated Employment Agreement, dated
September 18, 2008, by and between Vail Resorts, Inc. and Jeffrey W.
Jones. (Incorporated by reference to Exhibit 10.28(b) of Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2008.)
|
|
|
10.28*
|
Executive
Employment Agreement made and entered into October 15, 2008 by and between
Vail Holdings, Inc., a wholly-owned subsidiary of Vail Resorts, Inc., and
Keith Fernandez. (Incorporated by reference to Exhibit 10.3 of
the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended
October 31, 2008.)
|
|
|
10.29*
|
Executive
Employment Agreement made and entered into October 15, 2008 by and between
Vail Holdings, Inc., a wholly-owned subsidiary of Vail Resorts, Inc., and
John McD. Garnsey. (Incorporated by reference to Exhibit 10.4
of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended
October 31, 2008.)
|
|
|
10.30(a)*
|
Executive
Employment Agreement made and entered into October 15, 2008 by and between
Vail Holdings, Inc., a wholly-owned subsidiary of Vail Resorts, Inc., and
Blaise Carrig. (Incorporated by reference to Exhibit 10.5 of
the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended
October 31, 2008.)
|
|
|
10.30(b)*
|
Addendum
to the Employment Agreement, dated September 1, 2002, between Blaise
Carrig and Heavenly Valley, Limited Partnership. (Incorporated by
reference to Exhibit 10.31(b) of Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2008.)
|
|
|
10.31
|
Form
of Indemnification Agreement. (Incorporated by reference to
Exhibit 10.8 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended October 31, 2008.)
|
|
|
21
|
Subsidiaries
of Vail Resorts, Inc.
|
258
|
|
22
|
Consent
of Independent Registered Public Accounting Firm.
|
264
|
|
23
|
Power
of Attorney. Included on signature pages
hereto.
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
265
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
266
|
|
32
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
267
|
|
*Management
contracts and compensatory plans and arrangements.
|
||
|
**Portions
of this Exhibit have been omitted pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
|
||
b) Exhibits
The
exhibits filed herewith as indicated in the exhibit listed above following the
Signatures section of this report.
c) Financial
Statement Schedules
|
Consolidated
Financial Statement Schedule
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||
|
For
the Years Ended July 31,
|
|||||||||||||
|
Balance
at
|
Charged
to
|
Balance
at
|
|||||||||||
|
Beginning
of
|
Costs
and
|
End
of
|
|||||||||||
|
Period
|
Expenses
|
Deductions
|
Period
|
||||||||||
|
2007
|
|||||||||||||
|
Inventory
Reserves
|
$
|
755
|
$
|
2,202
|
$
|
(2,131
|
)
|
$
|
826
|
||||
|
Valuation
Allowance on Income Taxes
|
1,605
|
--
|
(17
|
)
|
1,588
|
||||||||
|
Trade
Receivable Allowances
|
1,388
|
1,638
|
(908
|
)
|
2,118
|
||||||||
|
2008
|
|||||||||||||
|
Inventory
Reserves
|
826
|
2,729
|
(2,344
|
)
|
1,211
|
||||||||
|
Valuation
Allowance on Income Taxes
|
1,588
|
--
|
--
|
1,588
|
|||||||||
|
Trade
Receivable Allowances
|
2,118
|
670
|
(1,122
|
)
|
1,666
|
||||||||
|
2009
|
|||||||||||||
|
Inventory
Reserves
|
1,211
|
2,496
|
(2,252
|
)
|
1,455
|
||||||||
|
Valuation
Allowance on Income Taxes
|
1,588
|
--
|
--
|
1,588
|
|||||||||
|
Trade
Receivable Allowances
|
$
|
1,666
|
$
|
2,109
|
$
|
(1,898
|
)
|
$
|
1,877
|
||||
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
Date: September
24, 2009
|
Vail
Resorts, Inc.
|
|
|
By:
|
/s/ Jeffrey W. Jones
|
|
|
Jeffrey
W. Jones
|
||
|
Senior
Executive Vice President and
|
||
|
Chief
Financial Officer
|
||
|
(Principal
Financial Officer)
|
||
|
Date: September
24, 2009
|
Vail
Resorts, Inc.
|
|
|
By:
|
/s/ Mark L. Schoppet
|
|
|
Mark
L. Schoppet
|
||
|
Vice
President, Controller and
|
||
|
Chief
Accounting Officer
|
||
|
(Principal
Accounting Officer)
|
||
POWER
OF ATTORNEY
Each
person whose signature appears below hereby constitutes and appoints Jeffrey W.
Jones or Mark L. Schoppet his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments or
supplements to this Form 10-K and to file the same with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or
appropriate to be done with this Form 10-K and any amendments or supplements
hereto, as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on September 24, 2009.
|
Signature
|
Title
|
|
/s/
Robert A. Katz
|
Chief
Executive Officer and Chairman of the Board
|
|
Robert
A. Katz
|
(Principal
Executive Officer)
|
|
/s/
Jeffrey W. Jones
|
Senior
Executive Vice President,
|
|
Jeffrey
W. Jones
|
Chief
Financial Officer and Director
|
|
(Principal
Financial Officer)
|
|
|
/s/
Roland A. Hernandez
|
|
|
Roland
A. Hernandez
|
Director
|
|
/s/
Thomas D. Hyde
|
|
|
Thomas
D. Hyde
|
Director
|
|
/s/
Richard D. Kincaid
|
|
|
Richard
D. Kincaid
|
Director
|
|
/s/
John T. Redmond
|
|
|
John
T. Redmond
|
Director
|
|
/s/
John F. Sorte
|
|
|
John
F. Sorte
|
Director
|
|
/s/
William P. Stiritz
|
|
|
William
P. Stiritz
|
Director
|
____________________
SUPPLEMENTAL
INDENTURE
Dated as
of August 24, 2009
to
INDENTURE
Dated as
of January 29, 2004
among
VAIL
RESORTS, INC., as Issuer,
the
Guarantors named therein, as Guarantors,
and
THE BANK
OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
____________________
6 3/4 %
Senior Subordinated Notes due 2014
SUPPLEMENTAL
INDENTURE, dated as of August 24, 2009, among Vail Resorts, Inc., a Delaware
corporation (the “Issuer”), the
Guarantors named on the signature pages hereto (the “Guarantors”), the
Additional Guarantor named on the signature pages hereto (collectively the
“Additional
Guarantor”), and The Bank of New York Mellon Trust Company, N.A., as
successor trustee to The Bank of New York, as Trustee (the “Trustee”).
WHEREAS,
the Issuer and the Guarantors have heretofore executed and delivered to the
Trustee an Indenture dated as of January 29, 2004 (the “Indenture”) providing
for the issuance of $390,000,000 aggregate principal amount of 6 3/4%
Senior Subordinated Notes due 2014 of the Company (the “Notes”);
and
WHEREAS,
subsequent to the execution of the Indenture and the issuance of $390,000,000
aggregate principal amount of the Notes, the Additional Guarantor has become a
guarantor under the Credit Agreement; and
WHEREAS,
pursuant to and as contemplated by Sections 4.18 and 9.01 of the Indenture, the
parties hereto desire to execute and deliver this Supplemental Indenture for the
purpose of providing for the Additional Guarantor to expressly assume all the
obligations of a Guarantor under the Notes and the Indenture.
NOW,
THEREFORE, in consideration of the above premises, each party agrees, for the
benefit of the other and for the equal and ratable benefit of the Holders of the
Notes, as follows:
I.
ASSUMPTION
OF GUARANTEES
The
Additional Guarantor, as provided by Section 4.18 of the Indenture, jointly and
severally, hereby unconditionally expressly assumes all of the obligations of a
Guarantor under the Notes and the Indenture to the fullest as set forth in
Article 12 of the Indenture; and the Additional Guarantor may expressly exercise
every right and power of a Guarantor under the Indenture with the same effect as
if it had been named a Guarantor therein.
II.
MISCELLANEOUS
PROVISIONS
A. Terms
Defined.
For all
purposes of this Supplemental Indenture, except as otherwise defined or unless
the context otherwise requires, terms used in capitalized form in this
Supplemental Indenture and defined in the Indenture have the meanings specified
in the Indenture.
B. Indenture.
Except as
amended hereby, the Indenture and the Notes are in all respects ratified and
confirmed and all the terms shall remain in full force and effect.
C. Governing
Law.
THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
D. Successors.
All
agreements of the Company, the Guarantors and the Additional Guarantor in this
Supplemental Indenture, the Notes and the Guarantees shall bind their respective
successors. All agreements of the Trustee in this Supplemental
Indenture shall bind its successors.
E. Duplicate
Originals.
The
parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
F. Trustee
Disclaimer.
The
Trustee is not responsible for the validity or sufficiency of this Supplemental
Indenture.
SIGNATURES
IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed, all as of the date first written above.
ISSUER:
|
|
VAIL
RESORTS, INC.
|
|
By:
|
/s/
Jeffrey W. Jones
|
|
|
Name:
Jeffrey W. Jones
|
||
|
Title: Senior
Executive Vice President and Chief
|
||
|
Financial
Officer
|
||
|
|
GUARANTORS:
|
Arrabelle
at Vail Square, LLC
Beaver
Creek Associates, Inc.
Beaver
Creek Consultants, Inc.
Beaver
Creek Food Services, Inc.
Breckenridge
Resort Properties, Inc.
Bryce
Canyon Lodge Company
Colter
Bay Corporation
Colter
Bay Convenience Store, LLC
Colter
Bay General Store, LLC
Colter
Bay Café Court, LLC
Colter
Bay Marina, LLC
Crystal
Peak Lodge of Breckenridge, Inc.
Delivery
Acquisition, Inc.
Gillett
Broadcasting, Inc.
Grand
Teton Lodge Company
Heavenly
Valley, Limited Partnership
Jackson
Hole Golf and Tennis Club, Inc.
Jackson
Hole Golf & Tennis Club Snack Shack, LLC
Jackson
Lake Lodge Corporation
Jenny
Lake Lodge, Inc.
Jenny
Lake Store, LLC
JHL&S
LLC
Keystone
Conference Services, Inc.
Keystone
Development Sales, Inc.
Keystone
Food and Beverage Company
Keystone
Resort Property Management Company
Lodge
Properties, Inc.
Lodge
Realty, Inc.
Mesa
Verde Lodge Company
National
Park Hospitality Company
One Ski
Hill Place, LLC
Property
Management Acquisition Corp., Inc.
RCR Vail,
LLC
Rockresorts
Arrabelle, LLC
Rockresorts
Cheeca, LLC
Rockresorts
Cordillera Lodge Company, LLC
Rockresorts
Eleven Biscayne, LLC
Rockresorts
Equinox, Inc.
Rockresorts
Hotel Jerome, LLC
Rockresorts
International, LLC
Rockresorts
LLC
Rockresorts
LaPosada, LLC
Rockresorts
Rosario, LLC
Rockresorts
(St. Lucia) Inc.
Rockresorts
Ski Tip, LLC
Rockresorts
Third Turtle, Ltd.
Rockresorts
Wyoming, LLC
SOHO
Development, LLC
SSV
Holdings, Inc.
Stampede
Canteen, LLC
Teton
Hospitality Services, Inc.
The
Chalets at the Lodge at Vail, LLC
The Vail
Corporation
The
Village at Breckenridge Acquisition Corp., Inc.
Vail
Associates Holdings, Ltd.
Vail
Associates Investments, Inc.
Vail
Associates Real Estate, Inc.
Vail Food
Services, Inc.
Vail
Holdings, Inc.
Vail
Hotel Management Company, LLC
Vail
Resorts Development Company
Vail
Resorts Lodging Company
Vail
Summit Resorts, Inc.
Vail
Trademarks, Inc.
Vail/Arrowhead,
Inc.
Vail/Beaver
Creek Resort Properties, Inc.
VAMHC,
Inc.
Vail RR,
Inc.
VA Rancho
Mirage I, Inc.
VA Rancho
Mirage II, Inc.
VA Rancho
Mirage Resort, L.P.
VR
Heavenly I, Inc.
VR
Heavenly II, Inc.
VR
Holdings, Inc.
Zion
Lodge Company
Each by
its authorized officer or signatory:
|
By:
|
/s/
Jeffrey W. Jones
|
|
|
Name:
Jeffrey W. Jones
|
||
|
Title: Senior
Executive Vice President and
|
||
|
Chief
Financial Officer of each Guarantor listed
above
|
||
ADDITIONAL
GUARANTOR:
ROCKRESORTS
DR, LLC
a
Delaware limited liability company
by:
Rockresorts International, LLC, its
managing
member
by: Vail
R.R., Inc., its
managing
member
|
By:
|
/s/
Jeffrey W. Jones
|
|
|
Name:
Jeffrey W. Jones
|
||
|
Title: Senior
Executive Vice President and
|
||
|
Chief
Financial Officer
|
||
|
|
TRUSTEE:
|
|
|
THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
Trustee
|
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By:
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/s/
Alex Briffett
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Name:
John A. (Alex) Briffett
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Title: Senior
Associate
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Exhibit 10.8(a)
CUSIP
NUMBER:
FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as
of January 28, 2005
among
THE
VAIL CORPORATION
(d/b/a “Vail Associates, Inc.”)
as
Borrower
BANK
OF AMERICA, N.A.
as
Administrative Agent
U.S.
BANK NATIONAL ASSOCIATION
WELLS
FARGO BANK, NATIONAL ASSOCIATION
as
Co-Syndication Agents
DEUTSCHE
BANK TRUST COMPANY AMERICAS
LASALLE
BANK NATIONAL ASSOCIATION
as
Co-Documentation Agents
and
The
Lenders Party Hereto
BANC OF AMERICA SECURITIES
LLC,
as Sole
Lead Arranger and Sole Book Manager
TABLE OF
CONTENTS
Page
SECTION 1
DEFINITIONS AND TERMS. 1
1.1
Definitions. 1
1.2
Number and Gender of Words. 24
1.3
Accounting Principles. 25
1.4
Rounding. 26
1.5
References to Agreements and Laws. 26
1.6 Times
of Day. 26
1.7 L/C
Amounts. 26
SECTION 2
COMMITMENT. 26
2.1
Credit Facility. 26
2.2 Loan
Procedure. 26
2.3 L/C
Subfacility. 28
2.4 Swing
Line Loans. 36
2.5
Increase in Total Commitment. 38
SECTION 3
TERMS OF PAYMENT. 39
3.1 Notes
and Payments. 39
3.2
Interest and Principal Payments; Prepayments; Voluntary Commitment Reductions.
40
3.3
Interest Options. 42
3.4
Quotation of Rates. 42
3.5
Default Rate. 42
3.6
Interest Recapture. 42
3.7
Interest Calculations. 42
3.8
Maximum Rate. 42
3.9
Interest Periods. 43
3.10
Order of Application. 43
3.11
Sharing of Payments, Etc. 44
3.12
Booking Loans. 44
SECTION 4
TAXES, YIELD PROTECTION, AND ILLEGALITY 44
4.1
Taxes. 44
4.2
Illegality. 46
4.3
Inability to Determine Rates. 46
4.4
Increased Costs; Reserves on Revolver Loans that are LIBOR Loans.
47
4.5
Compensation for Losses. 48
4.6
Mitigation Obligations; Replacement of Lenders. 48
4.7
Survival. 49
SECTION 5
FEES. 49
5.1
Treatment of Fees. 49
5.2 Fee
Letter. 49
5.3 L/C
Fees. 49
5.4
Commitment Fee. 50
SECTION 6
GUARANTY AND SECURITY. 50
6.1
Guaranty. 50
6.2
Collateral. 50
6.3
Additional Collateral and Guaranties. 50
6.4
Additional Documents or Information. 51
SECTION 7
CONDITIONS PRECEDENT. 51
7.1
Initial Advance. 51
7.2 Each
Advance. 52
SECTION 8
REPRESENTATIONS AND WARRANTIES. 53
8.1
Regulation U. 53
8.2
Corporate Existence, Good Standing, Authority and Compliance. 53
8.3
Subsidiaries. 53
8.4
Authorization and Contravention. 54
8.5
Binding Effect. 54
8.6
Financial Statements; Fiscal Year. 54
8.7
Litigation. 54
8.8
Taxes. 54
8.9
Environmental Matters. 55
8.10
Employee Plans. 55
8.11
Properties and Liens. 55
8.12
Government Regulations. 56
8.13
Transactions with Affiliates. 56
8.14
Debt. 56
8.15
Material Agreements. 56
8.16
Labor Matters. 56
8.17
Solvency. 57
8.18
Intellectual Property. 57
8.19 Full
Disclosure. 57
8.20
Insurance. 57
8.21
Compliance with Laws. 57
8.22
Senior Debt. 57
SECTION 9
AFFIRMATIVE COVENANTS. 57
9.1 Items
to be Furnished. 57
9.2 Use
of Proceeds. 59
9.3 Books
and Records. 59
9.4
Inspections. 59
9.5
Taxes. 60
9.6
Payment of Obligations. 60
9.7
Maintenance of Existence, Assets, and Business. 60
9.8
Insurance. 60
9.9
Environmental Laws. 61
9.10
Subsidiaries. 61
9.11
Designation and Re-designation of Subsidiaries. 61
SECTION
10 NEGATIVE COVENANTS. 62
10.1
Taxes. 62
10.2
Payment of Obligations. 62
10.3
Employee Plans. 62
10.4
Debt. 62
10.5
Liens. 62
10.6
Transactions with Affiliates. 63
10.7
Compliance with Laws and Documents. 63
10.8
Loans, Advances and Investments. 63
10.9
Distributions. 65
10.10
Sale of Assets. 66
10.11
Acquisitions, Mergers, and Dissolutions. 66
10.12
Assignment. 68
10.13
Fiscal Year and Accounting Methods. 68
10.14 New
Businesses. 68
10.15
Government Regulations. 68
10.16
Burdensome Agreements. 68
10.17 Use
of Proceeds. 68
SECTION
11 FINANCIAL COVENANTS. 68
11.1
Maximum Leverage Ratios. 69
11.2
Minimum Fixed Charge Coverage Ratio. 69
11.3
Minimum Net Worth. 69
11.4
Interest Coverage Ratio. 70
11.5
Capital Expenditures. 70
SECTION
12 DEFAULT. 70
12.1
Payment of Obligation. 70
12.2
Covenants. 70
12.3
Debtor Relief. 70
12.4
Judgments and Attachments. 70
12.5
Government Action. 71
12.6
Misrepresentation. 71
12.7
Ownership. 71
12.8
Default Under Other Agreements. 71
12.9
Subordinated Debt. 71
12.10
Validity and Enforceability of Loan Papers. 71
12.11
Employee Plans. 71
SECTION
13 RIGHTS AND REMEDIES. 72
13.1
Remedies Upon Default. 72
13.2
Company Waivers. 72
13.3
Performance by Administrative Agent. 72
13.4 Not
in Control. 72
13.5
Course of Dealing. 73
13.6
Cumulative Rights. 73
13.7
Application of Proceeds. 73
13.8
Diminution in Value of Collateral. 73
13.9
Certain Proceedings. 73
SECTION
14 ADMINISTRATIVE AGENT. 73
14.1
Appointment and Authority. 73
14.2
Delegation of Duties. 73
14.3
Rights as a Lender. 74
14.4
Reliance by Administrative Agent. 74
14.5
Exculpatory Provisions. 74
14.6
Resignation as Administrative Agent. 75
14.7
Non-Reliance on Administrative Agent and Other Lenders. 76
14.8
Administrative Agent May File Proofs of Claim. 76
14.9
Collateral and Guaranty Matters. 76
14.10
Financial Hedges 78
14.11
Bond L/Cs and Bond Documents. 78
14.12 No
Other Duties, Etc. 79
SECTION
15 MISCELLANEOUS. 79
15.1
Headings. 79
15.2
Nonbusiness Days; Time. 79
15.3
Notices and Other Communications; Facsimile Copies. 79
15.4
Expenses; Indemnity; Damage Waiver. 81
15.5
Exceptions to Covenants; Conflict with Agreement. 82
15.6
Governing Law. 82
15.7
Severability. 83
15.8
Waiver of Jury Trial. 83
15.9
Amendments, Etc. 83
15.10
Counterparts; Integration; Effectiveness. 84
15.11
Successors and Assigns; Participation. 85
15.12
Payments Set Aside. 87
15.13
Right of Setoff. 88
15.14
Replacement of Lenders. 88
15.15
Confidentiality. 88
15.16 USA
PATRIOT Act Notice. 89
15.17
Survival of Representations and Warranties. 89
15.18
ENTIRE AGREEMENT. 89
15.19
Designation as Senior Debt. 90
15.20
Restatement of Existing Agreement. 90
SCHEDULES
AND EXHIBITS
Schedule
1 Parties, Addresses, Commitments, and Wiring Information
Schedule
2.3 Existing Letters of Credit and Scheduled Debt
Schedule
7.1 Post-Closing Items and Conditions
Schedule
8.2 Corporate Organization and Structure
Schedule
8.7 Material Litigation Summary
Schedule
8.9 Material Environmental Matters
Schedule
8.11 Critical Assets
Schedule
8.13 Non-Standard Transactions with Affiliates
Schedule
10.8 Loans, Advances and Investments
Schedule
10.9 Permitted Distributions
Schedule
10.16 Existing Burdensome Agreements
Schedule
15.11 Processing and Recordation Fees
Exhibit
A-1 Form of Revolver Note
Exhibit
A-2 Form of Swing Line Note
Exhibit
B-1 Form of Guaranty
Exhibit
B-2 Form of Confirmation of Guaranty
Exhibit
C-1 Form of Loan Notice
Exhibit
C-2 Form of Swing Line Loan Notice
Exhibit D
Form of Compliance Certificate
Exhibit E
Form of Assignment and Assumption
Exhibit
F-1 Form of Pledge Agreement
Exhibit
F-2 Form of Confirmation of Pledge Agreement
FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT
This
Fourth Amended and Restated Credit Agreement is entered into as of January 28,
2005, among The Vail Corporation, a Colorado corporation doing business as
“Vail Associates, Inc.”
(“Borrower”), Lenders (defined below),
and Bank of America, N.A., as Administrative Agent for itself and the other
Lenders.
RECITALS
A. Borrower,
certain lenders, and NationsBank of Texas, N.A., as Agent, were parties to a
Credit Agreement dated as of December 19, 1997 (as amended, the “Original
Agreement”).
B. The
Original Agreement was amended and restated by that certain Amended and Restated
Credit Agreement among Borrower, certain lenders and NationsBank, N.A.
(successor by merger to NationsBank of Texas, N.A.), as Agent, dated as of May
1, 1999 (as amended, the “Amended and
Restated Agreement”).
C. Effective
July 5, 1999, NationsBank, N.A. changed its name to Bank of America, N.A., and
effective July 23, 1999, Bank of America, N.A. merged with and into Bank of
America National Trust and Savings Association, which then changed its name to
Bank of America, N.A.
D. The
Amended and Restated Agreement was amended and restated by that certain Second
Amended and Restated Credit Agreement among Borrower, certain lenders and Bank
of America, N.A., as Agent, dated as of November 13, 2001 (as amended, the “Second Amended
and Restated Agreement”).
E. The
Second Amended and Restated Agreement was amended and restated by that certain
Third Amended and Restated Revolving Credit and Term Loan Agreement among
Borrower, certain lenders and Bank of America, N.A., as Administrative Agent,
dated as of June 10, 2003 (as amended, the “Existing
Agreement”).
F. The
parties wish to amend and restate the Existing Agreement on the terms and
conditions of this Agreement.
In
consideration of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Existing Agreement is hereby amended and restated to read in
its entirety as follows:
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SECTION
1
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DEFINITIONS
AND TERMS.
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1.1
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Definitions.
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Additional
Critical Assets means Critical Assets acquired by the Companies after the
Third Agreement Date.
Adjusted EBITDA
means, without duplication, for any period of calculation, the sum of (a) Resort EBITDA and
(b) EBITDA of the Restricted Companies related to real estate activities in an
amount not greater than 33% of Adjusted EBITDA.
Administrative
Agent means Bank of America, N.A., a national banking association, and
its successor as administrative agent for Lenders under this
Agreement.
Administrative
Agent’s Office
means Administrative Agent’s address and, as appropriate, account as set forth
on Schedule
1, or such other address or account as Administrative Agent may from time
to time notify to Borrower and Lenders.
Administrative
Questionnaire means an Administrative Questionnaire in a form supplied by
Administrative Agent.
Affiliate
means with respect to any Person (the “Relevant
Person”) (a) any
other Person that directly, or indirectly through one or more intermediaries,
controls the relevant Person (a “Controlling
Person”), or (b)
any Person (other than
the Relevant Person) which is controlled by or is under common control with a
Controlling Person. As used herein, the term “control” means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Agreement
means this Fourth Amended and Restated Credit Agreement, and all
schedules and exhibits thereto, as renewed, extended, amended, supplemented, or
restated from time to time.
Applicable Margin
means, for any day, the margin of interest over the Base Rate or LIBOR,
as the case may be, that is applicable when any interest rate is determined
under this Agreement. The Applicable Margin is subject to adjustment
(upwards or downwards, as appropriate) based on the ratio of Funded Debt to
Adjusted EBITDA, as follows:
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Ratio
of Funded Debt to Adjusted EBITDA
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Applicable
Margin for
LIBOR
Loans
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Applicable
Margin
Base
Rate Loans
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I
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Less
than 2.50 to 1.00
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1.00%
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0.00%
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II
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Greater
than or equal to 2.50 to 1.00, but less than 3.00 to 1.00
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1.25%
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0.00%
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III
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Greater
than or equal to 3.00 to 1.00, but less than 3.50 to 1.00
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1.50%
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0.25%
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IV
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Greater
than or equal to 3.50 to 1.00, but less than 4.00 to 1.00
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1.75%
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0.50%
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V
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Greater
than or equal to 4.00 to 1.00
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2.00%
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1.00%
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Prior to
Administrative Agent’s receipt of the Companies’ consolidated Financial
Statements for the Companies’ fiscal quarter ended January 31, 2005, the ratio
of Funded Debt to Adjusted EBITDA shall be fixed at Level
IV. Thereafter, the ratio of Funded Debt to Adjusted EBITDA shall be
calculated on a consolidated basis for the Companies in accordance with GAAP for
the most recently completed fiscal quarter of the Companies for which results
are available. The ratio shall be determined from the Current
Financials and any related Compliance Certificate and any change in the
Applicable Margin resulting from a change in such ratio shall be effective as of
the date of delivery of such Compliance Certificate. However, if
Borrower fails to furnish to Administrative Agent the Current Financials and any
related Compliance Certificate when required pursuant to Section
9.1, then the ratio shall be deemed to be at Level V until Borrower
furnishes the required Current Financials and any related Compliance Certificate
to Administrative Agent. Furthermore, if the Companies’ audited
Financial Statements delivered to Administrative Agent for any fiscal year
pursuant to Section 9.1(a)
result in a different ratio, such revised ratio (whether higher or lower) shall
govern effective as of the date of such delivery. For purposes of
determining such ratio, Adjusted EBITDA for any fiscal quarter shall include on
a pro forma basis all
EBITDA of the Restricted Companies for such period relating to assets acquired
in accordance with this Agreement (including, without limitation, Restricted
Subsidiaries formed or acquired in accordance with Section 9.10
hereof, and Unrestricted Subsidiaries re-designated as Restricted
Subsidiaries in accordance with Section
9.11(b) hereof) during such period, but shall exclude on a pro forma basis all EBITDA of
the Restricted Companies for such period relating to any such assets disposed of
in accordance with this Agreement during such period (including, without
limitation, Restricted Subsidiaries re-designated as Unrestricted Subsidiaries
in accordance with Section
9.11(a) hereof).
Applicable
Percentage means, for any day, the commitment fee percentage applicable
under Section
5.4 when commitment fees are determined under this
Agreement. The Applicable Percentage is subject to adjustment
(upwards or downwards, as appropriate) based on the ratio of Funded Debt to
Adjusted EBITDA, as follows:
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Level
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Ratio
of Funded Debt to Adjusted EBITDA
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Applicable
Percentage
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I
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Less
than 2.50 to 1.00
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0.175%
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II
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Greater
than or equal to 2.50 to 1.00, but less than 3.00 to 1.00
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0.200%
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III
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Greater
than or equal to 3.00 to 1.00, but less than 3.50 to 1.00
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0.250%
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IV
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Greater
than or equal to 3.50 to 1.00, but less than 4.00 to 1.00
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0.250%
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V
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Greater
than or equal to 4.00 to 1.00
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0.375%
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Prior to
Administrative Agent’s receipt of the Companies’ consolidated Financial
Statements for the Companies’ fiscal quarter ended January 31, 2005, the ratio
of Funded Debt to Adjusted EBITDA (which shall be determined as described in the
definition of “Applicable
Margin”) shall be fixed at Level IV.
Approved
Fund means any Fund that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Arranger
means Banc of America Securities LLC, in its capacity as sole lead arranger and
sole book manager.
Assignee
Group means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment
advisor.
Assignment and
Assumption means an Assignment and Assumption substantially in the form
of Exhibit
E hereto.
Attorney
Costs has the meaning set forth in Section
7.1(m).
Auto-Extension
L/C has the meaning set forth in Section
2.3(b)(iii).
Bank of America
means Bank of America, N.A., a national banking association, in its
individual capacity and not as Administrative Agent, and its permitted
successors and assigns.
Base Rate
means, for any day, a fluctuating rate per annum equal to the higher of
(a) the Federal Funds Rate plus 1/2 of 1% and (b) the
rate of interest in effect for such day as publicly announced from time to time
by Bank of America as its “prime rate.” The
“prime rate” is a rate
set by Bank of America based upon various factors including Bank of America’s
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in such rate announced by
Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.
Base Rate Loan
means a Loan bearing interest at the sum of the Base Rate plus the Applicable
Margin.
BBA LIBOR
means the British Bankers Association LIBOR Rate.
BC Housing
L/Cs means, collectively, the (a) $9,232,709 irrevocable transferable L/C
expiring October 31, 2005, issued by the applicable L/C Issuer to Colorado
National Bank and any successor thereto as Trustee under the 1997 Trust
Indenture with Eagle County, Colorado, as Issuer, relating to $10,600,000 of
Eagle County, Colorado, Taxable Housing Facilities Revenue Bonds (BC Housing,
LLC Project) Series 1997A, and (b) $1,531,250 irrevocable transferable L/C
expiring June 15, 2005, issued by the applicable L/C Issuer to Colorado National
Bank and any successor thereto as Trustee under the 1997 Trust Indenture with
Eagle County, Colorado, as Issuer, relating to $10,600,000 of Eagle County,
Colorado, Taxable Housing Facilities Revenue Bonds (BC Housing, LLC Project)
Series 1997B, under the terms of which such Trustee is, subject to the terms and
conditions set forth therein, entitled to draw, with respect to such Bonds, up
to (x) amounts sufficient to pay (i) the principal of such Bonds when due, or
(ii) the portion of the purchase price of such Bonds tendered or deemed tendered
for purchase in accordance with such Indenture and not subsequently remarketed
corresponding to the principal amount of such Bonds, plus (y) amounts equal to
approximately 35 days of accrued interest on such Bonds at 15% per annum (with
respect to Series A) and 50 days of accrued interest on such Bonds (with respect
to Series B) to pay (i) interest on such Bonds when due, or (ii) the portion of
the purchase price of such Bonds tendered or deemed tendered for purchase in
accordance with such Indenture and not subsequently remarketed corresponding to
accrued interest, as each such L/C may be renewed, extended, increased or
amended from time to time in accordance with the Loan Papers.
Bond Documents
means (a) when used in connection with any Bond L/C, those certain Bonds
or other certificates of indebtedness with respect to which such Bond L/C has
been issued as credit support, together with any remarketing agreement, trust
indenture, purchased bond custody agreement, funding agreement, pledge
agreement, and other documents executed pursuant to or in connection with such
bonds or other certificates of indebtedness, and all amendments or supplements
thereto, and (b) in all other cases, collectively, all Bond Documents as defined
in the preceding clause (a)
relating to Bond L/Cs then outstanding.
Bond L/Cs
means all L/Cs issued by any L/C Issuer at the request of (a) Borrower
and any Housing District in support of Bonds issued by such Housing District, or
(b) Borrower and any Metro District in support of Bonds issued by such Metro
District, which L/Cs satisfy the conditions set forth in Section 2.3(j)(i)
herein, and renewals or extensions thereof, including, without limitation, the
BC Housing L/Cs, the Breckenridge Terrace L/Cs, the Tarnes L/Cs, the Tenderfoot
Housing L/Cs, and the Holland Creek L/C.
Bond Purchase
Drawing has the meaning set forth in Section
2.3(j)(ii).
Bond
Rights has the meaning set forth in Section
2.3(j)(iv).
Bonds
means revenue bonds issued by (a) any Housing District or other Person
for the purpose of financing, directly or indirectly, the development of housing
projects designated for employees of the Companies, or (b) any Metro District or
other Person for the purpose of financing, directly or indirectly,
the operation, construction, and maintenance of infrastructure
projects, which projects are related to the Companies’ business activities in
the region in which the projects are being developed, and for which a Restricted
Company has issued credit support in the form of a Bond L/C for such revenue
bonds.
Borrower
is defined in the preamble to this Agreement.
Borrower
Materials has the meaning specified in Section
9.1.
Breckenridge
Terrace L/Cs means, collectively, the (a) $15,198,459 irrevocable
transferable L/C expiring October 31, 2005, issued by the applicable L/C Issuer
to U.S. Bank National Association and any successor thereto as Trustee under the
1999 Trust Indenture with Breckenridge Terrace LLC as Issuer, relating to
approximately $19,980,000 of Breckenridge Terrace LLC Taxable Housing Facilities
Revenue Notes (Breckenridge Terrace Project), Series 1999A, and (b) $5,108,334
irrevocable transferable L/C expiring April 29, 2005, issued by the applicable
L/C Issuer to U.S. Bank National Association and any successor thereto as
Trustee under the 1999 Trust Indenture with Breckenridge Terrace LLC as Issuer,
relating to approximately $19,980,000 of Breckenridge Terrace LLC Taxable
Housing Facilities Revenue Notes (Breckenridge Terrace Project), Series 1999B,
under the terms of which such Trustee is, subject to the terms and conditions
set forth therein, entitled to draw up to (x) amounts sufficient to pay (i) the
principal of such Notes when due, or (ii) the portion of the purchase price of
such Notes tendered or deemed tendered for purchase in accordance with such
Indenture and not subsequently remarketed corresponding to the principal amount
of such Notes, plus (y)
amounts equal to approximately 35 days of accrued interest on such Notes at 15%
per annum (with respect to Series A) and 52 days of accrued interest on such
Notes (with respect to Series B) to pay (i) interest on such Notes when due, or
(ii) the portion of the purchase price of such Notes tendered or deemed tendered
for purchase in accordance with such Indenture and not subsequently remarketed
corresponding to accrued interest, as each such L/C may be renewed, extended,
increased, or amended from time to time in accordance with the Loan
Papers.
Business
Day means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to be closed under the Laws of, or are in fact
closed in, Dallas, Texas or New York, New York, or if such day relates to any
LIBOR Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar
market.
Capital Lease
means any capital lease or sublease that has been (or under GAAP should
be) capitalized on a balance sheet.
Change in
Law means the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any Law, rule, regulation, or
treaty, (b) any change in any Law, rule, regulation, or treaty or in the
administration, interpretation, or application thereof by any Governmental
Authority, or (c) the making or issuance of any request, guideline, or directive
(whether or not having the force of Law) by any Governmental
Authority.
Change of Control
Transaction means an event or series of events by which:
(a) any
“person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such person or its subsidiaries, and any
person or entity acting in its capacity as trustee, agent, or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or
indirectly, of 40% or more of the equity securities of VRI entitled to vote for
members of the board of directors or equivalent governing body of VRI on a
fully-diluted basis;
(b) during
any period of 24 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of VRI cease to be composed of
individuals (i) who were members of that board or equivalent governing body on
the first day of such period, (ii) whose election or nomination to that board or
equivalent governing body was approved by individuals referred to in clause (i)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body, or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses
(i) and (ii) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body (excluding, in the case of both clause
(ii) and clause
(iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as a
result of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors); or
(c) any
Person or two or more Persons acting in concert shall have acquired, by contract
or otherwise, control over the equity securities of VRI entitled to vote for
members of the board of directors or equivalent governing body of VRI on a
fully-diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 51% or more of the combined voting power of such
securities.
Closing
Date means the first date that all conditions precedent set forth in
Section
7.1 have been satisfied or waived in accordance with such
Section.
Code means
the Internal Revenue Code of
1986, as amended from time to time, and related rules and regulations
from time to time in effect.
Collateral
is defined in Section
6.2.
Commitment means,
as to each Lender, its obligation to (a) make Revolver Loans to Borrower
pursuant to Section
2.1, (b) purchase participations in the L/C Exposure, and (c) purchase
participations in Swing Line Loans, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule
1 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable (which amount is subject to increase,
reduction, or cancellation in accordance with the Loan Papers).
Commitment
Percentage means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Total Commitment represented by
such Lender’s Commitment at such time. If the commitment of each
Lender to make Loans and the obligation of each L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section
13.1 or if the Total Commitment has expired, then the Commitment
Percentage of each Lender shall be determined based on the Commitment Percentage
of such Lender most recently in effect, giving effect to any subsequent
assignments. The initial Commitment Percentage of each Lender is set
forth opposite the name of such Lender on Schedule 1
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable.
Commitment
Usage means, at the time of any determination thereof, the sum of (a) the aggregate
Outstanding Amount of all Loans, plus, without duplication, (b) the
L/C Exposure.
Companies
means VRI and each of VRI’s Restricted and Unrestricted Subsidiaries now
or hereafter existing, and Company
means any of the Companies.
Compliance
Certificate means a certificate substantially in the form of Exhibit D
and signed by Borrower’s Chief Financial Officer, together with the
calculation worksheet described therein.
Confirmation of
Guaranty means that certain Confirmation of Guaranty dated of even date
herewith, executed and delivered by the Guarantors party thereto in favor of
Administrative Agent, for the benefit of Lenders, substantially in the form of
Exhibit B-2
hereto.
Confirmation of
Pledge Agreement means a Confirmation of Pledge Agreement dated of even
date herewith, executed and delivered by any Restricted Company that executed a
Pledge Agreement under the Existing Agreement in favor of Administrative Agent,
for the benefit of Lenders, substantially in the form of Exhibit F-2
hereto.
Critical
Assets means all improvements, assets, and Rights essential to ski resort
operations owned or acquired by any Company.
Current
Financials means, initially, the consolidated Financial Statements of the
Companies for the period ended October 31, 2004, and thereafter, the
consolidated Financial Statements of the Companies most recently delivered to
Administrative Agent under Sections 7.1,
9.1(a) or 9.1(b), as
the case may be.
Daily Floating
LIBOR means, for any day, a fluctuating rate per annum equal to BBA
LIBOR, as published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by Administrative Agent from time to time)
at approximately 11:00 a.m., London time, on such day for Dollar deposits with a
term equivalent to one (1) month. If such rate is not available at
such time for any reason, then Daily Floating LIBOR shall be the rate per annum
determined by Administrative Agent to be the rate at which deposits in Dollars
in same day funds in the approximate amount of the Daily Floating LIBOR Loan
being made by Bank of America and with a term equivalent to one (1) month would
be offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London
time) on such day. Notwithstanding the foregoing, Daily Floating
LIBOR on any day that is not a Business Day with respect to LIBOR Loans shall be
Daily Floating LIBOR determined on the immediately preceding Business Day for
LIBOR Loans.
Daily Floating
LIBOR Loan means a Loan at such time as it is made and/or maintained at a
rate of interest based upon Daily Floating LIBOR.
Debt of
any Person means at any date, without duplication (and calculated in accordance
with GAAP), (a) all obligations of such Person for borrowed money (whether as a
direct obligation on a promissory note, bond, zero coupon bond, debenture or
other similar instrument, or as an unfulfilled reimbursement obligation on a
drawn letter of credit or similar instrument, or otherwise), including, without
duplication, all Capital Lease obligations (other than the interest
component of such obligations) of such Person, (b) all obligations of such
Person to pay the deferred purchase price of property or services, other than (i) obligations
under employment contracts or deferred employee compensation plans and (ii)
trade accounts payable and other expenses or payables arising in the ordinary
course of business, (c) all Debt of others secured by a Lien on any asset of
such Person (or for which the holder of the Debt has an existing Right,
contingent or otherwise, to be so secured), whether or not such Debt is assumed
by such Person, and (d) all guarantees and other contingent obligations (as a
general partner or otherwise) of such Person with respect to Debt of
others.
Debtor Relief
Laws means the Bankruptcy Reform Act of
1978, as amended from time to time, and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar Laws affecting
creditors’ Rights from time to time in effect.
Default is defined in Section
12.
Default Rate
means, on any day, an annual rate of interest equal from day to day to
the lesser of
(a) the then-existing Base Rate plus the Applicable Margin
for Base Rate Loans plus 2%, and (b) the
Maximum Rate.
Defaulting
Lender means any Lender that (a) has failed to fund any portion of the
Revolver Loans, participations in L/C Exposure, or participations in Swing Line
Loans required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder, (b) has otherwise failed to pay over to
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute, or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.
Disqualified
Equity Interests means capital stock or other Equity Interests that by
their terms (or by the terms of any debt or security into which they are
convertible or for which they are exchangeable) or upon the happening of any
event, mature or are mandatorily redeemable pursuant to a sinking fund, demand
of the holder, or otherwise, in whole or in part, including, without limitation,
any Equity Interests issued in exchange for or in redemption of any Subordinated
Debt.
Distribution
means, with respect to any shares of any capital stock or other Equity
Interests issued by VRI or any Subsidiary, (a) the retirement, redemption,
purchase, or other acquisition for value of those securities or Equity Interests
by such Person (including, without limitation, in connection with the merger or
consolidation of any Company), (b) the payment of any dividend (whether in cash,
securities, or property) on or with respect to those securities or Equity
Interests by such Person (including, without limitation, in connection with the
merger or consolidation of any Company), (c) any loan or advance by that Person
to, or other investment by that Person in, the holder of any of those
securities, and (d) any other payment by that Person with respect to those
securities or Equity Interests, including any sinking fund or general deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation,
or termination of any such securities or Equity Interests, or on account of any
return of capital to such Person’s stockholders, partners, or members (or the
equivalent Person), if any.
Dollars
and $ mean
lawful money of the United States.
EBITDA
means, for any period of calculation with respect to any Person (or group
of Persons whose Financial Statements are consolidated in accordance with GAAP),
Net Income before interest expense, Taxes based on or measured by income, and
Non-Cash Operating Charges, in each case to the extent deducted in determining
Net Income.
Eligible
Assignee means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) Administrative Agent, the L/C Issuers, and the Swing Line Lenders, and
(ii) unless a Default has occurred and is continuing, Borrower (each such
approval not to be unreasonably withheld or delayed); provided that notwithstanding
the foregoing, Eligible
Assignee shall not include Borrower, any of Borrower’s Affiliates, or the
Companies.
Employee Plan
means an employee pension benefit plan covered by Title IV of ERISA and
established or maintained by any Company.
Environmental Law
means any Law that relates to the pollution or protection of ambient air,
water or land or to Hazardous Substances.
Equity
Interests means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
warrants, options, or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities (other than debt securities) convertible into
or exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights, or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member, or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights, or other interests
are outstanding on any date of determination.
ERISA
means the Employee
Retirement Income Security Act of 1974, as amended, and related rules and
regulations.
Excluded
Taxes means, with respect to Administrative Agent, any Lender, the L/C
Issuers, or any other recipient of any payment to be made by or on account of
any obligation of Borrower hereunder, (a) Taxes imposed on or measured by its
overall net income (however denominated), and franchise Taxes imposed on it (in
lieu of net income Taxes), by the jurisdiction (or any political subdivision
thereof) under the Laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits Taxes imposed by
the United States or any similar Tax imposed by any other jurisdiction in which
Borrower is located, and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by Borrower under Section
15.14), any withholding Tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section
4.1(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from Borrower with respect to such
withholding Tax pursuant to Section
4.1(a).
Existing
Agreement is defined in the Recitals of this Agreement.
Existing Critical
Assets means each of the Critical Assets owned by the Companies on the
Third Agreement Date and listed on Schedule 8.11(a)
hereto.
Existing Housing
Bonds means the following Bonds issued by Housing Districts before the
Third Agreement Date (and re-issuances of such Housing Bonds in accordance with
the related Bond Documents): (a) $10,600,000 of Eagle County, Colorado,
Taxable Housing Facilities Revenue Bonds (BC Housing, LLC Project) Series 1997A
and 1997B, (b) $19,980,000 of Breckenridge Terrace LLC Taxable Housing
Facilities Revenue Notes (Breckenridge Terrace Project), Series 1999A and 1999B,
(c) $10,410,000 of Eagle County, Colorado, Taxable Housing Facilities Revenue
Bonds (The Tarnes at BC, LLC Project), Series 1999A and 1999B, and (d)
$11,585,000 of the Tenderfoot Seasonal Housing, LLC Taxable Housing Facilities
Revenue Notes (Tenderfoot Seasonal Housing, LLC Project), Series 2000A and
2000B, and renewals or extensions of each of the foregoing (but not increases
thereof) on or after the Third Agreement Date.
Existing Housing
Districts means, collectively, Tenderfoot Seasonal Housing LLC, The
Tarnes at BC Housing LLC, BC Housing LLC (Riveredge), and Breckenridge Terrace
LLC, and Existing Housing
District means any one of the Existing Housing Districts.
Existing Metro
Districts means, collectively, Smith Creek Metropolitan District,
Bachelor Gulch Metropolitan District, Holland Creek Metropolitan District, and
Red Sky Ranch Metropolitan District, and Existing Metro
District means any one of the Existing Metro Districts.
Federal Funds
Rate means, for any day, the annual rate (rounded upwards, if necessary,
to the nearest 0.01%) determined (which determination is conclusive and binding,
absent manifest error) by Administrative Agent to be equal to the weighted
average of the rates on overnight federal funds transactions with member banks
of the Federal Reserve System arranged by federal funds brokers on that day, as
published by the Federal Reserve Bank of New York on the next Business Day, or,
if those rates are not published for any day, the average rate charged to
Administrative Agent (in its individual capacity) on such day on such
transactions as determined by Administrative Agent.
Fee
Letters means, collectively, (a) the letter agreement dated December 17,
2004, among VRI, Borrower, Administrative Agent, Arranger, and Bank of America,
as L/C Issuer, and (b) the letter agreement dated January 24, 2005, among VRI,
Borrower, and Wells Fargo Bank, National Association, as L/C Issuer; and Fee Letter
means one of the Fee Letters.
Financial Hedge
means a transaction between Borrower and any Lender or an Affiliate of
any Lender (or another Person reasonably acceptable to Administrative Agent),
which is intended to reduce or eliminate the risk of fluctuations in one or more
interest rates, foreign currencies, commodity prices, equity prices, or other
financial measures, whether or not such transaction is governed by or subject to
any master agreement conforming to ISDA standards and which is legal and
enforceable under applicable Law.
Financial
Statements of a Person means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared (a)
according to GAAP, and (b) other than as stated in Section
1.3, in comparative form to prior year-end figures or corresponding
periods of the preceding fiscal year, as applicable.
Foreign Lender
means a Lender that is not a “United States person” within
the meaning of Section
7701(a)(30) of the Code.
Forest Service
Permit Agreements means (a) that certain Amended and Restated Multiparty
Agreement Regarding Forest Service Term Special Use Permit No. 4056/01; (b) that
certain Amended and Restated Multiparty Agreement Regarding Forest Service
Special Use Permit No. 4065-03; (c) any similar agreement or instrument relating
to any Forest Service Permit and authorized or contemplated by the provisions of
the documents executed in connection with the issuance of the Vail Bonds; and
(d) all renewals, extensions and restatements of, and amendments and supplements
to, any of the foregoing.
Forest Service
Permits means (a) Ski Area Term Special Use Permit Holder No. 4056/01
issued by the Service to Borrower for the Vail ski area on November 23, 1993,
and expiring on October 31, 2031; (b) Term Special Use Permit No. Holder 4065-03
issued by the Service to Borrower’s wholly-owned subsidiary, Beaver Creek
Associates, Inc., for the Beaver Creek ski area on November 10, 1999, and
expiring on December 31, 2038; (c) Term Special Use Permit Holder No. 5289-01
for Keystone ski area issued by the Service to Ralston Resorts, Inc., now known
as Vail Summit Resorts, on December 31, 1996, and expiring on December 31, 2032;
(d) Term Special Use Permit Holder No. 5289-04 for Breckenridge ski area issued
by the Service to Ralston Resorts, Inc., now known as Vail Summit Resorts, on
December 31, 1996, and expiring on December 31, 2029; (e) Term Special Use
Permit Holder No. EDL508901 for Heavenly ski area issued by the Service to
Heavenly Valley on May 7, 2002, and expiring on May 1, 2042; and (f) any
replacements of any of the foregoing.
Fund means
any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding, or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.
Funded Debt
means, without duplication, on any date of determination, the sum of the following,
calculated on a consolidated basis for the Restricted Companies in accordance
with GAAP: (a) all obligations for borrowed money (whether as a direct
obligation on a promissory note, bond, zero coupon bond, debenture, or other
similar instrument, or as an unfulfilled reimbursement obligation on a drawn
letter of credit or similar instrument, or otherwise), plus (b) all Capital Lease
obligations (other than
the interest component of such obligations) of SSI or any Restricted Company,
plus (c) reimbursement
obligations and undrawn amounts under Bond L/Cs supporting Bonds (other than
Existing Housing Bonds) issued by Unrestricted Subsidiaries, but expressly excluding (d)
Debt under Existing Housing Bonds; provided, that, for purposes of
calculating the Funded Debt of the Restricted Companies under this Agreement, if
SSI is not a Restricted Subsidiary, then (unless otherwise indicated) a
percentage of principal of and interest on SSI’s Funded Debt shall be included
in each such calculation, with such percentage being the average weighted
membership interest held by Borrower in SSI (expressed as a percentage) on such
date of determination.
Funding Loss
means any loss or expense that any Lender reasonably incurs because (a)
Borrower fails or refuses (for any reason whatsoever, other than a default by
Administrative Agent or Lender claiming such loss or expense) to take any Loan
that it has requested under this Agreement, or (b) Borrower pays any Revolver
Loan that is a LIBOR Loan or converts any Revolver Loan that is a LIBOR Loan to
a Base Rate Loan, in each case, before the last day of the applicable Interest
Period.
GAAP means
generally accepted accounting principles of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the United States accounting profession) that are
applicable from time to time.
Governmental
Authority means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank, or other
entity exercising executive, legislative, judicial, taxing, regulatory, or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central
Bank).
Guarantor
means each Person executing a Guaranty.
Guaranty
means, collectively, (a) a guaranty substantially in the form of Exhibit
B-1, executed and delivered by any Person pursuant to the requirements of
the Loan Papers, together with (b) any related Confirmation of Guaranty and any
other amendment, modification, supplement, restatement, ratification, or
reaffirmation of any Guaranty made in accordance with the Loan
Papers.
Hazardous
Substance means any substance that is defined or classified as a
hazardous waste, hazardous material, pollutant, contaminant or toxic or
hazardous substance under any Environmental Law.
Heavenly Valley
means Heavenly Valley, Limited Partnership, a Nevada limited
partnership.
Holland Creek
L/C means an irrevocable transferable L/C of up to $8,597,808 expiring
August 24, 2005, issued by the applicable L/C Issuer to U.S. Bank National
Association and any successor thereto as Trustee under the Trust Indenture dated
as of June 1, 2001 with Holland Creek Metropolitan District, pursuant to which
$8,500,000 in aggregate principal amount of the Holland Creek Metropolitan
District, Eagle County, Colorado, Variable Rate Revenue Bonds, Series 2001, are
being issued and delivered by Holland Creek Metropolitan District, a
quasi-municipal corporation and political subdivision of the State of Colorado
under the terms of which such Trustee is, subject to the terms and conditions
set forth therein, entitled to draw, with respect to such Bonds, up to (a) an
amount sufficient to pay (i) the principal of such Bonds when due, or (ii) the
portion of the purchase price of such Bonds tendered or deemed tendered for
purchase in accordance with such Indenture and not subsequently remarketed
corresponding to the principal amount of such Bonds, plus (b) an amount equal
to approximately 35 days of accrued interest on such Bonds (at up to 12% per
annum), to pay (i) interest on such Bonds when due, or (ii) the portion of the
purchase price of such Bonds tendered or deemed tendered for purchase in
accordance with such indenture and not subsequently remarketed corresponding to
accrued interest, as such L/C may be renewed, extended, increased or amended
from time to time in accordance with the Loan Papers.
Honor Date
has the meaning set forth in Section
2.3(c)(i).
Housing Districts
means, collectively, (a) the Existing Housing Districts, and (b) any
other Person which issues Bonds after the Closing Date to finance the
development of housing projects for employees of the Companies; and Housing
District means one of the Housing Districts.
Indemnified
Taxes means Taxes other than Excluded Taxes.
Intellectual
Property means (a) common law, federal statutory, state statutory and
foreign trademarks or service marks (including, without limitation, all
registrations and pending applications and the goodwill of the business
symbolized by or conducted in connection with any such trademark or service
mark), trademark or service mark licenses and all proceeds of trademarks or
service marks (including, without limitation, license royalties and proceeds
from infringement suits), (b) U.S. and foreign patents (including,
without limitation, all pending applications, continuations,
continuations-in-part, divisions, reissues, substitutions and extensions of
existing patents or applications), patent licenses and all proceeds of patents
(including, without limitation, license royalties and proceeds from infringement
suits), (c) copyrights (including, without limitation, all registrations
and pending applications), copyright licenses and all proceeds of copyrights
(including, without limitation, license royalties and proceeds from infringement
suits), and (d) trade secrets, but does not include (i) any
licenses (including, without limitation, liquor licenses) or any permits
(including, without limitation, sales Tax permits) issued by a Governmental
Authority and in which (y) the licensee’s or permittee’s interest is defeasible
by such Governmental Authority and (z) the licensee or permittee has no right
beyond the terms, conditions and periods of the license or permit, or (ii) trade
names or “dba”s to the extent they do not constitute trademarks or service
marks.
Interest
Period means, as to each Revolver Loan that is a LIBOR Loan, the period
commencing on the date such Revolver Loan is disbursed or converted to or
continued as a Revolver Loan that is a LIBOR Loan and ending on the date one,
two, three or six months thereafter, as selected by Borrower in its Loan Notice;
provided that:
(a) any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day;
(b) any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no
Interest Period shall extend beyond the Termination Date.
Internal Control
Event means a material weakness in, or fraud that involves management or
other employees who have a significant role in, Borrower’s internal controls
over financial reporting, in each case as described in the Securities
Laws.
Investment
Limit means, on any date of determination, the sum of (a) $75,000,000 plus (b) 10% of Total
Assets.
ISP means,
with respect to any L/C, the “International Standby Practices
1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).
Laws means
all applicable statutes, laws, treaties, ordinances, rules, regulations, orders,
writs, injunctions, decrees and judgments.
L/C means
(a) each of the Bond L/Cs and each existing letter of credit issued by an L/C
Issuer for the account of any of the Companies and described on Part A of
Schedule
2.3, and (b) each other letter of credit (in such form as shall be
customary in respect of obligations of a similar nature and as shall be
reasonably requested by Borrower) issued by an L/C Issuer under this
Agreement. An L/C may be a standby or commercial letter of
credit.
L/C Agreement
means an application and agreement for the issuance or amendment of an
L/C in the form from time to time in use by the applicable L/C
Issuer.
L/C Borrowing
means an extension of credit resulting from a drawing under any L/C that
has not been reimbursed on the date when made or refinanced as a Revolver
Loan.
L/C Credit
Extension means, with respect to any L/C, the issuance thereof, the
extension of the expiry date thereof, or the increase of the amount
thereof.
L/C Expiration
Date means the day that is seven (7) days prior to the Termination Date
then in effect (or, if such day is not a Business Day, the next preceding
Business Day).
L/C Exposure
means, on any date of determination, without duplication, the sum of (a) the aggregate
amount available to be drawn under all outstanding L/Cs (including, without
limitation, any reinstatement of or increase in the face amount thereof effected
pursuant to the terms of any Bond L/C), plus (b) the aggregate unpaid
reimbursement obligations of Borrower with respect to drawings, drafts or other
forms of demand honored under any L/C (including, without limitation, all L/C
Borrowings and unpaid reimbursement obligations under any Bond
L/C). For purposes of computing the amount available to be drawn
under any L/C, the amount of such L/C shall be determined in accordance with
Section
1.7. For all purposes of this Agreement, if on any date of
determination an L/C has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such
L/C shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.
L/C Issuer
means Bank of America and Wells Fargo Bank, National Association, in their
respective capacities as issuers of L/Cs hereunder, or any successor issuer of
L/Cs hereunder; and L/C Issuer
means one of the L/C Issuers.
L/C Subfacility
means a subfacility under the Agreement for the issuance of L/Cs, as
described in Section
2.3, under which the L/C Exposure may never exceed the L/C
Sublimit.
L/C
Sublimit means the lesser of (a) $150,000,000 and (b) the Total
Commitment (as the same may be increased or reduced in accordance with the Loan
Papers). The L/C Sublimit is part of, and not in addition to, the
Total Commitment.
Lenders
means (a) each of the lenders named on the attached Schedule 1
(and as the context so requires, the Swing Line Lenders) and, subject to this
Agreement, their respective successors and assigns (but not any Participant who
is not otherwise a party to this Agreement), and (b) additional lenders who
become party to this Agreement in accordance with Section
2.5(b) hereof.
Lending Office
means as to any Lender, the office or offices of such Lender described as
such in such Lender’s Administrative Questionnaire, or such other office or
offices as a Lender may from time to time notify Borrower and Administrative
Agent.
LIBOR
means for any Interest Period the rate per annum equal to BBA LIBOR as published
by Reuters (or other customarily used, commercially available source providing
quotations of BBA LIBOR as designated by Administrative Agent from time to time)
at approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first (1st) day
of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason,
then LIBOR
with respect to any such Revolver Loan that is a LIBOR Loan for such
Interest Period shall be the rate per annum determined by Administrative Agent
to be the rate at which deposits in Dollars for delivery on the first (1st) day
of such Interest Period in same day funds in the approximate amount of such
Revolver Loan that is a LIBOR Loan being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be offered by
Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the commencement of such Interest Period;
and
LIBOR Loan
means (a) with respect to Revolver Loans, a Loan bearing interest at the
sum of LIBOR plus the Applicable Margin,
and (b) with respect to Swing Line Loans (or participations therein), a Loan
bearing interest at Daily Floating LIBOR plus the Applicable
Margin.
Lien
means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, a Person shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
Litigation
means any action, suit, proceeding, claim, or dispute by or before any
Governmental Authority.
Loan means
any amount disbursed by any Lender to Borrower or on behalf of any Company under
the Loan Papers, either as an original disbursement of funds, the continuation
of an amount outstanding, or payment under an L/C.
Loan Date
is defined in Section
2.2(a).
Loan Notice
means a request substantially in the form of Exhibit
C-1.
Loan Papers
means (a) this Agreement and the Notes, (b) each Guaranty, (c) all L/Cs
and L/C Agreements, (d) the Security Documents, and (e) all renewals,
extensions, restatements of, amendments and supplements to, and confirmations or
ratifications of, any of the foregoing.
Material Adverse
Event means any (a) material impairment of the ability of the Restricted
Companies as a whole to perform their payment or other material obligations
under the Loan Papers or material impairment of the ability of Administrative
Agent or any Lender to enforce any of the material obligations of the Restricted
Companies as a whole under the Loan Papers; (b) material and adverse effect on
the operations, business, properties, liabilities (actual or contingent), or
condition (financial or otherwise) of the Restricted Companies as a whole; or
(c) a material adverse effect upon the legality, validity, or binding effect
against the Restricted Companies as a whole of any Loan Paper to which such
Restricted Companies are parties.
Material
Agreement means, for any Person, any agreement (excluding purchase orders
for material, services, or inventory in the ordinary course of business) to
which that Person is a party, by which that Person is bound, or to which any
assets of that Person may be subject, that is not cancelable by that Person upon
30 or fewer days’ notice without liability for further payment, other than nominal penalty,
and that requires that Person to pay more than $2,000,000 during any 12-month
period.
Maximum Amount
and Maximum Rate
respectively mean, for a Lender, the maximum non-usurious amount and the
maximum non-usurious rate of interest that, under applicable Law, such Lender is
permitted to contract for, charge, take, reserve or receive on the Obligation
held by such Lender.
Metro
Districts means, collectively, (a) the Existing Metro Districts, and (b)
any other Person which issues Bonds after the Closing Date to finance the
operation, construction, and maintenance of infrastructure projects in
municipalities, which projects are related to the Companies’ business activities
in the region in which the projects are being developed; and Metro
District means one of the Metro Districts.
Moody’s
means Moody’s Investor’s Service, Inc.
Multiemployer
Plan means a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to
which any Company (or any Person that, for purposes of Title IV of ERISA, is a
member of Borrower’s controlled group or is under common control with Borrower
within the meaning of Section
414 of the Code) is making, or has made, or is accruing, or has accrued,
an obligation to make contributions.
Net Income
means, for any period with respect to any Person (or group of Persons whose
Financial Statements are consolidated in accordance with GAAP), the net income
of such Person or Persons from continuing operations after extraordinary items
(excluding gains or losses from the disposition of assets) for that period
determined in accordance with GAAP; provided however, that for
purposes of calculating Net Income of the Restricted Companies under this
Agreement:
(a) if
any Restricted Company owns an interest in a Person that is not consolidated in
the consolidated financial statements of VRI and its Restricted Subsidiaries in
accordance with GAAP (a “Non-Consolidated
Entity”), then such equity interest shall not be accounted for under the
equity method of accounting, but the “Net
Income” of such Restricted Company shall be increased to the extent cash
is distributed to such Restricted Company by any such Non-Consolidated Entity
during such period and shall be decreased to the extent cash is contributed in
the form of equity to such Non-Consolidated Entity in order to fund losses of
such Non-Consolidated Entity during such period; provided, that for purposes of Section
10.9(d), the Net Income of any Restricted Company for any period shall
not be adjusted to the extent cash is contributed by such Restricted Company in
the form of equity to a Non-Consolidated Entity in order to fund losses of such
Non-Consolidated Entity during such period;
(b) if
SSI is not a Restricted Subsidiary, then (unless otherwise indicated) a
percentage of the Net Income of SSI shall be included in each such calculation,
with such percentage being the weighted average membership interest held by
Borrower in SSI (expressed as a percentage) during the applicable period of
calculation for each such calculation; and
(c) premiums
paid and the write-off of any unamortized balance of original issue discount in
connection with a redemption of, or tender offer for, debt that is consummated
in accordance with the Loan Papers, and the amortization and write-off of any
unamortized balance of debt issuance costs, shall be excluded.
Net Proceeds
means, with respect to the issuance of equity securities, the cash and
non-cash proceeds received from such issuance, net of attorneys’ fees,
investment banking fees, accountants fees, underwriting discounts and
commissions, and other customary fees and expenses actually incurred in
connection with such issuance (other than fees, discounts,
commissions, and expenses paid to an Affiliate of such Person).
Non-Cash
Operating Charges means depreciation expense, amortization expense, and
any other non-cash charges determined in accordance with GAAP (including,
without limitation, non-cash compensation expenses incurred in respect of stock
option plans, including, without limitation, pursuant to FAS 123R).
Nonextension
Notice Date has the meaning set forth in Section
2.3(b)(iii).
Notes
means, collectively, the Revolver Notes and Swing Line Notes, and “Note”
means any of the Notes.
Obligation
means all present and future indebtedness and obligations, and all
renewals, increases, and extensions thereof, or any part thereof, now or
hereafter owed to Administrative Agent, the L/C Issuers, and any Lender
(including, without limitation, the Swing Line Lenders) by the Companies under
the Loan Papers, together with
all interest accruing thereon, fees, costs, and expenses (including,
without limitation, all attorneys’ fees and expenses incurred in the enforcement
or collection thereof) payable under the Loan Papers or in connection with the
protection of Rights under the Loan Papers; provided that, all references
to the Obligation
in the Security Documents, the Guaranty, and Section 3.10
herein shall, in addition to the foregoing, also include all present and future
indebtedness, liabilities, and obligations (and all renewals and extensions
thereof or any part thereof) now or hereafter owed to any Lender or any
Affiliate of a Lender arising from, by virtue of, or pursuant to any Financial
Hedge entered into by any Restricted Company.
Other
Taxes means all present or future stamp or documentary Taxes or any other
excise or property Taxes, charges, or similar levies arising from any payment
made hereunder or under any other Loan Paper or from the execution, delivery, or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Paper.
Outstanding
Amount means (a) with respect to Revolver Loans and Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving effect
to any borrowings and prepayments or repayments of Revolver Loans and Swing Line
Loans, as the case may be, occurring on such date; and (b) with respect to any
L/C Exposure on any date, the amount of such L/C Exposure on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Exposure as of such date, including
as a result of any reimbursements by Borrower of Unreimbursed
Amounts.
Participant
is defined in Section
15.11(d).
PBGC means
the Pension Benefit Guaranty Corporation, or any successor thereof, established
under ERISA.
Permitted Debt
means:
(a) the
Obligation;
(b) Debt
of any Company which is listed on Part B of Schedule
2.3;
(c) Debt
of any Company arising from endorsing negotiable instruments for collection in
the ordinary course of business;
(d) Subordinated
Debt (and guarantees by Restricted Companies of Subordinated Debt of other
Restricted Companies, if such guarantees are subordinated to the payment and
collection of the Obligation on the same terms as such Subordinated Debt or
otherwise upon terms satisfactory to Administrative Agent);
(e) in
addition to the foregoing: (i) Debt of Unrestricted Subsidiaries which is
non-recourse to the Restricted Companies and their assets, unless otherwise
included in clause (iii)
hereof; (ii) Debt of any Company arising under or pursuant to the
Existing Housing Bonds to which any such Company is a party; (iii) Debt of any
Company arising under or pursuant to Bonds (other than Existing Housing Bonds)
to which any such Company is a party, so long as after giving
effect to the incurrence of such Debt and, without duplication, Debt incurred by
Borrower or any other Company in support thereof, (A) the Companies are in pro
forma compliance with all financial covenants set forth in Section 11.1
herein, and (B) no Default or Potential Default exists or would result
after giving effect thereto; (iv) fees and other amounts payable under the
Forest Service Permits in the ordinary course of business; and (v) inter-company
Debt between Restricted Companies;
(f) up
to $12,975,000 of Debt arising under the guaranty by Borrower of amounts owed by
SSI under its Credit Agreement dated as of December 30, 1999, as amended,
restated or supplemented from time to time (with any remaining Debt under such
guaranty permitted only to the extent permitted under clause (g)
below); and
(g) in
addition to the foregoing, Debt in an amount equal to the sum of (i) $100,000,000 and
(ii) at such time as the SSI guaranty in clause (f)
above is or has been terminated in full, such that Borrower has no obligations
thereunder, $13,000,000, less any amount paid by Borrower, if any, under such
guaranty.
Permitted Liens
means:
(a) Liens
created by the Security Documents or other Liens securing the Obligation, and
so long as the
Obligation is ratably secured therewith, Liens securing Debt incurred by any
Company under any Financial Hedge with any Lender or an Affiliate of any Lender
to the extent permitted under Section 10.8(i);
(b) Liens
created by, or pursuant to, the Forest Service Permit Agreements for the benefit
of the holders of the Vail Bonds and Liens on the amounts in the Bond Fund
established and maintained in accordance with the provisions of the documents
executed in connection with the issuance of the Vail Bonds (and Liens created on
all or any portion of the same assets in connection with any refinancing of such
bonds);
(c) Liens
on the amounts in the Bond Fund, Redemption Fund and Rebate Fund established and
maintained in accordance with the provisions of the documents executed in
connection with the issuance of the Summit Bonds (and Liens created on all or
any portion of the same assets in connection with any refinancing of such
bonds);
(d) Liens
on assets of Unrestricted Subsidiaries securing Debt which is non-recourse
(other than with respect to the L/C listed on Schedule 2.3
supporting obligations of SSI) to the Restricted Companies and their
assets (to the extent not otherwise included in clause (f)
below);
(e) Liens
on assets of any Company securing Permitted Debt arising under or pursuant to
any Bond Documents to which any such Company is a party;
(f) purchase
money liens which encumber only the assets acquired;
(g) pledges
or deposits made to secure payment of workers’ compensation, unemployment
insurance or other forms of governmental insurance or benefits (other
than ERISA) or to participate in any fund in connection with workers’
compensation, unemployment insurance, pensions (other than ERISA) or other
social security programs;
(h) good-faith
pledges or deposits made to secure performance of bids, tenders, contracts
(other than for the
repayment of borrowed money) or leases, or to secure statutory obligations,
surety or appeal bonds or indemnity, performance or other similar bonds in the
ordinary course of business;
(i) encumbrances
and restrictions on the use of real property which do not materially impair the
use thereof;
(j) the
following, if either (1) no amounts are due and payable and no Lien has been
filed or agreed to, or (2) the validity or amount thereof is being contested in
good faith by lawful proceedings diligently conducted, reserve or other
provision required by GAAP has been made, levy and execution thereon have been
(and continue to be) stayed or payment thereof is covered in full (subject to
the customary deductible) by insurance: (i) Liens for Taxes; (ii)
Liens upon, and defects of title to, property, including any attachment of
property or other legal process prior to adjudication of a dispute on the
merits; (iii) Liens imposed by operation of Law (including, without limitation,
Liens of mechanics, materialmen, warehousemen, carriers and landlords, and
similar Liens); and (iv) adverse judgments on appeal;
(k) any
interest or title of a lessor or licensor in assets being leased or licensed to
a Company;
(l) licenses,
leases or subleases granted to third Persons which do not interfere in any
material respect with the business conducted by the Companies;
(m) any
Lien on any asset of any entity that becomes a Subsidiary of VRI, which Lien
exists at the time such entity becomes a Subsidiary of VRI, so long as (i) any such
Lien was not created in contemplation of such acquisition, merger, or
consolidation, and (ii) any such Lien does not and shall not extend to any
asset other than the assets secured immediately prior to the acquisition in
formation of such Subsidiary;
(n) in
respect of Water Rights, the provisions of the instruments evidencing such Water
Rights and any matter affecting such Water Rights which does not affect the
Companies’ rights to sufficient quantity and quality of water to conduct
business as in effect on the date hereof or any expansion planned as of the date
hereof (including, without limitation, any Lien of the Colorado Water
Conservation Board, or its successors and assigns, on stock owned by any Company
in a Colorado ditch and reservoir company formed in accordance with the Colorado
Corporation Code, as amended);
(o) in
respect of the Forest Service Permits, the provisions of the instruments
evidencing such permits and all rights of the U.S. and its agencies with respect
thereto or with respect to the land affected thereby; and
(p) Liens
on cash accounts not to exceed $250,000 in the aggregate at the FirstBank of
Vail established in connection with collateralizing a portion, if any, of
certain second mortgage loans made by such bank, and guaranteed by Borrower, as
part of the Vail Associates Home Mortgage Program for Borrower’s
employees.
Person
means any individual, partnership, entity or Governmental
Authority.
Platform
has the meaning specified in Section
9.1
Pledge Agreement
means, collectively, (a) a pledge agreement substantially in the
form of Exhibit
F-1, executed and delivered by any Person pursuant to the requirements of
the Loan Papers, together with (b) any related Confirmation of Pledge Agreement
and any other amendment, modification, supplement, restatement, ratification, or
reaffirmation of any Pledge Agreement made in accordance with the Loan
Papers.
Potential Default
means the occurrence of any event or existence of any circumstance that
would, upon notice or lapse of time or both, become a Default.
Principal Debt
means, at any time, the aggregate unpaid principal balance of all Loans,
together with the aggregate unpaid reimbursement obligations of Borrower in
respect of drawings under any L/C (including, without limitation, any L/C
Borrowing).
Purchase
Price means, with respect to any acquisition or merger consummated in
accordance with the provisions of Section
10.11 herein, all (a) direct and indirect cash payments, and (b) deferred
cash payments determined by Borrower to be reasonably likely to be payable
following the closing date of such acquisition or merger, which payments
pursuant to clauses (a)
and (b) herein
are made to or for the benefit of the Person being acquired (or whose assets are
being acquired), its shareholders, or its Affiliates in connection with such
acquisition or merger, including, without limitation, the amount of any Debt
being assumed in connection with such acquisition or merger (and subject to the
limitations on Permitted Debt hereunder) or seller financing, and excluding,
without limitation, payments to Affiliates of the Person being acquired (or
whose assets are being acquired) for usual and customary transitional services
or other operating services provided by such Affiliates of the Person being
acquired (or whose assets are being acquired) pursuant to agreements that have
been entered into in good faith by the parties thereto.
Quarterly Date
means each January 31, April 30, July 31 and October 31; provided, that if any such
Quarterly Date is not a Business Day, the provisions of Section
15.2 shall apply to payments required on such day.
Real Estate Held
for Sale means, with respect to any Person, the real estate of such
Person and its Restricted Subsidiaries classified for financial reporting
purposes as “Real Estate Held
for Sale,” including, without limitation, cash deposits constituting
earnest money or security deposits relating to such real estate held by any such
Person.
Real Estate Joint
Venture means any Person engaged exclusively in the acquisition,
development and operation, or resale of any real estate asset or group of
related real estate assets (and directly related activities).
Related
Parties means, with respect to any Person, such Person’s Affiliates and
the partners, directors, officers, employees, agents and advisors of such Person
and of such Person’s Affiliates.
Representatives
means representatives, officers, directors, employees, attorneys and
agents.
Required Capital
Expenditures means $30,000,000.
Required Lenders
means Lenders holding more than (a) 50% of the Total Commitment, prior to
the termination of the Total Commitment, or (b) 50% of the Commitment Usage,
after the termination of the Total Commitment (with the aggregate amount of each
Lender’s risk participation and funded participation in L/Cs and Swing Line
Loans being deemed “held” by such Lender for
purposes of this definition); provided, that the Commitment of, and
the portion of the Commitment Usage held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.
Resort EBITDA
means, without duplication, on any date of determination, (a) the sum of (i) EBITDA of the
Restricted Companies, plus
(ii) a
percentage of the EBITDA of SSI (with such percentage being the weighted average
membership interest held by Borrower in SSI (expressed as a percentage) during
the applicable period of calculation), plus (iii) insurance proceeds
(up to a maximum of $10,000,000 in the aggregate in any fiscal year) received by
the Restricted Companies under policies of business interruption insurance (or
under policies of insurance which cover losses or claims of the same character
or type), minus (b)
EBITDA of the Restricted Companies related to real estate activities; it being
understood that for purposes of this definition, the Restricted Companies
engaged in VRI’s lodging segment shall not be deemed to be engaged in real
estate activities.
Responsible
Officer means the chairman, president, chief executive officer, or chief
financial officer of Borrower.
Restricted
Companies means VRI, VHI, Borrower, and all of VRI’s Restricted
Subsidiaries; and Restricted
Company means any of the Restricted Companies.
Restricted
Subsidiaries means (a) VHI, (b) Borrower, and (c) all of VRI’s other
direct and indirect Subsidiaries (other than Unrestricted
Subsidiaries); and Restricted
Subsidiary means any of the Restricted Subsidiaries.
Revolver
Loan means any Loan made under this Agreement, other than a Swing Line Loan
or an L/C Borrowing.
Revolver
Note means a promissory note in substantially the form of Exhibit A-1,
and all renewals and extensions of all or any part thereof.
Rights
means rights, remedies, powers, privileges and benefits.
S&P
means Standard & Poor’s Ratings Group (a division of The McGraw Hill
Companies, Inc.).
Securities
Laws means the Securities Act of 1933, the Securities Exchange Act of
1934, and the applicable accounting and auditing principles, rules, standards,
and practices promulgated, approved, or incorporated by the Securities and
Exchange Commission, or any Governmental Authority succeeding to any of its
principal functions, or the Public Company Accounting Oversight Board, as each
of the foregoing may be amended and in effect on any applicable date
hereunder.
Security
Documents means, collectively, (a) each Pledge Agreement, each
Confirmation of Pledge Agreement, any security agreement, mortgage, deed of
trust, control agreement, or other agreement or document, together with all
related financing statements and stock powers, in form and substance reasonably
satisfactory to Administrative Agent and its legal counsel, executed and
delivered by any Person in connection with this Agreement to create a Lien in
favor of Lenders on any of its real or personal property, as amended, modified,
supplemented, restated, ratified, or reaffirmed; and (b) with respect to each
Bond L/C, the trust indenture entered into in connection with such Bond L/C, and
such other agreements and documents delivered by the Issuer (as defined in the
applicable Bond L/C) and the applicable Trustee, pursuant to which such Issuer’s
interest in the Trust Estate (as defined in the applicable trust indenture) and,
upon payment in full of the applicable Bonds, such Trustee’s interest in the
applicable Bond Documents, are assigned to the applicable L/C Issuer as security
for payment of such Bonds.
Senior Debt
means Funded Debt other
than Subordinated Debt.
Senior
Subordinated Indenture means the Indenture dated as of January 29, 2004,
among VRI, as Issuer, The Bank of New York, as Trustee, and certain of VRI’s
Subsidiaries, as guarantors, as supplemented from time to time.
Service
means the U.S. Department of Agriculture Forest Service or any successor
agency.
Shareholders’
Equity means, as of any date of determination for the Restricted
Companies on a consolidated basis, shareholders’ equity as of that date
determined in accordance with GAAP.
Similar
Business means any business conducted by VRI or any of its Subsidiaries
on the Closing Date or any other recreation, leisure, and/or hospitality
business, including, without limitation, ski mountain resort operations or any
business or activity that is reasonably similar thereto, a reasonable extension,
development, or expansion thereof, or reasonably ancillary thereto.
Solvent
means, as to a Person, that (a) the aggregate fair market value of its
assets exceeds its liabilities (whether contingent, subordinated, unmatured,
unliquidated, or otherwise), (b) it has sufficient cash flow to enable it to pay
its Debts as they mature, and (c) it does not have unreasonably small capital to
conduct its businesses.
SSI means
SSI Venture LLC, a Colorado limited liability company doing business as
“Specialty Sports Venture” and an Unrestricted Subsidiary of
Borrower.
Subordinated Debt
means any unsecured indebtedness for borrowed money for which a Company
is directly and primarily obligated, so long as such Debt (a) does
not have any stated maturity before the latest maturity of any part of the
Obligation, (b) has terms that are no more restrictive upon the Company than the
terms of the Loan Papers, and (c) is subordinated, upon terms satisfactory to
Administrative Agent, to the payment and collection of the Obligation; and, in
any event, Subordinated
Debt includes notes, guarantees and all other obligations now or
hereafter arising under or pursuant to the Senior Subordinated Indenture (or any
other indenture that contains substantially the same material terms as the
Senior Subordinated Indenture).
Subordinated
Notes means the 6-¾% Senior Subordinated Notes issued under the Senior
Subordinated Indenture.
Subsidiary
means, with respect to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such
Person.
Summit Bonds
means (a) the Summit County, Colorado, Sports Facilities Refunding
Revenue Bonds (Keystone Resorts Management, Inc. Project) Series 1990, in the
original principal amount of $20,360,000 (of which, approximately $19,000,000 is
outstanding on the date hereof), (b) the Summit County, Colorado, Sports
Facilities Refunding Revenue Bonds (Keystone Resorts Management, Inc. Project)
Series 1991, in the original principal amount of $3,000,000 ($1,500,000 of which
remains outstanding on the date hereof), and (c) refinancings of any of the
foregoing.
Swing Line
Borrowing means a borrowing of a Swing Line Loan pursuant to Section
2.4.
Swing Line
Lenders means, collectively, Bank of America and U.S. Bank National
Association, in their respective capacities as providers of Swing Line Loans,
and any successor swing line lender hereunder; and Swing Line
Lender means any one of the Swing Line Lenders.
Swing Line
Loan has the meaning set forth in Section
2.4(a).
Swing Line Loan
Notice means a notice of a Swing Line Borrowing pursuant to Section
2.4(b), which, if in writing, is substantially in the form of Exhibit
C-2.
Swing Line
Note means a promissory note in substantially the form of Exhibit A-2,
and all renewals and extensions of all or any part thereof.
Swing Line
Subfacility means a subfacility under the Agreement (the portion of the
Loans attributable to which may never exceed in the aggregate the Swing Line
Sublimit) as described in, and subject to the limitations of, Section 2.4
hereof.
Swing Line
Sublimit means, on any date, an
amount equal to the lesser of (a) $25,000,000 and (b) the Total Commitment (as
the same may be increased or reduced in accordance with the Loan
Papers). The Swing Line Sublimit is part of, and not in addition to,
the Total Commitment.
Tarnes
L/Cs means, collectively, the (a) $8,116,667 irrevocable transferable L/C
expiring October 31, 2005, issued by the applicable L/C Issuer to U.S. Bank
National Association and any successor thereto as Trustee under the 1999 Trust
Indenture with Eagle County, Colorado, as Issuer, relating to approximately
$10,410,000 of Eagle County, Colorado, Taxable Housing Facilities Revenue Bonds
(The Tarnes at BC, LLC Project), Series 1999A, and (b) $2,462,217 irrevocable
transferable L/C expiring May 26, 2009, issued by the applicable L/C Issuer to
U.S. Bank National Association and any successor thereto as Trustee under the
1999 Trust Indenture with Eagle County, Colorado, as Issuer, relating to
approximately $10,410,000 of Eagle County, Colorado, Taxable Housing Facilities
Revenue Bonds (The Tarnes at BC, LLC Project), Series 1999B, under the terms of
which such Trustee is, subject to the terms and conditions set forth therein,
entitled to draw up to (x) amounts sufficient to pay (i) the principal of such
Bonds when due, or (ii) the portion of the purchase price of such Bonds tendered
or deemed tendered for purchase in accordance with such Indenture and not
subsequently remarketed corresponding to the principal amount of such Bonds,
plus (y) amounts equal
to approximately 35 days of accrued interest on such Bonds at 15% per annum
(with respect to Series A) and 52 days of accrued interest on such Bonds (with
respect to Series B) to pay (i) interest on such Bonds when due, or (ii) the
portion of the purchase price of such Bonds tendered or deemed tendered for
purchase in accordance with such Indenture and not subsequently remarketed
corresponding to accrued interest, as each such L/C may be renewed, extended,
increased or amended from time to time in accordance with the Loan
Papers.
Taxes
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees, or other charges imposed by any Governmental
Authority, including any interest, additions to tax, or penalties applicable
thereto.
Tenderfoot
Housing L/Cs means, collectively, the (a) $5,783,125 irrevocable
transferable L/C expiring October 31, 2005, issued by the applicable L/C Issuer
to U.S. Bank National Association and any successor thereto as Trustee under the
Trust Indenture dated as of June 1, 2001 with Tenderfoot Seasonal Housing, LLC,
relating to $11,585,000 in aggregate principal amount of the Tenderfoot Seasonal
Housing, LLC Taxable Housing Facilities Notes (Tenderfoot Seasonal Housing, LLC
Project), Series 2000A, and (b) $6,012,509 irrevocable transferable L/C expiring
June 15, 2005, issued by the applicable L/C Issuer to U.S. Bank National
Association and any successor thereto as Trustee under the Trust Indenture dated
as of June 1, 2001 with Tenderfoot Seasonal Housing, LLC, relating to
$11,585,000 in aggregate principal amount of the Tenderfoot Seasonal Housing,
LLC Taxable Housing Facilities Notes (Tenderfoot Seasonal Housing, LLC Project),
Series 2000B, under the terms of which such Trustee is, subject to the terms and
conditions set forth therein, entitled to draw, with respect to such Notes, up
to (x) amounts sufficient to pay (i) the principal of such Notes when due, or
(ii) the portion of the purchase price of such Notes tendered or deemed tendered
for purchase in accordance with such Indenture corresponding to the principal
amount of such Notes, plus (y) amounts equal to
approximately 35 days of accrued interest on such Notes at 15% per annum (with
respect to Series A) and 52 days of accrued interest on such Notes (with respect
to Series B) to pay (i) interest on such Notes when due, or (ii) the portion of
the purchase price of such Notes tendered or deemed tendered for purchase which
corresponds to the accrued interest on the principal amount of such Notes, as
each such L/C may be renewed, extended, increased or amended from time to time
in accordance with the Loan Papers.
Termination Date
means the earlier of (a) January 28, 2010, and (b) the effective date
upon which Lenders’ Commitments are otherwise canceled or
terminated.
Third Agreement
Date means June 10, 2003, the “Closing Date” of the Third
Amended and Restated Revolving Credit and Term Loan Agreement among Borrower,
certain lenders party thereto, and Bank of America, N.A., as administrative
agent for such lenders.
Threshold Amount
means $25,000,000.
Total Assets
means, as of any date of determination for the Restricted Companies on a
consolidated basis, the book value of all assets of the Restricted Companies (as
determined in accordance with GAAP).
Total
Commitment means, on any date of determination, the aggregate Commitments
of all Lenders then in effect.
Trustee
means any Trustee designated as the beneficiary of a Bond
L/C.
Type means
any type of Loan determined with respect to the applicable interest
option.
Unreimbursed
Amount has the meaning set forth in Section
2.3(c)(i).
Unrestricted
Subsidiary means any existing Subsidiary or newly-formed Subsidiary
created by Borrower pursuant to Section
9.10 (which may be a partnership, joint venture, corporation, limited
liability company, or other entity) (a) which does not own any Forest Service
Permit or the stock of any Restricted Company or any Critical Assets,
(b) which has (and whose other partners, joint venturers, members or
shareholders have) no Debt or other material obligation which is recourse to any
Restricted Company or to the assets of any Restricted Company (other than with respect to
limited guarantees or other recourse agreements of the Restricted Companies
which are permitted to be incurred under this Agreement under clauses
(f) and
(g)
of the definition of “Permitted Debt”), and (c)
which is specifically identified in this definition or has been designated by
Borrower as an Unrestricted Subsidiary by notice to Administrative Agent under
Section
9.11 hereof. As of the Closing Date the Unrestricted
Subsidiaries are Eagle Park Reservoir Company, SSI Venture LLC, Boulder/Beaver,
LLC, Colter Bay Corporation, Gros Ventre Utility Company, Jackson Lake Lodge
Corporation, Jenny Lake Lodge, Inc., Forest Ridge Holdings, Inc., Resort
Technology Partners LLC, and RT Partners, Inc.
U.S. means
the United States of America.
Vail Bonds
means (a) the Eagle County, Colorado Sports Facilities Revenue Refunding
Bonds Series 1998, in the original principal amount of $41,200,000 and (b)
refinancings of any of the foregoing.
Vail Summit
Resorts means Vail Summit Resorts, Inc. (f/k/a “Ralston Resorts, Inc.”),
a Colorado corporation and a Wholly Owned Subsidiary of Borrower.
VHI means
Vail Holdings, Inc., a Colorado corporation and the direct owner of
Borrower.
VRI means
Vail Resorts, Inc., a Delaware corporation and the indirect owner of
Borrower.
Water Rights
means all water rights and conditional water rights that are appurtenant
to real property owned by the Companies or that have been used or are intended
for use in connection with the conduct of the business of the Companies,
including but not limited to (a) ditch, well, pipeline, spring and reservoir
rights, whether or not adjudicated or evidenced by any well or other permit, (b)
all rights with respect to groundwater underlying any real property owned by the
Companies, (c) any permit to construct any water well, water from which is
intended to be used in connection with such real property, and (d) all right,
title and interest of the Companies under any decreed or pending plan of
augmentation or water exchange plan.
Wholly Owned
when used in connection with any Subsidiary means any corporation,
partnership, limited liability company, or other entity of which all of the
equity securities or other ownership interests are owned, directly or
indirectly, by VRI, Borrower, or one or more of their Wholly Owned Restricted
Subsidiaries.
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1.2
|
Number and Gender of
Words.
|
(a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.
(b) (i) The
words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Paper shall refer to such Loan Paper as a
whole and not to any particular provision thereof.
(ii) Article,
Section, Exhibit and Schedule references are to the Loan Papers in which such
reference appears.
(iii) The
term “including” is by
way of example and not limitation.
(iv) The
terms “documents” and
“papers” includes any
and all instruments, documents, agreements, certificates, notices, reports,
financial statements and other writings, however evidenced, whether in physical
or electronic form.
(c) In
the computation of periods of time from a specified date to a later specified
date, the word “from”
means “from and
including”; the words “to” and “until” each mean “to but excluding”; and the
word “through” means
“to and
including.”
(d) Section
headings herein and in the other Loan Papers are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Papers.
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1.3
|
Accounting
Principles.
|
(a) Under
the Loan Papers and any documents delivered thereunder, unless otherwise stated,
(i) all accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the audited Financial Statements delivered pursuant to Section
9.1, (ii) all accounting principles applied in a current period must be
comparable in all material respects to those applied during the preceding
comparable period, and (iii) while VRI has any consolidated Restricted
Subsidiaries, all accounting and financial terms and compliance with financial
covenants must be on a consolidating and consolidated basis, as
applicable.
(b) If
at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in any Loan Paper, and either Borrower or
Required Lenders shall so request, Administrative Agent, Lenders and Borrower
shall negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein, and (ii)
Borrower shall provide to Administrative Agent and Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in
GAAP.
(c) All
references herein to consolidated financial statements of VRI and its
Subsidiaries or its Restricted Subsidiaries, or to the determination of “Adjusted EBITDA” or “Funded Debt” for VRI and its
Subsidiaries or its Restricted Subsidiaries on a consolidated basis, or any
similar reference, shall, in each case, be deemed to include each variable
interest entity that VRI is required to consolidate pursuant to FASB
Interpretation No. 46 – Consolidation of Variable Interest Entities: an
interpretation of ARB No. 51 (January 2003) or is otherwise required to
consolidate in accordance with GAAP; provided, that in determining such
amounts, (i) the Funded Debt and Adjusted EBITDA of the Existing Housing
Districts in respect of the Existing Housing Bonds shall be excluded, and (ii)
the Funded Debt and Adjusted EBITDA of the Existing Metro Districts in respect
of any Bonds issued prior to the Closing Date shall be excluded.
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1.4
|
Rounding.
|
Any
financial ratios required to be maintained by the Companies pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number).
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1.5
|
References to
Agreements and Laws.
|
Unless
otherwise expressly provided herein, (a) references to organization documents,
agreements (including the Loan Papers) and other contractual instruments shall
be deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto, but only to the extent that such
amendments, restatements, extensions, supplements and other modifications are
not prohibited by any Loan Papers, and (b) references to any Law shall include
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting such Law.
|
1.6
|
Times of
Day.
|
Unless
otherwise specified, all references herein to times of day shall be references
to central time (daylight or standard, as applicable).
|
1.7
|
L/C
Amounts.
|
Unless
otherwise specified, all references herein to the amount of an L/C at any time
shall be deemed to mean the maximum face amount of such L/C after giving effect
to all increases thereof contemplated by such L/C, the L/C Agreement therefor,
or any other document, agreement, or instrument entered into by any L/C Issuer
and Borrower or in favor of the applicable L/C Issuer relating to such L/C,
whether or not such maximum face amount is in effect at such time.
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SECTION
2
|
COMMITMENT.
|
|
2.1
|
Credit
Facility.
|
Subject
to the provisions in the Loan Papers, each Lender hereby severally and not
jointly agrees to lend to Borrower its Commitment Percentage of one or more
Revolver Loans in an aggregate principal amount outstanding at any time up to
such Lender’s Commitment; provided
that: (i) each Revolver Loan must occur on a Business Day
and no later than the Business Day immediately preceding the Termination Date;
(ii) each Revolver Loan must be in an amount not less than (A) $500,000 or
a greater integral multiple of $100,000 (if a Base Rate Loan), or (B) $1,000,000
or a greater integral multiple of $100,000 (if a LIBOR Loan); and (iii) on
any date of determination, after giving effect to the requested Loan, (A) the
Commitment Usage may not exceed the Total Commitment then in effect, and (B) the
aggregate Outstanding Amount of the Revolver Loans of any Lender, plus such Lender’s Commitment
Percentage of the Outstanding Amount of all L/C Exposure, plus such Lender’s Commitment
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment. Revolver Loans may be repaid or reborrowed
from time to time in accordance with the terms and provisions of the Loan
Papers.
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2.2
|
Loan
Procedure.
|
(a) Each
borrowing of Revolver Loans hereunder, conversion of Revolver Loans from one
Type to the other, and continuation of Revolver Loans that are LIBOR Loans shall
be made upon Borrower’s irrevocable notice to Administrative Agent, which may be
given by telephone. Each such notice must be received by
Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to
the requested date of any Loan of, conversion to, or continuation of Revolver
Loans that are LIBOR Loans or of any conversion of Revolver Loans that are LIBOR
Loans to Base Rate Loans, and (ii) on the requested date of any Base Rate
Loan. Each telephonic notice by Borrower pursuant to this Section
2.2 must be confirmed promptly by delivery to Administrative Agent of a
written Loan Notice, appropriately completed and signed by a Responsible Officer
of Borrower. Each borrowing of, conversion to, or continuation of
Revolver Loans that are LIBOR Loans shall be in amounts set forth in Section
2.1. Each Loan Notice (whether telephonic or written) shall
specify (i) whether Borrower is requesting a Revolver Loan, a conversion of
Revolver Loans from one Type to the other, or a continuation of Revolver Loans
as LIBOR Loans, (ii) the requested date of the borrowing (such date, a “Loan
Date”), conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Revolver Loans to be borrowed,
converted or continued, (iv) the Type of Revolver Loans to be borrowed or to
which existing Revolver Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto. If Borrower
fails to specify a Type of Revolver Loan in a Loan Notice or if Borrower fails
to give a timely notice requesting a conversion or continuation, then the
applicable Revolver Loans shall be made as, or converted to, Base Rate
Loans. Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable Revolver Loans that are LIBOR Loans. If Borrower
requests a borrowing of, conversion to, or continuation of Revolver Loans that
are LIBOR Loans in any such Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one
month. Administrative Agent shall promptly notify each Lender of its
receipt of any Loan Notice and its contents.
(b) Each
Lender shall remit its Commitment Percentage of each requested Revolver Loan to
Administrative Agent’s principal office in Dallas, Texas, in funds that are
available for immediate use by Administrative Agent by 12:00 noon on the
applicable Loan Date. Subject to receipt of such funds,
Administrative Agent shall (unless to its actual knowledge any of the applicable
conditions precedent have not been satisfied by Borrower or waived by Required
Lenders) make such funds available to Borrower as directed in the Loan Notice;
provided however, that
if on the date of such Loan Notice there are L/C Borrowings outstanding, then
the proceeds of such Revolver Loans shall be provided, first, to the payment in full
of any such L/C Borrowing, and then, to Borrower as provided
herein.
(c)
Unless Administrative Agent shall have received notice from a Lender prior to
the proposed date of any Revolver Loan that such Lender will not make available
to Administrative Agent such Lender’s share of such Revolver Loan (or, in the
case of any Base Rate Loan, prior to 12:00 noon on the date of such Base Rate
Loan), Administrative Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.2(b)
and may, in reliance upon such assumption, make available to Borrower a
corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Revolver Loan available to Administrative Agent,
then the applicable Lender and Borrower severally agree to pay to Administrative
Agent forthwith on demand such corresponding amount in immediately available
funds with interest thereon, for each day from and including the date such
amount is made available to Borrower to but excluding the date of payment to
Administrative Agent, at (A) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Rate and a rate determined by Administrative
Agent in accordance with banking industry rules on interbank compensation, and
(B) in the case of a payment to be made by Borrower, the interest rate
applicable to Base Rate Loans. If Borrower and such Lender shall pay
such interest to Administrative Agent for the same or an overlapping period,
Administrative Agent shall promptly remit to Borrower the amount of such
interest paid by Borrower for such period. If such Lender pays its
share of the applicable Revolver Loan to Administrative Agent, then the amount
so paid shall constitute such Lender’s Loan included in such Revolver
Loan. Any payment by Borrower shall be without prejudice to any claim
Borrower may have against a Lender that shall have failed to make such payment
to Administrative Agent.
(d) Unless
Administrative Agent shall have received notice from Borrower prior to the date
on which any payment is due to Administrative Agent for the account of Lenders
or any L/C Issuer hereunder that Borrower will not make such payment,
Administrative Agent may assume that Borrower has made such payment on such date
in accordance herewith and may, in reliance upon such assumption, distribute to
Lenders or the applicable L/C Issuer, as the case may be, the amount
due. In such event, if Borrower has not in fact made such payment,
then each Lender or the applicable L/C Issuer, as the case may be, severally
agrees to repay to Administrative Agent forthwith on demand the amount so
distributed to such Lender or the applicable L/C Issuer, in immediately
available funds with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by Administrative Agent in accordance with banking industry rules on
interbank compensation. A notice of Administrative Agent to any
Lender or Borrower with respect to any amount owing under this subsection
(d) shall be conclusive, absent manifest error.
(e) The
obligations of Lenders hereunder to make Loans, to fund participations in L/Cs
and Swing Line Loans, and to make payments pursuant to Section
15.4(c) are several and not joint. The failure of any Lender
to make any Loan, to fund any such participation, or to make any payment under
Section
15.4(c) on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, to purchase
its participation, or to make its payment under Section
15.4(c).
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2.3
|
L/C
Subfacility.
|
(a) The L/C
Commitment.
(i) Subject
to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in
reliance upon the agreements of the other Lenders set forth in this Section
2.3, (1) from time to time on any Business Day during the period from the
Closing Date until the L/C Expiration Date, to issue L/Cs for the account of
Borrower, and to amend or renew L/Cs previously issued by it, in accordance with
subsection
(b) below, and (2) to honor sight drafts under the L/Cs; and (B) Lenders
severally agree to participate in L/Cs issued for the account of Borrower; provided that no L/C Issuer
shall be obligated to make any L/C Credit Extension with respect to any L/C, and
no Lender shall be obligated to participate in any L/C, if as of the date of
such L/C Credit Extension (after giving effect to any proposed L/C Credit
Extension on such date), (x) the Commitment Usage would exceed the Total
Commitment, (y) the aggregate Outstanding Amount of the Revolver Loans of such
Lender, plus such
Lender’s Commitment Percentage of the Outstanding Amount of all L/C Exposure,
plus such Lender’s
Commitment Percentage of the Outstanding Amount of all Swing Line Loans would
exceed such Lender’s Commitment, or (z) the Outstanding Amount of the L/C
Exposure would exceed the L/C Sublimit. Within the foregoing limits,
and subject to the terms and conditions hereof, Borrower’s ability to obtain
L/Cs shall be fully revolving; accordingly Borrower may, during the foregoing
period, obtain L/Cs to replace L/Cs that have expired or that have been drawn
upon and reimbursed. All L/Cs existing on the Closing Date and set
forth on Part A of Schedule
2.3 shall be deemed to have been issued pursuant hereto, and from and
after the Closing Date shall be subject to and governed by the terms and
conditions hereof.
(ii) Neither
L/C Issuer shall be under any obligation to issue any L/C if:
(A) any
order, judgment or decree of any Governmental Authority or arbitrator shall by
its terms purport to enjoin or restrain the applicable L/C Issuer from issuing
such L/C, or any Law applicable to the applicable L/C Issuer or any request or
directive (whether or not having the force of Law) from any Governmental
Authority with jurisdiction over the applicable L/C Issuer shall prohibit, or
request that such L/C Issuer refrain from, the issuance of letters of credit
generally or such L/C in particular or shall impose upon the applicable L/C
Issuer with respect to such L/C any restriction, reserve or capital requirement
(for which such L/C Issuer is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon the applicable L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which such L/C Issuer in good faith deems material to it;
(B) subject
to Section
2.3(b)(iii), the expiry date of such requested L/C would occur more than
thirteen months after the date of issuance or last renewal, unless Required
Lenders have approved such expiry date or unless the requested L/C is a Bond
L/C, in which case the Bond L/C will expire in accordance with the terms set
forth in the applicable Bond L/C as approved by the applicable L/C Issuer and
Administrative Agent in accordance with Section
2.3(j);
(C) the
expiry date of such requested L/C would occur after the L/C Expiration Date,
unless Required Lenders have approved such expiry date;
(D) the
issuance of such L/C would violate one or more policies of the applicable L/C
Issuer; or
(E) such
L/C is to be denominated in a currency other than Dollars.
(iii) Neither
L/C Issuer shall be under any obligation to amend any L/C if (A) such L/C Issuer
would have no obligation at such time to issue such L/C in its amended form
under the terms hereof, or (B) the beneficiary of such L/C does not accept the
proposed amendment to such L/C.
(b) Procedures for
Issuance and Amendment of Letters of
Credit: Auto-Extension Letters of
Credit.
(i) Each
L/C shall be issued or amended, as the case may be, upon the request of Borrower
delivered to the applicable L/C Issuer (with a copy to Administrative Agent) in
the form of an L/C Agreement, appropriately completed and signed by a
Responsible Officer of Borrower. Such L/C Agreement must be received
by the applicable L/C Issuer and Administrative Agent not later than 11:00 a.m.
at least two Business Days (or such later date and time as the applicable L/C
Issuer may agree in a particular instance in its sole discretion) prior to the
proposed issuance date or date of amendment, as the case may be. In
the case of a request for an initial issuance of an L/C, such L/C Agreement
shall specify in form and detail satisfactory to the applicable L/C Issuer: (A)
the proposed issuance date of the requested L/C (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the applicable L/C Issuer (or, in the case of the Bond L/Cs,
the applicable L/C Issuer or Administrative Agent) may require. In
the case of a request for an amendment of any outstanding L/C, such L/C
Agreement shall specify in form and detail satisfactory to the applicable L/C
Issuer (A) the L/C to be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the proposed amendment; and
(D) such other matters as the applicable L/C Issuer (or, in the case of the Bond
L/Cs, the applicable L/C Issuer or Administrative Agent) may
require.
(ii) Promptly
after receipt of any L/C Agreement, the applicable L/C Issuer will confirm with
Administrative Agent (by telephone or in writing) that Administrative Agent has
received a copy of such L/C Agreement from Borrower and, if not, such L/C Issuer
will provide Administrative Agent with a copy thereof. Upon receipt
by the applicable L/C Issuer of confirmation from Administrative Agent that the
requested issuance or amendment is permitted in accordance with the terms
hereof, then, subject to the terms and conditions hereof, such L/C Issuer shall,
on the requested date, issue an L/C for the account of Borrower or enter into
the applicable amendment, as the case may be, in each case in accordance with
such L/C Issuer's usual and customary business practices. Immediately
upon the issuance of each L/C, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the applicable L/C
Issuer a risk participation in such L/C in an amount equal to such Lender’s
Commitment Percentage of the amount of such L/C.
(iii) If Borrower
so requests in any applicable L/C Agreement, the applicable L/C Issuer may, in
its sole and absolute discretion, agree to issue an L/C that has automatic
extension provisions (each, an “Auto-Extension L/C”);
provided that any such
Auto-Extension L/C must permit the applicable L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of
issuance of such L/C) by giving prior notice to the beneficiary thereof not
later than a day (the “Nonextension
Notice Date”) in each such twelve-month period to be agreed upon at the
time such L/C is issued. Unless otherwise directed by the applicable
L/C Issuer, Borrower shall not be required to make a specific request to such
L/C Issuer for any such extension. Once an Auto-Extension L/C has
been issued, Lenders shall be deemed to have authorized (but may not require)
the applicable L/C Issuer to permit the extension of such L/C at any time to an
expiry date not later than the L/C Expiration Date; provided, however, that the
applicable L/C Issuer shall not permit any such extension if (A) such L/C Issuer
has determined that it would have no obligation at such time to issue such L/C
in its extended form under the terms hereof (by reason of the provisions of
Section
2.3(a)(ii) or otherwise), or
(B) it has received notice (which may be by telephone or in writing) on or
before the day that is five Business Days before the Nonextension Notice Date
(1) from Administrative Agent that Required Lenders have elected not
to permit such extension or (2) from Administrative Agent, any Lender, or
Borrower that one or more of the applicable conditions specified in Section
7.2 is not then satisfied.
(iv) Promptly
after its delivery of any L/C or any amendment to an L/C to an advising bank
with respect thereto or to the beneficiary thereof, the applicable L/C Issuer
will also deliver to Borrower and Administrative Agent a true and complete copy
of such L/C or amendment.
(c) Drawings and
Reimbursements; Funding of Participations.
(i) Upon
receipt from the beneficiary of any L/C of any notice of a drawing under such
L/C, the applicable L/C Issuer shall notify Borrower and Administrative Agent
thereof. Not later than 11:00 a.m. on the date of any payment by the
applicable L/C Issuer under an L/C (each such date, an “Honor
Date”), Borrower shall reimburse such L/C Issuer through Administrative
Agent in an amount equal to the amount of such drawing. If Borrower
fails to so reimburse such L/C Issuer by such time, Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Commitment Percentage
thereof. In such event, Borrower shall be deemed to have requested a
Base Rate Loan hereunder to be disbursed on the Honor Date in an amount equal to
the Unreimbursed Amount, without regard to the minimum and multiples specified
in Section
2.1 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Total Commitment and the conditions set
forth in Section
7.2 (other than the delivery of a Loan Notice). Any notice
given by any L/C Issuer or Administrative Agent pursuant to this Section
2.3(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack
of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.
(ii) Each
Lender (including any Lender acting as an L/C Issuer) shall upon any notice
pursuant to Section
2.3(c)(i) make funds available to Administrative Agent for the
account of the applicable L/C Issuer at Administrative Agent’s Office in an
amount equal to its Commitment Percentage of the Unreimbursed Amount not later
than 1:00 p.m. on the Business Day specified in such notice by Administrative
Agent; whereupon, subject to the provisions of Section
2.3(c)(iii), each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan hereunder to Borrower in such
amount. Administrative Agent shall remit the funds so received to the
applicable L/C Issuer.
(iii) With
respect to any Unreimbursed Amount that is not fully refinanced by a Revolver
Loan because the conditions set forth in Section
7.2 cannot be satisfied or for any other reason, Borrower shall be deemed
to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount
of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the Default Rate. In such event, each Lender’s payment to
Administrative Agent for the account of the applicable L/C Issuer pursuant to
Section
2.3(c)(ii) shall be deemed payment in respect of its participation in
such L/C Borrowing in satisfaction of its participation obligation under this
Section
2.3.
(iv) Until
each Lender funds its portion of a Revolver Loan or participation in an L/C
Borrowing pursuant to this Section
2.3(c) to
reimburse the applicable L/C Issuer for any amount drawn under any L/C, interest
in respect of such Lender’s Commitment Percentage of such amount shall be solely
for the account of the applicable L/C Issuer.
(v) Each
Lender’s obligation to reimburse the L/C Issuers for amounts drawn under L/Cs
(whether by making a Revolver Loans or funding its participation in an L/C
Borrowing), as contemplated by this Section
2.3(c), shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against the applicable L/C Issuer,
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default or Potential Default, or (C) any other occurrence,
event or condition, whether or not similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Revolver Loans pursuant to this Section
2.3(c) is subject to the conditions set forth in Section
7.2 (other than delivery by Borrower of a Loan Notice). No
funding of a participation in an L/C Borrowing shall relieve or otherwise impair
the obligation of Borrower to reimburse the applicable L/C Issuer for the amount
of any payment made by such L/C Issuer under any L/C, together with interest as
provided herein.
(vi) If
any Lender fails to make available to Administrative Agent for the account of
the applicable L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section
2.3(c) by the time specified in Section
2.3(c)(ii), the applicable L/C Issuer shall be entitled to recover from
such Lender (acting through Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the applicable L/C Issuer
at a rate per annum equal to the Federal Funds Rate from time to time in
effect. A certificate of the applicable L/C Issuer submitted to any
Lender (through Administrative Agent) with respect to any amounts owing under
this clause
(vi) shall be conclusive absent manifest error.
(d) Repayment of
Participations.
(i) At
any time after an L/C Issuer has made a payment under any L/C and has received
from any Lender such Lender’s funding of its participation in the related L/C
Borrowing in accordance with Section
2.3(c), if Administrative Agent receives for the account of such L/C
Issuer any payment in respect of the related Unreimbursed Amount or interest
thereon (whether directly from Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by Administrative Agent), Administrative Agent will
distribute to such Lender its Commitment Percentage thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender’s participation in the L/C Borrowing was outstanding) in the
same funds as those received by Administrative Agent.
(ii) If
any payment received by Administrative Agent for the account of any L/C Issuer
pursuant to Section
2.3(c)(i) is required to be returned under any of the circumstances
described in Section 15.12
(including pursuant to any settlement entered into by the applicable L/C
Issuer in its discretion), each Lender shall pay to Administrative Agent for the
account of the applicable L/C Issuer its Commitment Percentage thereof on demand
of Administrative Agent, plus interest thereon from the date of such demand to
the date such amount is returned by such Lender, at a rate per annum equal to
the Federal Funds Rate from time to time in effect.
(e) Obligations
Absolute. The obligation of
Borrower to reimburse the applicable L/C Issuer for each drawing under each L/C
and to repay each L/C Borrowing shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:
(i) any
lack of validity or enforceability of such L/C, this Agreement, or any other
agreement or instrument relating thereto;
(ii) the
existence of any claim, counterclaim, set-off, defense or other right that
Borrower may have at any time against any beneficiary or any transferee of such
L/C (or any Person for whom any such beneficiary or any such transferee may be
acting), the applicable L/C Issuer or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or by such L/C or any
agreement or instrument relating thereto, or any unrelated
transaction;
(iii) any
draft, demand, certificate or other document presented under such L/C proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such L/C;
(iv) any
payment by the applicable L/C Issuer under such L/C against presentation of a
draft or certificate that does not strictly comply with the terms of such L/C;
or any payment made by the applicable L/C Issuer under such L/C to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such L/C, including any
arising in connection with any proceeding under any Debtor Relief Law;
or
(v) any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Borrower.
Borrower
shall promptly examine a copy of each L/C and each amendment thereto that is
delivered to it and, in the event of any claim of noncompliance with Borrower’s
instructions or other irregularity, Borrower will immediately notify the
applicable L/C Issuer. Borrower shall be conclusively deemed to have
waived any such claim against the applicable L/C Issuer and its correspondents
unless such notice is given as aforesaid.
(f) Role of L/C
Issuers Each
Lender and Borrower agree that, in paying any drawing under an L/C, the
applicable L/C Issuer shall not have any responsibility to obtain any document
(other than any sight draft, certificates and documents expressly required by
the L/C) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document. None of the L/C Issuers, any Related Party of the
Administrative Agent, or any of the respective correspondents, participants, or
assignees of the L/C Issuers shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
Lenders or Required Lenders, as applicable; (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any L/C or L/C Agreement. Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any L/C; provided, however, that this
assumption is not intended to, and shall not, preclude Borrower’s pursuing such
rights and remedies as it may have against the beneficiary or transferee at Law
or under any other agreement. None of the L/C Issuers, any Related
Party of the Administrative Agent, or any of the respective correspondents,
participants, or assignees of any L/C Issuer shall be liable or responsible for
any of the matters described in clauses
(i) through (v) of
Section
2.3(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
Borrower may have a claim against an L/C Issuer, and an L/C Issuer may be liable
to Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrower
which Borrower proves were caused by such L/C Issuer's willful misconduct or
gross negligence or such L/C Issuer's willful failure to pay under any L/C after
the presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of an L/C. In furtherance and not
in limitation of the foregoing, an L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and an L/C Issuer shall
not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign an L/C or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason.
(g) Cash
Collateral.
(i) Upon
the request of Administrative Agent, (A) if an L/C Issuer has honored any full
or partial drawing request under any L/C and such drawing has resulted in an L/C
Borrowing, then Borrower shall immediately Cash Collateralize the L/C Borrowing
in an amount equal to such L/C Borrowing, or (B) if, as of the L/C
Expiration Date, any L/C may for any reason remain outstanding and partially or
wholly undrawn, then Borrower shall immediately Cash Collateralize the L/C
Exposure in an amount equal to such L/C Exposure determined as of the L/C
Expiration Date. For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to
Administrative Agent, for the benefit of the L/C Issuers and Lenders, as
collateral for the L/C Exposure, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to Administrative Agent and the
L/C Issuers (which documents are hereby consented to by
Lenders). Derivatives of such term have corresponding
meanings. Borrower hereby grants to Administrative Agent, for
the benefit of the L/C Issuers and Lenders, a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash Collateral shall be maintained in blocked,
non-interest bearing deposit accounts at Bank of America.
(ii) If
at any time (A) the L/C Exposure exceeds the L/C Sublimit or (B) the Commitment
Usage exceeds the Total Commitment (after giving effect to all prepayments
required under Section
3.2(d)), then Borrower shall immediately Cash Collateralize the L/C
Exposure in an amount equal to the greater of (x) the amount by which the L/C
Exposure exceeds the L/C Sublimit, or (y) the amount by which the Commitment
Usage exceeds the Total Commitment.
(iii) Notwithstanding
any provision to the contrary in any Bond Document, all Bonds (including,
without limitation, “Repurchased Bonds” as defined
in the Bond Documents) issued to or held for the benefit of any L/C Issuer (or
other designee) shall be held as Cash Collateral securing reimbursement
obligations under the related Bond L/C (including, without limitation, any L/C
Borrowing).
(h) Applicability of
ISP and UCP. Unless otherwise
expressly agreed by the applicable L/C Issuer and Borrower when an L/C is issued
(including any such agreement applicable to any L/C set forth on Part A of Schedule
2.3), (i) the rules of the ISP shall apply to each standby L/C and each
Bond L/C, and (ii) the rules of the Uniform Customs and Practice for Documentary
Credits (“UCP”), as
most recently published by the International Chamber of Commerce at the time of
issuance, shall apply to each commercial L/C.
(i) Conflict with L/C
Agreement. In the event of any conflict between the terms
hereof and the terms of any L/C Agreement, the terms hereof shall
control.
(j) Bond
L/Cs. Notwithstanding any provision to the contrary set forth
in this Section
2.3:
(i) (A) The
Bond L/Cs shall be subject to the terms and conditions of this Agreement and
applicable Law; provided
however, that (1) such Bond L/Cs may have expiration dates later than
thirteen months from the date of issuance, so long as such date is not later
than the L/C Expiration Date; and (2) the terms of such Bond L/Cs must be
acceptable to the applicable L/C Issuer and Administrative Agent, and, (I)
subject to the provisions of Section
2.3(j)(ii) and 2.3(j)(iii),
may provide for the reinstatement of drawn portions of the Bond L/C, whether or
not reimbursement has been received (which may have the effect of increasing the
amount of such Bond L/C), (II) may provide for automatic extensions thereof, so
long as such terms comply with the auto extension provisions set forth in Section
2.3(b)(iii) hereof, and (III) may contain provisions whereby the
applicable L/C Issuer is granted certain Rights in collateral and voting Rights
under the related Bond Documents, which Rights are expressly assigned by the
applicable L/C Issuer to Administrative Agent for the benefit of Lenders
pursuant to Section
2.3(j)(iv) herein.
(B) Borrower
may request that an L/C Issuer issue Bond L/Cs by providing at least 30 days
prior written notice of such request to the applicable L/C Issuer, and by
delivering a certificate at least 30 days prior to the issuance of any Bond L/C
to Administrative Agent demonstrating the Companies’ pro forma compliance with
the financial covenants set forth in Section
11.1 herein, after giving effect to the issuance of any such Bonds and,
without duplication, any Debt incurred by Borrower or any Company in support
thereof, and certifying that no Default or Potential Default exists or would
result after giving effect thereto.
(ii) In
the event that the proceeds of any drawing under any Bond L/C are used to pay
the purchase price of Bonds tendered or deemed tendered by the owner thereof
pursuant to the related Bond Documents (such drawing, including the drawing of
any accrued interest on the tendered Bonds, a “Bond Purchase
Drawing”), then the stated amount of such Bond L/C will be temporarily
reduced by the amount of such drawing, subject to automatic reinstatement
(whether or not reimbursement for any drawings thereunder has been received or
the conditions set forth in Section
7.2 have been satisfied, and without
further approval from Lenders) pursuant to the provisions of the applicable Bond
L/C by an amount equal to the Bond Purchase Drawing, so long as (A) the
applicable L/C Issuer (or Administrative Agent, as assignee of such L/C Issuer)
has been properly accounted for on the securities depository’s records as the
beneficial owner of such Bonds purchased with the proceeds (or portion thereof)
of the Bond L/C, or (B) such Bonds have been delivered to the appropriate
custodian and registered as directed by such L/C Issuer (or Administrative
Agent, as assignee of such L/C Issuer), or (c) to the extent provided for in the
applicable Bond L/C, such Bonds have been remarketed in accordance with the
terms of the applicable Bond Documents and released by the applicable L/C
Issuer; provided
however, that if the repurchased Bonds are not transferred to such L/C
Issuer (or Administrative Agent, as assignee of such L/C Issuer) as required in
clauses (A)
and
(B) preceding, then the
applicable L/C Issuer shall notify Administrative Agent (who shall subsequently
notify Lenders) of such failure. Unless otherwise directed by
Required Lenders, the applicable L/C Issuer shall then deliver notice to the
applicable Trustee prior to the fifth Business Day after any such Bond Purchase
Drawing that the amount of such drawing will not be reinstated.
(iii) If
the interest portion of any Bond L/C is drawn by the applicable Trustee to make
scheduled interest payments on the outstanding principal amount of the Bonds,
then the stated amount of such Bond L/C will be temporarily reduced by the
amount of such drawing, subject to automatic reinstatement of the interest
portion of such Bond L/C (whether or not reimbursement for any drawings
thereunder has been received or the conditions set forth in Section
7.2 have been satisfied, and without further approval from Lenders)
pursuant to the provisions of the applicable Bond L/C. Subject to
compliance with Section 2.3(b)
herein, the stated amount of the related Bond L/C may be increased as
required by the related Bond Documents (to reflect an increase in the maximum
rate of interest or number of days of accrued interest covered by such Bond L/C
or otherwise).
(iv) All
liens and security interests securing reimbursement obligations and other
obligations owed to the applicable L/C Issuer of any Bond L/C under the related
Bond Documents (including, without limitation, any L/C Borrowing), any rights in
and to any Bonds or other certificates of indebtedness issued to such L/C Issuer
under the related Bond Documents, and any voting rights or other rights created
in favor of such L/C Issuer under or pursuant to or in connection with any
related Bond Documents (collectively, the “Bond
Rights”), now or hereafter existing in favor of such L/C Issuer, are
hereby assigned and conveyed by the applicable L/C Issuer to Administrative
Agent for the ratable benefit of Lenders. Notwithstanding anything to
the contrary set forth in any Bond L/C, any Bonds or certificates of
indebtedness purchased from the owner thereof by the applicable Trustee with
funds received pursuant to a drawing under any Bond L/C shall be registered in
the name of Administrative Agent and shall be delivered to or held by
Administrative Agent or such other entity as may be specified by the applicable
L/C Issuer and approved by Administrative Agent in a written instrument
delivered to the applicable Trustee, for the benefit of the applicable L/C
Issuer, Administrative Agent, and the other Lenders. Each L/C Issuer
of a Bond L/C agrees to execute all such other assignments, conveyances,
financing statements, and other documents required by Administrative Agent to
effect the requirements of this Section
2.3(j)(iv); provided that, Lenders,
Administrative Agent, and such L/C Issuer agree that in the event any Bonds or
certificates of indebtedness are issued to such L/C Issuer (or Administrative
Agent as the assignee of such L/C Issuer) as a result of a drawing by the
applicable Trustee under the Bond L/C for which such L/C Issuer is not
immediately reimbursed, and subsequently the Bonds are remarketed and such L/C
Issuer is reimbursed for all amounts so advanced (which reimbursement may be a
repayment of any Loan disbursed by Lenders as payment of the related L/C
reimbursement obligations under Section
2.3(c) or a repayment of an L/C Borrowing), then any Bonds or
certificates of indebtedness shall be released by Administrative Agent and
delivered to such Trustee without any further authorization from Lenders or such
L/C Issuer.
(v) To
the extent Rights (including, without limitation, voting rights, rights to
provide notice and elect remedies, and rights to approve waivers, consents, or
amendments of the related Bond Documents) are created in favor of the L/C
Issuers of any Bond L/C, such Rights (other than ministerial, non discretionary
Rights) may only be exercised with the consent, or in accordance with the
directions, of Required Lenders.
(vi) In
the event of any conflict between the terms and provisions of this Section
2.3 relating to Bond L/Cs and the terms and provisions of any Loan Paper
relating to L/Cs (other than Bond L/Cs), the terms and provisions of this Section
2.3 shall control.
(k) L/Cs Issued for
Subsidiaries. Notwithstanding that an L/C issued or
outstanding hereunder is in support of any obligations of, or is for the account
of, a Subsidiary of Borrower or a Metro District, Borrower shall be obligated to
reimburse the applicable L/C Issuer hereunder for any and all drawings under
such L/C. Borrower hereby acknowledges that the issuance of L/Cs for
the account of Subsidiaries of Borrower or a Metro District inures to the
benefit of Borrower, and that Borrower’s business derives substantial benefits
from the businesses of such Subsidiaries.
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2.4
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Swing Line
Loans.
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(a) The Swing
Line. Subject to the terms and conditions set forth herein,
each Swing Line Lender agrees (severally, not jointly), in reliance upon the
agreements of the other Lenders set forth in this Section
2.4, to make loans (each such loan, a “Swing Line
Loan”) to Borrower from time to time on any Business Day prior to the
Termination Date, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Commitment Percentage of the Outstanding Amount of Revolver
Loans and L/C Exposure of such Lender acting as Swing Line Lender, may exceed
the amount of such Lender’s Commitment; provided, however, that after
giving effect to any Swing Line Loan, (i) the aggregate Outstanding Amount of
all Swing Line Loans made by the Swing Line Lenders shall not exceed the Swing
Line Sublimit, (ii) the Commitment Usage shall not exceed the Total Commitment,
and (iii) the aggregate Outstanding Amount of the Revolver Loans of any Lender,
plus such Lender’s
Commitment Percentage of the Outstanding Amount of all L/C Exposure, plus such Lender’s Commitment
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and provided, further, that
Borrower shall not use the proceeds of any Swing Line Loan to refinance any
outstanding Swing Line Loan. Within the foregoing limits, and subject
to the other terms and conditions hereof, Borrower may borrow under this Section
2.4, prepay under Section
3.2, and reborrow under this Section
2.4. Each Swing Line Loan shall be a Daily Floating LIBOR
Loan. Immediately upon the making of a Swing Line Loan, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the applicable Swing Line Lender a risk participation in such
Swing Line Loan in an amount equal to the product of such Lender’s Commitment
Percentage times the
amount of such Swing Line Loan.
(b) Borrowing
Procedures. Each Swing Line Borrowing shall be made upon
Borrower’s irrevocable notice to either Swing Line Lender and Administrative
Agent, which may be given by telephone. Each such notice must be received by the
applicable Swing Line Lender and Administrative Agent not later than 12:00
noon on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $1,000,000, and (ii) the
requested borrowing date, which shall be a Business Day. Each such
telephonic notice must be confirmed promptly by delivery to such Swing Line
Lender and Administrative Agent of a written Swing Line Loan Notice,
appropriately completed and signed by a Responsible Officer of
Borrower. Promptly after receipt by the applicable Swing Line Lender
of any telephonic Swing Line Loan Notice, such Swing Line Lender will confirm
with Administrative Agent (by telephone or in writing) that Administrative Agent
has also received such Swing Line Loan Notice and, if not, such Swing Line
Lender will notify Administrative Agent (by telephone or in writing) of the
contents thereof. Unless such Swing Line Lender has received notice
(by telephone or in writing) from Administrative Agent (including at the request
of any Lender) prior to 1:00 p.m. on the date of the proposed Swing Line
Borrowing (A) directing such Swing Line Lender not to make such Swing Line Loan
as a result of the limitations set forth in the proviso to the first sentence of
Section
2.4(a), or (B) that one or more of the applicable conditions specified in
Section
7 is not then satisfied, then, subject to the terms and conditions
hereof, such Swing Line Lender will, not later than 2:00 p.m. on the borrowing
date specified in such Swing Line Loan Notice, make the amount of its Swing Line
Loan available to Borrower.
(c) Refinancing of
Swing Line Loans.
(i) Each
Swing Line Lender, as applicable, at any time in its sole and absolute
discretion may request, on behalf of Borrower (which hereby irrevocably
authorizes each Swing Line Lender to so request on its behalf), that each Lender
make a Base Rate Loan in an amount equal to such Lender's Commitment Percentage
of the Outstanding Amount of the Swing Line Loans owed to such Swing Line
Lender. Such request shall be made in writing (which written request
shall be deemed to be a Loan Notice for purposes hereof) and in accordance with
the requirements of Section
2.2, without regard to the minimum and multiples specified in Section
2.1 for the principal amount of Base Rate Loans, but subject to the
unutilized portion of the Total Commitment and the conditions set forth in Section
7.2. The applicable Swing Line Lender shall furnish Borrower
with a copy of the applicable Loan Notice promptly after delivering such notice
to Administrative Agent. Each Lender shall make an amount equal to
its Commitment Percentage of the amount specified in such Loan Notice available
to Administrative Agent in immediately available funds for the account of the
applicable Swing Line Lender at Administrative Agent’s Office not later than
12:00 noon on the day specified in such Loan Notice, whereupon, subject to Section
2.4(c)(ii), each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan to Borrower in such amount. Administrative
Agent shall remit the funds so received to the applicable Swing Line
Lender.
(ii) If
for any reason any Swing Line Loan cannot be refinanced by a Revolver Loan in
accordance with Section
2.4(c)(i), the request for Base Rate Loans submitted by the applicable
Swing Line Lender as set forth herein shall be deemed to be a request by such
Swing Line Lender that each Lender fund its risk participation in the relevant
Swing Line Loans and each Lender’s payment to Administrative Agent for the
account of such Swing Line Lender pursuant to Section
2.4(c)(i) shall be deemed payment in respect of such
participation.
(iii) If
any Lender fails to make available to Administrative Agent for the account of
the applicable Swing Line Lender any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section
2.4(c) by the time specified in Section
2.4(c)(i), such Swing Line Lender shall be entitled to recover from such
Lender (acting through Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to such Swing Line Lender at
a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by such Swing Line Lender in accordance with banking industry rules
on interbank compensation. A certificate of such Swing Line Lender
submitted to any Lender (through Administrative Agent) with respect to any
amounts owing under this clause
(iii) shall be conclusive absent manifest error.
(iv) Each
Lender’s obligation to make Revolver Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section
2.4(c) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense,
or other right which such Lender may have against the applicable Swing Line
Lender, Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default or Potential Default, or (C) any other
occurrence, event, or condition, whether or not similar to any of the foregoing;
provided, however, that
each Lender’s obligation to make Revolver Loans pursuant to this Section
2.4(c) is subject to the conditions set forth in Section
7.2. No such funding of risk participations shall relieve or
otherwise impair the obligation of Borrower to repay Swing Line Loans, together
with interest as provided herein.
(d) Repayment of
Participations.
(i) At
any time after any Lender has purchased and funded a risk participation in a
Swing Line Loan, if the applicable Swing Line Lender receives any payment on
account of such Swing Line Loan, such Swing Line Lender will distribute to such
Lender its Commitment Percentage of such payment (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender’s risk participation was funded) in the same funds as those received by
such Swing Line Lender.
(ii) If
any payment received by the applicable Swing Line Lender in respect of principal
or interest on any Swing Line Loan is required to be returned by such Swing Line
Lender under any of the circumstances described in Section
15.12 (including pursuant to any settlement entered into by such Swing
Line Lender in its discretion), each Lender shall pay to such Swing Line Lender
its Commitment Percentage thereof on demand of Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds
Rate. Administrative Agent will make such demand upon the request of
such Swing Line Lender. The obligations of Lenders under this clause
shall survive the payment in full of the Obligation and the termination of this
Agreement.
(e) Interest for
Account of Swing Line Lenders. Each Swing Line Lender shall be
responsible for invoicing Borrower for interest on its respective Swing Line
Loans. Until each Lender funds its Base Rate Loan or risk
participation pursuant to this Section
2.4 to refinance such Lender’s Commitment Percentage of any Swing Line
Loan, interest in respect of such Commitment Percentage of such Swing Line Loan
shall be solely for the account of the applicable Swing Line
Lender.
(f) Payments Directly
to Swing Line Lenders. Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the
applicable Swing Line Lender.
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2.5
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Increase in Total
Commitment.
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(a) Request for
Increase. Provided there exists no Default or Potential
Default, upon notice to Administrative Agent (which shall promptly notify
Lenders), Borrower may, from time to time, request an increase in the Total
Commitment up to a maximum Total Commitment of $500,000,000; provided, that any such request for an
increase shall be in a minimum amount of $10,000,000, and greater integral
multiples of $500,000 thereof.
(b) Additional
Lenders. To achieve the full amount of a requested increase
and subject to the approval of Administrative Agent, each L/C Issuer, and each
Swing Line Lender (which approvals shall not be unreasonably withheld), Borrower
may (i) invite additional Eligible Assignees to become Lenders pursuant to a
joinder agreement in form and substance satisfactory to Administrative Agent and
its counsel (each, a “Joinder
Agreement”), or (ii) request one or more Lenders to increase their
respective Commitments hereunder, but each such Lender shall not be deemed to
have agreed to increase its Commitment unless such Lender notifies
Administrative Agent prior to any deadline specified by Borrower (in
consultation with Administrative Agent) of its agreement to increase its
Commitment and the amount thereof.
(c) Effective Date
and Allocations. If the Total Commitment is increased in
accordance with this Section, Administrative Agent and Borrower shall determine
the effective date (the “Increase
Effective Date”) and the final allocation of such
increase. Administrative Agent shall promptly notify Borrower and
Lenders (including, without limitation, any Eligible Assignee becoming a Lender
as of such Increase Effective Date) of the final allocation of such increase and
the Increase Effective Date.
(d) Conditions to
Effectiveness of Increase. As a condition precedent to such
increase, Borrower shall deliver to Administrative Agent:
(i) with
respect to any Lender requesting a Note, such Note executed by
Borrower;
(ii) Joinder
Agreements executed by Borrower, Administrative Agent, and each Eligible
Assignee becoming a new Lender hereunder pursuant to Section 2.5(c)
hereof, together with a completed Administrative Questionnaire;
and
(iii) a
certificate of each Company dated as of the Increase Effective Date signed by a
Responsible Officer of Borrower and each Guarantor (i) certifying and attaching
the resolutions adopted by each such entity approving or consenting to such
increase, and (ii) in the case of Borrower, certifying that, before and after
giving effect to such increase, (A) the representations and warranties contained
in Section
8 and the other Loan Papers are true and correct on and as of the
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and (B) no Default or Potential Default
exists or would result therefrom. Borrower shall prepay any Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section
4.5) to the extent necessary to keep the outstanding Loans ratable with
any revised Commitment Percentages arising from any nonratable increase in the
Commitments under this Section.
(e) Conflicting
Provisions. This Section shall supersede any provisions in
Sections
3.11 or 15.9 to
the contrary.
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SECTION
3
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TERMS
OF PAYMENT.
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3.1
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Notes and
Payments.
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(a) The
Loans made by each Lender and any L/C Credit Extension shall be evidenced by one
or more accounts or records maintained by such Lender and by Administrative
Agent in the ordinary course of business. The accounts or records
maintained by Administrative Agent and each Lender shall be conclusive absent
manifest error of the amount of the Loans or L/C Credit Extension made by
Lenders to Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of Borrower hereunder to pay any amount owing
with respect to the Obligation. In the event of any conflict between
the accounts and records maintained by any Lender and the accounts and records
of Administrative Agent in respect of such matters, the accounts and records of
Administrative Agent shall control in the absence of manifest
error. Upon the request of any Lender or either Swing Line Lender, as
the case may be, made through Administrative Agent, Borrower shall promptly
execute and deliver to such Lender (through Administrative Agent) a Note (or in
the case of a Swing Line Lender, a Swing Line Note), which shall evidence such
Lender’s Loans (or in the case of a Swing Line Lender, such Swing Line Lender’s
Swing Line Loan) in addition to such account or records. Each Lender
(or Swing Line Lender, as the case may be) may attach schedules to its Note (or
Swing Line Note, as the case may be) and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect
thereto.
(b) In
addition to the accounts and records referred to in clause (a)
herein, each Lender and Administrative Agent shall maintain in
accordance with its usual practice accounts or records evidencing the purchases
and sales by such Lender of participations in L/Cs. In the event of
any conflict between the accounts and records maintained by Administrative Agent
and the accounts and records of any Lender in respect of such matters, the
accounts and records of Administrative Agent shall control in the absence of
manifest error.
(c) Borrower
must make each payment on the Obligation, without condition or deduction for any
counterclaim, defense, recoupment or setoff. All payments by Borrower
hereunder shall be made in Dollars to Administrative Agent, for the account of
the respective Lenders to which such payment is owed, at Administrative Agent’s
principal office in Dallas, Texas, in funds that will be available for immediate
use by Administrative Agent by 1:00 p.m. on the day due; otherwise, but subject
to Section
3.8, those funds continue to accrue interest as if they were received on
the next Business Day. Administrative Agent shall promptly distribute
to each Lender its Commitment Percentage (or other payment share as provided
herein) of such payment to which that Lender is entitled on the same day
Administrative Agent receives the funds from Borrower if Administrative Agent
receives the payment before 1:00 p.m., and otherwise before 1:00 p.m. on the
following Business Day. If and to the extent that Administrative
Agent does not make payments to Lenders when due, unpaid amounts shall accrue
interest at the Federal Funds Rate from the due date until (but not including)
the payment date.
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3.2
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Interest and Principal
Payments; Prepayments; Voluntary Commitment
Reductions.
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(a) Accrued
interest on each Revolver Loan that is a LIBOR Loan is due and payable on the
last day of its Interest Period. If any Interest Period with respect
to a Revolver Loan that is a LIBOR Loan is a period greater than three months,
then accrued interest is also due and payable on the date three months after the
commencement of the Interest Period. Accrued interest on each Base
Rate Loan and each Swing Line Loan is due and payable on each Quarterly Date and
on the Termination Date.
(b) The
Principal Debt is due and payable on the Termination Date.
(c) Borrower
shall repay the outstanding principal amount of each Swing Line Loan on the
earlier to occur of (i) the date that is ten (10) Business Days after such Loan
is made, and (ii) the Termination Date.
(d) If
the Commitment Usage ever exceeds the Total Commitment, or if the aggregate
unpaid principal amount of all outstanding Swing Line Loans ever exceeds the
Swing Line Commitment, then Borrower shall immediately prepay Loans and/or Cash
Collateralize the L/C Exposure in an aggregate amount equal to such excess;
provided, however, that
Borrower shall not be required to Cash Collateralize the L/C Exposure pursuant
to this Section
3.2(d) unless, after prepayment in full of the Loans, the Commitment
Usage exceeds the Total Commitment then in effect.
(e) Without
premium or penalty and upon giving at least two Business Days prior written and
irrevocable notice to Administrative Agent (who shall promptly notify Lenders of
its receipt of such notice and its contents), Borrower may terminate all or
reduce part of the unused portion of the Total Commitment. Each
partial reduction (unless the remaining portion of such commitment is less) must
be in an amount of not less than $5,000,000 or a greater integral multiple of
$1,000,000, and shall be ratable among all Lenders according to their respective
Commitment Percentages. Once terminated or reduced, such commitments
may not be reinstated or increased. Borrower shall not terminate or
reduce the Total Commitment if, after giving effect thereto and to any
concurrent prepayments hereunder, the Commitment Usage would exceed the Total
Commitment. If, after giving effect to any reduction of the Total
Commitment, the L/C Sublimit, or the Swing Line Sublimit, exceeds the amount of
the Total Commitment, such sublimits shall be automatically reduced by the
amount of such excess. Administrative Agent will promptly notify
Lenders of any such notice of termination or reduction of the Total
Commitment.
(f) Borrower
may voluntarily prepay all or any part of the Principal Debt (other than
Principal Debt under the Swing Line Subfacility, which may be prepaid in
accordance with clause (g)
below) at any time without premium or penalty, subject to the following
conditions:
(i) Administrative
Agent must receive Borrower’s written payment notice (which shall specify (1)
the payment date, and (2) the Type and amount of the Loan(s) to be paid; such
notice shall constitute an irrevocable and binding obligation of Borrower to
make a payment on the designated date) by 11:00 a.m. on (x) the first Business
Day preceding the date of payment of a Revolver Loan that is a LIBOR Loan, and
(y) the date of payment of a Base Rate Loan;
(ii) each
partial payment must be in a minimum amount of at least $500,000 if a Base Rate
Loan or $1,000,000 if a Revolver Loan that is a LIBOR Loan or, in either case, a
greater integral multiple of $100,000;
(iii) all
accrued interest on the principal amount so to be prepaid must also be paid in
full on the date of payment;
(iv) Borrower
shall pay any related Funding Loss upon demand; and
(v) unless
a Default or Potential Default has occurred and is continuing (or would arise as
a result thereof), any prepayment of the Principal Debt may be reborrowed by
Borrower, subject to the terms and conditions of the Loan Papers.
Administrative
Agent will promptly notify each Lender of its receipt of a payment notice from
Borrower, and of the amount of such Lender’s Commitment Percentage of such
prepayment.
(g) Borrower
may, upon notice to the applicable Swing Line Lender (with a copy to
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans owed to such Swing Line Lender, in whole or in part without
premium or penalty; provided,
that (i) such notice must be received by the applicable Swing Line Lender
and Administrative Agent not later than 12:00 noon on the date of the
prepayment, and (ii) any such prepayment shall be in a minimum principal amount
of $100,000, or a greater integral multiple thereof. Each such notice
shall specify the date and amount of such prepayment. Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein.
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3.3
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Interest
Options.
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Except
where specifically otherwise provided, (a) Revolver Loans bear interest at an
annual rate equal to the lesser of (i) the Base Rate plus the Applicable Margin or
LIBOR plus the
Applicable Margin for the Interest Period, if any, selected by Borrower (in each
case as designated or deemed designated by Borrower), as the case may be, and
(ii) the Maximum Rate, and (b) Swing Line Loans bear interest at an annual rate
equal to the lesser of (i) Daily Floating LIBOR plus the Applicable Margin
and (ii) the Maximum Rate. Each change in the Base Rate, Daily
Floating LIBOR, and the Maximum Rate is effective, without notice to Borrower or
any other Person, upon the effective date of change.
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3.4
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Quotation of
Rates.
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A
Responsible Officer of Borrower may call Administrative Agent before delivering
a Loan Notice or Swing Line Loan Notice to receive an indication of the interest
rates then in effect, but the indicated rates do not bind Administrative Agent
or Lenders or affect the interest rate that is actually in effect when Borrower
delivers its Loan Notice or Swing Line Loan Notice or on the Loan
Date.
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3.5
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Default
Rate.
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While any
Default exists, Borrower shall pay interest on the Principal Debt at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Law. If any amount (other
than principal of any Loan) payable by Borrower under any Loan Paper is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration, or otherwise, then upon the request of Required
Lenders, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.
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3.6
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Interest
Recapture.
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If the
designated interest rate applicable to any Loan exceeds the Maximum Rate, the
interest rate on that Loan is limited to the Maximum Rate, but any subsequent
reductions in the designated rate shall not reduce the interest rate thereon
below the Maximum Rate until the total amount of accrued interest equals the
amount of interest that would have accrued if that designated rate had always
been in effect. If at maturity (stated or by acceleration), or at
final payment of the Notes, the total interest paid or accrued is less than the
interest that would have accrued if the designated rates had always been in
effect, then, at that time and to the extent permitted by Law, Borrower shall
pay an amount equal to the difference between (a) the lesser of the amount of
interest that would have accrued if the designated rates had always been in
effect and the amount
of interest that would have accrued if the Maximum Rate had always been in
effect, and (b) the amount of interest actually paid or accrued on the
Notes.
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3.7
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Interest
Calculations.
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All
computations of interest for Base Rate Loans when the Base Rate is determined by
Bank of America’s “prime rate” shall be made on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year). Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall,
subject to Section 3.1(c),
bear interest for one day.
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3.8
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Maximum
Rate.
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Regardless
of any provision contained in any Loan Paper or any document related thereto, no
Lender is entitled to contract for, charge, take, reserve, receive or apply, as
interest on all or any part of the Obligation any amount in excess of the
Maximum Rate, and, if Lenders ever do so, then any excess shall be treated as a
partial payment of principal and any remaining excess shall be refunded to
Borrower. In determining if the interest paid or payable exceeds the
Maximum Rate, Borrower and Lenders shall, to the maximum extent permitted under
applicable Law, (a) treat all Loans as but a single extension of credit (and
Lenders and Borrower agree that is the case and that provision in this Agreement
for multiple Loans is for convenience only), (b) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (c) exclude
voluntary payments and their effects, and (d) amortize, prorate, allocate and
spread the total amount of interest throughout the entire contemplated term of
the Obligation. However, if the Obligation is paid in full before the
end of its full contemplated term, and if the interest received for its actual
period of existence exceeds the Maximum Amount, Lenders shall refund any excess
(and Lenders shall not, to the extent permitted by Law, be subject to any
penalties provided by any Laws for contracting for, charging, taking, reserving
or receiving interest in excess of the Maximum Amount).
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3.9
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Interest
Periods.
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When
Borrower requests LIBOR for Revolver Loans, Borrower may elect the applicable
Interest Period. No more than ten (10) LIBOR Interest Periods may be
in effect at one time.
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3.10
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Order of
Application.
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(a) If
no Default or Potential Default exists, payments and prepayments of the
Obligation shall be applied first to fees then due, second to accrued interest
then due and payable on the Principal Debt, and then to the remaining Obligation
in the order and manner as Borrower may direct.
(b) If
a Default or Potential Default exists, any payment or prepayment (including
proceeds from the exercise of any Rights) shall be applied to the Obligation in
the following order: (i) to the payment of all fees, expenses,
and indemnities for which Administrative Agent has not been paid or reimbursed
in accordance with the Loan Papers; (ii) to the ratable payment of all
fees, expenses, and indemnities (other than L/C fees set forth in Section
5.3 hereof (collectively, “L/C
Fees”)) for which Lenders have not been paid or reimbursed in accordance
with the Loan Papers (as used in this clause
(ii), a “ratable
payment” for any Lender shall be, on any date of determination, that
proportion which the portion of the total fees, expenses, and indemnities owed
to such Lender bears to the total aggregate fees, expenses, and indemnities owed
to all Lenders on such date of determination); (iii) to the ratable payment
of accrued and unpaid interest on the Principal Debt and L/C Fees (as used in
this clause
(iii), “ratable
payment” means, for any Lender, on any date of determination, that
proportion which the accrued and unpaid interest on the Principal Debt owed to
such Lender bears to the total accrued and unpaid interest on the Principal Debt
owed to all Lenders); (iv) to the ratable payment of the Principal Debt (as
used in this clause
(iv), “ratable
payment” means for any Lender, on any date of determination, that
proportion which the Principal Debt owed to such Lender bears to the Principal
Debt owed to all Lenders); (v) to Administrative Agent for the account of
the applicable L/C Issuer, to Cash Collateralize that portion of L/C Exposure
comprised of the aggregate undrawn amount of L/Cs; (vi) to the payment of the
remaining Obligation in the order and manner Required Lenders deem appropriate;
and (vii) the balance, if any, after all of the Obligation has been
indefeasibly paid in full, to Borrower or as otherwise required by
Law.
Subject
to Section
2.3(c), amounts used to Cash Collateralize the aggregate undrawn amount
of L/Cs pursuant to clause (v)
above shall be applied to satisfy drawings under such L/Cs as they
occur. If any amount remains on deposit as Cash Collateral after all
L/Cs have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligation, if any, in the order set forth
above.
Subject
to the provisions of Section 14
and provided that
Administrative Agent shall not in any event be bound to inquire into or to
determine the validity, scope, or priority of any interest or entitlement of any
Lender and may suspend all payments or seek appropriate relief (including,
without limitation, instructions from Required Lenders or Required Lenders or an
action in the nature of interpleader) in the event of any doubt or dispute as to
any apportionment or distribution contemplated hereby, Administrative Agent
shall promptly distribute such amounts to each Lender in accordance with the
Agreement and the related Loan Papers.
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3.11
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Sharing of Payments,
Etc.
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If any
Lender (a “Benefitted
Lender”) shall
at any time receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion
than any such payment to or Collateral received by any other Lender, if any, in
respect of such other Lender’s Loans owing to it, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender’s Loans owing to it, or shall
provide such other Lenders with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
Lender; provided, however,
that (i) if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest, and (ii) the provisions of this Section shall
not be construed to apply to (x) any payment made by Borrower pursuant to and in
accordance with the express terms of this Agreement, or (y) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or subparticipations in L/C Exposure or Swing Line Loans to any
assignee or participant, other than to Borrower or any Subsidiary thereof (as to
which the provisions of this Section shall apply). Borrower
agrees that any Lender so purchasing a participation from a Lender pursuant to
this Section 3.11
may, to the fullest extent permitted by Law, exercise all of its Rights of
payment (including the Right of setoff) with respect to such participation as
fully as if such Person were the direct creditor of Borrower in the amount of
such participation.
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3.12
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Booking
Loans.
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To the
extent permitted by Law, any Lender may make, carry or transfer its Loans at,
to, or for the account of any of its branch offices or the office of any of its
Affiliates. However, no Affiliate is entitled to receive any greater
payment under Section 4.3
than the transferor Lender would have been entitled to receive with
respect to those Loans.
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SECTION
4
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TAXES,
YIELD PROTECTION, AND
ILLEGALITY
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4.1
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Taxes.
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(a) Payments Free of
Taxes. Any and all payments by or on account of any obligation
of Borrower hereunder or under any other Loan Paper shall be made free and clear
of and without reduction or withholding for any Indemnified Taxes or Other
Taxes, provided, that if Borrower shall be
required by applicable Law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), Administrative Agent,
Lender, or applicable L/C Issuer, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions, and (iii) Borrower shall timely pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable Law.
(b) Payment of Other
Taxes by Borrower. Without limiting the provisions of subsection
(a) above, Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable Law.
(c) Indemnification
by Borrower. Borrower shall indemnify Administrative Agent,
each Lender, and each L/C Issuer, within 10 days after receipt by Borrower of
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by Administrative
Agent, such Lender, or such L/C Issuer, as the case may be, and, to the extent
not resulting from the gross negligence or willful misconduct by Administrative
Agent, any Lender, or either L/C Issuer, any penalties, interest, and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to Borrower by a Lender or the
applicable L/C Issuer (with a copy to Administrative Agent), or by
Administrative Agent on its own behalf or on behalf of a Lender or the
applicable L/C Issuer, shall be conclusive absent manifest error.
(d) Evidence of
Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority,
Borrower shall deliver to Administrative Agent the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Administrative Agent.
(e) Status of
Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding Tax under the Law of the jurisdiction in which
Borrower is resident for Tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Paper
shall deliver to Borrower (with a copy to Administrative Agent), at the time or
times prescribed by applicable Law or reasonably requested by Borrower or
Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by Borrower or Administrative Agent, shall deliver such
other documentation prescribed by applicable Law or reasonably requested by
Borrower or Administrative Agent as will enable Borrower or Administrative Agent
to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.
Without
limiting the generality of the foregoing, in the event that Borrower is resident
for Tax purposes in the United States, any Foreign Lender shall deliver to
Borrower and Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
request of Borrower or Administrative Agent, but only if such Foreign Lender is
legally entitled to do so), whichever of the following is
applicable:
(i) duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income Tax treaty to which the United States is a
party,
(ii) duly
completed copies of Internal Revenue Service Form W-8ECI,
(iii) in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code,
(x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of
the Code, (B) a “10 percent
shareholder” of Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the
Code and (y) duly completed copies of Internal Revenue Service Form
W-8BEN, or
(iv) any
other form prescribed by applicable Law as a basis for claiming exemption from
or a reduction in United States Federal withholding Tax duly completed together
with such supplementary documentation as may be prescribed by applicable Law to
permit Borrower to determine the withholding or deduction required to be
made.
(f) Treatment of
Certain Refunds. If Administrative Agent, any Lender, or
either L/C Issuer determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by
Borrower or with respect to which Borrower has paid additional amounts pursuant
to this Section, it shall pay to Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
Borrower under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of Administrative Agent, such
Lender, or the applicable L/C Issuer, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided, that Borrower, upon
the request of Administrative Agent, such Lender, or the applicable L/C Issuer,
agrees to repay the amount paid over to Borrower (plus any penalties, interest
or other charges imposed by the relevant Governmental Authority) to
Administrative Agent, such Lender, or the applicable L/C Issuer in the event
Administrative Agent, such Lender, or the applicable L/C Issuer is required to
repay such refund to such Governmental Authority. This subsection
shall not be construed to require Administrative Agent, any Lender or the
applicable L/C Issuer to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to Borrower or any
other Person.
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4.2
|
Illegality.
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If any
Lender determines that any Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain, or fund LIBOR Loans, or to determine or charge
interest rates based upon LIBOR or Daily Floating LIBOR, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to Borrower through
Administrative Agent, any obligation of such Lender to make or continue Revolver
Loans that are LIBOR Loans or to convert Base Rate Loans to Revolver Loans that
are LIBOR Loans, or to make Daily Floating LIBOR Loans, shall be suspended until
such Lender notifies Administrative Agent and Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of
such notice, Borrower shall, upon demand from such Lender (with a copy to
Administrative Agent), prepay or, if applicable, convert all LIBOR Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor (or, in the case of Daily Floating LIBOR Loans, on the next Business
Day for LIBOR Loans), if such Lender may lawfully continue to maintain such
LIBOR Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such Revolver Loan that are LIBOR Loans, Daily Floating
LIBOR Loans, or participations in Swing Line Loans. Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the amount
so prepaid or converted.
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4.3
|
Inability to Determine
Rates.
|
If
Required Lenders determine that for any reason in connection with any request
for a LIBOR Loan or, with respect to a Revolver Loan that is a LIBOR Loan, the
conversion to or continuation thereof, that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Revolver Loan that is a LIBOR Loan, (b)
adequate and reasonable means do not exist for determining LIBOR for any
requested Interest Period or Daily Floating LIBOR with respect to the applicable
proposed LIBOR Loan, or (c) LIBOR for any requested Interest Period or Daily
Floating LIBOR with respect to the applicable proposed LIBOR Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan,
Administrative Agent will promptly so notify Borrower and each
Lender. Thereafter, the obligation of Lenders to make or maintain
LIBOR Loans shall be suspended until Administrative Agent (upon the instruction
of Required Lenders) revokes such notice. Upon receipt of such
notice, Borrower may revoke any pending request for a Loan of, conversion to or
continuation of Revolver Loans that are, LIBOR Loans or, failing that, will be
deemed to have converted such request into a request for a borrowing of Base
Rate Loans in the amount specified therein.
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4.4
|
Increased Costs;
Reserves on Revolver Loans that are LIBOR
Loans.
|
(a) Increased Costs
Generally. If any Change in Law shall:
(i) impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge, or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any Lender (except any
reserve requirement contemplated by Section
4.4(e)) or the L/C Issuers;
(ii) subject
any Lender or either L/C Issuer to any Tax of any kind whatsoever with respect
to this Agreement, any L/C, any participation in a L/C, or any Revolver Loan
that is a LIBOR Loan made by it, or change the basis of taxation of payments to
such Lender or such L/C Issuer in respect thereof (except for Indemnified Taxes
or Other Taxes covered by Section
4.1 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or such L/C Issuer); or
(iii) impose
on any Lender or either L/C Issuer or the London interbank market any other
condition, cost, or expense affecting this Agreement or LIBOR Loans made by such
Lender or any L/C or participation therein;
and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any LIBOR Loan (or of maintaining its obligation to make
any such Loan), or to increase the cost to such Lender or such L/C Issuer of
participating in, issuing, or maintaining any L/C (or of maintaining its
obligation to participate in or to issue any L/C), or to reduce the amount of
any sum received or receivable by such Lender or such L/C Issuer hereunder
(whether of principal, interest, or any other amount) then, upon request of such
Lender or such L/C Issuer, Borrower will pay to such Lender or such L/C Issuer,
as the case may be, such additional amount or amounts as will compensate such
Lender or such L/C Issuer, as the case may be, for such additional costs
incurred or reduction suffered.
(b) Capital
Requirements. If any Lender or either L/C Issuer determines
that any Change in Law affecting such Lender or the applicable L/C Issuer or any
Lending Office of such Lender or such Lender’s or the applicable L/C Issuer’s
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or the applicable L/C
Issuer’s capital or on the capital of such Lender’s or the applicable L/C
Issuer’s holding company, if any, as a consequence of this Agreement, the
Commitment of such Lender or the Loans made by, or participations in L/Cs held
by, such Lender, or the L/Cs issued by the applicable L/C Issuer, to a level
below that which such Lender or the applicable L/C Issuer or such Lender’s or
the applicable L/C Issuer’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the applicable L/C
Issuer’s policies and the policies of such Lender’s or the applicable L/C
Issuer’s holding company with respect to capital adequacy), then from time to
time, upon demand of such Lender or the applicable L/C Issuer, Borrower will pay
to such Lender or the applicable L/C Issuer, as the case may be, such additional
amount as will compensate such Lender or the applicable L/C Issuer or such
Lender’s or the applicable L/C Issuer’s holding company for any such reduction
suffered.
(c) Certificates for
Reimbursement. A certificate of a Lender or either L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the
applicable L/C Issuer or its holding company, as the case may be, as specified
in subsection
(a) or (b) of
this Section and delivered to Borrower shall be conclusive absent manifest
error. Borrower shall pay such Lender or the applicable L/C Issuer,
as the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof.
(d) Delay in
Requests. Failure or delay on the part of any Lender or either
L/C Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or the applicable L/C
Issuer’s right to demand such compensation, provided, that that Borrower
shall not be required to compensate a Lender or the applicable L/C Issuer
pursuant to the foregoing provisions of this Section for any increased costs
incurred or reductions suffered more than nine months prior to the date that
such Lender or the applicable L/C Issuer, as the case may be, notifies Borrower
of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s or the applicable L/C Issuer’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the nine-month period referred to above shall
be extended to include the period of retroactive effect thereof).
(e) Reserves on LIBOR
Loans. Borrower shall pay to each Lender, as long as such
Lender shall be required to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits, additional
interest on the unpaid principal amount of each LIBOR Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall
be due and payable on each date on which interest is payable on such Loan; provided, that Borrower shall
have received at least 10 days prior notice (with a copy to Administrative
Agent) of such additional interest from such Lender. If a Lender
fails to give notice 10 days prior to the last day of the relevant Interest
Period, such additional interest shall be due and payable 10 days from receipt
of such notice.
|
4.5
|
Compensation for
Losses.
|
Upon
demand of any Lender (with a copy to Administrative Agent) from time to time,
Borrower shall promptly compensate such Lender for and hold such Lender harmless
from any loss, cost, or expense incurred by it as a result of:
(a) any
continuation, conversion, payment, or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);
(b) any
failure by Borrower (for a reason other than the failure of such Lender to make
a Loan) to prepay, borrow, continue, or convert any Loan other than a Base Rate
Loan on the date or in the amount notified by Borrower; or
(c) any
assignment of a Revolver Loan that is a LIBOR Loan on a day other than the last
day of the Interest Period therefor as a result of a request by Borrower
pursuant to Section 15.14;
including
any loss of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained. Borrower shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing.
For
purposes of calculating amounts payable by Borrower to Lenders under this Section
4.5, each Lender shall be deemed to have funded each Revolver Loan that
is a LIBOR Loan made by it at LIBOR for such Loan by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such LIBOR Loan was in fact so
funded.
|
4.6
|
Mitigation
Obligations; Replacement of
Lenders.
|
(a) Designation of a
Different Lending Office. If any Lender requests compensation
under Section
4.4, or Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
4.1, or if any Lender gives a notice pursuant to Section
4.2, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches, or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section
4.1 or 4.4, as
the case may be, in the future, or eliminate the need for the notice pursuant to
Section
4.2, as applicable, and (ii) in each case, would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be materially
disadvantageous to such Lender. Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of
Lenders. If any Lender requests compensation under Section
4.4, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section
4.1, Borrower may replace such Lender in accordance with Section
15.14.
|
4.7
|
Survival.
|
All of
Borrower’s obligations under this Section
4 shall
survive termination of the Total Commitment and repayment of the Obligation
hereunder.
|
SECTION
5
|
FEES.
|
|
5.1
|
Treatment of
Fees.
|
The fees
described in this Section 5
(a) are not compensation for the use, detention, or forbearance of money,
(b) are in addition to, and not in lieu of, interest and expenses otherwise
described in this Agreement, (c) are payable in accordance with Section
3.1(c), (d) are non-refundable, and (e) to the fullest extent permitted
by Law, bear interest, if not paid when due, at the Default Rate.
|
5.2
|
Fee
Letter.
|
Borrower
shall pay to Arranger and Administrative Agent, for their respective accounts or
for the respective accounts of Lenders, as the case may be, fees in the amounts
and at the times specified in the applicable Fee Letter. Such fees
shall be fully earned when paid and shall not be refundable for any reason
whatsoever.
|
5.3
|
L/C
Fees.
|
(a) L/C
Fees. Borrower shall pay to Administrative Agent for the
account of each Lender in accordance with its Commitment Percentage (i) a fee
for each commercial L/C equal to 1/8 of 1% per annum times the actual daily
maximum amount available to be drawn under each such L/C, and (ii) a fee for
each standby L/C equal to the Applicable Margin for Revolver Loans that are
LIBOR Loans times the
actual daily maximum amount available to be drawn under each such
L/C. Such fee for each L/C shall be due and payable quarterly in
arrears on each Quarterly Date, commencing with the first such date to occur
after the issuance of such L/C, and on the expiration date of such
L/C. If there is any change in the Applicable Margin during any
quarter, the actual daily amount of each standby L/C shall be computed and
multiplied by the Applicable Margin separately for each period during such
quarter that such Applicable Margin was in effect. Notwithstanding
anything to the contrary contained herein, upon the request of Required Lenders,
while any Default exists, the fees set forth herein with respect to L/Cs shall
accrue at the Default Rate.
(b) Fronting Fee and
Documentary and Processing Charges Payable to L/C
Issuers. Borrower shall pay directly to each L/C Issuer, for
its own account, a fronting fee in an amount specified in the Fee Letter
executed by such L/C Issuer or, with respect to commercial L/Cs, in an amount
agreed upon by Borrower and such L/C Issuers. Such fronting fee shall
be due and payable (i) with respect to standby L/Cs, on the tenth Business Day
after the end of each January, April, July, and October in respect of the most
recently-ended quarterly period (or portion thereof, in the case of the first
payment), commencing with the first such date to occur after the issuance of
such L/C, on the L/C Expiration Date, and thereafter on demand, or (ii) with
respect to commercial L/Cs, upon the issuance thereof. In addition,
Borrower shall pay directly to the applicable L/C Issuer for its own account the
customary issuance, presentation, amendment and other processing fees, and other
standard costs and charges of such L/C Issuer relating to letters of credit as
from time to time in effect. Such customary fees and standard costs
and charges are due and payable on demand and are nonrefundable.
(c) Calculation of
L/C Fees. Each L/C (other than a fee payable upon
the issuance of the L/C) shall be calculated on the basis of a year of 360 days
and the actual number of days elapsed.
|
5.4
|
Commitment
Fee.
|
Borrower
shall pay to Administrative Agent for the account of each Lender in accordance
with its Commitment Percentage, a commitment fee equal to the Applicable
Percentage times the daily amount by which the Total Commitment exceeds the
Commitment Usage (excluding from Commitment Usage, for the purposes hereof, the
outstanding principal balance of Swing Line Loans). The commitment
fee shall accrue at all times from the Closing Date to the Termination Date,
including at any time during which one or more of the conditions in Section 7
is not met, and shall be due and payable quarterly in arrears on each Quarterly
Date, commencing with the first such date to occur after the Closing Date, and
on the Termination Date. The commitment fee shall be calculated
quarterly in arrears on the basis of the actual days elapsed (including the
first day but excluding the last day) in a calendar year of 360 days, and if
there is any change in the Applicable Percentage during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Percentage
separately for each period during such quarter that such Applicable Percentage
was in effect.
|
SECTION
6
|
GUARANTY
AND SECURITY.
|
|
6.1
|
Guaranty.
|
Full and
complete payment of the Obligation under the Loan Papers shall be guaranteed in
accordance with a Guaranty executed by each Restricted Company (other than
Borrower).
|
6.2
|
Collateral.
|
Full and
complete payment of the Obligation under the Loan Papers shall be secured by (a)
all capital stock or other equity interests issued to a Restricted Company by
any Restricted Subsidiary organized under the Laws of the United States (or any
state thereof), (b) 65% of all capital stock or other equity interests issued to
a Restricted Company organized under the Laws of the United States (or any state
thereof) by any Restricted Subsidiary organized under the Laws of any country
other than the United
States, (c) a pledge by Borrower of its membership interests in SSI, and (d) all
Bond Rights created in favor of or held by the L/C Issuers (as assigned to
Administrative Agent pursuant to Section
2.3(j)(iv) herein), including, without limitation, any Rights thereunder
pledged or assigned to the L/C Issuer as security for payment of the “Bonds” defined therein
(collectively, the “Collateral”).
|
6.3
|
Additional Collateral
and Guaranties.
|
Administrative
Agent may, without notice or demand and without affecting any Person’s
obligations under the Loan Papers, from time to time (a) receive and hold
additional collateral from any Person for the payment of all or any part of the
Obligation and exchange, enforce or release all or any part of that collateral
(in accordance with Section
14.9), and (b) accept and hold any endorsement or guaranty of payment of
all or any part of the Obligation and release any endorser or guarantor, or any
Person who has given any other security for the payment of all or any part of
the Obligation, or any other Person in any way obligated to pay all or any part
of the Obligation (in accordance with Section
14.9).
|
6.4
|
Additional Documents
or Information.
|
Each
Company will execute or cause to be executed, stock powers, control agreements,
and other writings in the form and content reasonably required by Administrative
Agent, and shall deliver (or grant Administrative Agent the authority to file on
behalf of each Company) financing statements requested by Administrative
Agent. Borrower shall pay all costs of (a) filing any financing,
continuation, amendment or terminations statements, or (b) other actions taken
by Administrative Agent relating to the Collateral, including, without
limitation, costs and expenses of any Lien search required by Administrative
Agent.
|
SECTION
7
|
CONDITIONS
PRECEDENT.
|
|
7.1
|
Initial
Advance.
|
Lenders
will not be obligated to fund the initial Loans hereunder, and the L/C Issuers
will not be obligated to issue the initial L/Cs hereunder, unless (x) there have
been no changes or developments in the information and projections provided by
the Companies prior to the date hereof to Administrative Agent and Lenders in
connection with the transactions contemplated hereby, (y) Administrative Agent
and Lenders have not received or discovered new or additional information
regarding the Companies that could reasonably be expected to cause a Material
Adverse Event, and (z) Administrative Agent has received each of the items in
clauses
(a)
through (k) below,
and the conditions in clauses
(l)
and (m) below
have been satisfied (other
than each item or condition, if any, listed on Schedule
7.1, which items or conditions are hereby permitted to be delivered or
satisfied after the Closing Date, but not later than the respective dates for
delivery or satisfaction specified on Schedule
7.1):
(a) an
executed counterpart of this Agreement, sufficient in number for distribution to
Administrative Agent, each Lender, and Borrower;
(b) with respect to any Lender requesting a
Note pursuant to Section 3.1(a), a Revolver Note, payable to the order
of such requesting Lender, as contemplated in Section 3.1(a),
and if requested by either Swing Line Lender pursuant to Section 3.1(a),
a Swing Line Note, payable to such Swing Line Lender;
(c) from any
Restricted Company (other
than Borrower) (i) that has not previously executed a Guaranty, a
Guaranty executed by such Restricted Company, or (ii) that has previously
executed a Guaranty, a Confirmation of Guaranty executed by such Restricted
Company;
(d) from the
holder of the capital stock or other equity interests of any Restricted Company
or SSI, as applicable, (i) that has not previously executed a Pledge Agreement,
a Pledge Agreement executed by such Person, pledging such capital stock or other
equity interest, or (ii) that has previously executed a Pledge Agreement, a
Confirmation of Pledge Agreement executed by such Person;
(e) an
Officers’ Certificate for each Restricted Company, relating to articles of
incorporation or organization, bylaws, regulations, or operating agreements,
resolutions, and incumbency;
(f) Certificates
of Existence and Good Standing (Account Status) for each Restricted Company from
its state of organization and each other state where it does business, each
dated after January 1, 2005;
(g) Forest
Service Permit Agreements duly executed by the United States Department of
Agriculture, Forest Service, the applicable Company, and Administrative
Agent;
(h) Legal
opinions of Martha Dugan Rehm, General Counsel of VRI, and Cahill Gordon &
Reindel LLP, special New York counsel to Borrower and the other Restricted
Subsidiaries, each in form and substance satisfactory to Administrative Agent;
one of the foregoing opinions shall include opinions confirming that (i) the
Debt incurred under this Agreement and the related Loan Papers (A) has been
incurred or entered into in compliance with the requirements of the Senior
Subordinated Indenture, and (B) constitutes “Senior Debt” under the terms
of the Senior Subordinated Indenture, and (ii) this Agreement constitutes the
“Credit Agreement” as
such term is defined in the Senior Subordinated Indenture.
(i) a
certificate signed by a Responsible Officer certifying that (i) all of the
representations and warranties of the Companies in the Loan Papers are true and
correct in all material respects; (ii) no Default or Potential Default exists
under the Existing Agreement; (iii) no Default or Potential Default exists or
would result from the execution and delivery of the Loan Papers or the proposed
funding of the Loans or issuance of L/Cs on the Closing Date; (iv) there has
been no event or circumstance since July 31, 2004 that has had or could be
reasonably expected to result in, either individually or in the aggregate, a
Material Adverse Event; and (v) except as set forth on Schedule
8.7, there is no action, suit, investigation, or proceeding pending or,
to the knowledge of Borrower, threatened, in any court or before any arbitrator
or Governmental Authority that could reasonably be expected to (A) materially
and adversely affect the Companies, or (B) adversely affect any transaction
contemplated hereby, the rights and remedies of Administrative Agent, Lenders,
and the L/C Issuers hereunder, or the ability of the Companies or any other
obligor under any Guaranty to perform their respective obligations under the
Agreement;
(j) evidence
that all insurance required to be maintained pursuant to the Loan Papers has
been obtained and is in effect;
(k) evidence,
in form and substance satisfactory to Administrative Agent, that concurrently
with the Closing Date, the “Term Loans” under the
Existing Agreement shall be repaid in full, the security interests of the “Term Loan Lenders” in the
collateral shall be released, and all obligations of Borrower with respect
thereto shall be terminated;
(l) payment
of all fees payable on or prior to the Closing Date to Administrative Agent,
any Related Party of the Administrative Agent, and any Lender as
provided for in Section 5;
and
(m) unless
waived by Administrative Agent, payment in full of all reasonable fees,
expenses, and disbursements of Haynes and Boone, LLP and, without duplication,
the reasonably allocated cost of internal legal services and all reasonable
expenses and disbursements of internal counsel (collectively, “Attorney
Costs”) of Administrative Agent to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall constitute
Administrative Agent’s reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided, that such estimate shall not
thereafter preclude a final settling of accounts between Borrower and
Administrative Agent).
|
7.2
|
Each
Advance.
|
The
obligation of each Lender to make any Loan (other than a conversion of Loans to
the other Type or a continuation of Revolver Loans as LIBOR Loans) is subject to
the following conditions precedent: (a) Administrative Agent shall
have timely received a Loan Notice (or in the case of a Swing Line Loan, a Swing
Line Loan Notice) or the applicable L/C Issuer shall have timely received the
applicable L/C Agreement; (b) the applicable L/C Issuer shall have received any
applicable L/C fee; (c) all of the representations and warranties of the
Companies in the Loan Papers are true and correct in all material respects
(unless they speak to a specific date or are based on facts which have changed
by transactions contemplated or permitted by this Agreement); (d) no Material
Adverse Event, Default or Potential Default exists or would result from the
proposed funding of such Loans or issuance of L/Cs; and (e) the funding of the
Loans or issuance of the L/Cs is permitted by Law. Upon
Administrative Agent’s reasonable request, Borrower shall deliver to
Administrative Agent evidence substantiating any of the matters in the Loan
Papers that are necessary to enable Borrower to qualify for the Loans or
L/Cs. Each condition precedent in this Agreement is material to the
transactions contemplated by this Agreement, and time is of the essence with
respect to each condition precedent. Subject to the prior approval of
Required Lenders, Lenders may fund any Loan, and the applicable L/C Issuer may
issue any L/C, without all conditions being satisfied, but, to the extent
permitted by Law, that funding and issuance shall not be deemed to be a waiver
of the requirement that each condition precedent be satisfied as a prerequisite
for any subsequent funding or issuance, unless Required Lenders specifically
waive each item in writing. Each Loan Notice (other than a Loan
Notice requesting only a conversion of Loans to the other Type or a continuation
of Revolver Loans as LIBOR Loans), each Swing Line Loan Notice, and each L/C
Agreement submitted by Borrower shall be deemed to be a representation and
warranty that the conditions specified in this Section
7.2 have been satisfied on and as of the date of the applicable Loan or
issuance of the applicable L/C. Notwithstanding anything to the
contrary set forth in this Section
7.2, Lenders will not be obligated to honor any Loan Notice (including a
Loan Notice converting Revolver Loans that are Base Rate Loans to Revolver Loans
that are LIBOR Loans or continuing Revolver Loans that are LIBOR Loans) or Swing
Line Loan Notice if a Default or Potential Default exists or would result after
giving effect to the proposed funding, conversion, or continuation of such Loans
or issuance of L/Cs.
|
SECTION
8
|
REPRESENTATIONS
AND WARRANTIES.
|
Borrower
(and each Guarantor by execution of a Guaranty) represents and warrants to
Administrative Agent and Lenders as set forth below; provided however, that
representations and warranties of any such Guarantor shall be made solely as to
such Guarantor and its Subsidiaries:
|
8.1
|
Regulation
U.
|
No
Company is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
“margin stock” within
the meaning of Regulations T
or U of the Board of Governors of the Federal Reserve System, as
amended. No part of the proceeds of any Loan will be used, directly
or indirectly, for a purpose which violates any Law, including, without
limitation, the provisions of Regulations T, U, or X (as enacted by the Board of
Governors of the Federal Reserve System, as amended). Following the
application of the proceeds of each Loan, each L/C Borrowing, or each drawing
under each L/C, not more than 25% of the value of the assets (either of Borrower
only or the Companies on a consolidated basis) subject to the provisions of
Section 10.5,
Section 10.10
and Section 10.11
or subject to any restriction contained in any agreement or instrument between
Borrower and any Lender or any Affiliate of any Lender relating to Debt and
within the scope of Section
12.8 will be margin stock.
|
8.2
|
Corporate Existence,
Good Standing, Authority and
Compliance.
|
Each
Company is duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it is incorporated or organized as identified on
Schedule
8.2 (or any revised Schedule 8.2
delivered by Borrower to Lenders evidencing changes permitted by Sections 9.10,
9.11, 10.10 or
10.11). Except
where failure is not a Material Adverse Event, each Restricted Company (a) is
duly qualified to transact business and is in good standing as a foreign
corporation or other entity in each jurisdiction where the nature and extent of
its business and properties require due qualification and good standing as
identified on Schedule
8.2 (or any such revised Schedule 8.2),
and (b) possesses all requisite authority, permits, licenses, consents,
approvals and power to (i) own or lease its assets and conduct its business as
is now being, or is contemplated by this Agreement to be, conducted, and (ii)
execute, deliver, and perform its obligations under the Loan Papers to which it
is party.
|
8.3
|
Subsidiaries.
|
VRI has
no Subsidiaries, other
than as disclosed on Schedule 8.2
(or on any revised Schedule 8.2
delivered by Borrower to Lenders evidencing changes permitted by Sections 9.10,
9.11, 10.10 or
10.11). All
of the outstanding shares of capital stock (or similar voting interests) of the
Restricted Companies are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of the
Restricted Companies other
than VRI are owned of record and beneficially as set forth thereon, free
and clear of any Liens, restrictions, claims or Rights of another Person, other than Permitted Liens,
and are not subject to any warrant, option or other acquisition Right of any
Person or subject to any transfer restriction, other than restrictions
imposed by securities Laws and general corporate Laws. All
Unrestricted Subsidiaries meet the requirements of “Unrestricted Subsidiaries” as
set forth in the definition thereof.
|
8.4
|
Authorization and
Contravention.
|
The
execution and delivery by, and enforcement against, each Restricted Company of
each Loan Paper or related document to which it is a party and the performance
by it of its obligations thereunder (a) are within its organizational power, (b)
have been duly authorized by all necessary action, (c) require no action by or
filing with any Governmental Authority (other than any action or
filing that has been taken or made on or before the Closing Date), (d) do not
violate any provision of its organizational documents, (e) do not violate any
provision of Law or any order of any Governmental Authority applicable to it,
other than violations
that individually or collectively are not a Material Adverse Event, (f) do not
violate any Material Agreements to which it is a party, or (g) do not result in
the creation or imposition of any Lien on any asset of any Company.
|
8.5
|
Binding
Effect.
|
Upon
execution and delivery by all parties thereto, each Loan Paper which is a
contract will constitute a legal and binding obligation of each Restricted
Company party thereto, enforceable against it in accordance with its terms,
except as
enforceability may be limited by applicable Debtor Relief Laws and general
principles of equity.
|
8.6
|
Financial Statements;
Fiscal Year.
|
The
Current Financials were prepared in accordance with GAAP and, together with the
notes thereto, present fairly, in all material respects, the consolidated
financial condition, results of operations, and cash flows of the Companies as
of, and for the portion of the fiscal year ending on, the date or dates thereof
(subject only to normal year-end adjustments), and show all material
indebtedness and other liabilities, direct or contingent, of the Companies as of
such date or dates, including liabilities for Taxes, material commitments and
Debt. Since the date of the Current Financials, there has been no
event or circumstance, either individually or in the aggregate, that has
resulted in or could reasonably be expected to result in a Material Adverse
Event. The fiscal year of Borrower ends on July 31.
|
8.7
|
Litigation.
|
Except as
disclosed on Schedule
8.7, (a) no Company (other than as a creditor or
claimant) is subject to, or aware of the threat of, any Litigation (i) that is
reasonably likely to be determined adversely to any Company and, if so adversely
determined, shall result in a Material Adverse Event, or (ii) that purports to
affect or pertain to this Agreement or any other Loan Paper, or any of the
transactions contemplated hereby, (b) no outstanding or unpaid judgments against
any Company exist, and (c) no Company is a party to, or bound by, any judicial
or administrative order, judgment, decree or consent decree relating to any past
or present practice, omission, activity or undertaking which constitutes a
Material Adverse Event.
|
8.8
|
Taxes.
|
All Tax
returns of each Company required to be filed have been filed (or extensions have
been granted) before delinquency, other than returns for which
the failure to file is not a Material Adverse Event or, in any event, likely to
result in a Lien on the assets of the Companies securing any liability of the
Companies (individually or when aggregated with any liability of the Companies
contemplated elsewhere in this Section and in Sections 8.9
and
Section 8.10 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount, and all Taxes shown as due and payable in such
returns have been paid before delinquency, other than Taxes for which
the criteria for Permitted Liens (as specified in clause (j)
of the definition of “Permitted Liens”) have been
satisfied, for which nonpayment is not a Material Adverse Event or, in any
event, likely to result in a Lien on the assets of the Companies securing any
liability of the Companies (individually or when aggregated with any liability
of the Companies contemplated elsewhere in this Section and in Section 8.9
and
Section 8.10 herein that reasonably likely to be secured by Liens) in
excess of the Threshold Amount, or which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided. There is no proposed Tax assessment against any
Company that would, if made, result in a Material Adverse Event or, in any
event, result in a Lien on the assets of such Company or Companies securing any
liability (individually or when aggregated with any liability of the Companies
contemplated elsewhere in this Section and in Section 8.9
and
Section 8.10 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount.
|
8.9
|
Environmental
Matters.
|
Except as
disclosed on Schedule
8.9 and except
for conditions, circumstances or violations that are not, individually or in the
aggregate, a Material Adverse Event or, in any event, likely to result in a Lien
on the assets of the Companies securing liability of the Companies (individually
or when aggregated with any liability of the Companies contemplated elsewhere in
this Section and in Section 8.8
and
Section 8.10 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount, no Company (a) knows of any environmental
condition or circumstance adversely affecting any Company’s properties or
operations, (b) has, to its knowledge, received any written report of any
Company’s violation of any Environmental Law, or (c) knows that any Company is
under any obligation imposed by a Governmental Authority to remedy any violation
of any Environmental Law. Except as disclosed on Schedule
8.9, each Company believes that its properties and operations do not
violate any Environmental Law, other than violations that
are not, individually or in the aggregate, a Material Adverse Event or, in any
event, likely to result in a Lien on the assets of the Companies securing
liability of the Companies (individually or when aggregated with any liability
of the Companies contemplated elsewhere in this Section and in Section 8.8
and
Section 8.10 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount. No facility of any Company is used
for, or to the knowledge of any Company has been used for, treatment or disposal
of any Hazardous Substance or storage of Hazardous Substances, other than in material
compliance with applicable Environmental Laws.
|
8.10
|
Employee
Plans.
|
Except
where the occurrence or existence is not a Material Adverse Event or, in any
event, likely to result in a Lien on the assets of any Company or the Companies
securing liability of any Company or the Companies (individually or when
aggregated with any liability of the Companies contemplated elsewhere in this
Section and in Section 8.8
and
Section 8.9 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount, (a) no Employee Plan has incurred an “accumulated funding
deficiency” (as defined in section 302 of ERISA or section 412 of the
Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (other than required insurance
premiums, all of which have been paid), (c) no Company has withdrawn in whole or
in part from participation in a Multiemployer Plan, (d) no Company has engaged
in any “prohibited
transaction” (as defined in section 406 of ERISA or section 4975 of the
Code), and (e) no “reportable
event” (as defined in section 4043 of ERISA) has occurred
with respect to an Employee Plan, excluding events for which the notice
requirement is waived under applicable PBGC regulations.
|
8.11
|
Properties and
Liens.
|
(a) Each
Company has good and marketable title in fee simple to, or a valid leasehold
interest in, all material property reflected on the Current Financials (other than for property that
is obsolete or that has been disposed of in the ordinary course of business or
as otherwise permitted by Section
10.10 or Section
10.11).
(b) Except
for Permitted Liens, no Lien exists on any property of any Company (including,
without limitation, the Forest Service Permits and the Water Rights), and the
execution, delivery, performance or observance of the Loan Papers will not
require or result in the creation of any Lien on any Company’s
property.
(c) As of the
date hereof, the Forest Service Permits constitute all of the material licenses,
permits or leases from the U.S. held by the Companies for use in connection with
their respective skiing businesses.
(d) Each of
the Water Rights is, to the knowledge of the Companies, in full force and effect
and, to the knowledge of the Companies, there is no material default or existing
condition which with the giving of notice or the passage of time or both would
cause a material default under any Water Right that is material to the operation
of the Companies. Subject to the available supply and to the terms
and conditions of the applicable decrees, the Companies’ Water Rights provide a
dependable, legal and physical snowmaking, irrigation and domestic water supply
for the operation of the Companies’ businesses.
(e) As of the
Closing Date, the Companies own the Critical Assets set forth on Schedule
8.11. The Critical Assets set forth on part (a)
of Schedule
8.11, which constitute Existing Critical Assets, were acquired on or
before the Third Agreement Date. The Critical Assets set forth on
part (b)
of Schedule
8.11, which constitute Additional Critical Assets, were acquired after
the Third Agreement Date. Each Existing Critical Asset owned by any Company is
owned by a Wholly Owned Restricted Subsidiary of Borrower (other than Existing
Critical Assets owned by Heavenly Valley), and each Additional Critical Asset is
owned by a Restricted Subsidiary of Borrower.
|
8.12
|
Government
Regulations.
|
No
Company or Controlling Person (a) is a “holding company,” or a “subsidiary company” of a
“holding company,” or
an “affiliate” of a
“holding company” or of
a “subsidiary company” of a “holding company,” within the meaning of the Public
Utility Holding Company Act of 1935, or (b) is or is required to be registered
as an “investment company” under the Investment Company Act of
1940.
|
8.13
|
Transactions with
Affiliates.
|
Except as
set forth in Schedule
8.13 and except
for other transactions which do not, in the aggregate, cost the Restricted
Companies more than $2,000,000 in any fiscal year, no Restricted Company is a
party to any transaction with any Affiliate (other than another Restricted
Company), except upon
fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm’s-length transaction with a Person that was
not its Affiliate.
|
8.14
|
Debt.
|
No
Company is an obligor on any Debt, other than Permitted
Debt.
|
8.15
|
Material
Agreements.
|
All
Material Agreements to which any Restricted Company is a party are in full force
and effect, and no default or potential default (a) exists on the part of any
Restricted Company thereunder that is a Material Adverse Event or (b) would
result from the consummation of the transactions contemplated by this Agreement
or any other Loan Paper.
|
8.16
|
Labor
Matters.
|
There are
no binding agreements of any type with any labor union, labor organization,
collective bargaining unit or employee group to which any Company is bound,
other than agreements
which may be entered into after the Closing Date which do not constitute a
Material Adverse Event. No actual or threatened strikes, labor
disputes, slow downs, walkouts, or other concerted interruptions of operations
by the employees of any Company that constitute a Material Adverse Event
exist. Hours worked by and payment made to employees of the Companies
have not been in violation of the Fair Labor Standards Act, as
amended, or any other applicable Law dealing with labor matters, other than any violations,
individually or collectively, that are not a Material Adverse
Event. All payments due from any Company for employee health and
welfare insurance have been paid or accrued as a liability on its books, other than any nonpayments
that are not, individually or collectively, a Material Adverse
Event.
|
8.17
|
Solvency.
|
On the
Closing Date, on each Loan Date, and on each date of an L/C Credit Extension,
Borrower and each Guarantor are, and after giving effect to the requested Loan,
will be, Solvent.
|
8.18
|
Intellectual
Property.
|
Each
Company owns (or otherwise holds rights to use) all material Intellectual
Property, licenses, permits, and trade names necessary to continue to conduct
its businesses as presently conducted by it and proposed to be conducted by it
immediately after the Closing Date. To its knowledge, each Company is
conducting its business without infringement or claim of infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others, other than any infringements
or claims that, if successfully asserted against or determined adversely to any
Company, would not, individually or collectively, constitute a Material Adverse
Event, and to the best of each Company’s knowledge, no slogan or other
advertising device, product, process, method, substance or part or other
material now employed, or now contemplated to be employed, by such Company
infringes upon any rights held by any other Person. To the knowledge
of any Company as of the date hereof, no infringement or claim of infringement
by others of any material Intellectual Property, license, permit, trade name, or
other intellectual property of any Company exists, other than claims which will
not result in a Material Adverse Event.
|
8.19
|
Full
Disclosure.
|
Each
material fact or condition relating to the Loan Papers or the financial
condition, business or property of any Company has been disclosed to
Administrative Agent. All reports, financial statements, certificates
and other information furnished by any Company to Administrative Agent in
connection with the Loan Papers on or before the Closing Date was, taken as a
whole, true and accurate in all material respects or based on reasonable
estimates on the date the information is stated or certified.
|
8.20
|
Insurance.
|
The
properties of the Companies are insured with financially sound and reputable
insurance companies not Affiliates of the Companies, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Companies operate.
|
8.21
|
Compliance with
Laws.
|
Each
Company is in compliance in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Event.
|
8.22
|
Senior
Debt.
|
The
Obligation represents, among other things, the restatement, renewal, amendment,
extension, and modification of the “Obligation” (as defined in
the Existing Agreement) and constitutes “Senior Debt” under the Senior
Subordinated Indenture and other documents evidencing and relating to
Subordinated Debt.
|
SECTION
9
|
AFFIRMATIVE
COVENANTS.
|
So long
as Lenders are committed to fund Loans and the L/C Issuers are committed to
issue L/Cs under this Agreement, and thereafter until the Obligation is paid in
full, Borrower covenants and agrees as follows:
|
9.1
|
Items to be
Furnished.
|
Borrower
shall cause the following to be furnished to each Lender:
(a) With
respect to each fiscal year of the Companies, within 5 Business Days after the
date required to be filed with the Securities and Exchange Commission as part of
the Companies’ periodic reporting, Financial Statements showing the consolidated
financial condition and results of operations of the Companies as of, and for
the year ended on, that last day, accompanied by: (A) the unqualified opinion of
a “Registered Public
Accounting Firm” (as such term is specified in the Securities Laws) of
nationally-recognized standing, based on an audit using generally accepted
auditing standards and applicable Securities Laws, that the Financial Statements
were prepared in accordance with GAAP and present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Companies, (B) any management letter prepared by the accounting firm delivered
in connection with its audit, (C) a certificate from the accounting firm to
Administrative Agent indicating that during its audit it obtained no knowledge
of any Default or Potential Default, or if it obtained knowledge, the nature and
period of existence thereof, and (D) a Compliance Certificate with respect to
the Financial Statements.
(b) With
respect to each fiscal quarter of the Companies (other than the last fiscal
quarter of each fiscal year), within 5 Business Days after the date
required to be filed with the Securities and Exchange Commission as part of the
Companies periodic reportings, Financial Statements showing the consolidated
financial condition and results of operations of the Companies for such fiscal
quarter and for the period from the beginning of the current fiscal year to the
last day of such fiscal quarter, accompanied by a Compliance Certificate with
respect to the Financial Statements.
(c) Promptly
after receipt, a copy of each interim or special audit report, management letter
and recommendations issued by independent accountants with respect to any
Company or its financial records.
(d) Notice,
promptly after any Company knows or has reason to know, of (i) the existence and
status of any Litigation that, if determined adversely to any Company, would be
a Material Adverse Event, (ii) any change in any material fact or circumstance
represented or warranted by any Restricted Company in connection with any Loan
Paper, (iii) the receipt by any Company of notice of any violation or alleged
violation of any Environmental Law or ERISA (which individually or collectively
with other violations or allegations is reasonably likely to constitute a
Material Adverse Event), (iv) a Default or Potential Default, specifying the
nature thereof and what action the Restricted Companies have taken, are taking,
or propose to take, (v) any breach or nonperformance of, or default under, a
Material Agreement of a Restricted Company that is reasonably likely to result
in a Material Adverse Event, (vi) any material change in accounting policies or
financial reporting practices by any Restricted Company, (vii) the occurrence of
any Internal Control Event, or (viii) the occurrence of any event pursuant to
which any “person” or
“group” (as such terms
are used in Sections
13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent, or other fiduciary or administrator of any such
plan) is granted or otherwise obtains or receives the right to acquire (such
right, an “option
right”), whether such right is exercisable immediately or only after the
passage of time, directly or indirectly, 5% or more of the equity securities of
VRI entitled to vote for members of the board of directors or equivalent
governing body of VRI on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right). Each notice pursuant to Section
9.1(d)(iv) shall describe with particularity any and all provisions of
this Agreement and any other Loan Paper that have been breached.
(e) Promptly
after filing, copies of all material reports or filings filed by or on behalf of
any Company with any securities exchange or the Securities and Exchange
Commission (including, without limitation, copies of each Form 10-K, Form 10-Q
and Form S-8 filed by or on behalf of VRI with the Securities and Exchange
Commission within 15 days after filing).
(f) Documents
required to be delivered pursuant to Section
9.1(a) and (b) and
Section
9.1(e) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
Borrower posts such documents, or provides a link thereto on Borrower’s website
on the Internet at the website address listed on Schedule
1, or (ii) on
which such documents are posted on Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by
Administrative Agent); provided, that: (x) Borrower shall
deliver paper copies of such documents to Administrative Agent or any Lender
that requests Borrower to deliver such paper copies until a written request to
cease delivering paper copies is given by Administrative Agent or such Lender,
and (y) Borrower shall notify Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such
documents. Notwithstanding anything contained herein, in every
instance Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 9.1(a)
and (b) to
Administrative Agent. Except for such Compliance Certificates,
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents.
Borrower
hereby acknowledges that Administrative Agent will make available to Lenders and
L/C Issuers materials and/or information provided by or on behalf of Borrower
hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”).
(g) Subject
to the confidentiality provisions set forth in Section
15.15, promptly upon reasonable request by Administrative Agent or any
Lender (through Administrative Agent), information (not otherwise required to be
furnished under the Loan Papers) respecting the business affairs, assets and
liabilities of the Companies (including, but not limited to, seasonal operating
statistics, annual budgets, etc.) and opinions, certifications and documents in
addition to those mentioned in this Agreement.
(h) With
respect to the post-closing items set forth on Schedule 7.1,
if any, deliver, or cause to be delivered, to Administrative Agent, all
agreements, documents, instruments, or other items listed on Schedule 7.1
on or prior to the date specified for delivery thereof on Schedule 7.1.
|
9.2
|
Use of
Proceeds.
|
Borrower
will use all of the proceeds of Loans, L/Cs, and L/C Borrowings for working
capital, to make advances and other investments permitted by Section
10.8, to make acquisitions permitted under Section
10.11, and for other general corporate purposes and capital expenditures
of the Companies. No part of the proceeds of any L/C draft or
drawing, any L/C Borrowing, or any Loan will be used, directly or indirectly,
for a purpose that violates any Law, including without limitation, the
provisions of Regulation U.
|
9.3
|
Books and
Records.
|
Each
Company will maintain books, records, and accounts necessary to prepare
financial statements in accordance with GAAP and in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Company.
|
9.4
|
Inspections.
|
Upon
reasonable request, and subject to the confidentiality provisions set forth in
Section 15.15,
each Company will allow Administrative Agent (or its Representatives) to inspect
any of its properties, to review reports, files, and other records, and to make
and take away copies, to conduct tests or investigations, and to discuss any of
its affairs, conditions, and finances with its other creditors, directors,
officers, employees, or representatives from time to time, during reasonable
business hours; provided that
when a Default exists, Administrative Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of the
foregoing at the expense of Borrower at any time during normal business hours
and with two (2) Business Days advance notice. Any of Lenders (or
their Representatives) may accompany Administrative Agent during such
inspections.
|
9.5
|
Taxes.
|
Each
Restricted Company will promptly pay when due any and all Taxes, other than Taxes which are
being contested in good faith by lawful proceedings diligently conducted,
against which reserve or other provision required by GAAP has been made; provided, however, that all
such Taxes shall, in any event, be paid prior to any levy for execution in
respect of any Lien on any property of a Restricted Company.
|
9.6
|
Payment of
Obligations.
|
Each
Company will pay (or renew and extend) all of its obligations at such times and
to such extent as may be necessary to prevent a Material Adverse Event (except for obligations, other than Funded Debt, which
are being contested in good faith by appropriate proceedings).
|
9.7
|
Maintenance of
Existence, Assets, and
Business.
|
(a) Except as
otherwise permitted by Section
10.11, each Company will (i) maintain its organizational existence and
good standing in its state of organization and its authority to transact
business in all other states where failure to maintain its authority to transact
business is a Material Adverse Event; (ii) maintain all Water Rights, licenses,
permits (including, without limitation, the Forest Service Permits), and
franchises necessary for its business where failure to maintain is a Material
Adverse Event; (iii) preserve or renew all of its Intellectual Property, the
non-preservation of which could reasonably be expected to result in a Material
Adverse Event; and (iv) keep all of its assets that are useful in and necessary
to its business in good working order and condition (ordinary wear and tear
excepted) and make all necessary repairs and replacements.
(b) Subject
to dispositions permitted pursuant to Section 10.10
hereof, each Existing Critical Asset owned by any Company shall be owned
by a Wholly Owned Restricted Subsidiary of Borrower (other than Existing
Critical Assets owned by Heavenly Valley), and each Additional Critical Asset
owned or acquired by any Company after the Third Agreement Date shall be owned
by a Restricted Subsidiary of Borrower, so long as (i) such
Restricted Subsidiary has provided a Guaranty and Pledge Agreement in accordance
with the provisions set forth in Sections
6.1, 6.2, 9.10, or
9.11
herein, as the case may be, (ii) the stock or other equity interests in
such Restricted Subsidiary owned by a Restricted Company have been pledged to
Administrative Agent, for the benefit of Lenders, pursuant to a Pledge
Agreement, and (iii) such Restricted Subsidiary has otherwise complied with the
terms and provisions set forth in the Loan Papers, including, without
limitation, Section 10.16
herein.
(c) No
Restricted Company party to a Pledge Agreement will change its name in any
manner (except by
registering additional trade names), unless such Restricted Company shall have
given Administrative Agent prior notice thereof. Borrower shall
promptly notify Administrative Agent of any change in name of any other Company
(except the registering
of additional tradenames).
|
9.8
|
Insurance.
|
Each
Company will maintain with financially sound, responsible, and reputable
insurance companies or associations (or, as to workers’ compensation or similar
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against casualties and contingencies and of types and in amounts (and
with co-insurance and deductibles) as is customary in the case of similar
businesses. At Administrative Agent’s request, each Company will
deliver to Administrative Agent certificates of insurance for each policy of
insurance and evidence of payment of all premiums.
|
9.9
|
Environmental
Laws.
|
Each
Company will (a) conduct its business so as to comply in all material respects
with all applicable Environmental Laws and shall promptly take required
corrective action to remedy any non-compliance with any Environmental Law, except where failure to
comply or take action would not be a Material Adverse Event, and (b) establish
and maintain a management system designed to ensure compliance with applicable
Environmental Laws and minimize material financial and other risks to each
Company arising under applicable Environmental Laws or as the result of
environmentally related injuries to Persons or property, except where failure to
comply would not be a Material Adverse Event. Borrower shall deliver
reasonable evidence of compliance with the foregoing covenant to Administrative
Agent within 30 days after any written request from Required Lenders, which
request shall be made only if Required Lenders reasonably believe that a failure
to comply with the foregoing covenant would be a Material Adverse
Event.
|
9.10
|
Subsidiaries.
|
The
Companies may create or acquire additional Subsidiaries (including Unrestricted
Subsidiaries); provided
that (a) each Person that becomes a Restricted Subsidiary after the
Closing Date (whether as a result of an acquisition permitted under Section
10.11, creation, the failure of such Subsidiary to meet the requirements
of an “Unrestricted
Subsidiary” as set forth in the definition thereof, or otherwise) shall
execute and deliver to Administrative Agent a Guaranty within 30 days after
becoming a Restricted Subsidiary, (b) each Restricted Company that becomes the
holder of the capital stock or equity interest of each Person that becomes a
Restricted Subsidiary after the Closing Date (whether as a result of an
acquisition permitted under Section
10.11, creation, the failure of such Subsidiary to meet the requirements
of an “Unrestricted
Subsidiary” as set forth in the definition thereof, or otherwise) shall
execute and deliver to Administrative Agent a Pledge Agreement, together with
any related Security Documents reasonably required by Administrative Agent,
pledging such capital stock or equity interests within 30 days after such Person
becomes a Subsidiary, (c) Borrower shall deliver to Administrative Agent a
revised Schedule
8.2 reflecting such new Subsidiary within 30 days after it becomes a
Subsidiary, and (d) no Default or Potential Default exists or arises after
giving pro forma effect to the creation, acquisition, or addition of such
Subsidiary; provided,
that for purposes of determining compliance, (x) Debt of each Subsidiary
created or acquired shall be deemed to have been incurred on the date of such
acquisition or creation, and (y) Adjusted EBITDA for the most-recently-ended
four fiscal quarters shall include on a pro forma basis for such
period the EBITDA of each Restricted Subsidiary created or
acquired.
|
9.11
|
Designation and
Re-designation of
Subsidiaries.
|
(a) Borrower
may designate any Subsidiary as an Unrestricted Subsidiary and may re-designate
any Restricted Subsidiary as an Unrestricted Subsidiary; provided, that (a) Borrower shall
deliver to Administrative Agent a revised Schedule
8.2 reflecting the designation of such Subsidiary as an Unrestricted
Subsidiary or the re-designation of such Restricted Subsidiary as an
Unrestricted Subsidiary within 30 days after it becomes an Unrestricted
Subsidiary, (b) such Subsidiary otherwise meets (or would meet concurrently with
the effectiveness of such re-designation) the requirements of an “Unrestricted Subsidiary” as
set forth in the definition thereof, and (c) no Default or Potential Default
exists or will arise after giving pro forma effect to such designation or
re-designation; provided, that for purposes of
determining compliance (x) with Section 10.8
hereof, all outstanding loans, advances, and investments in such
designated or re-designated Subsidiary shall be deemed to have been made on (and
shall be valued as of) the date of such designation or re-designation, as
applicable, and (y) Adjusted EBITDA for the most-recently-ended four fiscal
quarters shall exclude on a pro forma basis for such
period the EBITDA of such designated or re-designated
Subsidiary. Subject to Section 15.9(g),
Administrative Agent shall execute documentation reasonably required to release
any Restricted Subsidiary which is re-designated by Borrower as an Unrestricted
Subsidiary from its Guaranty.
(b) Borrower
may re-designate any Unrestricted Subsidiary as a Restricted Subsidiary; provided, that (a) such Subsidiary
shall have complied with Section 9.10
hereof, (b) Borrower shall deliver to Administrative Agent a revised
Schedule
8.2 reflecting the re-designation of such Unrestricted Subsidiary as a
Restricted Subsidiary within 30 days after it becomes a Restricted Subsidiary,
and (c) no Default or Potential Default exists or will arise after giving pro
forma effect to such re-designation; provided, that for purposes of
determining compliance, (x) all existing Debt of, and loans, advances, or
investments made by, such re-designated Subsidiary shall be deemed to have been
incurred on the date of such re-designation, and (y) Adjusted EBITDA for the
most-recently-ended four fiscal quarters shall include on a pro forma basis for such
period the EBITDA of such re-designated Subsidiary.
|
SECTION
10
|
NEGATIVE
COVENANTS.
|
So long
as Lenders are committed to fund Loans and the L/C Issuers are committed to
issue L/Cs under this Agreement, and thereafter until the Obligation is paid in
full, Borrower covenants and agrees as follows:
|
10.1
|
Taxes.
|
No
Company shall use any portion of the proceeds of any Loan to pay the wages of
employees, unless a timely payment to or deposit with the U.S. of all amounts of
Tax required to be deducted and withheld with respect to such wages is also
made.
|
10.2
|
Payment of
Obligations.
|
No
Company shall voluntarily prepay principal of, or interest on, any Funded Debt,
other than the
Obligation, if a Default or Potential Default exists (or would result from such
payment). No Company shall repay, repurchase, redeem, or defease
Subordinated Debt without the prior written consent of Required Lenders; provided, that any Company
may, without the approval of Required Lenders, (a) tender for, repurchase
(including, without limitation, in open market transactions or private
negotiated transactions), redeem, or discharge (each, a “Permitted
Redemption”) up to an aggregate of $90,000,000 of Subordinated Debt,
so long as (i) on and
as of the date of each such Permitted Redemption, no Default or Potential
Default then exists or arises, and (ii) not less than $300,000,000 of
Subordinated Debt remains outstanding after giving effect to each such Permitted
Redemption, and (b) repay Subordinated Debt in connection with the concurrent
issuance of additional Subordinated Debt (“Permitted
Refinancing”), so long
as (i) on and as of the date of such Permitted Refinancing, no Default or
Potential Default then exists or arises, (ii) the Subordinated Debt issued in
connection with such Permitted Refinancing (“Replacement
Subordinated Debt”) satisfies the requirements for permitted Subordinated
Debt as set forth in the Loan Papers, including, without limitation, the
requirements imposed by the definition of “Subordinated Debt” in Section
1.1 and by Section
10.16, and is otherwise in form and substance satisfactory to
Administrative Agent, (iii) the principal amount of such Replacement
Subordinated Debt does not exceed the principal amount of, plus premium and
accrued interest on, the Subordinated Debt so refinanced, and (iv) such
Replacement Subordinated Debt has a final maturity date later than the final
maturity date of the Subordinated Debt so refinanced.
|
10.3
|
Employee
Plans.
|
Except
where a Material Adverse Event would not result, no Company shall permit any of
the events or circumstances described in Section
8.10 to exist or occur.
|
10.4
|
Debt.
|
No
Company shall create, incur or suffer to exist any Debt, other than Permitted
Debt.
|
10.5
|
Liens.
|
No
Company shall (a) create, incur or suffer or permit to be created or incurred or
to exist any Lien upon any of its assets, other than Permitted Liens, or (b)
enter into or permit to exist any arrangement or agreement that directly or
indirectly prohibits any Company from creating or incurring any Lien, other than (i) the Loan Papers,
(ii) the documents executed in connection with the Vail Bonds (and any documents
relating to a refinancing of the Vail Bonds), (iii) the Senior Subordinated
Indenture as in effect on the Closing Date (which does not prohibit the creation
or incurrence of Liens securing “Senior Debt” defined therein), (iv)
any other indenture evidencing Subordinated Debt which is Permitted Debt and
that contains the same exception for liens securing “Senior Debt” as the Senior
Subordinated Indenture, and (v) leases or licenses that prohibit Liens on the
leased or licensed property.
|
10.6
|
Transactions with
Affiliates.
|
Except
for transactions which do not, in the aggregate, cost the Restricted Companies
more than $2,000,000 in any fiscal year, no Restricted Company shall enter into
or suffer to exist any transaction with any Affiliate (other than another Restricted
Company), or guaranty, obtain any letter of credit or similar instrument in
support of, or create, incur or suffer to exist any Lien upon any of its assets
as security for, any Debt or other obligation of any Affiliate (other than Debts or other
obligations of another Restricted Company) unless (a) such transaction is an
advance or equity contribution to an Unrestricted Subsidiary permitted by Sections
10.8(j), 10.8(l),
or 10.8(m),
(b) such transaction is described in Section
10.9 or on Schedule
8.13, (c) such transaction is an investment in employee residences
permitted by Section
10.8(n)(iii), or
(d) such transaction is upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm’s-length
transaction with a Person that was not its Affiliate.
|
10.7
|
Compliance with Laws
and Documents.
|
No
Company shall (a) violate the provisions of any Laws or rulings of any
Governmental Authority applicable to it or of any Material Agreement to which it
is a party if that violation alone, or when aggregated with all other
violations, would be a Material Adverse Event, (b) violate the provisions of its
organizational documents if such violation would cause a Material Adverse Event,
or (c) repeal, replace or amend any provision of its organizational documents if
that action would be a Material Adverse Event.
|
10.8
|
Loans, Advances and
Investments.
|
Except as
permitted by Section
10.9 or Section
10.11, no Restricted Company shall make or suffer to exist any loan,
advance, extension of credit or capital contribution to, make any investment in,
or purchase or commit to purchase any stock or other securities or evidences of
Debt of, or interests in, any other Person, other than:
(a) expense
accounts for and other loans or advances to its directors, officers, and
employees in the ordinary course of business in accordance with applicable
Law;
(b) marketable
obligations issued or unconditionally guaranteed by the U.S. or issued by any of
its agencies and backed by the full faith and credit of the U.S., in each case
maturing within one year from the date of acquisition;
(c) short-term
investment grade domestic and eurodollar certificates of deposit or time
deposits that are fully insured by the Federal Deposit Insurance Corporation or
are issued by commercial banks organized under the Laws of the U.S. or any of
its states having combined capital, surplus, and undivided profits of not less
than $100,000,000 (as shown on its most recently published statement of
condition);
(d) commercial
paper and similar obligations rated “P-1” by Moody’s or “A-1” by
S&P;
(e) readily
marketable Tax-free municipal bonds of a domestic issuer rated “A-2” or better by Moody’s or
“A” or better by
S&P, and maturing within one year from the date of issuance;
(f) mutual
funds or money market accounts investing primarily in items described in
clauses
(b) through (e)
above;
(g) demand
deposit accounts maintained in the ordinary course of business;
(h) current
trade and customer accounts receivable that are for goods furnished or services
rendered in the ordinary course of business and that are payable in accordance
with customary trade terms;
(i) Financial
Hedges existing on the date hereof which have previously been approved by
Administrative Agent and other Financial Hedges entered into after the date
hereof under terms reasonably acceptable to Administrative Agent;
(j) loans,
advances, and investments of the Restricted Companies existing on the Closing
Date (i) in the Existing Housing Districts, Existing Metro Districts, and
Keystone/IntraWest LLC, which investments are identified on part (a)
of Schedule
10.8, and (ii) in Persons other than Restricted Companies, Existing
Housing Districts, Existing Metro Districts, and Keystone IntraWest LLC, which
loans and investments are identified on part
(b) of
Schedule
10.8;
(k) additional
loans, advances, and investments in Restricted Companies, including, without
limitation, investments in Persons that become Restricted Subsidiaries upon
transactions consummated in compliance with Section 10.11
herein;
(l) so long
as no Default or Potential Default exists or arises, capital contributions or
other contributions of Real Estate Held for Sale, in each case to Unrestricted
Subsidiaries or Real Estate Joint Ventures;
(m) so long
as no Default or Potential Default exists or arises, investments in Unrestricted
Subsidiaries, additional investments in Housing Districts and Metro Districts
not otherwise permitted in clause (j)(ii)
above, and investments in other Persons involved in Similar Businesses,
so long as, on the date
of each such investment, the aggregate amount of all outstanding investments
made pursuant to this clause (m)
(determined for each investment based on the value thereof on the date
made), when aggregated with all investments set forth on part (b)
of Schedule
10.8, does not exceed the sum of (i) the Investment Limit, plus (ii) net reductions in
investments permitted by this Section
10.8(m), in an aggregate amount not to exceed the Investment Limit, as a
result of (A) dispositions of any such investments sold or otherwise liquidated
or repaid to the extent of the net cash proceeds and the fair market value of
any assets or property (as determined in good faith by the Board of Directors of
VRI) received, (B) dividends reducing any such investment, repayment of the
outstanding principal amount of loans or advances, or other transfers of assets
to VRI or any Restricted Subsidiary of VRI, or (C) the portion (proportionate to
VRI’s direct or indirect interest in the equity of a Person) of the fair market
value of the net assets of an Unrestricted Subsidiary or other Person
immediately prior to the time such Unrestricted Subsidiary or other Person is
designated or becomes a Restricted Subsidiary of VRI in accordance with Sections 9.10
or 9.11(b)
hereof; provided,
that, notwithstanding the foregoing, (x) the Restricted Companies may not
contribute Critical Assets to an Unrestricted Subsidiary or other Person
pursuant to this Section
10.8(m), and (y) the Restricted Companies may only contribute assets
owned on the Closing Date (excluding Critical Assets) to an Unrestricted
Subsidiary or other Person pursuant to this Section
10.8(m) if all such assets contributed on or after the Closing Date have
an aggregate fair market value (determined in good faith by the Board of
Directors of Borrower at the time of each such contribution) of less than
$75,000,000;
(n) the
following investments:
(i) a capital
contribution, in an amount not to exceed $650,000, in Boulder/Beaver
LLC;
(ii) workers
compensation reserve account, established pursuant to a self-insurance permit
from the Department of Labor or comparable agency in any state in which the
Companies’ businesses are located, invested exclusively in items described in
clauses
(b) through (f) above;
and
(iii) loans and
contributions to employees for investments in employee residences as part of
such employees’ compensation packages not to exceed $10,000,000 in the
aggregate;
(o) so
long as no Default or Potential Default exists or arises, investments set forth
on part (c)
of Schedule
10.8, which investments are made (i) as a result of the exercise of put
options by the owners thereof, and (ii) in accordance with the agreements set
forth on part (c)
of Schedule 10.8
as in effect on the Closing Date.
|
10.9
|
Distributions.
|
Except as
set forth on Schedule
10.9, no Company shall make any Distribution, except as
follows:
(a) VRI may
make payments of approximately $100,000 accruing to certain option
holders;
(b) any
Company may make Distributions to a Restricted Company;
(c) if VRI
issues any Subordinated Debt which is subsequently converted to preferred stock,
VRI may, if no Default or Potential Default exists (or would result therefrom),
pay dividends on such stock at an annual rate which is less than or equal to the
annual rate of interest payable on such Subordinated Debt prior to its
conversion, so long as the terms on such preferred stock are no more favorable
to the holders of the preferred stock than the terms afforded to the holders of
the Subordinated Debt set forth in the indenture and other documents evidencing
or executed in connection with such Subordinated Debt;
(d) if no
Default or Potential Default exists or arises, VRI and its Restricted
Subsidiaries may make additional Distributions not otherwise permitted under
this Section
10.9, and loans, advances, and investments not otherwise permitted under
Section
10.8, so long as
the aggregate amount of Distributions permitted under this clause
(d), and the aggregate amount of loans, advances, and investments made,
which are not otherwise permitted under Section
10.8, on any date of determination, does not exceed the sum of:
(i) 50%
of the cumulative Net Income of the Restricted Companies, on a consolidated
basis, from the last day of the first fiscal quarter ending after the Closing
Date to such date of determination; plus
(ii) 100%
of the aggregate net cash proceeds received by VRI (and the other Restricted
Companies, in the case of clause (A)
below) during the period from the Closing Date to such date of determination
from:
(A) the
issuance of Debt which constitutes “Permitted Debt” under clauses
(d) and (g) of the
definition thereof (excluding refinancings of Subordinated Debt);
and
(B) the
issuance of Equity Interests to Persons (other than the issuance of Equity
Interests to any Restricted Company and the issuance of Disqualified Equity
Interests); minus
(iii) the
amount of Distributions made by the Companies pursuant to clause (h)
below;
(e) if no
Default or Potential Default exists or arises, VRI may make Distributions on
Equity Interests (other than Disqualified Equity Interests) payable solely in
the form of common stock or other common equity interests of VRI; provided, that VRI may make
Distributions on Disqualified Equity Interests in the form of additional
Disqualified Equity Interests of the same type;
(f) if no
Default or Potential Default exists or arises, the Companies may make
Distributions to their respective employees, officers, or directors in an
aggregate amount not exceeding $2,000,000 in any twelve (12) month
period;
(g) so long
as no Default or Potential Default exists or arises, the redemption, repurchase,
or other acquisition of Equity Interests of VRI in exchange for, or out of the
net cash proceeds of the substantially concurrent sale (other than to a
Subsidiary of VRI) of, Equity Interests of VRI (except for any such redemption,
repurchase, or acquisition effected through the concurrent issuance of
Disqualified Stock of the same type); and
(h) if no
Default or Potential Default exists or arises, the Companies may make additional
Distributions in an aggregate amount not to exceed $25,000,000 on or after the
Closing Date.
|
10.10
|
Sale of
Assets.
|
No
Restricted Company may sell, assign, lease, transfer or otherwise dispose of all
or any material portion of the Critical Assets, if the ratio described in Section
11.1 would, on a pro
forma basis (taking the disposition into account), increase as a result
of such disposition.
|
10.11
|
Acquisitions, Mergers,
and Dissolutions.
|
(a) Except as
permitted by this Section
10.11 and subject to Sections
9.10, 10.8, and
10.14, a
Restricted Company may not (i) acquire all or any substantial portion of the
capital stock (or other equity or voting interests) of any other Person, (ii)
acquire all or any substantial portion of the assets of any other Person, (iii)
merge or consolidate with any other Person, or (iv) liquidate, wind up or
dissolve (or suffer any liquidation or dissolution).
(b) Any
Restricted Subsidiary may (i) acquire all or any substantial portion of the
capital stock (or other equity or voting interests) issued by any other
Restricted Subsidiary, (ii) acquire all or any substantial portion of the assets
of any other Restricted Subsidiary, and (iii) merge or consolidate with any
other Restricted Subsidiary (and, in the case of such merger or consolidation
or, in the case of the conveyance or distribution of such assets, the
non-surviving or selling entity, as the case may be, may be liquidated, wound up
or dissolved), provided,
that (1) if Borrower is a party to such merger or consolidation, then
Borrower must be the surviving entity, (2) if Borrower is not a party to such
merger or consolidation, and the surviving entity will own Existing Critical
Assets, then a Wholly Owned Restricted Subsidiary of Borrower must be the
surviving entity, (3) if Borrower is not a party to such merger or
consolidation, and the surviving entity will own Additional Critical Assets,
then a Restricted Subsidiary of Borrower must be the surviving entity, so long as the conditions for
the ownership of Additional Critical Assets by Restricted Subsidiaries of
Borrower set forth in Section 9.7(b)
herein are satisfied, and (4) if Borrower is not a party to such merger
or consolidation, and the surviving entity will not own Critical Assets, a
Restricted Subsidiary must be the surviving entity.
(c) Subject
to compliance with Section
9.10 herein, any Restricted Subsidiary may (i) acquire all or any
substantial portion of the capital stock (or other equity or voting interests)
issued by any other Person, (ii) acquire all or any substantial portion of the
assets of any other Person, or (iii) merge or consolidate with any other Person
(and, in the case of such merger or consolidation, the non-surviving entity may
be liquidated, wound up or dissolved), so long as, with respect to
any transaction contemplated by items (i)
through (iii)
above:
(i) the
Purchase Price for such transaction (A) when aggregated with the Purchase Price
of all other acquisitions or mergers consummated by the Restricted Subsidiaries
during the most-recent four fiscal quarters, does not exceed $150,000,000, and
(B) when aggregated with the Purchase Price of all other acquisitions or mergers
consummated by the Restricted Subsidiaries after the Closing Date, does not
exceed $300,000,000,
(ii) the
ratio of Funded Debt on the closing date of the transaction to Adjusted EBITDA
for the most-recently-ended four fiscal quarters, after giving pro forma effect
to the transaction, is less than or equal to 4.50 to 1.00; for purposes hereof,
Adjusted EBITDA for any period shall include on a pro forma basis all EBITDA
for the Restricted Companies for such period relating to assets acquired
(including, without limitation, Restricted Subsidiaries formed or acquired in
accordance with Section 9.10
hereof, and Unrestricted Subsidiaries re-designated as Restricted
Subsidiaries in accordance with Section
9.11(b) hereof) in accordance with this Agreement during such period, but
shall exclude on a pro
forma basis all EBITDA for the Restricted Companies for such period
relating to any such assets disposed of in accordance with this Agreement during
such period (including, without limitation, Restricted Subsidiaries
re-designated as Unrestricted Subsidiaries in accordance with Section
9.11(a) hereof).
(iii) such
other Person is engaged in a business in which a Restricted Company would be
permitted to engage under Section
10.14, and is organized under the Laws of the United States or
Canada,
(iv) in
respect of any such transaction for which the sum of the Purchase Price exceeds
$25,000,000, at least 15 days before the transaction’s closing date Borrower
delivers to Administrative Agent (A) a written description of the transaction,
including the funding sources, the Purchase Price, and calculations
demonstrating pro forma compliance with the terms and conditions of the Loan
Papers after giving effect to the transaction (including compliance with the
Companies’ applicable financial covenants), and (B) a copy of the executed
purchase agreement or executed merger agreement relating to the transaction
(and, to the extent available, all schedules and exhibits thereto),
(v) with
respect to a merger or consolidation, (1) if Borrower is a party to such merger
or consolidation, Borrower must be the surviving entity, (2) if Borrower is not
a party to such merger or consolidation, and the surviving entity will own
Existing Critical Assets, then a Wholly Owned Subsidiary of Borrower must be the
surviving entity, (3) if Borrower is not a party to such merger or
consolidation, and the surviving entity will own Additional Critical Assets,
then a Restricted Subsidiary of Borrower must be the surviving entity, so long as the conditions for
the ownership of Additional Critical Assets by Restricted Subsidiaries of
Borrower set forth in Section 9.7(b)
herein are satisfied, and (4) if Borrower is not a party to such merger
or consolidation, and the surviving entity will not own Critical Assets, then a
Restricted Subsidiary must be the surviving entity, so long as, to
the extent such surviving entity has not already done so, it shall concurrently
with (and not later than 30 days after) such merger or consolidation, execute
and deliver to Administrative Agent a Guaranty,
(vi) as
of the closing of any such transaction, the transaction has been approved and
recommended by the board of directors of the Person to be acquired or from which
such business is to be acquired,
(vii) as
of the closing of any transaction, after giving effect to such acquisition or
merger, the acquiring party is Solvent and the Companies, on a consolidated
basis, are Solvent, and
(viii) as
of the closing of any transaction, no Default or Potential Default exists or
shall occur as a result of, and after giving effect to, such
transaction.
|
10.12
|
Assignment.
|
No
Company shall assign or transfer any of its Rights or cause to be delegated its
duties or obligations under any of the Loan Papers.
|
10.13
|
Fiscal Year and
Accounting Methods.
|
No
Company shall change its fiscal year or its method of accounting (other than immaterial changes
in methods or as required by GAAP).
|
10.14
|
New
Businesses.
|
No
Restricted Company shall engage in any business, except the businesses in
which they are engaged on the Closing Date and any other Similar Business; provided, however, that the
foregoing shall not be construed to prohibit the cessation by any Company of its
business activities or the sale or transfer of the business or assets of such
Company to the extent not otherwise prohibited by this Agreement.
|
10.15
|
Government
Regulations.
|
No
Company shall conduct its business in a way that it becomes regulated under the
Investment Company Act of
1940, as amended, or the Public Utility Holding Company Act
of 1935, as amended.
|
10.16
|
Burdensome
Agreements.
|
No
Company shall enter into, incur or permit to exist any agreement or other
arrangement (other than this Agreement or any other Loan Paper) that prohibits,
restricts or imposes any condition upon (a) the ability of any Restricted
Company to create, incur or permit to exist any Lien upon any of its property or
assets, or (b) the ability of any Restricted Company to pay dividends or
other Distributions with respect to any shares of its capital stock to Borrower
or any Guarantor, to otherwise transfer property or assets to Borrower or any
Guarantor, to make or repay loans or advances to Borrower or any other
Guarantor, or to Guarantee the Debt of Borrower; provided, that (i) the foregoing
clauses (a)
and (b) shall
not apply to restrictions and conditions (A) imposed by Law, the Loan
Papers, the Senior Subordinated Indenture, or other Subordinated Debt issued
after the Closing Date, so
long as (1) such restrictions do not prevent, impede or impair
(I) the creation of Liens and Guarantees in favor of Lenders under the Loan
Papers or (II) the satisfaction of the obligations of
Borrower and Guarantors under the Loan Papers, and (2) Subordinated Debt (other
than Subordinated Debt that contains terms and provisions no more restrictive
than the terms and provisions of the Senior Subordinated Indenture as of the
Closing Date and provides that references to this Agreement therein shall
provide for the renewal, extension, amendment or modification of this Agreement
from time to time) issued after the Closing Date contains terms and provisions
acceptable to Administrative Agent, (B) contained in agreements relating to
the sale of a Subsidiary, so
long as the sale of such Subsidiary is permitted pursuant to this
Agreement, and (C) contained in agreements set forth on Schedule
10.16; and (ii) the foregoing clause (a)
shall not apply to customary provisions in leases and other agreements
restricting the assignment thereof.
|
10.17
|
Use of
Proceeds.
|
Borrower
shall not, and Borrower shall not permit any other Restricted Company to, use
any part of the proceeds of any Loan, directly or indirectly, for a purpose
which violates any Law, including, without limitation, the provisions of Regulations T, U, and X (as enacted by the Board
of Governors of the Federal Reserve System, as amended).
|
SECTION
11
|
FINANCIAL
COVENANTS.
|
So long
as Lenders are committed to fund Loans and the L/C Issuers are committed to
issue L/Cs under this Agreement, and thereafter until the Obligation is paid and
performed in full (except for provisions under
the Loan Papers expressly intended to survive payment of the Obligation and
termination of the Loan Papers), Borrower covenants and agrees to comply with
each of the following ratios. For purposes of determining each such
ratio, (a) Adjusted EBITDA for any period shall include on a pro forma basis all EBITDA
for the Restricted Companies for such period relating to assets acquired
(including, without limitation, Restricted Subsidiaries formed, acquired, or
added in accordance with Section 9.10
hereof, and Unrestricted Subsidiaries designated or re-designated as
Restricted Subsidiaries in accordance with Section
9.11(b) hereof) in accordance with this Agreement during such period, but
shall exclude on a pro
forma basis all EBITDA for the Companies for such period relating to any
such assets disposed of in accordance with this Agreement during such period
(including, without limitation, Restricted Subsidiaries re-designated as
Unrestricted Subsidiaries in accordance with Section
9.11(a) hereof), and (b) Borrower shall calculate each such ratio after
giving effect to the provisions of Section 1.3
hereof, as applicable.
|
11.1
|
Maximum Leverage
Ratios.
|
(a) Funded Debt to Adjusted
EBITDA. As calculated as of the last day of each fiscal
quarter of the Restricted Companies, the Restricted Companies shall not permit
the ratio of (i) the unpaid principal amount of Funded Debt existing as of such
last day to (ii) Adjusted EBITDA for the four fiscal quarters ending on such
last day to exceed the following:
|
As
of the last day of each fiscal quarter ending January 31, April 30, and
July 31:
|
4.50
to 1.00
|
|
|
As
of the last day of each fiscal quarter ending October 31:
|
5.00
to 1.00
|
(b) Senior Debt to Adjusted
EBITDA. As calculated as of the last day of each fiscal
quarter of the Restricted Companies, the Restricted Companies shall not permit
the ratio of (i) the unpaid amount of Senior Debt existing as of such last day
to (ii) Adjusted EBITDA for the four fiscal quarters ending on such last day to
exceed the following:
|
As
of the last day of each fiscal quarter ending January 31, April 30, and
July 31:
|
3.25
to 1.00
|
|
As
of the last day of each fiscal quarter ending October 31:
|
3.50
to 1.00
|
|
11.2
|
Minimum Fixed Charge
Coverage Ratio.
|
As
calculated as of the last day of each fiscal quarter of the Restricted
Companies, the Restricted Companies shall not permit the ratio of (a) Adjusted
EBITDA for the four fiscal quarters ending on such last day minus expenses for cash
income Taxes paid (adjusted for any Tax refunds received with respect thereto)
minus Required Capital
Expenditures, to (b) scheduled principal and interest payments on the Obligation
and on all other Funded Debt (excluding amortization of deferred financing costs
and original issue discounts) plus Distributions (other than of stock) made by
VRI, in each case in such four fiscal quarters, to be less than
1.25:1.00.
|
11.3
|
Minimum Net
Worth.
|
Shareholders’
Equity may not at any time be less than an amount equal to the sum of (a) $414,505,800,
plus (b) 75% of the Net
Income of the Restricted Companies, if positive, for each fiscal year completed
after October 31, 2004, plus (d) 100% of any Net
Proceeds received by any Restricted Company (other than from another
Company) from the offering, issuance, or sale of equity securities of a
Restricted Company after October 31, 2004.
|
11.4
|
Interest Coverage
Ratio.
|
As
calculated as of the last day of each fiscal quarter of the Restricted
Companies, the Restricted Companies shall not permit the ratio of (a) Adjusted
EBITDA for the four fiscal quarters ending on such last day to (b) interest on
Funded Debt (excluding amortization of deferred financing costs and original
issue discounts) in
such four fiscal quarters to be less than 2.50 to
1.00.
|
11.5
|
Capital
Expenditures.
|
The
Restricted Companies may not make or become legally obligated to make any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding (a) normal replacements and maintenance which are
properly charged to current operations, and (b) such expenditures relating
to real estate held for resale), except for capital
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Restricted Companies during each fiscal year, an amount equal to 10% of
the Total Assets as of the last day of such fiscal year as reflected on the
Companies’ audited Financial Statement for such fiscal year.
|
SECTION
12
|
DEFAULT.
|
The term
“Default” means
the occurrence of any one or more of the following events:
|
12.1
|
Payment of
Obligation.
|
The
failure or refusal of any Company to pay (a) any principal payment contemplated
by Sections
3.2(b) and 3.2(c) of
this Agreement after such payment becomes due and payable hereunder, (b) any
principal payment (other
than those contemplated by Sections
3.2(b) and 3.2(c)) or
interest payment contemplated to be made hereunder within 3 Business Days after
demand therefor by Administrative Agent, (c) any amount contemplated to be paid
hereunder in respect of fees, costs, expenses or indemnities within 10 Business
Days after demand therefor by Administrative Agent and (d) any amount in respect
of its reimbursement obligations in connection with any drawing under an L/C
(including, without limitation, any L/C Borrowing) within 3 Business Days after
demand therefor by Administrative Agent.
|
12.2
|
Covenants.
|
The
failure or refusal of any Company to punctually and properly perform, observe,
and comply with:
(a) Any
covenant, agreement, or condition applicable to it contained in Sections 9.2,
10 (other than
Sections
10.1, 10.3, 10.6 and 10.7) or
11;
or
(b) Any other
covenant, agreement, or condition applicable to it contained in any Loan Paper
(other than the
covenants to pay the Obligation and the covenants in clause (a)
preceding), and such failure or refusal continues for 30 days.
|
12.3
|
Debtor
Relief.
|
Any
Restricted Company (a) fails, or admits in writing its inability, to pay its
Debts generally as they become due, (b) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, (c) becomes a party to or is
made the subject of any proceeding provided for by any Debtor Relief Law that
could suspend or otherwise adversely affect the Rights of Administrative Agent
or any Lender granted in the Loan Papers (unless, if the proceeding is
involuntary, the applicable petition is dismissed within 60 days after its
filing), (d) becomes subject to an order for relief granted under the Bankruptcy
Reform Act of 1978, as amended from time to time (other than as a creditor or
claimant), or (e) takes any action to authorize any of the foregoing actions set
forth in clauses
(a) through (d)
herein.
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12.4
|
Judgments and
Attachments.
|
Any
Restricted Company fails, within 60 days after entry, to pay, bond or otherwise
discharge any judgment or order for the payment of money in excess of $5,000,000
(individually or collectively) or any warrant of attachment, sequestration or
similar proceeding against any assets of any Restricted Company having a value
(individually or collectively) of $5,000,000, which is neither (a) stayed on
appeal nor (b) diligently contested in good faith by appropriate proceedings and
adequate reserves have been set aside on its books in accordance with
GAAP.
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12.5
|
Government
Action.
|
Any
Governmental Authority condemns, seizes or otherwise appropriates, or takes
custody or control of all or any substantial portion of the Critical
Assets.
|
12.6
|
Misrepresentation.
|
Any
material representation or warranty made or deemed made by any Company in
connection with any Loan Paper at any time proves to have been materially
incorrect when made.
|
12.7
|
Ownership.
|
There
shall occur a Change of Control Transaction.
|
12.8
|
Default Under Other
Agreements.
|
Subject
to Section
12.9 below, (a) any Restricted Company fails to pay when due (after lapse
of any applicable grace period) any recourse Debt in excess (individually or
collectively) of $10,000,000; or (b) any default exists under any agreement to
which any Restricted Company is a party, the effect of which is to cause, or to
permit any Person (other
than a Restricted Company) to cause, any recourse obligation in excess
(individually or collectively) of $10,000,000 to become due and payable by any
Restricted Company before its stated maturity, except to the extent such
obligation is declared to be due and payable as a result of the sale of any
asset to which it relates.
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12.9
|
Subordinated
Debt.
|
(a) (i) The
occurrence of any “default,” “event of default,” or other
breach under or with respect to any Subordinated Debt, which “default,” “event of default,” or other
breach remains uncured (after lapse of any applicable cure periods) on any date
of determination; (ii) the trustee with respect to, or any holder of, any
Subordinated Debt shall effectively declare all or any portion of such Debt or
obligation thereunder due and payable prior to the stated maturity thereof; or
(iii) any obligations under the Subordinated Debt become due before its
stated maturity by acceleration of the maturity thereof.
(b) The
payment directly or indirectly (including, without limitation, any payment in
respect of any sinking fund, defeasance, redemption, or payment of any dividend
or distribution) by any Company of any amount of any Subordinated Debt in a
manner or at a time during which such payment is not permitted under the terms
of the Loan Papers or under any instrument or document evidencing or creating
the Subordinated Debt, including, without limitation, any subordination
provisions set forth therein, or if an event shall occur, including, without
limitation, a “Change of
Control” as defined in any agreement evidencing or creating the
Subordinated Debt, and (i) such event results in the ability of the trustee
or the holders of any such Debt or obligation to request or require (or any
Company shall automatically be so required) to redeem or repurchase such Debt or
obligation, or (ii) any Company shall initiate notice of redemption to
holders of the Subordinated Debt or obligation, in connection with a redemption
of any Debt or obligation arising under such agreements or
instruments.
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12.10
|
Validity and
Enforceability of Loan
Papers.
|
Except in
accordance with its terms or as otherwise expressly permitted by this Agreement,
any Loan Paper at any time after its execution and delivery ceases to be in full
force and effect in any material respect or is declared to be null and void or
its validity or enforceability is contested by any Company party thereto or any
Company denies that it has any further liability or obligations under any Loan
Paper to which it is a party.
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12.11
|
Employee
Plans.
|
Except
where the occurrence or existence is not a Material Adverse Event or, in any
event, likely to result in a Lien on the assets of any Company or the Companies
securing liability for any Company or the Companies (individually or when
aggregated with any liability of the Companies contemplated by Section 8.8
and
Section 8.9 herein that is reasonably likely to be secured by Liens) in
excess of the Threshold Amount, (a) an Employee Plan incurs an “accumulated funding deficiency”
(as defined in section 302 of ERISA or section 412 of the Code), (b) a
Company incurs liability under ERISA to the PBGC in connection with any Employee
Plan (other than
required insurance premiums paid when due), (c) a Company withdraws in whole or
in part from participation in a Multiemployer Plan, (d) a Company engages in any
“prohibited transaction”
(as defined in section
406 of ERISA or section 4975 of the Code), or (e) a “reportable event” (as defined in section 4043 of
ERISA) occurs with respect to an Employee Plan, excluding events for which the
notice requirement is waived under applicable PBGC regulations.
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SECTION
13
|
RIGHTS
AND REMEDIES.
|
|
13.1
|
Remedies Upon
Default.
|
(a) If a
Default exists under Section
12.3, the commitment to extend credit under this Agreement automatically
terminates, the entire unpaid balance of the Obligation automatically becomes
due and payable without any action of any kind whatsoever, and Borrower must
provide cash collateral in an amount equal to the then-existing L/C
Exposure.
(b) If any
Default exists, subject to the terms of Section
14.5, Administrative Agent may (with the consent of, and must, upon the
request of, Required Lenders), do any one or more of the
following: (i) if the maturity of the Obligation has not already been
accelerated under Section
13.1(a), declare the entire unpaid balance of all or any part of the
Obligation immediately due and payable, whereupon it is due and payable; (ii)
terminate the Commitments of Lenders; (iii) reduce any claim to judgment; (iv)
demand Borrower to provide cash collateral in an amount equal to the L/C
Exposure then existing; and (v) exercise any and all other legal or equitable
Rights afforded by the Loan Papers, the Laws of the State of New York, or any
other applicable jurisdiction.
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13.2
|
Company
Waivers.
|
To
the extent permitted by Law, each Company waives presentment and demand for
payment, protest, notice of intention to accelerate, notice of acceleration and
notice of protest and nonpayment, and agrees that its liability with respect to
all or any part of the Obligation is not affected by any renewal or extension in
the time of payment of all or any part of the Obligation, by any indulgence, or
by any release or change in any security for the payment of all or any part of
the Obligation.
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13.3
|
Performance by
Administrative Agent.
|
If any
covenant, duty or agreement of any Company is not performed in accordance with
the terms of the Loan Papers, Administrative Agent may, while a Default exists,
at its option (but subject to the approval of Required Lenders), perform or
attempt to perform that covenant, duty or agreement on behalf of that Company
(and any amount expended by Administrative Agent in its performance or attempted
performance is payable by the Companies, jointly and severally, to
Administrative Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of Administrative Agent’s expenditure
until paid). However, Administrative Agent does not assume and shall
never have, except by
its express written consent, any liability or responsibility for the performance
of any covenant, duty or agreement of any Company.
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13.4
|
Not in
Control.
|
None of
the covenants or other provisions contained in any Loan Paper shall, or shall be
deemed to, give Administrative Agent, the L/C Issuers, or Lenders the Right to
exercise control over the assets (including, without limitation, real property),
affairs, or management of any Company; the power of Administrative Agent, the
L/C Issuers, and Lenders is limited to the Right to exercise the remedies
provided in this Section
13.
|
13.5
|
Course of
Dealing.
|
The
acceptance by Administrative Agent or Lenders of any partial payment on the
Obligation shall not be deemed to be a waiver of any Default then
existing. No waiver by Administrative Agent, the L/C Issuers,
Required Lenders, or Lenders of any Default shall be deemed to be a waiver of
any other then-existing or subsequent Default. No delay or omission
by Administrative Agent, the L/C Issuers, Required Lenders, or Lenders in
exercising any Right under the Loan Papers will impair that Right or be
construed as a waiver thereof or any acquiescence therein, nor will any single
or partial exercise of any Right preclude other or further exercise thereof or
the exercise of any other Right under the Loan Papers or otherwise.
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13.6
|
Cumulative
Rights.
|
Notwithstanding
anything to the contrary provided herein, all Rights available to Administrative
Agent, the L/C Issuers, Required Lenders, and Lenders under the Loan Papers are
cumulative of and in addition to all other Rights granted to Administrative
Agent, the L/C Issuers, Required Lenders, and Lenders at Law or in equity,
whether or not the Obligation is due and payable and whether or not
Administrative Agent, the L/C Issuers, Required Lenders, or Lenders have
instituted any suit for collection, foreclosure, or other action in connection
with the Loan Papers.
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13.7
|
Application of
Proceeds.
|
Any and
all proceeds ever received by Administrative Agent or Lenders from the exercise
of any Rights pertaining to the Obligation shall be applied to the Obligation
according to Section
3.10.
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13.8
|
Diminution in Value of
Collateral.
|
Neither
Administrative Agent nor any Lender has any liability or responsibility
whatsoever for any diminution in or loss of value of any Collateral or other
collateral ever securing payment or performance of all or any part of the
Obligation (other than
diminution in or loss of value caused by its gross negligence or willful
misconduct).
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13.9
|
Certain
Proceedings.
|
The
Companies will promptly execute and deliver, or cause the execution and delivery
of, all applications, certificates, instruments, registration statements and all
other documents and papers Administrative Agent, the L/C Issuers, Required
Lenders, or Lenders reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license or authorization
of any Governmental Authority or other Person necessary or appropriate for the
effective exercise of any Rights under the Loan Papers. Because
Borrower agrees that Administrative Agent’s, the L/C Issuers’, Required
Lenders’, and Lenders’ remedies at Law for failure of the Companies to comply
with the provisions of this paragraph would be inadequate and that failure would
not be adequately compensable in damages, Borrower agrees that the covenants of
this paragraph may be specifically enforced.
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SECTION
14
|
ADMINISTRATIVE
AGENT.
|
14.1 Appointment and
Authority.
Each
Lender and each L/C Issuer hereby irrevocably appoints Bank of America to act on
its behalf as Administrative Agent hereunder and under the other Loan Papers and
authorizes Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to Administrative Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Article are solely for the
benefit of Administrative Agent, Lenders, and the L/C Issuers, and neither
Borrower nor any other Company have rights as a third party beneficiary of any
of such provisions.
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14.2
|
Delegation of
Duties.
|
Administrative
Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Paper by or through any one or more sub-agents
appointed in good faith by Administrative Agent. Administrative Agent
and any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Related Parties. The
exculpatory provisions of this Article shall apply to any such sub-agent and to
the Related Parties of Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.
14.3 Rights as a
Lender.
The
Person serving as Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not Administrative Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include
the Person serving as Administrative Agent hereunder in its individual
capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for, and generally engage in any kind of business with Borrower or any
Subsidiary or other Affiliate thereof as if such Person were not Administrative
Agent hereunder and without any duty to account therefor to
Lenders. Lenders acknowledge that, pursuant to such activities, Bank
of America or its Affiliates may receive information regarding any Restricted
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Restricted Company or such
Affiliate) and acknowledge that Administrative Agent shall be under no
obligation to provide such information to them.
14.4 Reliance by Administrative
Agent.
Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document, or other writing (including any electronic message, Internet or
intranet website posting, or other distribution) believed by it to be genuine
and to have been signed, sent, or otherwise authenticated by the proper
Person. Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of an L/C, that by its terms must be fulfilled to the satisfaction
of a Lender or an L/C Issuer, Administrative Agent may presume that such
condition is satisfactory to such Lender or the applicable L/C Issuer unless
Administrative Agent shall have received notice to the contrary from such Lender
or the applicable L/C Issuer prior to the making of such Loan or the issuance of
such L/C. Administrative Agent may consult with legal counsel (who
may be counsel for Borrower), independent accountants, and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants, or
experts.
|
14.5
|
Exculpatory
Provisions.
|
Administrative
Agent shall not have any duties or obligations except those expressly set forth
herein and in the other Loan Papers. Without limiting the generality
of the foregoing, Administrative Agent:
(a) shall
not be subject to any fiduciary or other implied duties, regardless of whether a
Default or Potential Default has occurred and is continuing;
(b) shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Papers that Administrative Agent is required to exercise as
directed in writing by Required Lenders (or such other number or percentage of
Lenders as shall be expressly provided for herein or in the other Loan Papers),
provided, that Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose Administrative Agent to liability or that is contrary to
any Loan Paper or applicable Law; and
(c) shall
not, except as expressly set forth herein and in the other Loan Papers, have any
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to Borrower or any of its Affiliates that is communicated
to or obtained by the Person serving as Administrative Agent or any of its
Affiliates in any capacity.
Administrative
Agent shall not be
liable for any action taken or not taken by it (i) with the consent or at the
request of Required Lenders (or such other number or percentage of Lenders as
shall be necessary, or as Administrative Agent shall believe in good faith shall
be necessary, under the circumstances as provided in Sections
15.9 and 13.1), or
(ii) in the absence of its own gross negligence or willful
misconduct. Administrative Agent shall be deemed not to have
knowledge of any Default or Potential Default unless and until notice describing
such Default or Potential Default is given to Administrative Agent by Borrower,
a Lender, or an L/C Issuer.
Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty, or representation made in or in connection with
this Agreement or any other Loan Paper, (ii) the contents of any certificate,
report, or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements, or other terms or conditions set forth herein or therein
or the occurrence of any Default or Potential Default, (iv) the validity,
enforceability, effectiveness, or genuineness of this Agreement, any other Loan
Paper, or any other agreement, instrument, or document, or (v) the satisfaction
of any condition set forth in Section
7 or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to Administrative Agent.
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14.6
|
Resignation as
Administrative Agent.
|
Administrative
Agent may at any time give notice of its resignation to Lenders, the L/C
Issuers, and Borrower. Upon receipt of any such notice of
resignation, Required Lenders shall have the right to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States, and shall be consented to
by Borrower at all times other than during the existence of a Default or
Potential Default (which consent of Borrower shall not be unreasonably
withheld). If no such successor shall have been so appointed by
Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, after consultation with Borrower, on
behalf of Lenders and the L/C Issuers, appoint a successor Administrative Agent
meeting the qualifications set forth above; provided, that if Administrative Agent
shall notify Borrower and Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder and under the other Loan
Papers (except that in the case of any collateral security held by
Administrative Agent on behalf of Lenders or the L/C Issuers under any of the
Loan Papers, the retiring Administrative Agent shall continue to hold such
collateral security until such time as a successor Administrative Agent or
collateral agent is appointed), and (2) all payments, communications, and
determinations provided to be made by, to, or through Administrative Agent shall
instead be made by or to each Lender and the applicable L/C Issuer directly,
until such time as Required Lenders appoint a successor Administrative Agent as
provided for above in this Section. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges, and
duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Papers (if not already discharged therefrom as
provided above in this Section). The fees payable by Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between Borrower and such
successor. After the retiring Administrative Agent’s resignation
hereunder and under the other Loan Papers, the provisions of this Section 14
and Section
15.4 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents, and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.
Any
resignation by Bank of America as Administrative Agent pursuant to this Section
shall also constitute its resignation as L/C Issuer and Swing Line
Lender. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, (a) such successor shall succeed to and become
vested with all of the rights, powers, privileges, and duties of the retiring
L/C Issuer and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line
Lender shall be discharged from all of their respective duties and obligations
hereunder or under the other Loan Papers, and (c) the successor L/C Issuer shall
issue letters of credit in substitution for the L/Cs, if any, outstanding at the
time of such succession or make other arrangements satisfactory to the retiring
L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such L/Cs.
|
14.7
|
Non-Reliance on
Administrative Agent and Other
Lenders.
|
Each
Lender and each L/C Issuer acknowledges that it has, independently and without
reliance upon Administrative Agent or any other Lender or any of their Related
Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and each L/C Issuer also acknowledges that it
will, independently and without reliance upon Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Paper, or any related agreement or any document furnished
hereunder or thereunder.
|
14.8
|
Administrative Agent
May File Proofs of Claim.
|
In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, or other judicial
proceeding relative to any Restricted Company, Administrative Agent
(irrespective of whether the principal of any Loan or L/C Exposure shall then be
due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Administrative Agent shall have made any demand on
Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file
and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Exposure, and all other Obligation that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders and Administrative Agent
(including any claim for the reasonable compensation, expenses, disbursements,
and advances of Lenders and Administrative Agent, and their respective agents
and counsel and all other amounts due Lenders, Administrative Agent and the L/C
Issuers, as applicable, under Sections
2.3(c), 5.3, and 15.4)
allowed in such judicial proceeding; and
(b) to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;
and any
custodian, receiver, assignee, trustee, liquidator, sequestrator, or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements, and advances of Administrative Agent and
its agents and counsel, and any other amounts due Administrative Agent under
Sections
5.3 and
15.4.
Nothing
contained herein shall be deemed to authorize Administrative Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligation
or the rights of any Lender or to authorize Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.
|
14.9
|
Collateral and
Guaranty Matters.
|
(a) Upon
the occurrence and continuance of a Default, Lenders agree to promptly confer in
order that Required Lenders or Lenders, as the case may be, may agree upon a
course of action for the enforcement of the Rights of Lenders; and
Administrative Agent shall be entitled to refrain from taking any action
(without incurring any liability to any Person for so refraining) unless and
until Administrative Agent shall have received instructions from Required
Lenders. All Rights of action under the Loan Papers and all Rights to
the Collateral, if any, hereunder may be enforced by Administrative Agent and
any suit or proceeding instituted by Administrative Agent in furtherance of such
enforcement shall be brought in its name as Administrative Agent without the
necessity of joining as plaintiffs or defendants any other Lender, and the
recovery of any judgment shall be for the benefit of Lenders subject to the
expenses of Administrative Agent. In actions with respect to any property of any
Restricted Company, Administrative Agent is acting for the ratable benefit of
each Lender. Any and all agreements to subordinate (whether made
heretofore or hereafter) other indebtedness or obligations of any Restricted
Company to the Obligation shall be construed as being for the ratable benefit of
each Lender.
(b) Each
Lender authorizes and directs Administrative Agent to enter into the Security
Documents for the benefit of Lenders. Except to the extent
unanimity is required hereunder, (i) each Lender agrees that any action taken by
Required Lenders in accordance with the provisions of the Loan Papers, and the
exercise by Required Lenders of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all Lenders, and (ii) each Lender agrees that any action taken by Required
Lenders in accordance with the provisions of the Loan Papers, and the exercise
by Required Lenders of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all Lenders.
(c) Administrative
Agent is hereby authorized on behalf of all Lenders, without the necessity of
any notice to or further consent from any Lender, from time to time to take any
action with respect to any Collateral or Security Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to the Security Documents.
(d) Administrative
Agent shall have no obligation whatsoever to any Lender or to any other Person
to assure that the Collateral exists or is owned by any Restricted Company or is
cared for, protected, or insured or has been encumbered or that the Liens
granted to Administrative Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected, or enforced, or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the Rights granted or available to Administrative Agent in
this Section
14.9 or in any of the Security Documents; it being understood and
agreed that in respect of the Collateral, or any act, omission, or event related
thereto, Administrative Agent may act in any manner it may deem appropriate, in
its sole discretion, given Administrative Agent’s own interest in the Collateral
as one of Lenders and that Administrative Agent shall have no duty or liability
whatsoever to any Lender, other than to act without
gross negligence or willful misconduct.
(e) Lenders
irrevocably authorize Administrative Agent (or in the case of Bond Rights, the
L/C Issuers), at its option and in its discretion, (i) to release any Lien on
any property granted to or held by Administrative Agent under any Loan Paper (A)
upon termination of the Total Commitment and payment in full of all Obligation
(other than contingent indemnification obligations) and the expiration or
termination of all L/Cs, (B) as permitted under Section
9.11, (C) constituting property being sold or disposed of as permitted
under Section
10.10, if Administrative Agent determines that the property being sold or
disposed is being sold or disposed in accordance with the requirements and
limitations of Section
10.10 and Administrative Agent concurrently receives all mandatory
prepayments with respect thereto, if any, or (D) if approved, authorized or
ratified in writing by Required Lenders, subject to Section
15.9, unless such Liens are held under any Bond Document; (ii) to release
(or authorize the release by the applicable L/C Issuer of) any Collateral held
by Administrative Agent (or the applicable L/C Issuer) under or pursuant to any
Bond Document upon the reimbursement of any Bond Purchase Drawing in accordance
with Section
2.3(j) herein; and (iii) to release any Restricted Company from its
Guaranty (A) upon full payment of the Obligation, (B) as permitted under Section
9.11, (C) in connection with the sale of disposition of the stock (or
other equity interest) issued by such Restricted Company permitted under Section
10.10, if Administrative Agent determines that the disposition or sale is
in accordance with the requirements and limitations of Section
10.10 and Administrative Agent concurrently receives all mandatory
prepayments with respect thereto, if any, or (D) if approved, authorized or
ratified in writing by Required Lenders, subject to Section
15.9. Upon request by Administrative Agent at any time,
Required Lenders will confirm in writing Administrative Agent’s authority to
release any Guarantor from its obligations under the Guaranty pursuant to this
Section
14.9.
(f) In
furtherance of the authorizations set forth in this Section
14.9, each Lender and each L/C Issuer hereby irrevocably appoints
Administrative Agent its attorney-in-fact, with full power of substitution, for
and on behalf of and in the name of each such Lender and each such L/C Issuer,
(i) to enter into Security Documents (including, without limitation, any
appointments of substitute trustees under any Security Document), (ii) to
take action with respect to the Collateral and Security Documents to perfect,
maintain, and preserve Lenders’ and the L/C Issuers’ Liens, as applicable, and
(iii) to execute instruments of release or to take other action necessary
to release Liens upon any Collateral to the extent authorized in clause (e)
hereof. This power of attorney shall be liberally, not restrictively,
construed so as to give the greatest latitude to Administrative Agent’s power,
as attorney, relative to the Collateral matters described in this Section
14.9. The powers and authorities herein conferred on
Administrative Agent may be exercised by Administrative Agent through any Person
who, at the time of the execution of a particular instrument, is an officer of
Administrative Agent. The power of attorney conferred by this Section
14.9(f) is granted for valuable consideration and is coupled with an
interest and is irrevocable so long as the Obligation, or any part thereof,
shall remain unpaid, Lenders are obligated to make any Loans, or the L/C Issuers
are obligated to issue L/Cs, under the Loan Papers.
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14.10
|
Financial
Hedges
|
To the
extent any Lender or any Affiliate of a Lender issues a Financial Hedge in
accordance with the requirements of the Loan Papers and accepts the benefits of
the Liens in the Collateral arising pursuant to the Security Documents, such
Lender (for itself and on behalf of any such Affiliates) agrees (a) to
appoint Administrative Agent, as its nominee and agent, to act for and on behalf
of such Lender or Affiliate thereof in connection with the Security Documents
and (b) to be bound by the terms of this Section 14;
whereupon all references to “Lender” in this Section 14
and in the Security Documents shall include, on any date of determination, any
Lender or Affiliate of a Lender that is party to a then-effective Financial
Hedge which complies with the requirements of the Loan
Papers. Additionally, if the Obligation owed to any Lender or
Affiliate of a Lender consists solely of Debt arising under
a Financial Hedge (such Lender or Affiliate being referred to in this Section 14.10
as an “Issuing
Lender”), then such Issuing Lender (by accepting the benefits of any
Security Documents) acknowledges and agrees that pursuant to the Loan Papers and
without notice to or consent of such Issuing Lender: (w) Liens in the
Collateral may be released in whole or in part; (x) all Guaranties may be
released; (y) any Security Document may be amended, modified, supplemented,
or restated; and (z) all or any part of the Collateral may be permitted to
secure other Debt.
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14.11
|
Bond L/Cs and Bond
Documents.
|
In
addition to the authorizations set forth in Section
14.9, each Lender and each L/C Issuer hereby authorize Administrative
Agent or the L/C Issuers, as the case may be, to execute and deliver all
certificates, documents, agreements, and instruments required to be delivered
after the Closing Date pursuant to or in connection with any Bond L/C and
Bond Documents executed in connection therewith, and to take such actions as
Administrative Agent or the L/C Issuers, as the case may be, deems necessary in
connection therewith. This authorization shall be liberally, not
restrictively, construed so as to give the greatest latitude to Administrative
Agent’s or the applicable L/C Issuer’s authority, as the case may be, relative
to the Bonds, Bond L/Cs and Bond Documents. The powers and
authorities herein conferred on Administrative Agent and the L/C Issuers may be
exercised by Administrative Agent or the applicable L/C Issuer, as the case may
be, through any Person who, at the time of the execution of a particular
instrument, is an officer of Administrative Agent or such L/C Issuer, as
applicable.
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14.12
|
No Other Duties,
Etc.
|
Anything
herein to the contrary notwithstanding, none of the co-syndication agents,
co-documentation agents, sole lead arranger, or sole book manger listed on the
cover page hereof shall have any powers, duties, or responsibilities under this
Agreement or any of the other Loan Papers, except in its capacity, as
applicable, as Administrative Agent, a Lender, or an L/C Issuer
hereunder.
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SECTION
15
|
MISCELLANEOUS.
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15.1
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Headings.
|
The
headings, captions, and arrangements used in any of the Loan Papers are, unless
specified otherwise, for convenience only and shall not be deemed to limit,
amplify, or modify the terms of the Loan Papers, nor affect the meaning
thereof.
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15.2
|
Nonbusiness Days;
Time.
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Any
payment or action that is due under any Loan Paper on a non-Business Day may be
delayed until the next-succeeding Business Day (but interest shall continue to
accrue on any applicable payment until payment is in fact made) unless the
payment concerns a Revolver Loan that is a LIBOR Loan, in which case if the
next-succeeding Business Day is in the next calendar month, then such payment
shall be made on the next-preceding Business Day.
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15.3
|
Notices and Other
Communications; Facsimile
Copies.
|
(a) Notices
Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection
(b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail, or sent by telecopier as follows, and
all notices and other communications expressly permitted hereunder to be given
by telephone shall be made to the applicable telephone number, as
follows:
(i) if
to Borrower, Administrative Agent, either L/C Issuer, or either Swing Line
Lender, to the address, telecopier number, electronic mail address, or telephone
number specified for such Person on Schedule
1; and
(ii) if
to any other Lender, to the address, telecopier number, electronic mail address,
or telephone number specified in its Administrative Questionnaire.
Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not given
during normal business hours for the recipient, shall be deemed to have been
given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to
the extent provided in subsection
(b) below, shall be effective as provided in such subsection
(b).
(b) Electronic
Communications. Notices and other communications to Lenders
and the L/C Issuers hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by Administrative Agent, provided, that the foregoing shall not
apply to notices to any Lender or either L/C Issuer pursuant to Section 2
if such Lender or such L/C Issuer, as applicable, has notified Administrative
Agent that it is incapable of receiving notices under such Section 2
by electronic communication. Administrative Agent or Borrower may, in
its discretion, agree to accept notices and other communications to it hereunder
by electronic communications pursuant to procedures approved by it, provided, that approval of such
procedures may be limited to particular notices or communications.
Unless
Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt
requested” function, as available, return e-mail, or other written
acknowledgement), provided, that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening of
business on the next business day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i)
of notification that such notice or communication is available and identifying
the website address therefor.
(c) The
Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE
ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE
PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED, OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM. In no event shall Administrative Agent or
any of its Related Parties (collectively, the “Agent
Parties”) have any liability to Borrower, any Lender, either L/C Issuer,
or any other Person for losses, claims, damages, liabilities, or expenses of any
kind (whether in tort, contract, or otherwise) arising out of Borrower’s or
Administrative Agent’s transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities, or expenses
are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided,
however, that in no event shall any Agent Party have any liability to
Borrower, any Lender, either L/C Issuer, or any other Person for indirect,
special, incidental, consequential, or punitive damages (as opposed to direct or
actual damages).
(d) Change of
Address, Etc. Each of Borrower, Administrative Agent, the L/C
Issuers, and the Swing Line Lenders may change its address, telecopier, or
telephone number for notices and other communications hereunder by notice to the
other parties hereto. Each other Lender may change its address,
telecopier, or telephone number for notices and other communications hereunder
by notice to Borrower, Administrative Agent, the L/C Issuers, and the Swing Line
Lender. In addition, each Lender agrees to notify Administrative
Agent from time to time to ensure that Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number, and
electronic mail address to which notices and other communications may be sent,
and (ii) accurate wire instructions for such Lender.
(e) Reliance by
Administrative Agent, L/C Issuers and Lenders. Administrative Agent,
the L/C Issuers, and Lenders shall be entitled to rely and act upon any notices
(including telephonic Loan Notices and Swing Line Loan Notices) purportedly
given by or on behalf of Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete, or were not preceded or followed by
any other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient, varied from any confirmation
thereof. Borrower shall indemnify Administrative Agent, the L/C
Issuers, each Lender, and the Related Parties of each of them from all losses,
costs, expenses, and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of Borrower. All
telephonic notices to and other telephonic communications with Administrative
Agent may be recorded by Administrative Agent, and each of the parties hereto
hereby consents to such recording.
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15.4
|
Expenses; Indemnity;
Damage Waiver.
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(a) Costs and
Expenses. Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by Administrative Agent and its Affiliates
(including the reasonable fees, charges, and disbursements of counsel for
Administrative Agent) in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery, and administration of this Agreement and the other Loan Papers, or any
amendments, modifications, or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
L/C Issuers in connection with the issuance, amendment, renewal, or extension of
any L/C or any demand for payment thereunder, and (iii) all out-of-pocket
expenses incurred by Administrative Agent, any Lender, or the L/C Issuers
(including the fees, charges, and disbursements of any counsel for
Administrative Agent, any Lender, or the L/C Issuers), and shall pay all fees
and time charges for attorneys who may be employees of Administrative Agent, any
Lender, or the L/C Issuers, in connection with the enforcement or protection of
its rights (A) in connection with this Agreement and the other Loan Papers,
including its rights under this Section, or (B) in connection with the
Loans made or L/Cs issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring, or negotiations in respect of such
Loans or L/Cs.
(b) Indemnification
by Borrower. Borrower shall indemnify Administrative Agent
(and any sub-agent thereof), each Lender, and the L/C Issuers, and each Related
Party of any of the foregoing Persons (each such Person being called an “Indemnitee”),
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities, and related expenses (including the fees, charges, and
disbursements of any counsel for any Indemnitee), and shall indemnify and hold
harmless each Indemnitee from all fees and time charges and disbursements for
attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by any Company arising out
of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Paper, or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder, or the consummation of the
transactions contemplated hereby or thereby, or, in the case of Administrative
Agent (and any sub-agent thereof) and its Related Parties only, the
administration of this Agreement and the other Loan Papers, (ii) any Loan
or L/C or the use or proposed use of the proceeds therefrom (including any
refusal by either L/C Issuer to honor a demand for payment under a L/C if the
documents presented in connection with such demand do not strictly comply with
the terms of such L/C), (iii) any actual or alleged presence or release of
Hazardous Substances on or from any property owned or operated by the or any
other Company, or any liability under Environmental Laws related in any way to
the or any other Company, or (iv) any actual or prospective claim,
litigation, investigation, or proceeding relating to any of the foregoing,
whether based on contract, tort, or any other theory, whether brought by a third
party or by Borrower or any other Company, and regardless of whether any
Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory, or
sole negligence of the Indemnitee; provided, that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities, or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee, or
(y) result from a claim brought by Borrower or any other Company against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or
under any other Loan Paper, if Borrower or such Loan Party has obtained a final
and nonappealable judgment in its favor on such claim as determined by a court
of competent jurisdiction.
(c) Reimbursement by
Lenders. To the extent that Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a)
or (b) of
this Section to be paid by it to Administrative Agent (or any sub-agent
thereof), the L/C Issuers, or any Related Party of any of the foregoing, each
Lender severally agrees to pay to Administrative Agent (or any such sub-agent),
the L/C Issuers, or such Related Party, as the case may be, such Lender’s
Commitment Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided, that the unreimbursed
expense or indemnified loss, claim, damage, liability, or related expense, as
the case may be, was incurred by or asserted against Administrative Agent (or
any such sub-agent) or any L/C Issuer in its capacity as such, or against any
Related Party of any of the foregoing acting for Administrative Agent (or any
such sub-agent) any L/C Issuer in connection with such capacity. The
obligations of Lenders under this subsection (c)
are subject to the provisions of Section 2.2(d).
(d) Waiver of
Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, each of Borrower and any Related Party of Borrower that is a
party to a Loan Paper from time to time shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential, or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Paper, or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or L/C, or the use of the proceeds
thereof. No Indemnitee referred to in subsection
(b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic, or other information transmission
systems in connection with this Agreement or the other Loan Papers or the
transactions contemplated hereby or thereby.
(e) Payments. All
amounts due under this Section shall be payable not later than ten Business Days
after demand therefor.
(f) Survival. The
agreements in this Section shall survive the resignation of Administrative Agent
and either L/C Issuer, the replacement of any Lender, the termination of the
Total Commitments, and the repayment, satisfaction, or discharge of all the
other Obligation.
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15.5
|
Exceptions to
Covenants; Conflict with
Agreement.
|
The
Companies may not take or fail to take any action that is permitted as an
exception to any of the covenants contained in any Loan Paper if that action or
omission would result in the breach of any other covenant contained in any Loan
Paper. Any conflict or ambiguity between the terms and provisions of
this Agreement and the terms and provisions in any other Loan Paper is
controlled by the terms and provisions of this Agreement.
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15.6
|
Governing
Law.
|
(a) GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO
JURISDICTION. BORROWER AND EACH OTHER COMPANY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE COUNTY OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN PAPER, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN PAPER SHALL
AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT, ANY LENDER OR EITHER L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN PAPER AGAINST BORROWER OR ANY OTHER COMPANY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF
VENUE. BORROWER AND EACH OTHER COMPANY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
PAPER IN ANY COURT REFERRED TO IN PARAGRAPH (B)
OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
(d) SERVICE OF
PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 15.3. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
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15.7
|
Severability.
|
If any
provision of this Agreement or the other Loan Papers is held to be illegal,
invalid, or unenforceable, (a) the legality, validity, and enforceability of the
remaining provisions of this Agreement and the other Loan Papers shall not be
affected or impaired thereby, and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid, or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the illegal, invalid, or unenforceable provisions. The invalidity
of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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15.8
|
Waiver of Jury
Trial.
|
EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN PAPER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN PAPERS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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15.9
|
Amendments,
Etc.
|
No
amendment or waiver of any provision of this Agreement or any other Loan Paper,
and no consent to any departure by Borrower or any Guarantor therefrom, shall be
effective unless in writing signed by Required Lenders and Borrower or the
applicable Guarantor, as the case may be, and acknowledged by Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that no
such amendment, waiver, or consent shall:
(a) waive any
condition set forth in Section
7.1 without the written consent of each Lender;
(b) extend or
increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section
13.1) without the written consent of such Lender;
(c) postpone
any date fixed by this Agreement or any other Loan Paper for any payment of
principal, interest, fees, or other amounts due to Lenders (or any of them)
hereunder or under any other Loan Paper without the written consent of each
Lender directly affected thereby;
(d) reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or any fees (other than fees covered by the Fee Letters) or other
amounts payable hereunder or under any other Loan Paper without the written
consent of each Lender directly affected thereby; provided, however, that only the
consent of Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any
obligation of Borrower to pay interest or L/C Fees (as described in Section
5.3(a)) at the Default Rate;
(e) change
Sections
3.10 or 3.11 in a
manner that would alter the sharing of payments required thereby without the
written consent of each Lender adversely affected thereby;
(f) change
Section
10.12, any provision of this Section, the definition of “Required Lenders,” or any
other provision hereof specifying the number or percentage of Lenders required
to amend, waive, or otherwise modify any Rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;
(g) waive
compliance with, amend, or release (in whole or in part) the Guaranty of VRI or
the Guaranties of all or substantially all of the Restricted Subsidiaries
without the consent of each Lender; or
(h) release
all or substantially all of the Collateral without the consent of each Lender,
except that
Administrative Agent or the applicable L/C Issuer, as applicable, may release
Collateral in accordance with Section
14.9(e) herein;
and,
provided further, that
(i) no amendment, waiver, or consent shall affect the Rights or duties of an L/C
Issuer under this Agreement or any L/C Agreement relating to any L/C issued or
to be issued by it unless signed by the L/C Issuer issuing such L/C in addition
to Lender required above; (ii) no amendment, waiver, or consent shall, unless in
writing and signed by the applicable Swing Line Lender in addition to Lenders
required above, affect the rights or duties of such Swing Line Lender under this
Agreement; (iii) no amendment, waiver, or consent shall, unless in writing and
signed by Administrative Agent in addition to Lenders required above, affect the
rights or duties of Administrative Agent under this Agreement or any other Loan
Paper; and (iv) the Fee Letters may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties
thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver, or consent hereunder, except that the Commitment of such Defaulting
Lender may not be increased or extended without the consent of such
Defaulting Lender.
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15.10
|
Counterparts;
Integration; Effectiveness.
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This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This
Agreement and the other Loan Papers constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section
7.1, this Agreement shall become effective when it shall have been
executed by Administrative Agent and when Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
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15.11
|
Successors and
Assigns; Participation.
|
(a) Successors and
Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of Administrative Agent and each Lender and no Lender may assign
or otherwise transfer any of its rights or obligations hereunder except (i) to
an Eligible Assignee in accordance with the provisions of subsection
(b) of this Section, (ii) by way of participation in accordance with the
provisions of subsection
(d) of this Section, or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection
(f) or (i) of
this Section, or (iv) to an SPC in accordance with the provisions of subsection
(h) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection
(d) of this Section and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Assignments by
Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this subsection
(b), participations in L/C Exposure and in Swing Line Loans) at the time
owing to it); provided,
that (i) except in the
case of an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an assignment
to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to Administrative Agent or, if
“Trade
Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 unless each of Administrative Agent and,
so long as no Default has occurred and is continuing, Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed); provided however, that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met; (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, except that
this clause
(ii) shall not apply to rights in respect of Swing Line Loans; (iii) any
assignment of a Commitment must be approved by Administrative Agent, the L/C
Issuers, and the Swing Line Lenders unless the Person that is the proposed
assignee is itself a Lender (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee); and (iv) the parties to each
assignment shall execute and deliver to Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee in the amount, if
any, required as set forth in Schedule
15.11, and the Eligible Assignee, if it shall not be a Lender, shall
deliver to Administrative Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof by
Administrative Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections
4.1,
4.4, 4.5, and 15.4 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Upon request, Borrower (at its expense) shall execute
and deliver a Note to the assignee Lender. Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this subsection shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with subsection
(d) of this Section.
(c) Register. Administrative
Agent, acting solely for this purpose as an agent of Borrower, shall maintain at
Administrative Agent’s Office a copy of each Assignment and Assumption delivered
to it and a register for the recordation of the names and addresses of Lenders,
and the Commitments of, and principal amounts of the Loans and L/C Exposure
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, and Borrower, Administrative Agent
and Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by each of Borrower and the L/C Issuers at any
reasonable time and from time to time upon reasonable prior
notice. In addition, at any time that a request for a consent for a
material or substantive change to the Loan Papers is pending, any Lender may
request and receive from Administrative Agent a copy of the
Register.
(d) Participations. Any
Lender may at any time, without the consent of, or notice to, Borrower or
Administrative Agent, sell participations to any Person (other than a natural
person or Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”)
in all or a portion of such Lender's rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Exposure and Swing Line Loans)
owing to it); provided,
that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) Borrower, Administrative Agent,
Lenders, and the L/C Issuers shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in
the first proviso to Section
15.9 that affects such Participant. Subject to subsection
(e) of this Section, Borrower agrees that each Participant shall be
entitled to the benefits of Sections
4.1, 4.4 or 4.5 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection
(b) of this Section. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 15.13
as though it were a Lender, provided such Participant
agrees to be subject to Section
3.11 as though it were a Lender.
(e) Limitations upon
Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 4.1
or 4.4 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 4.1
unless Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of Borrower, to comply with Section
4.1(e) as though it were a Lender.
(f) Certain
Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided, that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party
hereto.
(g) Electronic
Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like
import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state Laws based on
the Uniform Electronic Transactions Act.
(h) Resignation as
L/C Issuer or Swing Line Lender after
Assignment. Notwithstanding anything to the contrary contained
herein, if at any time any L/C Issuer or any Swing Line Lender assigns all of
its Commitment and Loans pursuant to subsection
(b) above, such L/C Issuer or such Swing Line Lender may, upon 30 days’
notice to Borrower and Lenders, resign as an L/C Issuer or a Swing Line Lender,
or both. In the event of any such resignation as an L/C Issuer or a
Swing Line Lender, Borrower shall be entitled to appoint from among Lenders a
successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by
Borrower to appoint any such successor shall affect the resignation of such L/C
Issuer or such Swing Line Lender. If an L/C Issuer resigns, it shall
retain all the rights, powers, privileges, and duties of an L/C Issuer hereunder
with respect to all L/C outstanding as of the effective date of its resignation
as an L/C Issuer and all L/C Exposure with respect thereto (including the right
to require Lenders to make Base Rate Loans or fund risk participations in
unreimbursed amounts pursuant to Section
2.3(c)). If a Swing Line Lender resigns, it shall retain all the rights
of a Swing Line Lender provided for hereunder with respect to Swing Line Loans
made by it and outstanding as of the effective date of such resignation,
including the right to require Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section
2.4(c). Upon the appointment of a successor L/C Issuer and/or
Swing Line Lender, (a) such successor shall succeed to and become vested with
all of the rights, powers, privileges, and duties of the retiring L/C Issuer or
Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall
issue letters of credit in substitution for the L/Cs, if any, outstanding at the
time of such succession or make other arrangements satisfactory to the resigning
L/C Issuer to effectively assume the obligations of such resigning L/C Issuer
with respect to such Letters of Credit.
|
15.12
|
Payments Set
Aside.
|
To the
extent that any payment by or on behalf of Borrower or any other obligor on the
Obligation under any Loan Paper is made to Administrative Agent, either L/C
Issuer, or any Lender, or Administrative Agent, either L/C Issuer, or any Lender
exercises its Right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required (including pursuant to any settlement
entered into by Administrative Agent, such L/C Issuer, or such Lender in its
discretion) to be repaid to a trustee, receiver, or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and (b)
each Lender and each L/C Issuer severally agrees to pay to Administrative Agent
upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by Administrative Agent, plus interest thereon from the
date of such demand to the date such payment is made at a rate per annum equal
to the Federal Funds Rate from time to time in effect. The
obligations of Lenders and the L/C Issuers under clause (b)
of the preceding sentence shall survive the payment in full of the Obligation
and the termination of this Agreement.
15.13 Right of
Setoff.
If a
Default shall have occurred and be continuing, each Lender, the L/C Issuers, and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by applicable Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the applicable L/C Issuer, or any
such Affiliate to or for the credit or the account of Borrower or any other
Company against any and all of the obligations of Borrower or such other Company
now or hereafter existing under this Agreement or any other Loan Paper to such
Lender or the applicable L/C Issuer, irrespective of whether or not such Lender
or the applicable L/C Issuer shall have made any demand under this Agreement or
any other Loan Paper and although such obligations of Borrower or such other
Company may be contingent or unmatured or are owed to a branch or office of such
Lender or the applicable L/C Issuer different from the branch or office holding
such deposit or obligated on such indebtedness. The rights of each
Lender, each L/C Issuer, and their respective Affiliates under this Section are
in addition to other rights and remedies (including other rights of setoff) that
such Lender, the applicable L/C Issuer, or their respective Affiliates may
have. Each Lender and each L/C Issuer agrees to notify Borrower and
Administrative Agent promptly after any such setoff and application, provided, that the failure to give
such notice shall not affect the validity of such setoff and
application.
15.14 Replacement of
Lenders.
Under any
circumstances set forth in this Agreement providing that Borrower shall have the
right to replace a Lender as a party to this Agreement, including, without
limitation, if any Lender requests compensation under Section
4.4, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section
3.1, or if any Lender is a Defaulting Lender, then Borrower may, at its
sole expense and effort, upon notice to such Lender and Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in, and consents required by, Section
15.11), all of its interests, rights, and obligations under this
Agreement and the related Loan Papers to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided, that:
(a) Borrower
shall have paid to Administrative Agent the assignment fee specified in Section
15.11(b);
(b) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in L/C Borrowings, accrued interest
thereon, accrued fees, and all other amounts payable to it hereunder and under
the other Loan Papers (including any amounts under Section
4.5) from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or Borrower (in the case of all other
amounts);
(c) in
the case of any such assignment resulting from a claim for compensation under
Section
4.4 or payments required to be made pursuant to Section
4.1, such assignment will result in a reduction in such compensation or
payments thereafter; and
(d) such
assignment does not conflict with applicable Laws.
A Lender
shall not be required to make any such assignment or delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling Borrower to require such assignment and delegation cease to
apply.
|
15.15
|
Confidentiality.
|
Each of
Administrative Agent, Lenders, and the L/C Issuers agrees to maintain
the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Paper or any action
or proceeding relating to this Agreement or any other Loan Paper or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to Borrower and its obligations, (g) with the consent of Borrower, (h)
to the extent such Information (x) becomes publicly available other than as a
result of a breach of this section or (y) becomes available to Administrative
Agent, any Lender, either L/C Issuer, or any of their respective Affiliates on a
nonconfidential basis from a source other than Borrower, or (i) to any direct or
indirect contractual counterparty in Financial Hedges or such contractual
counterparty’s professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by the
provisions of this Section
15.15). For purposes of this section, “Information”
means all information received from any Restricted Company relating to any
Restricted Company or any of their respective businesses, other than any such
information that is available to Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by any Restricted Company, provided that, in the case of
information received from a Restricted Company after the date hereof, such
information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Information as provided in this section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. Each of Administrative
Agent, Lenders, and the L/C Issuers acknowledges that (a) the Information may
include material non-public information concerning any Company, as the case may
be, (b) it has developed compliance procedures regarding the use of material
non-public information, and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state
securities Laws.
|
15.16
|
USA PATRIOT Act
Notice.
|
Each
Lender that is subject to the Act (as hereinafter defined) and Administrative
Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify, and record information that identifies Borrower,
which information includes the name and address of Borrower and other
information that will allow such Lender or Administrative Agent, as applicable,
to identify Borrower in accordance with the Act.
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15.17
|
Survival of
Representations and
Warranties.
|
All
representations and warranties made hereunder and in any other Loan Paper or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be
relied upon by Administrative Agent and each Lender, regardless of any
investigation made by Administrative Agent or any Lender or on their behalf and
notwithstanding that Administrative Agent or any Lender may have had notice or
knowledge of any Default or Potential Default at the time of any Loan or L/C
Credit Extension, and shall continue in full force and effect as long as any
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any
L/C shall remain outstanding.
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15.18
|
ENTIRE
AGREEMENT.
|
THIS AGREEMENT AND THE OTHER LOAN
PAPERS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES. This Agreement supersedes
all prior written agreements and understandings relating to the subject matter
hereof and may be supplemented only by documents delivered in accordance with
the terms hereof.
|
15.19
|
Designation as Senior
Debt.
|
The
Obligation constitutes “Senior
Debt” for purposes of and as defined in the Senior Subordinated
Indenture.
|
15.20
|
Restatement of
Existing Agreement.
|
The
parties hereto agree that, on the Closing Date, after all conditions precedent
set forth in Section 7.1
have been satisfied or waived: (a) the Obligation (as defined in this Agreement)
represents, among other things, the restatement, renewal, amendment, extension,
and modification of the “Obligation” (as defined in
the Existing Agreement); (b) this Agreement is intended to, and does hereby,
restate, renew, extend, amend, modify, supersede, and replace the Existing
Agreement in its entirety; (c) the Notes, if any, executed pursuant to this
Agreement amend, renew, extend, modify, replace, restate, substitute for, and
supersede in their entirety (but do not extinguish the Debt arising under) the
promissory notes issued pursuant to the Existing Agreement, which existing
promissory notes shall be returned to Administrative Agent promptly after the
Closing Date, marked “canceled
and replaced”; (d) each Confirmation of Pledge Agreement executed
pursuant to this Agreement ratifies and confirms (but does not extinguish or
impair the collateral security created or evidenced by) the “Pledge Agreement” executed
and delivered by the “Debtor” named therein
pursuant to the Existing Agreement; (e) the Confirmation of Guaranty executed
pursuant to this Agreement ratifies and confirms (but does not extinguish or
impair the “Guaranteed
Debt” guaranteed by) the “Guaranty” executed and
delivered pursuant to the Existing Agreement; and (f) the entering into and
performance of their respective obligations under the Loan Papers and the
transactions evidenced hereby do not constitute a novation nor shall they be
deemed to have terminated, extinguished, or discharged the “Debt” under the Existing
Agreement, the Security Documents, the Guaranty, or the other Loan Papers (or
the collateral security therefore), all of which Debt and Collateral shall
continue under and be governed by this Agreement and the other Loan Papers,
except as expressly provided otherwise herein.
Remainder
of Page Intentionally Blank.
Signature
Pages to Follow.
|
THE
VAIL CORPORATION (D/B/A “VAIL
|
|
|
ASSOCIATES, INC.”), as
Borrower
|
|
|
By:
|
/s/
Jeffrey W. Jones
|
|
Jeffrey
W. Jones
|
|
|
Senior
Executive Vice President and
|
|
|
Chief
Financial Officer
|
|
BANK OF AMERICA, N.A.,
as Administrative Agent,
|
|
|
and
L/C Issuer, a Swing Line Lender, and a Lender
|
|
|
By:
|
/s/
David McCauley
|
|
David
McCauley
|
|
|
Vice
President
|
|
U.S. BANK NATIONAL
ASSOCIATION,
|
|
|
as
Co-Syndication Agent, a Swing Line Lender, and a
|
|
|
Lender
|
|
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By:
|
/s/
Rob L. Stuart
|
|
Rob
L. Stuart
|
|
|
Assistant
Vice President
|
|
WELLS FARGO BANK,
NATIONAL
|
|
|
ASSOCIATION, as
Co-Syndication Agent, an L/C
|
|
|
Issuer,
and a Lender
|
|
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By:
|
/s/
Debbie A. Wright
|
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Debbie
A. Wright
|
|
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Vice
President
|
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DEUTSCHE BANK TRUST
COMPANY
|
|
|
AMERICAS, as
Co-Documentation Agent and a Lender
|
|
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By:
|
/s/
Steven P. Lapham
|
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Steven
P. Lapham
|
|
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Managing
Director
|
|
|
By:
|
/s/
Brenda Casey
|
|
Brenda
Casey
|
|
|
Vice
President
|
|
LASALLE BANK NATIONAL
ASSOCIATION,
|
|
|
as
Co-Documentation Agent and a Lender
|
|
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By:
|
/s/
Darren L. Lemkau
|
|
Darren
L. Lemkau
|
|
|
Senior
Vice President
|
|
JPMORGAN CHASE BANK, NA,
|
|
|
as
a Lender
|
|
|
By:
|
/s/
Kent A. Kaiser
|
|
Kent
A. Kaiser
|
|
|
Senior
Vice President
|
|
CALYON NEW YORK BRANCH,
|
|
|
as
a Lender
|
|
|
By:
|
/s/
Joseph A. Asciolla
|
|
Joseph
A. Asciolla
|
|
|
Managing
Director
|
|
CALYON NEW YORK BRANCH,
|
|
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as
a Lender
|
|
|
By:
|
/s/
Bruno Defloor
|
|
Bruno
Defloor
|
|
|
Director
|
|
COMPASS BANK,
|
|
|
as
a Lender
|
|
|
By:
|
/s/
Eric R. Long
|
|
Eric
R. Long
|
|
|
Senior
Vice President
|
|
COMERICA
WEST INCORPORATED
|
|
|
By:
|
/s/
Kevin T. Urban
|
|
Kevin
T. Urban
|
|
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Corporate
Banking Officer
|
GUARANTORS’ CONSENT AND
AGREEMENT
As an
inducement to Administrative Agent and Lenders to execute, and in consideration
of Administrative Agent’s and Lenders’ execution of the foregoing Limited
Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit
Agreement, the undersigned hereby consent thereto and agree that the same shall
in no way release, diminish, impair, reduce or otherwise adversely affect the
respective obligations and liabilities of each of the undersigned under each
Guaranty described in the Credit Agreement, or any agreements, documents or
instruments executed by any of the undersigned to create liens, security
interests or charges to secure any of the indebtedness under the Loan Papers,
all of which obligations and liabilities are, and shall continue to be, in full
force and effect. This consent and agreement shall be binding upon
the undersigned, and the respective successors and assigns of each, and shall
inure to the benefit of Administrative Agent and Lenders, and the respective
successors and assigns of each.
Vail
Resorts, Inc.
Vail
Holdings, Inc.
Beaver
Creek Associates, Inc.
Beaver
Creek Consultants, Inc.
Beaver
Creek Food Services, Inc.
Breckenridge
Resort Properties, Inc.
Complete
Telecommunications, Inc.
Gillett
Broadcasting, Inc.
Grand
Canyon Lodge Company North Rim
Grand
Teton Lodge Company
Heavenly
Valley, Limited Partnership
Jackson
Hole Golf and Tennis Club, Inc.
JHL&S
LLC
Keystone
Conference Services, Inc.
Keystone
Development Sales, Inc.
Keystone
Food and Beverage Company
Keystone
Resort Property Management
Company
Larkspur
Restaurant & Bar, LLC
Lodge
Properties, Inc.
Lodge
Realty, Inc.
Mountain
Thunder, Inc.
Property
Management Acquisition Corp., Inc.
Rockresorts
International, LLC
Rockresorts
LLC
Rockresorts
Cheeca, LLC
Rockresorts
Equinox, Inc.
Rockresorts
LaPosada, LLC
Rockresorts
Wyoming, LLC
Rockresorts
Casa Madrona, LLC
Rockresorts
Rosario, LLC
Teton
Hospitality Services, Inc.
The
Village at Breckenridge Acquisition Corp., Inc.
Timber
Trail, Inc.
VA Rancho
Mirage I, Inc.
VA Rancho
Mirage II, Inc.
VA Rancho
Mirage Resort, L.P.
Vail/Arrowhead,
Inc.
Vail
Associates Holdings, Ltd.
Vail
Associates Investments, Inc.
Vail
Associates Real Estate, Inc.
Vail/Beaver
Creek Resort Properties, Inc.
Vail Food
Services, Inc.
Vail
Resorts Development Company
Vail RR,
Inc.
Vail
Summit Resorts, Inc.
Vail
Trademarks, Inc.
VAMHC,
Inc.
VR
Heavenly I, Inc.
VR
Heavenly II, Inc.
VR
Holdings, Inc.
|
|
By:
/s/ Jeffrey W. Jones
|
|
|
Name:
Jeffrey W. Jones
|
|
|
Title:
Executive Vice President & Chief Financial
Officer
|
SCHEDULE
1
Parties, Addresses,
Committed Sums and Wiring Information
Borrower
and all other Companies
The Vail
Corporation
Post
Office Box 7
Vail,
Colorado 81658
137
Benchmark Road
Avon,
Colorado 81620
Contact:
Jeffrey P. Jones
Senior
Vice President and Chief Financial Officer
Phone: 970/845-2552
FAX: 970/845-2470
Wire
Instructions:
Location
of account: U.S. Bank National Association
ABA
No.: 102000021
City/State: Denver,
Colorado
Account
No.: 122705422295
Copy to:
Martha
Dugan Rehm, General Counsel
Vail
Resorts, Inc.
Post
Office Box 7
Vail,
Colorado 81658
137
Benchmark Road
Avon,
Colorado 81620
Phone: 970/845-2927
FAX: 970/845-2928
Administrative Agent, L/C Issuer, and Swing Line
Lender
Bank of
America, N.A.
Mail
Code: TX1-492-64-01
901 Main
Street, 64th Floor
Dallas,
Texas 75202
Credit
Contact:
David L.
McCauley
Mail
Code: TX1-492-64-01
901 Main
Street, 64th Floor
Dallas,
Texas 75202
Phone: 214/209-0940
FAX: 214/209-0905
|
|
Agency
Contact:
|
Donna F.
Kimbrough
Mail
Code: TX1-492-14-11
901 Main
Street, 14th Floor
Dallas,
Texas 75202
Phone: 214/209-1569
|
|
FAX: 214/290-9436
|
|
|
Swing Line
Contact:
|
Arlene
Minor
Mail
Code: TX1-492-14-12
901 Main
Street, 14th Floor
Dallas,
Texas 75202
Phone: 214/209-9177
|
|
FAX: 214/290-9412
|
|
|
Operations
Contact:
|
Arlene
Minor
Mail
Code: TX1-492-14-12
901 Main
Street, 14th Floor
Dallas,
Texas 75202
Phone: 214/209-9177
FAX: 214/290-9412
|
|
L/C
Contact:
|
|
|
Stella
Rosales
|
Mail
Code: CA9-703-19-23
333 S.
Beaudry Avenue
Los
Angeles, California 90017-1466
Phone:
213/345-0141
Fax:
213/345-6684
Wire
Instructions:
Bank of
America, N.A.
ABA
No.: 111000012
City/State: Dallas,
Texas
Account
No.: 1292000883
Attn: Credit
Services
Ref: The
Vail Corp
Copy to:
Haynes
and Boone, LLP.
901 Main
Street, Suite 3100
Dallas,
Texas 75202-3789
Attn: Karen
S. Nelson
Phone: 214/651-5648
FAX:: 214/200-0673
Swing
Line Lender
U.S. Bank
National Association
918 17th
Street, 4th Floor
Denver,
Co 80202
Credit
Contact:
Robert
Stuart
918 17th
Street, 4th Floor
Denver,
Colorado 80202
Phone:
303/585-4188
Fax:
303/585-4135
|
|
Swing Line
Contact:
|
|
|
Hanny
Nawawi
|
555 SW
Oak
Portland,
Oregon 97204
Phone: 503/275-7894
|
|
FAX: 503/275-8181
|
Wire
Instructions:
U.S. Bank
National Association
ABA
No.: 123000220
BNF: Commercial
Loan Services - West
Account
No.: 00340012160600
Attn: Hanny
Nawawi
Ref: The
Vail Corporation
L/C
Issuer
Wells
Fargo Bank, National Association
Credit
Contact:
Debbie
Wright/Susan Petri
1740
Broadway
Denver,
Colorado 80274
Phone:
303/863-4829
Fax:
303/863-6670
|
|
L/C
Contact:
|
Debbie
Wright/Susan Petri
1740
Broadway
Denver,
Colorado 80274
Phone:
303/863-4829
|
|
Fax:
303/863-6670
|
Wire
Instructions:
Wells
Fargo Bank, National Association
ABA
No.: 121000248
City/State: Denver,
Colorado
Account
No.: 029650720
Attn: WLS
Denver
Ref: Vail
Corporation
Lenders
and Commitments
|
LENDER
|
COMMITMENT
|
COMMITMENT
PERCENTAGE
|
|
Bank
of America, N.A.
|
$65,000,000
|
16.250000000%
|
|
U.S.
Bank
National
Association
|
$62,500,000
|
15.625000000%
|
|
Wells
Fargo Bank,
National
Association
|
$62,500,000
|
15.625000000%
|
|
Deutsche
Bank Trust
Company
Americas
|
$62,500,000
|
15.625000000%
|
|
LaSalle
Bank
National
Association
|
$62,500,000
|
15.625000000%
|
|
JPMorgan
Chase Bank, NA
|
$25,000,000
|
6.250000000%
|
|
Calyon
New York Branch
|
$25,000,000
|
6.250000000%
|
|
Compass
Bank
|
$20,000,000
|
5.000000000%
|
|
Comerica
West Incorporated
|
$15,000,000
|
3.750000000%
|
|
Totals
|
$400,000,000
|
100.0000000%
|
Existing Letters of Credit
and Scheduled Debt
Part
A – Existing Letters of Credit
|
Amount
|
Maturity Date
|
Beneficiary
|
|
$755,311
|
12/15/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
115,595
|
11/30/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
1,026,206
|
05/31/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
790,490
|
07/31/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
539,170
|
10/31/05
|
Teton
County Board of Commissioners
|
|
407,355
|
10/31/05
|
Teton
County Board of Commissioners
|
|
843,056
|
10/31/05
|
Teton
County Board of Commissioners
|
|
749,283
|
07/22/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
56,495
|
10/31/05
|
Teton
County Board of Commissioners
|
|
69,000
|
03/24/06
|
Board
of County Commissioners of Summit County
|
|
51,750
|
01/31/06
|
Board
of County Commissioners of Summit County
|
|
84,525
|
01/31/06
|
Board
of County Commissioners of Summit County
|
|
14,490
|
01/31/06
|
Board
of County Commissioners of Summit County
|
|
40,250
|
01/31/06
|
Board
of County Commissioners of Summit County
|
|
71,280
|
01/30/07
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
62,105
|
12/15/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
1,091,152
|
07/31/06
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
453,526
|
07/31/06
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
22,573
|
10/31/05
|
Board
of County Commissioners, County of Eagle, State of
Colorado
|
|
12,500
|
07/01/05
|
The
Town of Vail, Colorado
|
|
8,597,808
|
08/24/05
|
U.S.
Bank National Association as Trustee
|
|
9,232,709
|
10/31/05
|
U.S.
Bank Trust, Corp Trust Svcs
|
|
8,116,667
|
10/31/05
|
U.S.
Bank National Association as Trustee Under the Trust Indenture Dated as of
May 1, 1999 with Eagle County, Colorado
|
|
15,198,459
|
10/31/05
|
U.S.
Bank National Association as Trustee Under the Trust Indenture Dated as of
May 1, 1999 with Breckenridge Terrace, LLC
|
|
5,108,334
|
04/29/05
|
U.S.
Bank, N.A. Corporate Trust Services
|
|
5,783,125
|
10/31/05
|
U.S.
Bank National Association as Trustee Under the Trust Indenture Dated as of
June 1, 2000 w/ Tenderfoot Seasonal Housing, LLC
|
|
70,000
|
01/03/06
|
Airlines
Reporting Corporation
|
|
70,000
|
12/15/05
|
Airlines
Reporting Corporation
|
|
25,000
|
08/30/05
|
Airlines
Reporting Corporation
|
|
25,000
|
12/08/05
|
United
Airlines, Inc.
|
|
4,200,000
|
10/31/05
|
Key
Bank National Association**
|
|
2,635,000
|
10/31/05
|
American
Home Assurance Co
|
|
2,099,136
|
09/17/05
|
Self
Insurance Plans State of California
|
|
281,819
|
05/01/05
|
Sierra
Pacific Power Company
|
|
45,000
|
10/01/05
|
USDA
Forest Service
|
|
106,462
|
07/31/05
|
Liberty
Mutual Insurance Company
|
|
6,012,509
|
6/15/05
|
U.S.
Bank National Association as Trustee Under the Trust Indenture Dated as of
June 1, 2000 w/ Tenderfoot Seasonal Housing, LLC
|
|
2,462,217
|
5/26/09
|
U.S.
Bank National Association as Trustee Under the Trust Indenture Dated as of
May 1, 1999 with Eagle County, Colorado
|
|
1,531,250
|
6/15/05
|
U.S.
Bank Trust, Corp Trust Svcs
|
|
$
78,856,607
|
**
L/C support for SSI Credit Agreement
Part
B – Scheduled Debt
1. The
Vail Bonds and the Summit Bonds.
|
2.
|
Obligations
of the Companies with respect to letters of credit issued by U.S. Bank
National Association for the benefit of Eagle County, Colorado, in an
aggregate amount of up to $3,750,000 at any point in
time.
|
|
3.
|
$3,043,626
remaining outstanding as of December 31, 2004 under the Eagle Park
Reservoir Company promissory note.
|
|
4.
|
$437,500
principal amount outstanding as of December 31, 2004 under the Mission
Hills Country Club promissory note.
|
|
5.
|
$419,624.53
remaining outstanding as of December 31, 2004 under the capital lease for
the telephone system at The Lodge at Rancho
Mirage.
|
|
6.
|
SSI
Revolving Credit, Term Loan and Security Agreement dated May 27, 2003 in
the amount of $32,000,000, of which $10,507,892 is outstanding as of
December 31, 2004. Borrower has 61.68% interest in
SSI.
|
|
7.
|
$972,678.79
remaining outstanding as of December 31, 2004 under the capital leases for
SSV Snowell Tuning Machines. Borrower has 61.68% interest in
SSI.
|
|
8.
|
$11,487.14
remaining outstanding as of December 31, 2004 under the capital
lease for Pitney Bowes mail machine at The Lodge at Rancho
Mirage.
|
|
9.
|
$11,218.72
remaining outstanding as of December 31, 2004 under the capital
lease for Pitney Bowes label machine at The Lodge at Rancho
Mirage.
|
|
10.
|
$36,404.71
remaining outstanding as of December 31, 2004 under the capital
lease for De Lage Landen copier machine at The Lodge at Rancho
Mirage.
|
|
11.
|
$49,913.42
remaining outstanding as of December 31, 2004 under the capital
lease for De Lage Landen copier machine at The Lodge at Rancho
Mirage.
|
|
12.
|
$35.900.80
remaining outstanding as of December 31, 2004 under the capital
lease for GE Capital copier machine at The Lodge at Rancho
Mirage.
|
|
13.
|
$50,895.72
remaining outstanding as of December
31, 2004 under the capital lease for GE Capital copier machine
at The Lodge at Rancho Mirage.
|
SCHEDULE
7.1
Post-Closing Items and
Conditions
|
ITEM
|
DATE
FOR COMPLIANCE
|
|
|
1.Borrower
shall seek written consent from the United States Department of the
Interior, National Park Service (“Park
Service”) to Borrower’s pledge to Administrative Agent (for the
benefit of the Lenders) of the capital stock of Grand Teton Lodge Company,
a Wyoming corporation (“Grand
Teton”), issued to Borrower (the “Park
Service Consent”)
|
Not
later than the date upon which that certain Grand Teton Lodge Company 1973
Concession Agreement dated as of July 31, 1973, between Grand Teton and
the Park Service, is renewed (which is currently anticipated to be not
later than December 31, 2005)
|
|
|
2.Borrower
shall execute and deliver to Administrative Agent a Pledge Agreement
pledging the capital stock issued by Grand Teton to Borrower, accompanied
by a certificate (or other instrument evidencing the capital stock) and a
stock power or similar instrument of transfer or assignment duly executed
in blank, each in form and substance satisfactory to Administrative
Agent
|
On
or before the tenth (10th) day after the date it receives the Park Service
Consent
|
|
|
3.Borrower
shall cause to be delivered a financing statement listing BC Housing, LLC,
as debtor, and the applicable L/C Issuer or Administrative Agent, as
assignee, as secured party, to evidence the pledge and security interests
created under the Bond Documents for Existing Housing Bonds issued by
debtor, which financing statement shall be in form and substance
satisfactory to Administrative Agent
|
60
days after Closing Date
|
|
|
4.Borrower
shall cause to be delivered a financing statement listing The Tarnes at
BC, LLC, as debtor, and the applicable L/C Issuer or Administrative Agent,
as assignee, as secured party, to evidence the pledge and security
interests created under the Bond Documents for Existing Housing Bonds
issued by debtor, which financing statement shall be in form and substance
satisfactory to Administrative Agent
|
60
days after Closing Date
|
|
|
5.Borrower
shall cause to be delivered a financing statement listing Tenderfoot
Seasonal Housing, LLC, as debtor, and the applicable L/C Issuer or
Administrative Agent, as assignee, as secured party, to evidence the
pledge and security interests created under the Bond Documents for
Existing Housing Bonds issued by debtor, which financing statement shall
be in form and substance satisfactory to Administrative
Agent
|
60
days after Closing Date
|
SCHEDULE
8.2
Corporate Organization and
Structure
(Attached)
Schedule
8.2
To
Bank of America Forth Amended and
Restated
Credit Agreement
|
Corporation
|
State
of Incorp.
|
Affiliated
Parent / LLC Member
(%
of Ownership)
|
|
Beaver
Creek Associates, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Beaver
Creek Consultants, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Beaver
Creek Food Services, Inc.
|
CO
|
Beaver
Creek Associates, Inc. (100%)
|
|
Boulder/Beaver,
LLC
|
CO
|
Beaver
Creek Food Services, Inc. (86%)
|
|
Breckenridge
Resort Properties, Inc.
|
CO
|
VRDC
(100%)
|
|
Colter
Bay Corporation
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Complete
Telecommunications, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Eagle
Park Reservoir Company
|
CO
(non-profit)
|
The
Vail Corporation (55%)
|
|
Forest
Ridge Holdings, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Gillett
Broadcasting, Inc.
|
DE
|
Vail
Resorts, Inc. (100%)
|
|
Grand
Teton Lodge Company
|
WY
|
The
Vail Corporation (100%)
|
|
Gros
Ventre Utility Company
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Heavenly
Valley, Limited Partnership
|
NV
|
VR
Heavenly I, Inc. & VR Heavenly II, Inc. (together,
100%)
|
|
Jackson
Hole Golf & Tennis Club
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Jenny
Lake Lodge, Inc.
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
JHL&S
LLC
|
WY
|
Teton
Hospitality Services, Inc. (51%)
|
|
Keystone
Conference Services, Inc.
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Development Sales, Inc.
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Food and Beverage Company
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Resort Property Management Company
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Larkspur
Restaurant & Bar, LLC
|
CO
|
The
Vail Corporation (83% + or -)
|
|
Lodge
Properties, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Lodge
Realty, Inc.
|
CO
|
Lodge
Properties, Inc. (100%)
|
|
Mountain
Thunder, Inc.
|
CO
|
VR
Holdings, Inc. (100%)
|
|
Property
Management Acquisition Corp., Inc.
|
TN
|
Vail
Summit Resorts, Inc. (100%)
|
|
RTP,
LLC
|
CO
|
The
Vail Corporation (54.5%)
|
|
RT
Partners, Inc.
|
DE
|
RTP,
LLC (51%)
|
|
Rockresorts
Casa Madrona, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Cheeca, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Equinox, Inc.
|
VT
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
International, LLC
|
DE
|
Vail
RR, Inc. (100%)
|
|
Rockresorts
LaPosada, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Rosario, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Wyoming, LLC
|
WY
|
Rockresorts
International, LLC (100%)
|
|
SSI
Venture LLC
|
CO
|
The
Vail Corporation (52%)
|
|
Teton
Hospitality Services, Inc.
|
WY
|
The
Vail Corporation (100%)
|
|
Timber
Trail, Inc.
|
CO
|
VR
Holdings, Inc. (100%)
|
|
Vail/Arrowhead,
Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Associates Holdings, Ltd.
|
CO
|
Vail
Resorts Development Company (100%)
|
|
Vail
Associates Investments, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Associates Real Estate, Inc.
|
CO
|
Vail
Resorts Development Company (100%)
|
|
Vail/Beaver
Creek Resort Properties, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Corporation, The
|
CO
|
Vail
Holdings, Inc. (100%)
|
|
Vail
Food Services, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Holdings, Inc.
|
CO
|
Vail
Resorts, Inc. (100%)
|
|
Vail
Resorts Development Company
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Resorts, Inc.
|
DE
|
Publicly
traded on the NYSE
|
|
Vail
RR, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Summit Resorts, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Trademarks, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VAMHC,
Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage I, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage II, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage Resort, L.P.
|
DE
|
VA
Rancho Mirage I, Inc. – GP
VA
Rancho Mirage II, Inc. – LP
(100%)
|
|
The
Village at Breckenridge Acquisition Corp., Inc.
|
TN
|
Vail
Summit Resorts, Inc. (100%)
|
|
VR
Heavenly I, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VR
Heavenly II, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VR
Holdings, Inc.
|
CO
|
Vail/Arrowhead,
Inc. (100%)
|
SCHEDULE
8.7
Material Litigation
Summary
None,
except as referenced in VRI’s Annual Report on Form 10-K for the year ended July
31, 2004, at Item 3, and Quarterly Report on Form 10-Q for the quarter ended
October 31, 2004.
SCHEDULE
8.9
Material Environmental
Matters
None,
except as referenced in VRI’s Annual Report on Form 10-K for the year ended July
31, 2004, at Item 3, and Quarterly Report on Form 10-Q for the quarter ended
October 31, 2004.
SCHEDULE
8.11
Critical
Assets
(a)
Existing Critical Assets
Intellectual
Property
|
1.
|
The
following Intellectual Property of the Companies: the federally
trademarked “VAIL V” design/symbol/logo, the federally trademarked “BEAVER
CREEK” words, the federally trademarked “BRECKENRIDGE B”
design/symbol/logo, the federally trademarked “KEYSTONE” word, the
federally trademarked “KEYSTONE SNOWFLAKE” design/symbol/logo, and the
Colorado tradenames “Vail Associates, Inc.”, “Breckenridge Ski Resort” and
“Keystone Resort.”
|
|
2.
|
The
following intellectual property: the federally trademarked
“Heavenly” design/symbol/logo.
|
|
|
Vail
|
|
1.
|
All
improvements and personal property essential, from time to time, to ski
mountain operations located within the Vail Mountain U.S. Forest Service
Special Use Permit boundary.
|
|
2.
|
Rights
of use and access with respect to those portions of Parcel 1, Golden Peak
Ski Base & Recreation District Parcel, which, from time to time,
contain (a) the Chairlift #6 (Riva Bahn Express Lift) base terminal and
(b) the Chairlift #12 (Gopher Hill Lift) base
terminal.
|
|
3.
|
Rights
of use and access with respect to those portions of Tract E, Vail Village
Fifth Filing (or any resubdivision thereof), which, from time to time,
contain the Chairlift #16 (Vista Bahn Express Lift) base
terminal.
|
|
4.
|
Rights
of use and access with respect to those portions of Tract D, Vail
Lionshead First Filing (or any resubdivision thereof), which, from time to
time, contain the Chairlift #8 (Born Free Express Lift) base
terminal.
|
|
5.
|
Rights
of use and access with respect to those portions of Tract D, Vail
Lionshead First Filing (or any resubdivision thereof), which, from time to
time, contain the Lift #19 (Eagle Bahn Lift (a/k/a Gondola)) base
terminal.
|
|
6.
|
Rights
of use and access with respect to those portions of Tract D, Vail
Lionshead First Filing (or any ressubdivion thereof); Tract B, Vail
Lionshead First and Second Filings; and , Tract X, Forest Place
Subdivision (“Tract X”) which, from time to time, contain the Lionshead
Skier Bridge.
|
|
7.
|
Rights
of use and access with respect to those portions of Tract X and Tract A,
Block 1, Vail Village Sixth Filing, which, from time to time, provide
skier access to the Lionshead Skier
Bridge.
|
|
|
Beaver
Creek
|
|
1.
|
All
improvements and personal property essential, from time to time, to ski
mountain operations located within the Beaver Creek Mountain U.S. Forest
Service Special Use Permit
boundary.
|
|
2.
|
Rights
of use and access with respect to those portions of unplatted Tract S,
Beaver Creek Subdivision, and Lot 14, Block 1, Tract A, Beaver Creek
Subdivision, which, from time to time, contain the Chairlift #1 (Haymeadow
Lift) base terminal.
|
|
3.
|
Rights
of use and access with respect to those portions of unplatted Tract S,
Beaver Creek Subdivision, which, from time to time, contain the Chairlift
#2 (Highlands Lift) base terminal.
|
|
4.
|
Rights
of use and access with respect to those portions of unplatted Tract S and
Lot 4, Tract A, Block 1, Beaver Creek Subdivision, which, from time to
time, contain the Chairlift #12 (Strawberry Park Express Lift) base
terminal.
|
|
5.
|
Rights
of use and access with respect to those portions of unplatted Tract S,
Beaver Creek Subdivision, and Lot 14, Block 1, Tract A, Beaver Creek
Subdivision, which, from time to time, contain the Chairlift #6
(Centennial Express Lift) base
terminal.
|
|
6.
|
Rights
of use and access with respect to those portions of Lot 5, Tract S, Beaver
Creek Subdivision, which, from time to time, contain the Chairlift #14
(Elkhorn Lift) base terminal.
|
|
7.
|
All
land, improvements and personal property essential, from time to time, to
ski mountain operations at the base of Arrowhead Mountain in the Arrowhead
Planned Unit Development.
|
|
8.
|
Rights
of use and access with respect to those portions of Tract G, Arrowhead at
Vail, Filing No. 13 (Sixth Amendment), which, from time to time, contain
the Chairlift #17 (Arrow Bahn Express Lift) base
terminal.
|
|
9.
|
Rights
of use and access with respect to those portions of Tract D, Bachelor
Gulch Village Filing No. 2, which, from time to time, contain the
Chairlift #16 (Bachelor Gulch Express Lift) base
terminal.
|
|
|
Keystone
|
|
1.
|
All
improvements and personal property essential, from time to time, to ski
mountain operations located within the Keystone Mountain U.S. Forest
Service Special Use Permit
boundary.
|
|
2.
|
Rights
of use and access as granted in that certain Easement described in Section
10.07 of the Declarations and Covenants, Conditions and Restrictions for
the Neighbourhood at Keystone, which, from time to time, contains both the
River Run Gondola base terminal and the Summit Express
Lift.
|
|
3.
|
Rights
of use and access with respect to those portions of the real property
commonly referred to as the Base II/Mountain House neighborhood, which,
from time to time, contains the base terminals for the Argentine Lift, the
Peru Express Lift, the Packsaddle I Lift, the Pony Express I & II
Lifts, the Discovery Lift and the Ironhorse
Lift.
|
|
|
Breckenridge
|
|
1.
|
All
improvements and personal property essential, from time to time, to ski
mountain operations located within the Breckenridge Mountain U.S. Forest
Service Special Use Permit
boundary.
|
|
2.
|
Rights
of use and access with respect to those portions of the real property
commonly referred to as the Peak 8 Base Property, which, from time to
time, contains the base terminals for the Pony Lift, the Chair 7 Lift, the
Chair 5 Lift, the Rocky Mountain Superchair Lift, Trygve’s Platter Lift
and the Colorado Superchair Lift.
|
|
3.
|
Rights
of use and access to those portions of the real property commonly referred
to as the Quick Silver Tract, which, from time to time, contains the base
terminals for the Quick Silver Super Six Lift, the Camelback Lift, the
Lehman Lift and the Village Pony
Lift.
|
|
4.
|
Rights
of use and access as granted in that certain Easement from Beaver Run
Developments, a Colorado general partnership, pursuant to that certain
Fourth Addendum to Lease Agreement, which, from time to time, contains the
Beaver Run Superchair Lift.
|
|
|
Heavenly
|
|
1.
|
All
improvements and personal property essential, from time to time, to ski
mountain operations located within the Heavenly Ski Resort U.S. Forest
Service Special Use Permit
boundary.
|
|
2.
|
Rights
of use and access, including easements with respect to those portions of
the Park Avenue Subdivision Phases 1 and 3, which, from time to
time, contain the gondola base station, utilities, signage, the gondola
lift and related ground and aerial
easements.
|
|
3.
|
Rights
of use and access with respect to the White Bark subdivision, which from
time to time contain the summer maintenance road, underground utilities
and associated snowmaking water pump station and portions of Stagecoach
ski run.
|
|
4.
|
Existing
ground and aerial easements with respect to those portions of Crescent V
Subdivision, the City of South Lake Tahoe and the State of California
which, from time to time, contain the gondola lift and appurtenant
structures.
|
|
5.
|
Existing
easements with respect to the Tahoe Village Unit No. 1, Tahoe Village Unit
No. 2, amended Tahoe Village Unit No. 2 and Tahoe Village Unit No. 3
subdivisions which, from time to time, contain ski lifts, ski runs, summer
maintenance roads, access roads and snow storage
areas.
|
|
6.
|
Existing
easements with respect to the Bijou Beach subdivision and more
particularly the HKM Partnership for linear utility and pump station
easements.
|
|
|
(b)
Additional Critical Assets
|
|
|
Intellectual
Property
|
|
1.
|
The
following Intellectual Property of the Companies: the federally
trademarked VAIL word mark, the federally trademarked, “BEAVER CREEK” logo
with stylized “BC”, the federally trademarked “BC” stylized logo, the
federally trademarked “BRECKENRIDGE” word mark, the federally trademarked
“HEAVENLY” word mark, and the federally trademarked, “SKI TAHOE’S
HEAVENLY” word mark.
|
|
|
Beaver
Creek
|
|
1.
|
Rights
of use and access with respect to those portions of Lot 4, Tract B, Beaver
Creek Subdivision, which, from time to time, contain the Chairlift #15
(Lower Beaver Creek Mountain Express Lift) base
terminal.
|
SCHEDULE
8.13
Non-Standard Transactions
with Affiliates
|
1.
|
The
transactions described in Sections
10.8(n)(iii) and 10.9
of the Credit Agreement.
|
|
2.
|
Those
transactions described in the VRI Annual Report on Form 10-K for the year
ended July 31, 2004, Quarterly Report on Form10-Q for the quarter ended
October 31, 2004 and the proxy statement for the VRI 2004 Annual Meeting
of Shareholders, filed on November 19,
2004.
|
|
3.
|
Employment
Agreements with various management employees and use of facilities and
provision of other perquisites by the Companies to their officers,
directors and employees.
|
|
4.
|
Stock
option or other equity compensation agreements between VRI and certain
employees of VRI or Borrower as executed from time to
time.
|
SCHEDULE
10.8
Loans, Advances, and
Investments
(a) loans, advances, and investments
of the Restricted Companies existing on the Third Agreement Date in the Existing
Housing Districts, Existing Metro Districts, and Keystone/IntraWest LLC
(value as of December 31, 2004)
|
Investment
in Keystone/Intrawest
|
$1,578,305
|
|
Initial
aggregate investment in Existing Housing Districts
|
2,200
|
|
Aggregate
investments in Existing Housing Districts
|
(16,287,882)
|
(b) loans, advances, and investments
of the Restricted Companies in Persons other than Restricted Companies, Existing
Housing Districts, Existing Metro Districts, and Keystone IntraWest LLC
(value as of December 31, 2004)
|
Bachelor
Gulch Resort, LLC (note receivable)
|
-
|
|
Ritz-Carlton
Development Co., Inc. (note receivable)
|
$561,725
|
|
Investment
in Bachelor Gulch Resort, LLC (land)
|
-
|
|
Investment
in FFT Investment Partners
|
3,107,719
|
|
Investment
in Resort Technology Partners, Inc.
|
4,894,470
|
|
Investment
in Forest Ridge Holdings, Inc.
|
-
|
|
Investment
in Preferred Hotels & Resorts Worldwide, Inc.
|
9,600
|
|
Investment
in SSI Venture, LLC
|
7,233,778
|
|
Investment
in Eclipse Television and Sports Marketing, Inc.
|
400,000
|
|
Investment
in Slifer, Smith & Frampton/Vail Associates Real Estate,
LLC
|
2,500,000
|
|
Investment
in Avon Partners II, LLC
|
2,062,409
|
|
Investment
in Boulder/Beaver, LLC
|
3,238,139
|
|
Investment
in Eagle Park Reservoir Company
|
6,507,589
|
|
Investment
in Clinton Ditch & Reservoir Company
|
2,905,824
|
|
Note
receivable from Alpine Metropolitan District
|
1,930,712
|
|
Glendore
Development Inc. note receivable due 8/27/08 (Forest
Place)
|
500,000
|
|
La
Posada de Santa Fe Resort note receivable
|
1,500,000
|
|
Vail
Valley Foundation note receivable
|
144,500
|
|
Revolving
line of credit with Breckenridge Terrace, LLC (maximum borrowings
$6,750,000)
|
6,362,178
|
|
Receivable
from Keystone/Intrawest LLC for return of capital
|
1,499,165
|
|
Advances
to Keystone/Intrawest LLC
|
369,432
|
|
Total:
|
$45,727,240
|
(c)
put options
|
1.
|
SSI Venture LLC -
Pursuant to the SSI Venture LLC Amended and Restated Operating
Agreement, dated as of May 1, 2003, each of the minority shareholder
(“Gart”) and Vail Associates, Inc. (“VA”) has the right to require VA to
purchase from Gart, and Gart to sell to VA, Gart’s ownership interest in
SSI, on the terms and conditions set forth in such
agreement.
|
|
2.
|
Rockresorts International, LLC
- Pursuant to the Rockresorts International, LLC Limited Liability
Company Agreement, dated as of October 15, 2001, the minority shareholder
(“Olympus”) in Rockresorts International, LLC (“Rockresorts”) has an
option to sell all of its interests to Vail RR, Inc. (“Vail”), on the
terms and conditions set forth in such agreement. Olympus has
exercised its put to Vail, for a total put price of $2.0
million.
|
|
3.
|
Resort Technology Partners,,
LLC - Pursuant to the Resort Technology Partners, LLC Operating
Agreement, dated as of March 1, 2001, the minority shareholder (“RTP
Holding”) in Resort Technology Partners, LLC (“RTP “) has the right to
require The Vail Corporation (“TVC”) to purchase a portion of RTP
Holding’s interest in RTP, on the terms and conditions set forth in such
agreement.
|
|
4.
|
JHL&S LLC - Pursuant to the
JHL&S LLC Operating Agreement, dated as of December 21, 2000, (i)
Teton Hospitality Services, Inc. (“Teton Vail”) has the right to require
the minority shareholder (“SLM”) in JHL&S, LLC to sell all of its
ownership interest in JHL&S, LLC and (ii) SLM has the right
to require Teton Vail to acquire all of SLM’s ownership interest in
JHL&S, LLC, on the terms and conditions set forth in such
agreement.
|
SCHEDULE
10.9
Permitted
Distributions
|
|
|
(a)
|
So
long as no Default or Potential Default exists or would result therefrom,
Distributions for payment of tax liabilities not to exceed $10,000,000 in
the aggregate after the Closing Date by the following Restricted
Companies:
|
|
|
(i)
|
Distributions
by Larkspur Restaurant & Bar, LLC to its members in accordance with
the terms of its Operating
Agreement;
|
|
|
(ii)
|
Distributions
by JHL&S LLC to its members in accordance with the terms of its
Operating Agreement; and
|
|
|
(iii)
|
Distributions
by SSI Venture LLC to its members in accordance with the terms of its
Amended and Restated Operating
Agreement.
|
|
|
(iv)
|
Distributions
by RTP to its members in accordance with the terms of its Operating
Agreement.
|
|
(b)
|
Distributions
by SSI Venture LLC for “Preferred Payments” to
GSSI LLC, one of its members, pursuant to Section 4.1(b) of its
Amended and Restated Operating Agreement, so long as no Default or
Potential Default exists or would result therefrom and such payments do
not exceed the following amounts in the calendar years set forth
below:
|
|
Calendar Year
|
Permitted Distribution
|
|
2005
|
$47,250.00
|
SCHEDULE
10.16
Existing Burdensome
Agreements
1. Larkspur
Restaurant & Bar, LLC Operating Agreement
2. Rockresorts
International, LLC Limited Liability Company Agreement
3. JHL&S
LLC Operating Agreement
4. SSI
Venture LLC Amended and Restated Operating Agreement
|
|
SCHEDULE
15.11
|
PROCESSING AND RECORDATION
FEES
Administrative
Agent will charge a processing and recordation fee (an “Assignment
Fee”) in the amount of $2,500 for each assignment; provided, however, that in
the event of two or more concurrent assignments to members of the same Assignee
Group (which may be effected by a suballocation of an assigned amount among
members of such Assignee Group) or two or more concurrent assignments by members
of the same Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group), the Assignment Fee will be $2,500
plus the amount set forth below:
|
Transaction
|
Assignment
Fee
|
|
First
four concurrent assignments or suballocations to members of an Assignee
Group (or from members of an Assignee Group, as applicable)
|
-0-
|
|
Each
additional concurrent assignment or suballocation to a member of such
Assignee Group (or from a member of such Assignee Group, as
applicable)
|
$500
|
EXHIBIT
A-1
REVOLVER
NOTE
$________________ Dallas,
Texas __________________, 2005
For value
received, THE VAIL CORPORATION, a Colorado corporation doing business as “Vail
Associates, Inc.” (“Maker”),
hereby promises to pay to the order of ___________________ (“Payee”) on
or before the Termination Date, the principal amount of _______________, or so
much thereof as may be disbursed and outstanding hereunder, together with
interest, as hereinafter described.
This note
has been executed and delivered under, and is subject to the terms of, the
Fourth Amended and Restated Credit Agreement dated as of January 28,
2005 (as amended, supplemented or restated, the “Credit
Agreement”), among Maker, the Lenders, and Bank of America, N.A., as
Administrative Agent for itself and the other Lenders (including, without
limitation, Payee), and is one of the “Revolver Notes” referred to
therein. Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and interest
payment dates, final maturity, acceleration of maturity, exercise of Rights,
payment of Attorney Costs, court costs and other costs of collection, and
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due hereunder.
This note
is a Loan Paper and, therefore, is subject to the applicable provisions of Section 15
(including, without limitation, the registration provisions of Section
15.11(c)) of the Credit Agreement, all of which applicable provisions are
incorporated herein by reference the same as if set forth herein
verbatim.
Specific
reference is made to Section
3.8 of the Credit Agreement for usury savings provisions.
THE VAIL
CORPORATION
(D/B/A
“VAIL ASSOCIATES, INC.”)
By:
Name:
Title:
EXHIBIT
A-2
SWING
LINE NOTE
$________________ Dallas,
Texas __________________, 2005
For value
received, THE VAIL CORPORATION, a Colorado corporation doing business as “Vail
Associates, Inc.” (“Maker”),
hereby promises to pay to the order of ___________________ (“Payee”) on
or before the Termination Date or such earlier date as specified in Section
3.2 of the Credit Agreement (as hereinafter defined), the principal
amount of _______________, or so much as may be disbursed and outstanding
thereunder, together with interest, as hereinafter described.
This note
has been executed and delivered under, and is subject to the terms of, the
Fourth Amended and Restated Credit Agreement dated as of January 28, 2005 (as
amended, supplemented or restated, the “Credit
Agreement”), among Maker, the Lenders, and Bank of America, N.A., as
Administrative Agent for itself and the other Lenders (including, without
limitation, Payee), and is one of the “Swing Line Notes” referred to
therein. Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and interest
payment dates, final maturity, acceleration of maturity, exercise of Rights,
payment of Attorney Costs, court costs and other costs of collection, and
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due hereunder.
This note
is a Loan Paper and, therefore, is subject to the applicable provisions of Section 15
(including, without limitation, the registration provisions of Section
15.11(c)) of the Credit Agreement, all of which applicable provisions are
incorporated herein by reference the same as if set forth herein
verbatim.
Specific
reference is made to Section
3.8 of the Credit Agreement for usury savings provisions.
THE VAIL
CORPORATION
(D/B/A
“VAIL ASSOCIATES, INC.”)
By:
Name:
Title:
EXHIBIT
B-1
GUARANTY
THIS
GUARANTY (this “Guaranty”)
is executed as of ______________, by the undersigned guarantor (“Guarantor”)
for the benefit of BANK OF AMERICA, N.A. (with its successors in such capacity,
“Administrative
Agent”), as Administrative Agent for itself and other Lenders
(collectively, “Lenders”;
together with Administrative Agent, the “Guaranteed
Parties”) now or hereafter party to the Fourth Amended and Restated
Credit Agreement dated as of January 28, 2005 among THE VAIL CORPORATION, a
Colorado corporation doing business as “Vail Associates, Inc.” (“Borrower”),
the Lenders, and Administrative Agent (as hereafter amended, supplemented, or
restated, the “Credit
Agreement”). Capitalized terms not otherwise defined herein
are used as defined in the Credit Agreement.
A. Guarantor
is an Affiliate of Borrower.
B. [The
execution and delivery of this Guaranty is an integral part of the transactions
contemplated by the Loan Papers and is a condition precedent to Lenders’
obligations to extend credit under the Credit Agreement.]1 [Guarantor is required to deliver this
Guaranty pursuant to Section
[9.10] [9.11] of
the Credit Agreement.]2
NOW,
THEREFORE, Guarantor hereby guarantees to Lenders the prompt payment at maturity
(by acceleration or otherwise), and at all times thereafter, of the Guaranteed
Debt owing to Lenders as follows:
1. Borrower. The
term “Borrower”
includes, without limitation, Borrower as a debtor-in-possession and any party
hereafter appointed “Receiver” for Borrower or all
or substantially all of its assets under any Debtor Relief Law.
2. Guaranteed
Debt. The term “Guaranteed
Debt” means all present and future indebtedness and obligations of every
kind, nature, and character, direct or indirect, absolute or contingent,
liquidated or unliquidated, voluntary or involuntary, owed to the Guaranteed
Parties by Borrower under the Loan Papers to which it is a party, and all
instruments, agreements, and other documents of every kind and nature now or
hereafter created in connection with the Credit Agreement (including all
renewals, extensions and modifications thereof), including, without limitation,
the Obligation, together with all interest accruing thereon, fees, costs, and
expenses (including, without limitation, (a) all Attorney Costs incurred
pursuant to, or in connection with the protection of Rights under, the Loan
Papers to which Borrower is a party, and (b) amounts that would become due but
for operation of Section 502, 506 or any other applicable provision of Title 11
of the U.S. Code), together
with all pre- and post-maturity interest thereon (including, without
limitation, all post-petition interest if Borrower voluntarily or involuntarily
files for bankruptcy protection) and any and all costs, Attorney Costs, and
expenses reasonably incurred by any Guaranteed Party to enforce Borrower’s
payment of any of the foregoing indebtedness. Administrative Agent’s
books and records showing the amount of the Guaranteed Debt shall be admissible
in evidence in any action or proceeding, and shall be binding upon Guarantor and
conclusive for the purpose of establishing the amount of the Guaranteed
Debt.
3. Absolute Guaranty; Limit of
Liability. This instrument is an absolute, irrevocable and
continuing guaranty, and the circumstance that at any time or from time to time
the Guaranteed Debt may be paid in full does not affect the obligation of
Guarantor with respect to the Guaranteed Debt of Borrower thereafter
incurred. Notwithstanding Any Contrary
Provision in this Guaranty, However, the Obligations of Guarantor Hereunder
Shall Be Limited to an Aggregate Amount Equal to the Largest Amount That Would
Not Render its Obligations Hereunder Subject to Avoidance under Section 548 of
the U.S. Bankruptcy Code or Any Comparable Provisions of Any Applicable State
Law.
4. No Setoff or Deductions;
Taxes. Guarantor represents and warrants that it is
incorporated or formed and resident in the United States of America. All
payments by Guarantor hereunder shall be paid in full, without setoff or
counterclaim or any deduction or withholding whatsoever, including, without
limitation, for any and all present and future Indemnified Taxes. If Guarantor
shall be required by any Laws to deduct any Indemnified Taxes from or in respect
of any sum payable under this Guaranty to any Guaranteed Party, (i) the sum
payable shall be increased as necessary so that after making all required
deductions, each Guaranteed Party receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Guarantor shall make such
deductions, (iii) Guarantor shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Laws, and
(iv) within 30 days after the date of such payment, Guarantor shall furnish to
Administrative Agent (which shall forward the same to the applicable Guaranteed
Parties) the original or a certified copy of a receipt evidencing payment
thereof.
5. Representations and
Warranties. Guarantor acknowledges that certain
representations and warranties contained in the other Loan Papers (including,
without limitation, Section 8
of the Credit Agreement) apply to it and hereby represents and warrants to
Administrative Agent and Lenders that each such representation and warranty is
true and correct. In addition, Guarantor represents and warrants that
(a) by virtue of its relationship with Borrower, the execution, delivery and
performance of this Guaranty is for the direct benefit of Guarantor and it has
received adequate consideration for this Guaranty; and (b) the value of the
consideration received and to be received by Guarantor under the Loan Papers is
reasonably worth at least as much as its liability and obligation under this
Guaranty, and such liability and obligation may reasonably be expected to
benefit Guarantor directly or indirectly.
6. Waiver of
Notices. Guarantor waives notice of the acceptance of this
Guaranty and of the extension or continuation of the Guaranteed Debt or any part
thereof. Guarantor further waives presentment, protest, notice,
dishonor or default, demand for payment and any other notices to which such
Guarantor might otherwise be entitled.
7. Reinstatement; Stay of
Acceleration. Notwithstanding anything in this Guaranty to the
contrary, upon the insolvency, bankruptcy, or reorganization of Borrower or any
other Person, (a) this Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any portion of the Guaranteed
Debt is revoked, terminated, rescinded or reduced or must otherwise be restored
or returned, as if such payment had not been made and whether or not
Administrative Agent is in possession of or has released this Guaranty and
regardless of any prior revocation, rescission, termination or reduction, and
(b) in the event that acceleration of the time for payment of any of the
Guaranteed Debt is stayed, all such amounts shall nonetheless be payable by
Guarantor immediately upon demand by Administrative Agent.
8. Covenants. Guarantor
acknowledges that certain covenants, agreements and undertakings contained in
the other Loan Papers (including, without limitation, Sections 8,
9, and 10 of the
Credit Agreement) apply to it and hereby covenants and agrees with
Administrative Agent and Lenders to comply with each such covenant, agreement
and undertaking.
9. Other
Indebtedness. If Guarantor becomes liable for any indebtedness
owing by Borrower to any Guaranteed Party, other than under this
Guaranty, such liability will not be in any manner impaired or affected by this
Guaranty, and the Rights of the Guaranteed Parties under this Guaranty are
cumulative of any and all other Rights that the Guaranteed Parties may ever have
against Guarantor. The exercise by any Guaranteed Parties of any
Right or remedy under this Guaranty or otherwise will not preclude the
concurrent or subsequent exercise of any other Right or remedy.
10. Default; Exhaustion of Other
Remedies Not Required. If a Default under the Credit Agreement exists,
and as a result of such Default amounts are owing to any Guaranteed Party in
respect of its Guaranteed Debt, Guarantor shall, on demand and without further
notice of dishonor and without any notice having been given to Guarantor
previous to such demand of either the acceptance by any Guaranteed Party of this
Guaranty or the creation or incurrence of any Guaranteed Debt, pay the amount of
the Guaranteed Debt then due and payable to the appropriate Guaranteed
Party. The obligations of Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the Guaranteed
Debt. Guarantor waives diligence by Administrative Agent and action
on delinquency in respect of the Guaranteed Debt or any part thereof, including,
without limitation any provisions of Law requiring Administrative Agent to
exhaust any Right or remedy or to take any action against Borrower, any other
Guarantor, or any other Person or property before enforcing this Guaranty
against Guarantor.
11. Subordinated
Debt. All obligations of Borrower to Guarantor, whether now
existing or hereafter arising, including without limitation any obligation of
Borrower to Guarantor as subrogee of Administrative Agent or Lenders resulting
from any Guarantor’s performance under this Guaranty (the “Subordinated
Debt”), are expressly subordinated to the full and final payment of the
Guaranteed Debt. Guarantor agrees not to accept any payment of the
Subordinated Debt from Borrower with respect thereto, if a Default exists; and,
if Guarantor receives any payment of the Subordinated Debt in violation of the
foregoing, Guarantor will hold any such payment in trust for Administrative
Agent and promptly turn it over to Administrative Agent, in the form received
(with any necessary endorsements), to be applied to the Guaranteed Debt in the
manner contemplated by the Credit Agreement, but without reducing or affecting
in any manner the liability of Guarantor under this Guaranty.
12. Subrogation and
Contribution. Guarantor shall not exercise any Right of
subrogation, contribution or similar Rights with respect to any payments it
makes under this Guaranty until all of the Guaranteed Debt and any amounts
payable under this Guaranty are indefeasibly paid, the Total Commitment is
terminated, and the Obligation is paid in full. If any amounts are
paid to the Guarantor in violation of the foregoing limitation, then such
amounts shall be held in trust for the benefit of Guaranteed Parties and shall
forthwith be paid to Administrative Agent, for the benefit of Lender to reduce
the amount of the Guaranteed Debt, whether matured or unmatured.
13. Obligations Not
Diminished. Guarantor’s obligations under this Guaranty will
not be released, diminished or affected by the occurrence of any one or more of
the following events: (a) any Guaranteed Party’s taking or accepting
of any other security or guaranty for any or all of the Guaranteed Debt; (b) any
release, surrender, exchange, subordination, impairment or loss of any
Collateral securing any or all of the Guaranteed Debt; (c) any full or partial
release of the liability of any other obligor on the Obligation; (d) the
modification of or waiver of compliance with, any terms of any other Loan Paper;
(e) the insolvency, bankruptcy or lack of corporate power of any party at any
time liable for any or all of the Guaranteed Debt, whether now existing or
hereafter occurring; (f) any renewal, extension or rearrangement of any or all
of the Guaranteed Debt or any adjustment, indulgence, forbearance or compromise
that may be granted or given by Administrative Agent or Lenders to any other
obligor on the Obligation; (g) any neglect, delay, omission, failure or refusal
of Administrative Agent or Lenders to take or prosecute any action in connection
with the Guaranteed Debt; (h) any failure of Administrative Agent or Lenders to
notify Guarantor of any renewal, extension or assignment of any or all of the
Guaranteed Debt or the release of any security or of any other action taken or
refrained from being taken by Administrative Agent or Lenders against Borrower
or any new agreement between Administrative Agent or Lenders and Borrower, it
being understood that Administrative Agent and Lenders are not required to give
Guarantor any notice of any kind under any circumstances whatsoever with respect
to or in connection with the Guaranteed Debt; (i) the unenforceability of any
part of the Guaranteed Debt against any party because it exceeds the amount
permitted by Law, the act of creating it is ultra vires, the officers
creating it exceeded their authority or violated their fiduciary duties in
connection therewith, or otherwise; or (j) any payment of the Obligation to
Administrative Agent or Lenders is held to constitute a preference under any
Debtor Relief Law or for any other reason Administrative Agent or Lenders are
required to refund such payment or make payment to someone else (and in each
such instance this Guaranty will be reinstated in an amount equal to such
payment).
14. Waiver of Right to Require
Suit. Guarantor waives all Rights by which it might be
entitled to require suit on an accrued Right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others.
15. Independent Credit
Investigation. Guarantor confirms that it has executed and
delivered this Guaranty after reviewing the terms and conditions of the Loan
Papers and such other information as it has deemed appropriate in order to make
its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has the sole responsibility for,
has adequate means of determining, and has made its own independent
investigation with respect to, Borrower’s creditworthiness, and is not executing
and delivering this Guaranty in reliance on any representation or warranty by
Administrative Agent or Lenders as to such
creditworthiness. Guarantor expressly assumes all responsibilities to
remain informed of the financial condition, business, and operations of Borrower
and any circumstances affecting (a) Borrower’s ability to perform under the Loan
Papers to which it is a party or (b) any Collateral securing all or any part of
the Guaranteed Debt. Guarantor acknowledges and agrees that
Administrative Agent has no duty, and Guarantor is not relying on Administrative
Agent at any time, to disclose to Guarantor any information relating to the
business, operations or financial condition of Borrower.
16. Expenses. Guarantor
shall pay on demand all out-of-pocket expenses (including Attorney Costs) in any
way relating to the enforcement or protection of Guaranteed Parties’ Rights
under this Guaranty, including any incurred in the preservation, protection or
enforcement of any Rights of Administrative Agent or Lenders in any case
commenced by or against Guarantor under Debtor Relief Laws. The
obligations of Guarantor under the preceding sentence shall survive termination
of this Guaranty.
17. Amendments. No
provision of this Guaranty may be waived, amended, supplemented, or modified,
except by a written instrument executed by Administrative Agent and
Guarantor.
18. No Waiver;
Enforceability. No failure by Administrative Agent to
exercise, and no delay in exercising, any Right, remedy, or power hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any Right, remedy, or power hereunder preclude any
other or further
exercise thereof or the exercise of any other Right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by Law
or in equity. The unenforceability or invalidity of any provision of
this Guaranty shall not affect the enforceability or validity of any other
provision herein.
19. Setoff. If
and to the extent any payment is not made when due hereunder, any Lender may
setoff and charge from time to time any amount so due against any or all of
Guarantor’s accounts or deposits with such Lender.
20. No
Discharge. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Debt now or hereafter existing and shall remain in
full force and effect until all Guaranteed Debt and any other amounts payable
under this Guaranty are indefeasibly paid and performed in full and any of the
Commitments of Lenders are terminated. The Guaranteed Debt will not
be reduced, discharged or released because or by reason of any existing or
future offset, claim or defense (except for the defense of
payment of the Guaranteed Debt) of Borrower or any other party against
Administrative Agent or Lenders or against payment of the Guaranteed Debt,
whether such offset, claim or defense arises in connection with the Guaranteed
Debt or otherwise. Such claims and defenses include, without
limitation, failure of consideration, breach of warranty, fraud, bankruptcy,
incapacity/infancy, statute of limitations, lender liability, accord and
satisfaction, usury, forged signatures, mistake, impossibility, frustration of
purpose, and unconscionability. At Administrative Agent’s option, all
payments under this Guaranty shall be made to an office of Administrative Agent
located in the United States and in U.S. Dollars.
21. Successors and
Assigns. This Guaranty is for the benefit of Administrative
Agent and Lenders and their respective successors and permitted assigns, and in
the event of an assignment of all or any of the Guaranteed Debt, the Rights
hereunder, to the extent applicable to the portion assigned, shall be
transferred therewith. This Guaranty shall be binding upon Guarantor
and its successors and permitted assigns.
22. Loan
Paper. This Guaranty is a Loan Paper and is subject to the
applicable provisions of Section 15
of the Credit Agreement, all of which are incorporated into this Guaranty by
reference the same as if set forth in this Guaranty verbatim.
23. Release of
Guaranty. This Guaranty shall be released pursuant to and in
accordance with the terms set forth in Section
6.3 of the Credit Agreement.
[signatures begin on the
following page]
2 Use
if the Guaranty is required to be delivered pursuant to Sections 9.10 or 9.11 of
the Credit Agreement.
Executed as of the date first written
above.
GUARANTOR:
By:
Name:
Title:
EXHIBIT
B-2
CONFIRMATION
OF GUARANTY
THIS
CONFIRMATION OF GUARANTY (this “Confirmation”)
is executed as of January 28, 2005, by each of the undersigned (each, a “Guarantor,”
and collectively, the “Guarantors”),
in favor of Bank of America, N.A., as administrative agent (the “Administrative
Agent”) for the Lenders and their respective successors and assigns
(collectively, the “Lenders”)
that are from time to time parties to the Credit Agreement (as hereinafter
defined).
Capitalized
terms not otherwise defined in this Confirmation shall have the meanings
ascribed to such terms in the applicable Guaranty (as hereinafter
defined).
R E C I T A L S
A. The
Vail Corporation (d/b/a “Vail Associates, Inc.”), a Colorado corporation (the
“Borrower”),
certain lenders party thereto, and Bank of America, N.A., as administrative
agent, are parties to that certain Third Amended and Restated Revolving Credit
and Term Loan Agreement dated as of June 10, 2003 (as the same may have been
amended from time to time, the “Existing Credit
Agreement”).
B. In
connection with the Existing Credit Agreement, (i) each Guarantor, other than
Rockresorts Wyoming, LLC, a Wyoming limited liability company (“Rockresorts
Wyoming”), executed and delivered to Administrative Agent, for the
benefit of Lenders, that certain Amended and Restated Guaranty dated as of June
10, 2003 (as the same has been or may hereafter be from time to time amended,
the “Original
Guaranty”), and (ii) Rockresorts Wyoming executed and delivered to
Administrative Agent, for the benefit of Lenders, that certain Guaranty dated as
of August 29, 2003 (as the same has been or may hereafter be from time to time
amended, the “Rockresorts
Wyoming Guaranty”; the Rockresorts Wyoming Guaranty and the Original
Guaranty are each, a “Guaranty,”
and collectively, the “Guaranties”).
C. Concurrently
herewith, the Existing Credit Agreement will be amended and restated pursuant to
the Fourth Amended and Restated Credit Agreement (as the same may be restated,
modified, amended, or supplemented from time to time, the “Credit
Agreement”), by and among the Borrower, the Administrative Agent, and the
Lenders.
D. The
execution and delivery of this Confirmation is an integral part of the
transactions contemplated by the Loan Papers and is a condition precedent to
Lenders’ obligations to extend credit under the Credit Agreement.
E. In
connection with the Credit Agreement, each Guarantor has agreed to ratify and
confirm the Guaranty to which such Guarantor is party.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors hereby agrees as follows:
1. Confirmation
of Guaranty. Each Guarantor
hereby (a) consents and agrees to the execution and delivery of the Credit
Agreement and the related Loan Papers (as defined in the Credit Agreement),
(b) ratifies and confirms that the Guaranty executed by such Guarantor is
not released, diminished, impaired, reduced, or otherwise adversely affected by
the Credit Agreement and continues to guarantee and assure the full payment and
performance of all present and future obligations thereunder, and (c) agrees
that the Guaranteed Debt includes, without limitation, the Obligation (as
defined in the Credit Agreement).
2. Other
Agreements. Each Guarantor
(a) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional guaranties, and other agreements,
documents, instruments, and certificates as the Administrative Agent may
reasonably deem necessary or appropriate in order to preserve and protect those
guaranties and assurances previously guaranteed by such Guarantor pursuant to
the Guaranty executed by such Guarantor, (b) represents and warrants to the
Administrative Agent that such liability and obligation may reasonably be
expected to directly or indirectly benefit such Guarantor, and (c) waives
notice of acceptance of this Confirmation.
3. Continued
Effect. All terms,
provisions, and conditions of the Guaranties shall continue in full force and
effect and shall remain enforceable and binding in accordance with the terms
thereof.
4. Parties
Bound. This Confirmation
shall be binding upon and inure to the benefit of each Guarantor and the
Administrative Agent, for the benefit of the Lenders, and their respective
successors, permitted assigns, and legal representatives.
5. Headings. Section headings
are for convenience of reference only and shall in no way affect the
interpretation of this Confirmation.
6. Governing
Law. THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF THIS CONFIRMATION.
7. NOTICE OF
FINAL AGREEMENT.
THIS CONFIRMATION REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
Remainder
of Page Intentionally Blank
Signature
Pages to Follow
EXECUTED
as of the day and year first above written.
GUARANTORS:
Vail
Resorts, Inc.
Vail
Holdings, Inc.
Beaver
Creek Associates, Inc.
Beaver
Creek Consultants, Inc.
Beaver
Creek Food Services, Inc.
Breckenridge
Resort Properties, Inc.
Complete
Telecommunications, Inc.
Gillett
Broadcasting, Inc.
Grand
Teton Lodge Company
Heavenly
Valley Limited Partnership
Jackson
Hole Golf and Tennis Club, Inc.
JHL&S
LLC
Keystone
Conference Services, Inc.
Keystone
Development Sales, Inc.
Keystone
Food & Beverage Company
Keystone
Resort Property Management Company
Larkspur
Restaurant & Bar, LLC
Lodge
Properties, Inc.
Lodge
Realty, Inc.
Mountain
Thunder, Inc.
Property
Management Acquisition Corp., Inc.
Rockresorts
International, LLC
Rockresorts
LLC
Rockresorts
Cheeca, LLC
Rockresorts
Equinox, Inc.
Rockresorts
LaPosada, LLC
Rockresorts
Wyoming, LLC
Rockresorts
Casa Madrona, LLC
Rockresorts
Rosario, LLC
Teton
Hospitality Services, Inc.
The
Village at Breckenridge Acquisition Corp., Inc.
Timber
Trail, Inc.
VA Rancho
Mirage I, Inc.
VA Rancho
Mirage II, Inc.
VA Rancho
Mirage Resort, L.P.
Vail/Arrowhead,
Inc.
Vail
Associates Holdings, Ltd.
Vail
Associates Investments, Inc.
Vail
Associates Real Estate, Inc.
Vail/Beaver
Creek Resort Properties, Inc.
Vail Food
Services, Inc.
Vail
Resorts Development Company
Vail RR,
Inc.
Vail
Summit Resorts, Inc.
Vail
Trademarks, Inc.
VAMHC,
Inc.
VR
Heavenly I, Inc.
VR
Heavenly II, Inc.
VR
Holdings, Inc.
By:
Name:
Title:
The
undersigned, as Administrative Agent for the benefit of the Lenders, hereby
accepts the foregoing Confirmation.
ADMINISTRATIVE
AGENT:
BANK OF
AMERICA, N.A.
By:
Name:
Title:
EXHIBIT
C-1
LOAN
NOTICE
________________
Bank of
America, N.A., as Administrative Agent
Attn: Arlene
Minor
Fax: 214-290-9412
Reference
is made to the Fourth Amended and Restated Credit Agreement dated as of
January 28, 2005 (as amended, supplemented or restated from time to time,
the “Credit
Agreement”), among THE VAIL CORPORATION, a Colorado corporation doing
business as “Vail Associates, Inc.”, the Lenders, and Bank of America, N.A., as
Administrative Agent for itself and the other Lenders. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The undersigned
hereby gives you notice pursuant to Section 2.2(a)
of the Credit Agreement that it requests:
A
borrowing of
Loans A
conversion or continuation of Loans
on
(a Business Day),
in the
amount of
$ ,*
comprised
of
(Type of Loan requested),**
with an
Interest Period
of
months (for LIBOR Loans).***
Please
deposit the requested Loan in our account with you [and then wire transfer
amounts from that account as follows:
.]
[Borrower
hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the Loan Date specified above after
giving effect to such Loan: (a) all of the representations and
warranties of the Companies in the Loan Papers are true and correct in all
material respects (except to the extent that (i)
they speak to a specific date or (ii) the facts on which they are based have
been changed by transactions contemplated or permitted by the Credit Agreement);
and (b) no Material Adverse Event, Default, or Potential Default exists or will
result from the proposed funding of Loans requested herein.]****
Very
truly yours,
THE VAIL
CORPORATION
(D/B/A
“VAIL ASSOCIATES, INC.”)
By
Name:
Title:
|
*
|
Not
less than $500,000 or a greater integral multiple of $100,000 (if a Base
Rate Loan); not less than $1,000,000 or a greater integral multiple of
$100,000 (if a LIBOR Loan).
|
|
**
|
LIBOR
Loan or Base Rate Loan.
|
*** LIBOR
Loan -- 1, 2, 3 or 6 months.
In no
event may the Interest Period end after the Termination Date.
**** Insert
paragraph for any Loan Notice provided prior to a borrowing of
Loans
EXHIBIT
C-2
SWING
LINE LOAN NOTICE
________________
Bank of
America, N.A., as Administrative Agent
Attn: Arlene
Minor
Fax: 214-290-9412
Reference
is made to the Fourth Amended and Restated Credit Agreement dated as of
January 28, 2005 (as amended, supplemented or restated from time to time,
the “Credit
Agreement”), among THE VAIL CORPORATION, a Colorado corporation doing
business as “Vail Associates, Inc.”, the Lenders, and Bank of America, N.A., as
Administrative Agent for itself and the other Lenders. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The undersigned
hereby gives you notice pursuant to Section 2.4(b)
of the Credit Agreement that it requests a Swing Line Loan:
on
(a Business Day),
in the
amount of
$ *.
Please
deposit the requested Loan in our account with you [and then wire transfer
amounts from that account as follows:
.]
[Borrower
hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the Loan Date specified above after
giving effect to such Loan: (a) all of the representations and
warranties of the Companies in the Loan Papers are true and correct in all
material respects (except to the extent that (i)
they speak to a specific date or (ii) the facts on which they are based have
been changed by transactions contemplated or permitted by the Credit Agreement);
and (b) no Material Adverse Event, Default, or Potential Default exists or will
result from the proposed funding of Loans requested herein.]
The Swing
Line Borrowing requested herein complies with the requirements of the provisos
to the first sentence of Section
2.4(a) of the Credit Agreement.
Very
truly yours,
THE VAIL
CORPORATION
(D/B/A
“VAIL ASSOCIATES, INC.”)
By
Name:
Title:
|
|
* Not
less than 1,000,000
|
|
|
EXHIBIT
D
COMPLIANCE
CERTIFICATE
FOR
_______ENDED _______
Bank of
America, N.A., as Administrative Agent
901 Main
Street, 67th Floor
Dallas,
Texas 75202
|
Attn:
|
Frank
M. Johnson
|
FAX: 214/209-0980
Reference
is made to the Fourth Amended and Restated Credit Agreement dated as of
January 28, 2005 (as amended, supplemented or restated, the “Credit
Agreement”), among THE VAIL CORPORATION, a Colorado corporation doing
business as “Vail Associates, Inc.”, the Lenders, and Bank of America, N.A., as
Administrative Agent for itself and the other Lenders. Unless
otherwise defined herein, all capitalized terms have the meanings given to such
terms in the Credit Agreement.
This
certificate is delivered pursuant to Section
9.1 of the Credit Agreement.
I certify
to Administrative Agent that I am the Chief Financial Officer of Borrower on the
date hereof and that:
(i) The
financial statements attached hereto were prepared in accordance with GAAP
(except for the
omission of footnotes from financial statements delivered pursuant to Section
9.1(b) of the Credit Agreement) and present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Companies as of, and for the ___________ended on, ________________ (the “Subject
Period”).
(ii) During
the Subject Period, no Default or Potential Default has occurred which has not
been cured or waived (except for any Defaults set
forth on the attached schedule).
(iii) Evidence
of compliance by Borrower with the covenants of Sections 10.8(m)
and 10.9(d)
and the financial covenants of Section 11
of the Credit Agreement as of the last day of the Subject Period, is set forth
on the attached calculation worksheet.
Very
truly yours,
Name:
Chief
Financial Officer
Annex A to Exhibit
D
CREDIT
FACILITY COVENANTS CALCULATIONS
Subject
Period: ___________________, 200_
|
Months
Ended - -
|
|
|
10.8(m) INVESTMENTS
IN PERSONS
|
|
|
(i)Investments
during Subject Period in Unrestricted Subsidiaries, Housing Districts and
Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses:
|
$
|
|
(ii)Investments
during prior Subject Periods in Unrestricted Subsidiaries, Housing
Districts and Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses:
|
$
|
|
(iii) Investments
set forth on part
(b) of Schedule
10.8:
|
$
|
|
(iv)(10.8(m)(i)
plus 10.8(m)(ii)
plus 10.8(m)(iii)):
|
$
|
|
(v) $75,000,000:
|
$75,000,000
|
|
(vi) Book
value of Total Assets:
|
$
|
|
(vii) 10%
of 10.8(m)(vi):
|
$
|
|
(viii) Investment
Limit (10.8(m)(v)
plus 10.8(m)(vii)):
|
$
|
|
(ix) Net
reductions in investments permitted under Section
10.8(m) in an aggregate amount not to exceed 10.8(m)(viii):
|
$
|
|
(x)Maximum
permitted investments in Unrestricted Subsidiaries, Housing Districts and
Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses permitted after the Closing Date, and
investments set forth on part (b)
of Schedule
10.8 (10.8(m)(viii)
plus 10.8(m)(ix)):
|
$
|
|
(xi) Fair
market value of all assets owned by Restricted Subsidiaries on the Closing
Date which have been contributed to Unrestricted
Subsidiaries:
|
$
|
|
(xii) Is
10.8(m)(xi)
less than $75,000,000?
|
Yes/No
|
|
(xiii)Are
investments in Unrestricted Subsidiaries, Housing Districts and Metro
Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses, and investments set forth on part
(b) of Schedule
10.8 (10.8(m)(iv)), less
than or equal to the maximum amount permitted (10.8(m)(x))?
|
Yes/No
|
|
10.9(d) DISTRIBUTIONS,
LOANS, ADVANCES, AND INVESTMENTS
|
|
|
(i)Distributions
under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 during Subject Period:
|
$
|
|
(ii)Distributions
under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 during prior Subject Periods:
|
$
|
|
(iii)Aggregate
Distributions under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 (the sum of 10.9(d)(i)
plus 10.9(d)(ii)):
|
$
|
|
(iv)Cumulative
Net Income of the Restricted Companies on a consolidated basis from the
last day of the first fiscal quarter ending after the Closing
Date:
|
$
|
|
(v) To
the extent SSI is not a Restricted Subsidiary, the percentage of the Net
Income of SSI corresponding to the weighted average membership interest
held by Borrower in SSI (expressed as a percentage) from the last day of
the first fiscal quarter ending after the Closing Date:
|
$
|
|
(vi) Aggregate
cash contributed in the form of equity by the Restricted Companies to
Non-Consolidated Entities in order to fund losses of such Non-Consolidated
Entities from the last day of the first fiscal quarter ending after the
Closing Date:
|
$
|
|
(vii) 50%
of the sum of 10.9(d)(iv)
plus 10.9(d)(v)
plus 10.9(d)(vi):
|
$
|
|
(viii) Aggregate
net cash proceeds received by the Restricted Companies since
the Closing Date from the issuance of Debt which constitutes “Permitted Debt” under
clauses (d)
and (g)
of the definition thereof (excluding refinancings of Subordinated
Debt):
|
$
|
|
(ix) Aggregate
net cash proceeds received by VRI since the Closing Date from the issuance
of Equity Interests to Persons (other than the issuance of Equity
Interests to any Restricted Company and the issuance of any Disqualified
Equity Interests):
|
$
|
|
(x)The
amount of Distributions made by the Companies pursuant Section
10.9(h) (not to exceed $25,000,000):
|
$
|
|
(xi) Maximum
permitted Distributions, loans, investments, and advances (the sum of
10.9(d)(vii)
plus
10.9(d)(viii) plus 10.9(d)(ix)
minus 10.9(d)(x)):
|
$
|
|
(xii) Are
aggregate Distributions under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 (10.9(d)(iii))
less than the maximum amount permitted (10.9(d)(xi))?
|
Yes/No
|
|
Months
Ended - -
|
|
|
11.1(a) RATIO
OF FUNDED DEBT TO ADJUSTED EBITDA:
|
|
|
(i)All
obligations of the Companies for borrowed money:
|
$
|
|
(ii)Minus all obligations of the Unrestricted
Subsidiaries for borrowed money (the sum of items
11.1(a)(ii)(A) through 11.1(a)(ii)(K)
below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)[List
other Unrestricted Subsidiaries]
|
($_____________ )
|
|
(iii)Plus the principal portion of all Capital
Lease obligations of the Companies:
|
$_____________
|
|
(iv)Minus the principal portion of the Capital
Lease obligations for the following Unrestricted Subsidiaries (the sum of
items 11.1(a)(iv)(A)
through 11.1(a)(iv)(K)
below):
|
($____________)
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)[List
other Unrestricted Subsidiaries]
|
($_____________ )
|
|
(v) Plus reimbursement obligations and undrawn
amounts under Bond
L/Cs
supporting Bonds (other than Existing Housing Bonds) issued
by
Unrestricted Subsidiaries:
|
$
|
|
(vi)Debt
under Existing Housing Bonds:
|
$
|
|
(vii)Funded
Debt of the Restricted Companies (11.1(a)(i)
minus 11.1(a)(ii)
plus 11.1(a)(iii)
minus 11.1(a)(iv)
plus 11.1(a)(v)
minus 11.1(a)(vi)):
|
$
|
|
(viii)EBITDA
of the Companies for the last four fiscal quarters:
|
$
|
|
(ix)Plus insurance proceeds (up to a maximum of
$10,000,000 in the aggregate for any fiscal year) received by the
Restricted Companies under policies of business interruption insurance (or
under policies of insurance which cover losses or claims of the same
character or type):
|
$
|
|
(x)Plus pro forma EBITDA for
assets acquired during such period:
|
$
|
|
(xi)Minus pro forma EBITDA for
assets disposed of during such period:
|
($_____________ )
|
|
(xii)Minus EBITDA for such period related to
real estate activities:
|
($_____________ )
|
|
(xiii)Minus EBITDA for such period attributable
to the following Unrestricted Subsidiaries (sum of items 11.1(a)(xiii)(A)
through 11.1(a)(xiii)(K)
below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners Inc.
|
($_____________ )
|
|
(K)[List
other Unrestricted Subsidiaries]
|
($_____________ )
|
|
(xiv)Resort
EBITDA
(the sum of items 11.1(a)(viii)
plus 11.1(a)(ix)
plus 11.1(a)(x)
minus 11.1(a)(xi)
minus 11.1(a)(xii)
minus 11.1(a)(xiii)):
|
$
|
|
(xv)EBITDA
for the Subject Period related to real estate activities of the Restricted
Companies in an amount not greater than 33% of the Adjusted
EBITDA:
|
$
|
|
(xvi)Adjusted
EBITDA
(11.1(a)(xiv)
plus 11.1(a)(xv)):
|
$
|
|
(xvii)Ratio
of Funded Debt to Adjusted EBITDA
(Ratio of 11.1(a)(vii)
to 11.1(a)(xvi)):
|
|
|
(xviii)Maximum
ratio of Funded Debt to Adjusted EBITDA permitted:
|
|
|
As
of the last day of each fiscal quarter ending January 31, April 30 and
July 31:
|
4.50
: 1.00
|
|
As
of the last day of each fiscal quarter ending October 31:
|
5.00
: 1.00
|
|
(xix)Is
the ratio of Funded Debt to Adjusted EBITDA less than the maximum ratio
permitted?
|
Yes/No
|
|
11.1(b) RATIO
OF SENIOR DEBT TO ADJUSTED EBITDA:
|
|
|
(i)Funded
Debt of the Restricted Companies (11.1(a)(vii)):
|
$
|
|
(ii)Minus Subordinated Debt of the Restricted
Companies:
|
($_____________ )
|
|
(iii)Senior
Debt of the Restricted Companies (11.1(b)(i)
minus 11.1(b)(ii)):
|
$
|
|
(iv)Adjusted
EBITDA of the Restricted Companies (11.1(a)(xvi)):
|
$
|
|
(v) Ratio
of Senior Debt to Adjusted EBITDA
(Ratio of 11.1(b)(iii)
to 11.1(b)(iv)):
|
|
|
(vi)Maximum
ratio of Senior Debt to Adjusted EBITDA permitted:
|
|
|
For
each fiscal quarter ending January 31, April 30 and July
31:
|
3.25
: 1.00
|
|
As
of the last day of each fiscal quarter ending October 31:
|
3.50
: 1.00
|
|
(vii)Is
the ratio of Senior Debt to Adjusted EBITDA less than the maximum ratio
permitted?
|
Yes/No
|
|
11.2 MINIMUM
FIXED CHARGE COVERAGE RATIO:
|
|
|
(a)Adjusted
EBITDA for the last four fiscal quarters (11.1(a)(xvi)):
|
$
|
|
(b)Minus cash income Taxes paid (adjusted for
any Tax refunds received with respect thereto):
|
($ )
|
|
(c)Minus “Required Capital Expenditures” (as
defined in Section
1.1 of the Credit Agreement) for such period:
|
($30,000,000)
|
|
(d)Coverage
(11.2(a)
minus 11.2(b)
minus 11.2(c)):
|
$
|
|
(e)Interest
and principal on the Obligation and other Funded Debt for the last four
fiscal quarters:
|
$
|
|
(f) Minus amortization of deferred financing
costs and original issue discounts:
|
$
|
|
(g)Plus Distributions (other than of stock)
made by VRI during such period:
|
$
|
|
(h) Fixed
Charges
(11.2(e)
minus 11.2(f)
plus 11.2(g)):
|
$
|
|
(i)Fixed
Charge Coverage Ratio
(Ratio of 11.2(d)
to 11.2(h)):
|
|
|
(j)Minimum
required Fixed Charge Coverage Ratio:
|
1.25
: 1.00
|
|
(k)Does
the Fixed Charge Coverage Ratio exceed the minimum ratio
permitted?
|
Yes/No
|
|
11.3 MINIMUM
NET WORTH:
|
|
|
(a)Shareholders’
Equity determined in accordance with GAAP:
|
$
|
|
(b)$414,505,800:
|
$414,505,800
|
|
(c)Restricted
Companies’ Net Income, if positive, for each fiscal year completed after
October 31, 2004:
|
$
|
|
(d)75%
of the total from 11.3(c):
|
$
|
|
(e)Net
Proceeds received by any Restricted Company (other than from another
Company) from the offering, issuance, or sale of equity securities of a
Restricted Company afterOctober 31, 2004:
|
$
|
|
(f)Minimum
shareholders’ equity permitted
(11.3(b)
plus 11.3(d)
plus 11.3(e)):
|
$
|
|
(g)Does
Shareholders’ Equity exceed the minimum permitted?
|
Yes/No
|
|
11.4 INTEREST
COVERAGE RATIO
|
|
|
(a)Adjusted
EBITDA for the last four fiscal quarters (11.1(a)(xvi)):
|
$
|
|
(b)Interest
on Funded Debt for the last four fiscal quarters:
|
$
|
|
(c) Amortization
of deferred financing costs and original issue discounts:
|
$
|
|
(d) 11.4(b)
minus 11.4(c):
|
$
|
|
(e) Interest
Coverage Ratio (Ratio of 11.4(a)
to 11.4(d)):
|
|
|
(f) Minimum
Interest Coverage Ratio permitted:
|
2.50
: 1.00
|
|
(g)Does
the Interest Coverage Ratio exceed the minimum ratio
permitted?
|
Yes/No
|
|
11.5 CAPITAL
EXPENDITURES
|
|
|
(a)Aggregate
capital expenditures of the Restricted Companies in the ordinary course of
the business (excluding (i) normal replacements and maintenance which are
properly charged to current operations, and (ii) such expenditures
relating to real estate held for resale) during each fiscal
year:
|
$
|
|
(b)Total
Assets of the Restricted Companies as of the last day of the fiscal
year:
|
$
|
|
(c)Maximum
capital expenditures permitted (10% of Total Assets of the Restricted
Companies set forth in 11.5(b)):
|
$
|
|
(d)Are
aggregate capital expenditures less than the maximum amount
permitted?
|
Yes/No
|
|
LETTERS
OF CREDIT
|
|
|
Set
forth on Schedule
1 attached hereto is a list of all issued and outstanding letters
of credit issued for the account of any of the Companies, and the drawn
and undrawn amounts thereunder
|
H-523927.7 Annex
A/Page
EXHIBIT
E
ASSIGNMENT
AND ASSUMPTION AGREEMENT
This Assignment and Assumption (this
“Assignment
and Assumption”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of Assignor]
(the “Assignor”)
and [Insert name of
Assignee] (the “Assignee”). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in
full.
For an agreed consideration, the
Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee
hereby irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by Administrative Agent as contemplated below:
(a) all of the Assignor’s Rights and obligations in its capacity as a
Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding Rights and obligations of
the Assignor under the respective facilities identified below (including,
without limitation, the L/Cs and the Swing Line Loans included in such
facilities); and (b) to the extent permitted to be assigned under
applicable Law, all claims, suits, causes of action and any other Right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at Law or in equity related to the Rights
and obligations sold and assigned pursuant to clause (i)
above (the Rights and obligations sold and assigned pursuant to clauses (i)
and (ii) above
being referred to herein collectively as, the “Assigned
Interest”). Such sale and assignment is without recourse to
the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[Assignee is an Affiliate/Approved
Fund of [identify Lender]] 3
3. Borrower: The
Vail Corporation (d/b/a “Vail Associates, Inc.”)
|
|
4.
|
Administrative
Agent:Bank of America, N.A., as administrative agent under the Credit
Agreement
|
|
|
5.
|
Credit
Agreement:
|
Fourth
Amended and Restated Credit Agreement dated as of January 28, 2005,
among The Vail Corporation (d/b/a “Vail Associates, Inc.”), Lenders party
thereto, Bank of America, N.A., as Administrative Agent, and the other
agents party thereto
|
|
|
6.
|
Assigned
Interest
|
|
Facility/Subfacility
Assigned
|
Aggregate
Amount of Commitments/Loans for all Lenders under such
Facility/Subfacility4
|
Amount
of Commitments /Loans Assigned under such Facility/Subfacility2
|
Percentage
Assigned of Commitments/Loans5
|
|
$
|
$
|
%
|
|
|
$
|
$
|
%
|
|
|
$
|
$
|
%
|
7. Trade
Date: ______________6
Effective
Date: _____________ ___, 20___ [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
4 Amount to be adjusted by the
counterparties to take into account any payments or prepayments made between the
Trade Date and the Effective Date.
5 Set forth to at least 9 decimals as a
percentage of the Commitments/Loans of all Lenders under such
Facility/Subfacility.
6 To be completed if the Assignor and
the Assignee intend that the minimum assignment amount is to be determined as of
the Trade Date.
The terms
set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR:
[Name of
Assignor]
By:
Name:
Title:
ASSIGNEE:
[Name of
Assignee]
By:
Name:
Title:
Consented
to and Accepted:
BANK OF
AMERICA, N.A., as Administrative Agent
By:
Name:
Title:
Consented
to:
L/C
ISSUER:
By:
Name:
Title:
L/C
ISSUER:
By:
Name:
Title:
SWING
LINE LENDER:
By:
Name:
Title:
SWING
LINE LENDER:
By:
Name:
Title:
ANNEX
1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
STANDARD
TERMS AND CONDITIONS FOR
ASSIGNMENT
AND ASSUMPTION
1. Representations and
Warranties.
1.1 Assignor. The
Assignor: (a) represents and warrants that: (i) it is the legal and
beneficial owner of the Assigned Interest; (ii) the Assigned Interest is
free and clear of any Lien, encumbrance or other adverse claim; and
(iii) it has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to: (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Paper; (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Papers or any collateral thereunder; (iii) the financial
condition of Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Paper; or (iv) the performance or
observance by Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Paper.
1.2 Assignee. The
Assignee: (a) represents and warrants that: (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement; (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement); (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder; (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 9.1(a) and 9.1(b)
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on Administrative Agent or any other Lender; and (v) if it is a
Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that:
(i) it will, independently and without reliance on Administrative Agent,
the Assignor or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Papers; and (ii) it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Papers are required to be performed by it as a Lender.
2. Payments. From
and after the Effective Date, Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.
3. General Provisions. This
Assignment and Assumption shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be
governed by, and construed in accordance with, the Law of the State of New
York.
1.
EXHIBIT
F-1
PLEDGE
AGREEMENT
THIS
PLEDGE AGREEMENT (the “Agreement”)
is entered into as of ___________, between _____________________, a
_____________ _____________ (with its successors, “Debtor”)
and BANK OF AMERICA, N.A., a national banking association, as
Administrative Agent for the ratable benefit of the Lenders (“Secured
Party”).
A. The Vail
Corporation, a Colorado corporation doing business as “Vail Associates, Inc.”
(the “Borrower”),
the various financial institutions party to the Credit Agreement (defined
below) (collectively, and as they may change from time to time in accordance
with the terms of the Credit Agreement, the “Lenders”),
and Secured Party, have entered into that certain Fourth Amended and Restated
Credit Agreement dated as of January 28, 2005 (as amended, restated or
supplemented from time to time, the “Credit
Agreement”).
B. Under the
terms of the Credit Agreement, the Lenders have agreed, from time to time, to
make loans to the Borrower and issue letters of credit for the
account of Borrower.
C. Debtor is
an Affiliate of Borrower. Borrower and Debtor are engaged in the same
or substantially similar or related lines of business, have close business and
financial transactions and connections with each other, and use common
senior management and executive personnel and overall planning
programs. The Credit Agreement will be a material benefit to the
Debtor and Borrower and will result in direct business benefits to
the Debtor.
D. Debtor
has executed a Guaranty in favor of Secured Party, for the benefit of Lenders,
guaranteeing the Obligation under, and as defined in, the Credit Agreement
(as amended, restated or supplemented from time to time, the “Guaranty”).
E. [The
execution and delivery of this Agreement is an integral part of the transactions
contemplated by the Loan Papers and is a condition precedent to Lenders’
obligations to extend credit under the Credit Agreement.]7 [Debtor is required to deliver this
Agreement pursuant to Section
[9.10] [9.11] of
the Credit Agreement.]8
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. As
used in this Agreement, “Borrower,”
“Credit
Agreement,” “Debtor,”
“Guaranty,”
“Lenders,” and
“Secured
Party” have the respective meanings indicated above. Other
capitalized terms used, but not defined, in this Agreement and which are defined
in the Credit Agreement, have the respective meanings given them in the Credit
Agreement. Except as otherwise defined in this Agreement or in the
Credit Agreement, all terms used in this Agreement which are defined in the UCC
(as defined below and as in effect on the date of this Agreement) shall have the
respective meanings given them in Articles 8 and 9 of the UCC. In
addition, as used in this Agreement:
8 Use
if the Guaranty is required to be delivered pursuant to Sections 9.10 or 9.11 of
the Credit Agreement.
Collateral
means all of the property referred to in Section
3(a).
Issuer
means an issuer of Pledged Securities.
Partnership
Agreements means (a) those agreements listed on Annex A
attached hereto and incorporated herein by reference (together with any
modifications, amendments, or restatements thereof), and (b) partnership
agreements or joint venture agreements for any of the partnerships or joint
ventures described in clause (b)
of the definition of “Partnerships” below
(together with any modifications, amendments or restatements thereof), and Partnership
Agreement means one of the Partnership Agreements.
Partnership
Interests means all of Debtor’s Right, title and interest now or
hereafter accruing under the Partnership Agreements with respect to all
distributions, allocations, proceeds, fees, preferences, payments, or other
benefits, which Debtor now is or may hereafter become entitled to receive with
respect to such interests in the Partnerships and with respect to the repayment
of all loans now or hereafter made by Debtor to the Partnerships.
Partnerships
means (a) those partnerships and joint ventures listed on Annex A
attached hereto and incorporated herein by reference, as such partnerships exist
or may hereinafter be restated, amended, or restructured, (b) any
partnership or joint venture in which Debtor shall, at any time, become a
limited or general partner or venturer, or (c) any partnership, joint
venture, or corporation formed as a result of the restructure, reorganization,
or amendment of the Partnerships.
Person
means any individual, trustee, corporation, general partnership, limited
partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture or
Tribunal.
Pledged
Securities means (a) the Securities identified on Annex A
(and the certificates or instruments, if any representing such Securities), (b)
Securities issued to Debtor by any Issuer listed on Annex A or
any other Person which becomes a Restricted Subsidiary, (c) any additional or
substitute Securities issued to Debtor by any Issuer listed on Annex A or
any other Person which becomes a Restricted Subsidiary after the date of this
Agreement, and (d) all Securities required to be included in this
definition pursuant to the provisions of Section
2(b)(vi).
Proceeds
means all proceeds of, and all other profits, products, rentals and receipts, in
whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization
upon, the Collateral, whether now existing or hereafter
arising.
Secured
Obligation means (a) all obligations of Debtor under the Guaranty or this
Agreement, and (b) all present and future indebtedness, obligations and
liabilities, absolute or contingent, whether voluntary or involuntary, due or
not due, incurred directly or indirectly, or acquired by a Lender by assumption
or otherwise (including, without limitation, interest accruing after the
maturity of such debts, obligations or liabilities), and all renewals, increases
and extensions thereof, or any part thereof, now or hereafter owed to Secured
Party or Lenders by Borrower under the Loan Papers to which it is a party
(including the “Obligation” as defined in the
Credit Agreement), together with all interest accruing
thereon, fees, costs and expenses (including, without limitation, (i)
all Attorney Costs incurred in the enforcement or collection thereof
payable under the Loan Papers, or in connection with the protection of
Rights under, the Loan Papers to which Borrower is a party, and (ii)
amounts that would become due but for operation of Section 502, 506 or
any other applicable provision of Title 11 of the United States Code), together
with all pre- and post-maturity interest thereon (including,
without limitation, all post-petition interest if Debtor or Borrower voluntarily
or involuntarily files for bankruptcy protection, whether or not a claim for
post-filing or post-petition interest is allowed in such bankruptcy proceeding)
and any and all costs, Attorney Costs and expenses reasonably incurred by
Secured Party or any Lender to enforce payment of any of the foregoing
indebtedness.
Security
means (a) a share of capital stock issued by a Person, (b) a membership interest
issued by a Person, and (c) any other equity, ownership, or voting interest
issued by a Person, and “Securities”
means more than one Security.
Security
Interests means the security interests granted under this Agreement
securing the Secured Obligation.
UCC means
the Uniform Commercial Code as in effect from time to time in any applicable
jurisdiction.
2. Representations, Warranties
and Certain Agreements.
(a) Debtor
represents and warrants as follows:
(i) Debtor
has good title to all of the Collateral purported to be owned by it,
free and clear of any Liens (other than Permitted Liens), and will
keep the Collateral free and clear of all Liens (other than Permitted Liens).
The Pledged Securities described on Annex A
include all Securities issued by each such Issuer to Debtor. All of
the Pledged Securities have been duly authorized and validly issued, are
fully paid and non-assessable, and are subject to no option to
purchase or similar Rights of any Person. As of the date of this
Agreement, Debtor is not a party to or otherwise bound by any
agreement (other than
this Agreement) which restrict in any manner the Rights of any present
or future holder of any of the Pledged Securities with respect to transfers
thereof or payments of dividends thereon. The Pledged Securities are
not subject to any restrictions on transfer or manner of sale, any holding
period or any notice requirements, other than restrictions and requirements
under applicable securities Laws.
(ii) Each
Partnership issuing a Partnership Interest is duly organized, currently
existing, and in good standing under all applicable Laws; there have been no
amendments, modifications, or supplements to any agreement or certificate
creating any Partnership or any material contract relating to the Partnerships,
of which Secured Party has not been advised in writing; no default or breach or
potential default or breach has occurred and is continuing under any Partnership
Agreement; and no approval or consent of the partners of any Partnership is
required as a condition to the validity and enforceability of the Security
Interest created hereby or the consummation of the transactions contemplated
hereby which has not been duly obtained by Debtor. Debtor has good
title to the Partnership Interests free and clear of all Liens and encumbrances
(except for the
Security Interest granted hereby). The Partnership Interests are
validly issued, fully paid, and nonassessable and are not subject to statutory,
contractual, or other restrictions governing their transfer, ownership, or
control, except as set
forth in the applicable Partnership Agreements or applicable securities
Laws. All capital contributions required to be made by the terms of
the Partnership Agreements for each Partnership have been made.
(iii) Contemporaneously
with the execution and delivery of this Agreement, Debtor has delivered to
Secured Party the Pledged Securities described on Annex
A. No Collateral is in the possession of any Person
asserting any claim thereto or security interest therein that is
not permitted under the Loan Papers, except that Secured Party or
its designee may have possession of the Collateral.
(iv) Assuming
that Secured Party is in continuous possession of the Pledged
Securities, the Security Interests will constitute valid and perfected
security interests in the Pledged Securities prior to all other
Liens. Appropriate financing statements have been filed
in the necessary jurisdictions with respect to all other Collateral,
and the Security Interests, to the extent they may be perfected by filing
financing statements in the necessary jurisdictions, constitute valid and
continuing perfected security interests in such other Collateral to the
extent a security interest can be created therein under the UCC,
securing the payment of the Secured Obligation. All other actions
necessary to perfect the Security Interests in each item of such Collateral have
been duly taken to the extent a security interest can be created therein under
the UCC as in effect in the applicable jurisdictions of the United
States.
(v) Debtor’s
exact legal name is correctly set forth on the signature page
hereof. Debtor will provide Secured Party with at least thirty (30)
days prior written notice of any change in Debtor’s name or
identity.
(vi) Debtor’s
chief executive office is, and has been for the four-month period preceding the
date hereof (or, if less, the entire period of the existence of Debtor), located
in the state specified on the signature page hereof. In addition,
Debtor is an organization of the type and (if not an unregistered entity) is
incorporated in or organized under the Laws of the state specified on such
signature page.
(b) Debtor
agrees as follows:
(i) Debtor
shall, at Debtor’s expense, take all actions necessary or advisable from time to
time to maintain the first priority and perfection of said security interest and
shall not take any actions that would alter, impair or eliminate said priority
or perfection. Debtor will not change the location of its chief
executive office or chief place of business or change its jurisdiction of
organization unless it shall have given Secured Party at least thirty (30) days
prior notice thereof and (at Debtor’s cost and expense) delivered an
opinion of counsel with respect thereto prior to taking such action in customary
form confirming the continued validity and perfection under the UCC (to the
extent such Security Interests may be perfected under the UCC) of the
Security Interests (which opinion may contain such exceptions and
assumptions as are customary in a legal opinion of
such type). Debtor shall at all times maintain its chief
executive office within one of the 48 contiguous states in which Article 9
of the UCC is in effect. Debtor shall not in any event change
the location of any Collateral if such change would cause the
Security Interests in such Collateral to lapse or cease to be perfected
unless prior to taking such action it shall have taken such actions as may
be necessary to prevent such lapse in perfection or failure to be
perfected.
(ii) Debtor
shall (A) do or cause to be done all things necessary or appropriate to
keep the Partnerships in full force and effect and the Rights of Debtor and
Secured Party thereunder unimpaired; (B) except as expressly permitted by the
Credit Agreement, not consent to any Partnership selling, leasing, or
disposing of substantially all of its assets in a single transaction or a series
of transactions; (C) notify Secured Party of the occurrence of any default
or breach under any contract or agreement creating or relating to the
Partnerships; (D) except as permitted by the Credit Agreement, not
transfer, sell, or assign any of the Partnership Interests or any part thereof;
(E) pledge hereunder, immediately upon Debtor’s acquisition (directly or
indirectly) thereof, any and all additional Partnership Interests of any
Partnership granted to Debtor; and any and all additional shares of stock or
other securities of each; (F) deliver to Secured Party a fully-executed
Acknowledgment of Pledge, substantially in the form of Annex B,
for each Partnership Interest; and (G) take any commercially reasonable
action necessary, required, or requested by Secured Party to allow Secured Party
to fully enforce its Security Interest in the Partnership Interests, including,
without limitation, the filing of any claims with any court, liquidator,
trustee, custodian, receiver, or other like person or party.
(iii) Debtor
may not change its name or corporate structure in any manner unless
it shall have given Secured Party prior notice thereof and delivered
an opinion of counsel in customary form with respect thereto prior to taking
such action confirming the continued validity and perfection under the
UCC (to the extent such Security Interests may be perfected under the UCC)
of the Security Interests (which opinion may contain such exceptions and
assumptions as are customary in a legal opinion of such type).
(iv) Debtor
shall keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as Required Lenders may reasonably require in order to reflect the
Security Interests.
(v) Debtor
agrees to pay prior to delinquency all taxes, charges, Liens and assessments
against the Collateral, other than taxes, charges and assessments which are
being contested in good faith by lawful proceedings diligently conducted,
against which reserve or other provision required by GAAP has been made; and,
except as otherwise provided herein, upon the failure of Debtor to do so,
Secured Party may pay any of them in such amount as it reasonably deems
necessary to discharge the same.
(vi) The
Pledged Securities will at all times include not less than the percentage
of the issued and outstanding Securities of each Issuer shown on Annex A,
except to the extent any such Pledged Security shall have been released in
accordance with the provisions of Section 11 below.
(vii) Debtor
shall not become a party to any agreement prohibited by the fourth
sentence of Section
2(a)(i).
(viii) Debtor
shall promptly notify Secured Party in writing in the event that any of the
representations and warranties set forth herein is no longer true and
correct.
3. The Security
Interests.
(a) Debtor,
to secure the full and punctual payment and performance of the Secured
Obligation, and to induce Lenders to extend Debt under the Credit Agreement,
hereby irrevocably and unconditionally grants to Secured Party, for the
benefit of Lenders, a continuing first priority security interest in
and to all of the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (collectively, the
“Collateral”):
(i) all books
and records of Debtor pertaining to any of the property described in
this Section
3(a);
(ii) the
Pledged Securities owned or held by Debtor and all of its Rights and
privileges with respect thereto, including, without limitation, all
dividends, interest, principal and other payments and distributions made
upon or with respect to the Pledged Securities;
(iii) the
Partnership Interests and all Rights of Debtor with respect thereto, including,
without limitation, all Partnership Interests set forth on Annex A
and all of Debtor’s distribution Rights, income Rights, liquidation interest,
accounts, contract Rights, general intangibles, notes, instruments, drafts, and
documents relating to the Partnership Interests; and
(iv) all
Proceeds of all or any of the property described in clauses
(i), (ii), and
(iii) of
this Section 3(a)
to the extent that such Proceeds consist of cash or other property which
would constitute Collateral pursuant to such clauses
(i), (ii) and
(iii).
(b) The
Security Interests are granted as security only and shall not subject Secured
Party to, or transfer or in any way affect or modify, any obligation
or liability of the undersigned with respect to any of the Collateral
or any transaction in connection therewith.
4. Delivery of Pledged
Securities. If at any time or from time to time after the date
of this Agreement Debtor shall receive any Security required to be
pledged hereunder, it shall promptly:
(a) deliver
to Secured Party the certificate or other instrument evidencing each such
Security, accompanied by control letters and stock powers or any
other instruments of transfer or assignment duly executed in blank, to be
held by Secured Party for the benefit of Lenders as collateral for the
Secured Obligation in accordance with this agreement; and
(b) execute,
deliver, file and record any and all instruments, assignments, agreements,
financing statements and other documents necessary, to the extent
determined by and in form and substance satisfactory to Secured Party in
its reasonable judgment, to perfect or continue the perfection
of a security interest in such stock for the benefit of
Lenders.
5. General
Authority. Debtor hereby irrevocably appoints Secured Party
its true and lawful attorney, with full power of substitution, in the name
of the Debtor, Secured Party, Lenders, or otherwise, for the sole use and
benefit of Secured Party and Lenders, but at Debtor’s expense, to the extent
permitted by Law to exercise, at any time and from time to time while
a Default exists, all or any of the following powers (in addition
to the powers specified in the Credit Agreement) with respect to all
or any of the Collateral, but only to the extent directed to do so by
Required Lenders:
(a) to ask
for, demand, sue for, collect, endorse, receive, receipt and give acquittance
for any and all moneys due or to become due thereon or by virtue
thereof;
(b) to
commence, settle, compromise, compound, adjust, prosecute or defend any claim,
suit, action or proceeding with respect thereto;
(c) to
exercise as to the Collateral all Rights, powers and remedies of an owner
necessary to exercise its Rights under this Agreement, including, without
limitation, the Right to sell, transfer, assign or otherwise deal in or with the
same or any party thereof or the Proceeds or avails
thereof;
(d) to extend
the time of payment of any or all thereof and to make any allowance and
other adjustments with reference thereof;
(e) to
insure, process and preserve the Collateral;
(f) to
participate in any recapitalization, reclassification, reorganization,
consolidation, redemption, stock split, merger or liquidation of any issuer of
the Pledged Securities, and in connection therewith to deposit or surrender
control of the Collateral, accept money or other property in exchange for the
Collateral, and to take such action as it deems proper in connection therewith,
and any money or property received on account of or in exchange for the
Collateral shall be applied to the Secured Obligation or held by Secured Party
thereafter as Collateral pursuant to the provisions hereof; and
(g) to obtain
from any custodian or securities intermediary (if any) holding the Collateral
all information with respect to the Collateral, without any further consent of
or notice to Debtor;
provided, however, that
Secured Party shall give Debtor not less than ten days prior written notice of
the time and place of any sale or other intended disposition of any of
the Collateral pursuant to clause (c)
of this Section 5
and that Debtor agrees that such notice shall constitute “reasonable notice”
thereof. The foregoing appointments shall be deemed coupled with an
interest of Secured Party and shall not be revoked without Secured Party’s
written consent. To the extent permitted by Law, Debtor hereby
ratifies all said attorney-in-fact shall lawfully do by virtue
hereof.
6. Record Ownership of Pledged
Securities and Partnership Interests; Notices.
(a) While a
Default exists, Secured Party may at any time or from time to time at the
direction of Required Lenders, cause any or all of the Pledged
Securities and Partnership Interests to be transferred of record
into the name of Secured Party or its nominee. If Secured
Party transfers any Pledged Security or Partnership Interest into its
name or the name of its nominee, Secured Party will thereafter
promptly give Debtor copies of any notices and communications received
by Secured Party with respect to any Pledged Security and Partnership
Interests. If such Default is cured or waived, Secured
Party shall then cause any Pledged Security and Partnership Interest so
transferred into its name to be transferred into Debtor’s
name.
(b) If a
Default exists, Debtor will promptly give to Secured Party copies of any notices
and communications received by it with respect to any Pledged Security or
Partnership Interest.
7. Right to Receive
Distributions on Pledged Securities and Partnership
Interests.
(a) While a
Default exists, Secured Party shall have the Right to receive and retain as
additional security hereunder all dividends, interest, principal and other
payments and distributions made upon or with respect to the Pledged
Securities and Partnership Interests. Debtor shall take all such
action necessary or appropriate, or as Secured Party may reasonably
request, to give effect to such Right. Any dividends, interest,
principal and other payments and distributions which are received in
respect of the Pledged Securities or Partnership Interests by Debtor while
a Default exists shall be received in trust for the benefit of Required Lenders,
and shall be segregated from other funds of Debtor and shall (to the extent
so directed by Secured Party at the direction of Required Lenders)
forthwith be paid over to Secured Party (with any necessary
endorsement). Secured Party will not exercise its Rights under this
subsection unless directed to do so by Required Lenders. All
such dividends, interest, principal and other payments and distributions shall
be delivered to Secured Party upon demand.
(b) So long
as no Default exists, Debtor shall have full power and authority to receive and
retain all dividends, distributions, and other payments in respect of the
Pledged Securities and Partnership Interests pledged to Secured Party
hereunder.
8. Right to Vote Pledged
Securities and Partnership Interests; Releases.
(a) Unless a
Default exists and Required Lenders have directed Secured Party not to
permit Debtor to exercise such Rights, Debtor shall have the Right, from
time to time, to vote and to give consents, ratifications and waivers with
respect to the Pledged Securities and Partnership Interests and other Collateral
that it owns and Secured Party shall, upon receiving a written request from
an authorized financial officer of Debtor deliver to Debtor or as specified
in such request, such proxies, powers of attorney, consents, ratifications and
waivers as shall be reasonably requested by Debtor in respect of any of the
Pledged Securities and Partnership Interests owned by it which are
registered in the name of Secured Party or its nominee and any other Collateral
owned by Debtor.
(b) If a
Default exists, Secured Party shall have the Right, to the extent permitted by
Law, to vote and to give consents, ratifications and waivers and
take any other action with respect to all the Pledged Securities
and Partnership Interests with the same force and effect as if Secured Party
were the absolute and sole owner thereof. Debtor shall, at
the request of Secured Party, take all such action as may be
necessary or appropriate to give effect to the Rights
granted to Secured Party pursuant to the immediate preceding
sentence.
9. Remedies Upon Enforcement
Notice.
(a) If a
Default exists, Secured Party may (to the extent so directed by Required
Lenders) exercise, on behalf of Lenders, all Rights of a secured party
under the UCC (whether or not in effect in the jurisdiction where such
Rights are exercised) and, without limiting the foregoing, Secured
Party may, at the direction of Required Lenders, without being required to
give any notice, except
as herein provided or as may be required by Law: (i) sell the
Collateral or any part thereof at public or private sale, for cash, upon
credit or for future delivery, and at such price or prices as Secured Party may
deem satisfactory; (ii) declare the Secured Obligation immediately due and
payable, without notice or demand; (iii) exercise as to any or all of the
Collateral all the Rights, powers and remedies of an owner; (iv) enforce the
security interest given hereunder pursuant to the UCC; (v) exercise any other
remedy provided under this Agreement or by any applicable Law; or (vi) sell the
Collateral without giving any warranties as to the Collateral.
(b) Secured
Party or any Lender may be the purchaser of any or all of the Collateral sold
pursuant to Section
9(a)(i) at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at any private
sale). Debtor will execute and deliver such documents and take
such other lawful actions Secured Party deems necessary or advisable in order
that any such sale may be made in compliance with Law. Upon any such
sale Secured Party shall have the Right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold to it absolutely
and free from any claim or Right of whatsoever kind, including any equity
or Right of redemption of Debtor which may be waived, and Debtor to
the extent permitted by Law, hereby specifically waives all Rights of
redemption, stay or appraisal which it has or may have under any Law now
existing or hereafter adopted. The notice (if any) of such sale
required by Section 5
shall (1) in case of a public sale, state the time and place fixed
for such sale, and (2) in the case of a private sale, state the day
after which such sale may be consummated. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as Secured Party may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as
an entirety or in separate parcels, as Secured Party may
determine. Secured Party shall not be obligated to make any such
sale pursuant to any such notice. Secured Party may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may
be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the selling price is
paid by the purchaser thereof, but Secured Party shall not incur
any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. Secured Party,
instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at Law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
(c) Debtor
recognizes that, by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, and applicable state securities Laws, Secured
Party may be compelled, with respect to any sale of all or any part of
the Pledged Securities, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Debtor acknowledges that any such private sales may be at
prices and on terms less favorable to Secured Party than those
obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Securities for
the period of time necessary to permit the issuer thereof to register
it for public sale.
(d) For the
purpose of enforcing any and all Rights and remedies under this Agreement,
Secured Party may, subject to the provisions of the Credit Agreement, have
access to and use Debtor’s books and records relating to the
Collateral.
(e) All
Rights and remedies herein provided are cumulative and not exclusive of any
Rights or remedies otherwise provided by Law. Any single or partial
exercise of any Right or remedy shall not preclude the further exercise of any
other Right or remedy. Debtor and Borrower acknowledge that
compliance with applicable state and federal Law shall not be considered to
adversely affect the commercial reasonableness of any sale of the
Collateral.
10. Application of
Proceeds. During the time a Default exists, the proceeds of
any sale of, or other realization upon, all or any part of the Collateral shall
be delivered to Secured Party for the benefit of Lenders.
11. Termination of Security
Interests; Release of Collateral.
(a) Secured
Party shall be under no obligation to permit any trading, redemption, exchange,
distribution or substitution of the Collateral or, except as otherwise provided
in the Credit Agreement, to permit the release of any Collateral or the proceeds
thereof until the Secured Obligation has been paid in full. In no
event shall any trading, withdrawal or substitution be allowed of any Collateral
which is the subject of a Financial Hedge with a Lender or any Affiliate of a
Lender without the prior consent of such Lender or an Affiliate of any
Lender.
(b) At the
time specified in Section
14.9(e) of the Credit Agreement for the reversion or release of the
Collateral to Debtor, the Security Interests shall terminate and all Rights
to the Collateral shall revert and be released to it. At any time and
from time to time prior to such termination of the Security Interests,
Secured Party may release any of the Collateral pursuant to the terms of the
Credit Agreement.
(c) In the
event that any Pledged Securities or Partnership Interests are sold or otherwise
transferred in a transaction which is in compliance with the terms of the Credit
Agreement, Secured Party will release its Security Interest in such Pledged
Securities or Partnership Interests.
(d) Upon
any such termination or release of the Security Interests or Collateral,
Secured Party will, at the expense of the Borrower or Debtor, deliver to Debtor
any Collateral so released that is in its possession and execute and deliver
such documents, certificates or other instruments as the Borrower shall
reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
(e) Secured
Party may at any time deliver the Collateral or any part thereof to Debtor and
the receipt of Debtor shall be a complete and full acquittance for the
Collateral so delivered, and Secured Party shall thereafter be discharged from
any liability or responsibility therefor.
12. Waivers; Estoppel;
Non-Exclusive Remedies.
(a) No
failure on the part of Secured Party to exercise, no delay in exercising, and no
course of dealing with respect to, any Right under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise
by Secured Party of any Right under this Agreement preclude any other
or further exercise thereof or the exercise of any other
Right.
(b) No delay
or failure by Secured Party to enforce any provision hereunder shall preclude
Secured Party from enforcing any such provision thereafter.
(c) Secured
Party shall be under no duty or obligation whatsoever to give Debtor notice of,
or to exercise, any subscription Rights or privileges, any Rights or privileges
to exchange, convert or redeem or any other Rights or privileges relating to or
affecting any Collateral.
(d) Debtor,
to the extent it may lawfully do so, (i) agrees that it will not at any
time, in any manner whatsoever, claim or take the benefit or advantage of any
appraisement, valuation, stay, extension, moratorium, turnover or redemption
Law, or any Law permitting it to direct the order in which the
Collateral shall be sold, now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance or enforcement of
this Agreement, (ii) hereby waives all benefit or advantage of
all such Laws and covenants, and (iii) agrees that it will suffer
and permit the execution of every such power as though no such Law
were in force.
(e) Debtor,
to the extent it may lawfully do so, on behalf of itself and all who claim
through or under it, including, without limitation, any and all
subsequent creditors, vendees, assignees and lienors, waives and releases all
Rights to demand or to have any marshalling of the Collateral upon any
sale, whether made under any power of sale granted in this Agreement or
pursuant to judicial proceedings or upon foreclosure or any enforcement of
this Agreement and consents and agrees that all the Collateral
may at any such sale be offered and sold as an entirety.
(f) Debtor
waives, to the extent permitted by applicable Law, presentment, demand, protest
and any notice of any kind (except notices explicitly
required under this Agreement) in connection with this agreement and any
action taken by Secured Party with respect to the Collateral.
(g) The
Rights in this Agreement are cumulative and are not exclusive of any other
remedies provided by Law or any other contract.
13. Successors and
Assigns. This Agreement is for the benefit of Secured Party
and Lenders and their respective successors and permitted assigns, and in
the event of an assignment of all or any of the Secured Obligation,
the Rights hereunder, to the extent applicable to the portion assigned,
shall be transferred therewith. This Agreement shall be binding
on the undersigned, Secured Party, Lenders, and their respective successors and
permitted assigns.
14. Loan
Paper. This Agreement is a Loan Paper and is subject to the
applicable provisions of Section 15 of
the Credit Agreement, all of which are incorporated into this Agreement by
reference the same as if set forth in this Agreement verbatim.
15. Costs. All
advances, charges, costs and expenses, including reasonable Attorney Costs,
incurred or paid by Secured Party in exercising any Right, power or remedy
conferred by this Agreement or in the enforcement thereof, shall become a part
of the Debt secured hereunder and shall be paid to Secured Party by Borrower and
Debtor immediately and without demand, with interest thereon at an annual rate
equal to the highest rate of interest of any Debt secured by this Agreement (or,
if there is no such interest rate, at the maximum interest rate permitted by Law
for interest on judgments).
16. Authority to file Financing
Statements; Further Assurances.
(a) Debtor
hereby authorizes Secured Party to file one or more financing statements
describing all or part of the Collateral, and continuation statements, or
amendments thereto, relative to all or part of the Collateral as authorized by
applicable Law. Such financing statements, continuation statements
and amendments will contain any other information required by the UCC for the
sufficiency or filing office acceptance of any financing statement, continuation
statement or amendment, including whether Debtor is an organization, the type of
organization and any organizational identification number issued to
Debtor. Debtor agrees to furnish any such information to Secured
Party promptly upon request.
(b) Debtor
and Borrower shall, at the request of Secured Party, execute such other
agreements, documents or instruments in connection with this Agreement as
Secured Party may reasonably deem necessary to evidence or perfect the security
interests granted herein, to maintain the first priority of the security
interests, or to effectuate the Rights granted to Secured Party
herein.
17. UCC. Any
term used or defined in the UCC and not defined in this Agreement has the
meaning given to the term in the UCC, when used in this Agreement.
18. NOTICE OF FINAL
AGREEMENT. THIS WRITTEN SECURITY AGREEMENT AND ANY OTHER
DOCUMENTS EXECUTED IN CONNECTION WITH THIS SECURITY AGREEMENT REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
In Witness Whereof, Debtor has executed
this Agreement by its duly authorized officer, as of the date first written
above.
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Debtor’s
Chief Executive Office:
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DEBTOR:
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|
Street
Address
|
|
|
City State Zip
|
By:
|
|
Title:
Date:
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Debtor’s
type of
organization:
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Debtor’s
state of incorporation or organization (if Debtor is a corporation,
limited partnership, limited liability company or other registered
entity):
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Debtor’s
organizational identification number, if any, assigned by the state of
incorporation or organization (if no organizational identification number
has been assigned, enter “None”):
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SECURED
PARTY:
BANK OF
AMERICA, N.A.,
as
Administrative
Agent
By:
Name:
Title:
ANNEX A TO AMENDED
AND RESTATED
PLEDGE AGREEMENT
PLEDGED
SECURITIES
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Issuer
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Authorized
andOutstanding
Shares
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Par
Value
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Pledged
Stock\ Interest
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Certificate
Number
|
Percentage
Owned
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Other Liens
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PARTNERSHIPS AND PARTNERSHIP
AGREEMENTS
Partnership:
Partnership
Agreements:
ANNEX B TO AMENDED
AND RESTATED
PLEDGE AGREEMENT
ACKNOWLEDGMENT OF
PLEDGE
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PARTNERSHIP:
_______________INTEREST OWNER:
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BY THIS
ACKNOWLEDGMENT OF PLEDGE, dated as of ______________________, __________ (the “Partnership”)
hereby acknowledges the pledge in favor of Bank of America, N.A. (“Pledgee”),
in its capacity as Administrative Agent for certain Lenders and as Secured Party
under that certain Pledge Agreement dated as of _________________, against, and
a security interest in favor of Pledgee in, all of ‘s (the “Interest
Owner”) Rights in connection with any partnership interest in the
Partnership now and hereafter owned by the Interest Owner (“Partnership
Interest”).
A. Pledge
Records. The Partnership has identified Pledgee’s interest in
all of the Interest Owner’s Right, title, and interest in and to all of the
Interest Owner’s Partnership Interest as subject to a pledge and security
interest in favor of Pledgee in the Partnership Records.
B. Partnership Distributions,
Accounts, and Correspondence. The Partnership hereby
acknowledges that (i) all proceeds, distributions, and other amounts payable to
the Interest Owner, including, without limitation, upon the termination,
liquidation, and dissolution of the Partnership shall be paid and remitted to
the Pledgee upon demand, (ii) all funds in deposit accounts shall be held for
the benefit of Pledgee, and (iii) all future correspondence, accountings of
distributions, and tax returns of the Partnership shall be provided to the
Pledgee. The Partnership acknowledges and accepts such direction and
hereby agrees that it shall, upon the written demand by Secured Party, pay
directly to Secured Party at such address any and all distributions, income, and
cash flow arising from the Partnership Interests whether payable in cash,
property or otherwise, subject to and in accordance with the terms and
conditions of the Partnership. The Pledgee may from time to time
notify the Partnership of any change of address to which such amounts are to be
paid.
Remainder
of Page Intentionally Blank.
Signature
Page to Follow.
EXECUTED
as of the date first stated in this Acknowledgment of Pledge.
By:
Name:
Title:
[PARTNERSHIP]
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By:
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,
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as
General Partner
By:
Name:
Title:
EXHIBIT
F-2
CONFIRMATION
OF PLEDGE AGREEMENT
THIS
CONFIRMATION OF PLEDGE AGREEMENT (this “Confirmation”)
is executed as of January 28, 2005, by the undersigned debtor (“Debtor”),
in favor of Bank of America, N.A., as administrative agent (the “Administrative
Agent”) for the Lenders and their respective successors and assigns
(collectively, the “Lenders”)
that are from time to time parties to the Credit Agreement (as hereinafter
defined).
Capitalized
terms not otherwise defined in this Confirmation shall have the meanings
ascribed to such terms in the Pledge Agreement (as hereinafter
defined).
R E C I T A L S
A. The
Vail Corporation (d/b/a “Vail Associates, Inc.”), a Colorado corporation (the
“Borrower”),
certain lenders party thereto, and Bank of America, N.A., as administrative
agent, are parties to that certain Third Amended and Restated Revolving Credit
and Term Loan Agreement dated as of June 10, 2003 (as the same may have been
amended from time to time, the “Existing Credit
Agreement”).
B. In
connection with the Existing Credit Agreement, Debtor executed and delivered to
Administrative Agent, for the benefit of Lenders, an Amended and Restated Pledge
Agreement dated as of June 10, 2003 (as the same has been or may hereafter be
from time to time amended, the “Pledge
Agreement”).
C. Concurrently
herewith, the Existing Credit Agreement will be amended and restated pursuant to
the Fourth Amended and Restated Credit Agreement (as the same may be restated,
modified, amended, or supplemented from time to time, the “Credit
Agreement”), by and among the Borrower, the Administrative Agent, and the
Lenders.
D. The
execution and delivery of this Confirmation is an integral part of the
transactions contemplated by the Loan Papers and is a condition precedent to
Lenders’ obligations to extend credit under the Credit Agreement.
E. In
connection with the Credit Agreement, Debtor has agreed to ratify and confirm
its Pledge Agreement.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees as follows:
1. Confirmation
of Pledge. Debtor hereby (a)
consents and agrees to the execution and delivery of the Credit Agreement and
the related Loan Papers (as defined in the Credit Agreement), (b) ratifies and
confirms that the Pledge Agreement is not released, diminished, impaired,
reduced, or otherwise adversely affected by the Credit Agreement and continues
to secure the full
payment and performance of the Secured Obligation, (c) acknowledges the
continuing existence and priority of the liens granted, conveyed, and
assigned to Administrative Agent, for the benefit of Lenders, under the Pledge
Agreement, and (d) agrees that the Secured Obligation includes, without
limitation, the Obligation (as defined in the Credit Agreement).
2. Other
Agreements. Debtor
(a) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional pledges, and other agreements,
documents, instruments, and certificates as the Administrative Agent may
reasonably deem necessary or appropriate in order to preserve and protect those
Security Interests granted by Debtor pursuant to the Pledge Agreement, (b)
represents and warrants to the Administrative Agent that such liability and
obligation may reasonably be expected to directly or indirectly benefit Debtor,
and (c) waives notice of acceptance of this Confirmation.
3. Continued
Effect. All terms,
provisions, and conditions of each Pledge Agreement shall continue in full force
and effect and shall remain enforceable and binding in accordance with the terms
of such Pledge Agreement.
4. Parties
Bound. This Confirmation
shall be binding upon and inure to the benefit of Debtor and the Administrative
Agent, for the benefit of the Lenders, and their respective successors,
permitted assigns, and legal representatives.
5. Headings. Section headings
are for convenience of reference only and shall in no way affect the
interpretation of this Confirmation.
6. Governing
Law. THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF THIS CONFIRMATION.
7. NOTICE OF
FINAL AGREEMENT.
THIS CONFIRMATION REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN
THE PARTIES.
Remainder
of Page Intentionally Blank
Signature
Page to Follow
EXECUTED
as of the day and year first above written.
DEBTOR:
[ ]
By:
Name:
Title:
The
undersigned, as Administrative Agent for the benefit of the Lenders, hereby
accepts the foregoing Confirmation.
ADMINISTRATIVE
AGENT:
BANK OF
AMERICA, N.A.
By:
Name:
Title:
Exhibit
10.8(d)
LIMITED WAIVER, RELEASE, AND
THIRD AMENDMENT
TO
FOURTH AMENDED
AND RESTATED
CREDIT AGREEMENT
THIS
LIMITED WAIVER, RELEASE, AND THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT (this “Limited Waiver,
Release, and Amendment”) is dated as of March 13, 2007, but effective as
of the Effective Date (hereinafter defined), among THE VAIL CORPORATION, a
Colorado corporation doing business as “Vail Associates, Inc.” (the “Company”),
the Lenders (as defined in the Credit Agreement referenced below) party hereto,
and BANK OF AMERICA,
N.A., as Administrative Agent (hereinafter defined).
R E C I T A L
S
A. The
Company has entered into that certain Fourth Amended and Restated Credit
Agreement dated as of January 28, 2005, with Bank of America, N.A., as
Administrative Agent (in such capacity, the “Administrative
Agent”), and certain other agents and lenders party thereto, as amended
by that certain First Amendment to Fourth Amended and Restated Credit Agreement
dated as of June 29, 2005, and that certain Second Amendment to Fourth Amended
and Restated Credit Agreement dated as of February 17, 2006 (as amended, the
“Credit
Agreement”), providing for revolving credit loans, letters of credit, and
swing line loans in the aggregate principal amount of up to
$400,000,000. Unless otherwise indicated herein, all capitalized
terms used herein shall have the meanings set forth in the Credit Agreement, and
all Section references herein shall be references to sections in the Credit
Agreement.
B. The
Company has notified the Administrative Agent of the formation of the following
new Unrestricted Subsidiaries: Colter Bay Convenience Store, LLC, a Wyoming
limited liability company, Colter Bay General Store, LLC, a Wyoming limited
liability company, Colter Bay Marina, LLC, a Wyoming limited liability company,
Colter Bay Cafe Court, LLC, a Wyoming limited liability company, Jenny Lake
Store, LLC, a Wyoming limited liability company, Jackson Hole Golf & Tennis
Club Snack Bar, LLC, a Wyoming limited liability company, Stampede Canteen, LLC,
a Wyoming limited liability company, Crystal Peak Lodge of Breckenridge, Inc., a
Colorado corporation, and Hunkidori Land Company, LLC, a Colorado limited
liability company (collectively, the “New Unrestricted
Subsidiaries”). The Company did not deliver to the
Administrative Agent an updated Schedule 8.2 to the Credit
Agreement within thirty (30) days after the formation of the New Unrestricted
Subsidiaries, as required by Section 9.10 of the Credit
Agreement, and has requested that the Lenders waive any Default or Potential
Default resulting from such failure.
C. The
Company has also notified the Administrative Agent that the Company intends to
transfer 100% of the capital stock (the “Pledged CTI
Securities”) of Complete Telecommunications, Inc. (“CTI”) as
part of the Company’s disposition of its equity interest in RTP, LLC, an
Unrestricted Subsidiary. In connection therewith, the Company has
requested that the Administrative Agent, for the benefit of the Lenders, release
its liens on the Pledged CTI Securities and release CTI from its obligations
under the Guaranty executed by CTI.
D. The
Company has also requested that the Lenders amend the Credit Agreement to, among
other things, decrease the Total Commitment to $300,000,000, modify the interest
rates, and extend the Termination Date to February 1, 2012.
E. The
Lenders have agreed to the waiver, release, and amendments to the Credit
Agreement as set forth herein.
In
consideration of the foregoing and the mutual covenants contained herein, the
Company, the Lenders, the Guarantors (by execution of the attached Guarantors’
Consent and Agreement), and the Administrative Agent agree as
follows:
1. Limited
Waiver. The Lenders
hereby waive any Default or Potential Default resulting from the Company’s
failure to deliver an updated Schedule 8.2 to the
Administrative Agent within thirty (30) days after the formation of the New
Unrestricted Subsidiaries in accordance with Section 9.10 of the Credit
Agreement. Nothing herein shall, or shall be deemed to, waive any
other provision of the Credit Agreement, except as set forth
herein.
2. Releases.
(a) The
Lenders hereby (i) discharge CTI as a “Guarantor” under the Credit
Agreement and release CTI from any liability under the Credit Agreement and its
Guaranty, including, but not limited to, payment or performance of the
Guaranteed Debt (as defined in such Guaranty), and (ii) release the Liens on and
security interests in the Pledged CTI Securities, and accordingly release the
Company from its pledge of the Pledged CTI Securities pursuant to its Pledge
Agreement, but only to the extent of its interests in the Pledged CTI
Securities.
(b) The
Administrative Agent agrees to execute and deliver UCC financing statement
terminations and all further documents reasonably requested by the Company in
order to effectuate the releases contemplated hereby.
(c) It
is expressly agreed and understood that, except as set forth herein, this
Limited Waiver, Release, and Amendment shall in no manner release, affect or
impair the Administrative Agent’s and the Lenders’ rights, titles, interests,
and Liens against the Restricted Companies’ interests, properties or
assets.
3. Amendments.
(a) New
Definitions. Section 1.1 (Definitions) is
amended by inserting the following new definitions alphabetically to read as
follows:
(i) “Net Funded
Debt means, on any date of determination, an amount equal to (a) Funded
Debt minus (b) the
amount of Unrestricted Cash in excess of $10,000,000.”
(ii) “Temporary Cash
Investments means investments of the Restricted Companies permitted under
clauses (b)
through (g), (p), and
(q)
of Section 10.8
hereof.”
(iii) “Unrestricted
Cash means, on any date of determination, the aggregate amount of all
cash and Temporary Cash Investments of the Restricted Companies not subject to
any Lien or restriction (except for Liens of depository institutions securing
payment of customary service charges, transfer fees, account maintenance fees,
and charges for returned or dishonored items).
(b) Modifications of Existing
Definitions. Section 1.1 (Definitions) is
further amended by modifying the following existing definitions as
follows:
(i) The
definition of “Adjusted
EBITDA” is amended in its entirety to read as follows:
“Adjusted EBITDA
means, without duplication, on any date of determination, the sum of (a) EBITDA of the
Restricted Companies (excluding non-recurring gains or losses), plus (b) a percentage of the
EBITDA of SSI (with such percentage being the weighted average membership
interest held directly or indirectly by Borrower in SSI (expressed as a
percentage) during the applicable period of calculation), plus (c) insurance proceeds
(up to a maximum of $10,000,000 in the aggregate in any fiscal year) received by
the Restricted Companies under policies of business interruption insurance (or
under policies of insurance which cover losses or claims of the same character
or type).”
(ii) The
definition of “Applicable
Margin” is amended to cause the Applicable Margin to be calculated by
reference to the ratio of Net Funded Debt to Adjusted EBITDA and to modify the
pricing grid, as set forth on Annex
A attached
hereto.
(iii) The
definition of “Applicable
Percentage” is amended to cause the Applicable Percentage to be
calculated by reference to the ratio of Net Funded Debt to Adjusted EBITDA and
to modify the commitment fee grid, as set forth on Annex B
attached hereto.
(iv) The
definitions of “Funded
Debt” and “Net
Income” are amended by replacing the phrase “held by Borrower” in each
definition with the phrase “held directly or indirectly by
Borrower”.
(v) The
definitions of “Required
Capital Expenditures” and “Resort EBITDA” are
deleted.
(vi) The
definition of “SSI” is
amended by removing the words “of Borrower” at the end
thereof.
(vii) The
definition of “Termination
Date” is amended to extend such date by replacing the reference to “January 28, 2010” therein
with “February 1,
2012”.
(c) Modification of Accordion
Provision. Section 2.5 (Increase
in Total Commitment) is amended to modify the maximum Total Commitment to which
the facility may be increased by replacing the reference to “$500,000,000” therein with
“$400,000,000”.
(d) Modification of Permitted
Investments. Section 10.8 (Loans, Advances
and Investments) is amended by replacing the period at the end of clause (o) with a semi-colon
and inserting the following thereafter:
“(p) short-term
repurchase agreements with major banks and authorized dealers, fully
collateralized to at least 100% of market value by marketable obligations issued
or unconditionally guaranteed by the U.S. or issued by any of its agencies and
backed by the full faith and credit of the U.S.; and
(q) short-term
variable rate demand notes that invest in tax-free municipal bonds of domestic
issuers rated “A-2” or
better by Moody’s or “A” or better by S&P that
are supported by irrevocable letters of credit issued by commercial banks
organized under the laws of the U.S. or any of its states having combined
capital, surplus, and undivided profits of not less than
$100,000,000.”
(e) Modification of Limits on
Acquisitions. The qualifiers to clause (c) of Section 10.11 (Acquisitions,
Mergers, and Dissolutions) are amended as follows:
(i) Clause (i) is amended in its
entirety to read as follows:
“(i) the
Purchase Price for such transaction, when aggregated with the Purchase Price of
all other acquisitions or mergers consummated by the Restricted Subsidiaries
after March 13, 2007, does not exceed an amount equal to the sum of (A)
$400,000,000, plus (B)
the lesser of (1) the aggregate consideration paid by Borrower to purchase the
minority membership interest in SSI, and (2) $40,000,000.”
(ii) Clause (iv) is amended to
modify the threshold for delivery of documentation related to permitted
acquisitions by replacing the reference to “$25,000,000” therein with
“50,000,000”.
(f) Modifications of Financial
Covenants. Section 11 (Financial
Covenants) is amended as follows:
(i) Section 11.1 (Maximum
Leverage Ratios) is amended in its entirety to read as follows:
“11.1 Maximum Leverage
Ratio. As calculated as of the last day of each fiscal quarter
of the Restricted Companies, the Restricted Companies shall not permit the ratio
of (a) the unpaid principal amount of Net Funded Debt existing as of such last
day to (b) Adjusted EBITDA for the four fiscal quarters ending on such last day
to exceed 4.50 to 1.00.”
(ii) Section 11.2 (Minimum Fixed
Charge Coverage Ratio) is deleted in its entirety and substituted therefor is
the following reference:
“11.2 [Reserved]”.
(g) Modification of
Commitments. The Commitments of the Lenders are revised so
that the Total Commitment equals $300,000,000 as of the Effective
Date.
(h) Modification of Schedule
1. Schedule
1 (Parties, Addresses, Committed Sums and Wiring Information) is revised
to (i) update contact information for the Borrower, the Administrative Agent,
L/C Issuer and Swing Line Lender, as applicable, and (ii) reflect the Lenders’
revised Commitments and Commitment Percentages, as set forth on Annex C
attached hereto.
(i) Modification of Schedule
7.1. Items
1 and 2 of Schedule 7.1 (Post-Closing
Items and Conditions) are revised to reflect that, following approval by the
United States Department of the Interior, National Park Service, the Company
will transfer its equity interests in Grand Teton Lodge Company (“Grand
Teton”) to National Park Hospitality Company, a Colorado corporation
(“NPHC”),
and NPHC shall pledge such interests to the Administrative Agent, for the
benefit of the Lenders, as set forth on Annex D
attached hereto.
(j) Modification of Schedule
8.2. Schedule 8.2 (Corporate
Organization and Structure) is revised as set forth on Annex E
attached hereto.
(k) Modification of Compliance
Certificate. Annex A to the Compliance
Certificate is replaced with Annex F
attached hereto.
4. Representations
and Warranties. As a
material inducement to the Lenders and the Administrative Agent to execute and
deliver this Limited Waiver, Release, and Amendment, the Company represents and
warrants to the Lenders and the Administrative Agent (with the knowledge and
intent that Lenders are relying upon the same in entering into this Limited
Waiver, Release, and Amendment) that: (a) the Company and the Guarantors have
all requisite authority and power to execute, deliver, and perform their
respective obligations under this Limited Waiver, Release, and Amendment and the
Guarantors’ Consent and Agreement, as the case may be, which execution,
delivery, and performance have been duly authorized by all necessary action,
require no Governmental Approvals, and do not violate the respective
certificates of incorporation or organization, bylaws, or operating agreement,
or other organizational or formation documents of such Companies; (b) upon
execution and delivery by the Company, the Guarantors, the Administrative Agent,
and the Lenders, this Limited Waiver, Release, and Amendment will constitute the
legal and binding obligation of the Company and each Guarantor, enforceable
against such entities in accordance with the terms of this Limited Waiver,
Release, and Amendment, except as that enforceability
may be limited by general principles of equity or by bankruptcy or insolvency
laws or similar laws affecting creditors’ rights generally; (c) all
representations and warranties in the Loan Papers are true and correct in all
material respects as though made on the date hereof, except to the extent that any
of them speak to a specific date or the facts on which any of them are based
have been changed by transactions contemplated or permitted by the Credit
Agreement; and (d) no Default or Potential Default has occurred and is
continuing.
5. Conditions
Precedent to Effectiveness. This Limited
Waiver, Release, and Amendment shall be effective on the date (the “Effective
Date”) upon which the Administrative Agent receives each of the following
items (other than the
items listed on Schedule
7.1, as revised hereby, which items or conditions are hereby permitted to
be delivered or satisfied after the Effective Date, but not later than the
respective dates for delivery or satisfaction specified on Schedule 7.1):
(a) counterparts
of this Limited Waiver, Release, and Amendment executed by the Company, the
Administrative Agent, and Lenders;
(b) the
Guarantors’ Consent and Agreement executed by each Guarantor;
(c) a
Revolver Note for each Lender requesting a Note, payable to the order of such
requesting Lender, reflecting such Lender’s revised Commitment;
(d) legal
opinions of Martha D. Rehm, General Counsel of Vail Resorts, Inc., and Cahill
Gordon & Reindel LLP, special New York counsel to the Company and the other
Restricted Subsidiaries, each in form and substance satisfactory to the
Administrative Agent;
(e) an
Officers’ Certificate for the Restricted Companies (i) attaching resolutions
authorizing the transactions contemplated hereby, (ii) certifying that no
changes have been made to the Restricted Companies’ respective articles of
incorporation or organization, bylaws, or operating agreements since the date
such documents were previously provided to the Administrative Agent, as
applicable, (iii) listing the names and titles of the Responsible Officers, and
(iv) providing specimen signatures for such Responsible Officers;
(f) a
certificate signed by a Responsible Officer certifying that (i) all of the
representations and warranties of the Companies in the Loan Papers are true and
correct in all material respects (unless they speak to a specific date or are
based on facts which have changed by transactions contemplated or permitted by
the Credit Agreement); (ii) no Default or Potential Default exists under the
Credit Agreement or would result from the execution and delivery of this Limited
Waiver, Release, and Amendment; (iii) there has been no event or circumstance
since July 31, 2006 that has had or could be reasonably expected to result in,
either individually or in the aggregate, a Material Adverse Event; and (iv)
except as set forth on Schedule
8.7 of the Credit Agreement, there is no action, suit, investigation, or
proceeding pending or, to the knowledge of Borrower, threatened, in any court or
before any arbitrator or Governmental Authority that could reasonably be
expected to (A) materially and adversely affect the Companies, or (B) adversely
affect any transaction contemplated by the Credit Agreement, the rights and
remedies of the Administrative Agent, Lenders, and the L/C Issuers under the
Credit Agreement, or the ability of the Companies or any other obligor under any
Guaranty to perform their respective obligations under the Credit
Agreement;
(g) evidence
(in form and substance satisfactory to the Administrative Agent) that the
Commitment Usage does not exceed the Total Commitment (as reduced
hereby);
(h) such
organizational documents, Guaranties, Pledge Agreements, financing statements,
and other documents as the Administrative Agent may deem reasonably necessary to
reflect the changes to Schedule 8.2 (including,
without limitation, the addition of NPHC as a Restricted Subsidiary);
and
(i) payment
of an extension fee for the benefit of the Lenders equal to the product of (a)
five basis points (0.05%) times (b) the Total
Commitment as of the Effective Date (after giving effect to the reduction in the
Total Commitment contemplated by this Limited Waiver, Release, and
Amendment).
6. Expenses. The Company shall
pay all reasonable out-of-pocket fees and expenses paid or incurred by the
Administrative Agent incident to this Limited Waiver, Release, and Amendment,
including, without limitation, the reasonable fees and expenses of the
Administrative Agent’s counsel in connection with the negotiation, preparation,
delivery, and execution of this Limited Waiver, Release, and Amendment and any
related documents.
7. Miscellaneous. Unless stated
otherwise herein, (a) the singular number includes the plural, and vice versa, and words of any
gender include each other gender, in each case, as appropriate, (b) headings and
captions shall not be construed in interpreting provisions of this Limited
Waiver, Release, and Amendment, (c) this Limited Waiver, Release, and Amendment
shall be governed by and construed in accordance with the laws of the State of
New York, (d) if any part of this Limited Waiver, Release, and Amendment is for
any reason found to be unenforceable, all other portions of it shall
nevertheless remain enforceable, (e) this Limited Waiver, Release, and Amendment
may be executed in any number of counterparts with the same effect as if all
signatories had signed the same document, and all of those counterparts shall be
construed together to constitute the same document, (f) this Limited Waiver,
Release, and Amendment is a “Loan Paper” referred to in
the Credit Agreement, and the provisions relating to Loan Papers in Section 14
of the Credit Agreement are incorporated herein by reference, (g) this Limited
Waiver, Release, and Amendment, the Credit Agreement, as amended by this Limited
Waiver, Release, and Amendment, and the other Loan Papers constitute the entire
agreement and understanding among the parties hereto and supercede any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof, and (h) except as provided in this Limited Waiver, Release, and
Amendment, the Credit Agreement, the Notes, and the other Loan Papers are
unchanged and are ratified and confirmed.
8. Parties. This Limited
Waiver, Release, and Amendment binds and inures to the benefit of the Company,
the Guarantors, the Administrative Agent, the Lenders, and their respective
successors and assigns.
The
parties hereto have executed this Limited Waiver, Release, and Amendment in
multiple counterparts as of the date first above written.
Remainder
of Page Intentionally Blank.
Signature
Pages to Follow.
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
THE VAIL CORPORATION (D/B/A “VAIL
ASSOCIATES, INC.”), as the
Company
By: /s/
Jeffrey W. Jones
Name: Jeffrey
W. Jones
|
|
Title:Senior
Executive Vice President & Chief
Financial Officer
|
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
BANK OF AMERICA, N.A., as
Administrative Agent
By: Illegible
Name: Illegible
Title: Illegible
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
BANK OF AMERICA,
N.A.,
as an L/C
Issuer, a Swing Line Lender, and a Lender
By: /s/
David McCautey
Name: David
McCautey
Title: Principal
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
U.S. BANK NATIONAL
ASSOCIATION,
as
Co-Syndication Agent, a Swing Line Lender, and a Lender
By: /s/
Greg Blanchard
Name: Greg
Blanchard
Title: Vice
President
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agent, an L/C Issuer, and a
Lender
By: /s/
Debbie A. Wright
Name: Debbie
A. Wright
Title: Vice
President
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Co-Documentation Agent and a Lender
By: /s/
Steven P. Lapham
Name: Steven
P. Lapham
Title: Managing
Director
By: /s/
James Rolison
Name: James
Rolison
Title: Director
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
LASALLE BANK NATIONAL
ASSOCIATION,
as
Co-Documentation Agent and a Lender
By: /s/
Darren Lemkaw
Name: Darren
Lemkaw
Title: SVP
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
JPMORGAN CHASE BANK,
NA,
as a
Lender
By: /s/
David L. Ericson
Name: David
L. Ericson
Title: Senior
Vice President
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
COLORADO STATE BANK &
TRUST,
as a
Lender
By: /s/
Kent M. Mustari
Name: Kent
M. Mustari
Title: Senior
Vice President
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
COMPASS BANK,
as a
Lender
By: /s/
Eric R. Long
Name: Eric
R. Long
Title: Senior
Vice President
Signature
Page to that certain Limited Waiver, Release, and Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of March 13, 2007, among The Vail
Corporation (d/b/a “Vail Associates, Inc.”), the other agents and Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the
Lenders.
COMERICA WEST
INCORPORATED,
as a
Lender
By: /s/
Fatima Arshad
Name: Fatima
Arshad
Title: Corporate
Banking Officer
GUARANTORS’ CONSENT AND
AGREEMENT
As an
inducement to Administrative Agent and Lenders to execute, and in consideration
of Administrative Agent’s and Lenders’ execution of the foregoing Limited
Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit
Agreement, the undersigned hereby consent thereto and agree that the same shall
in no way release, diminish, impair, reduce or otherwise adversely affect the
respective obligations and liabilities of each of the undersigned under each
Guaranty described in the Credit Agreement, or any agreements, documents or
instruments executed by any of the undersigned to create liens, security
interests or charges to secure any of the indebtedness under the Loan Papers,
all of which obligations and liabilities are, and shall continue to be, in full
force and effect. This consent and agreement shall be binding upon
the undersigned, and the respective successors and assigns of each, and shall
inure to the benefit of Administrative Agent and Lenders, and the respective
successors and assigns of each.
Vail
Resorts, Inc.
Vail
Holdings, Inc.
Beaver
Creek Associates, Inc.
Beaver
Creek Consultants, Inc.
Beaver
Creek Food Services, Inc.
Breckenridge
Resort Properties, Inc.
Complete
Telecommunications, Inc.
Gillett
Broadcasting, Inc.
Grand
Canyon Lodge Company North Rim
Grand
Teton Lodge Company
Heavenly
Valley, Limited Partnership
Jackson
Hole Golf and Tennis Club, Inc.
JHL&S
LLC
Keystone
Conference Services, Inc.
Keystone
Development Sales, Inc.
Keystone
Food and Beverage Company
Keystone
Resort Property Management Company
Larkspur
Restaurant & Bar, LLC
Lodge
Properties, Inc.
Lodge
Realty, Inc.
Mountain
Thunder, Inc.
National
Park Hospitality Company
Property
Management Acquisition Corp., Inc.
Rockresorts
Arrabelle, LLC
Rockresorts
International, LLC
Rockresorts
LLC
Rockresorts
Cheeca, LLC
Rockresorts
Eleven Biscayne, LLC
Rockresorts
Equinox, Inc.
Rockresorts
LaPosada, LLC
Rockresorts
Wyoming, LLC
Rockresorts
Casa Madrona, LLC
Rockresorts
Cordillera Lodge Company, LLC
Rockresorts
Rosario, LLC
SOHO
Development, LLC
SSV
Holdings, Inc.
Teton
Hospitality Services, Inc.
The
Village at Breckenridge Acquisition Corp., Inc.
Timber
Trail, Inc.
VA Rancho
Mirage I, Inc.
VA Rancho
Mirage II, Inc.
VA Rancho
Mirage Resort, L.P.
Vail/Arrowhead,
Inc.
Vail
Hotel Management Company, LLC
Vail
Associates Holdings, Ltd.
Vail
Associates Investments, Inc.
Vail
Associates Real Estate, Inc.
Vail/Beaver
Creek Resort Properties, Inc.
Vail Food
Services, Inc.
Vail
Resorts Development Company
Vail RR,
Inc.
Vail
Summit Resorts, Inc.
Vail
Trademarks, Inc.
VAMHC,
Inc.
VR
Heavenly I, Inc.
VR
Heavenly II, Inc.
VR
Holdings, Inc.
|
|
By:
/s/ Jeffrey W. Jones
|
|
|
Name:
Jeffrey W. Jones
|
|
|
Title:
Executive Vice President & Chief Financial
Officer
|
Guarantors’
Consent and Agreement
ANNEX A
Applicable Margin
means, for any day, the margin of interest over the Base Rate or LIBOR,
as the case may be, that is applicable when any interest rate is determined
under this Agreement. The Applicable Margin is subject to adjustment
(upwards or downwards, as appropriate) based on the ratio of Net Funded Debt to
Adjusted EBITDA, as follows:
|
Ratio
of Net Funded Debt to Adjusted EBITDA
|
Applicable
Margin for
LIBOR
Loans
|
Applicable
Margin
Base
Rate Loans
|
|
|
I
|
Less
than 1.50 to 1.00
|
0.50%
|
0.00%
|
|
II
|
Greater
than or equal to 1.50 to 1.00, but less than 2.00 to 1.00
|
0.75%
|
0.00%
|
|
III
|
Greater
than or equal to 2.00 to 1.00, but less than 2.50 to 1.00
|
1.00%
|
0.00%
|
|
IV
|
Greater
than or equal to 2.50 to 1.00, but less than 3.00 to 1.00
|
1.25%
|
0.00%
|
|
V
|
Greater
than or equal to 3.00 to 1.00, but less than 3.50 to 1.00
|
1.50%
|
0.25%
|
|
VI
|
Greater
than or equal to 3.50 to 1.00, but less than 4.00 to 1.00
|
1.75%
|
0.50%
|
|
VII
|
Greater
than or equal to 4.00 to 1.00
|
2.00%
|
1.00%
|
Prior to
Administrative Agent’s receipt of the Companies’ consolidated Financial
Statements for the Companies’ fiscal quarter ended January 31, 2007, the ratio
of Net Funded Debt to Adjusted EBITDA shall be fixed at Level
III. Thereafter, the ratio of Net Funded Debt to Adjusted EBITDA
shall be calculated on a consolidated basis for the Companies in accordance with
GAAP for the most recently completed fiscal quarter of the Companies for which
results are available. The ratio shall be determined from the Current
Financials and any related Compliance Certificate and any change in the
Applicable Margin resulting from a change in such ratio shall be effective as of
the date of delivery of such Compliance Certificate. However, if
Borrower fails to furnish to Administrative Agent the Current Financials and any
related Compliance Certificate when required pursuant to Section
9.1, then the ratio shall be deemed to be at Level VII until Borrower
furnishes the required Current Financials and any related Compliance Certificate
to Administrative Agent. Furthermore, if the Companies’ audited
Financial Statements delivered to Administrative Agent for any fiscal year
pursuant to Section 9.1(a)
result in a different ratio, such revised ratio (whether higher or lower) shall
govern effective as of the date of such delivery. For purposes of
determining such ratio, Adjusted EBITDA for any fiscal quarter shall include on
a pro forma basis all
EBITDA of the Restricted Companies for such period relating to assets acquired
in accordance with this Agreement (including, without limitation, Restricted
Subsidiaries formed or acquired in accordance with Section 9.10
hereof, and Unrestricted Subsidiaries re-designated as Restricted
Subsidiaries in accordance with Section
9.11(b) hereof) during such period, but shall exclude on a pro forma basis all EBITDA of
the Restricted Companies for such period relating to any such assets disposed of
in accordance with this Agreement during such period (including, without
limitation, Restricted Subsidiaries re-designated as Unrestricted Subsidiaries
in accordance with Section
9.11(a) hereof).
Annex
A to
Limited
Waiver, Release, and Third Amendment
ANNEX B
Applicable
Percentage means, for any day, the commitment fee percentage applicable
under Section
5.4 when commitment fees are determined under this
Agreement. The Applicable Percentage is subject to adjustment
(upwards or downwards, as appropriate) based on the ratio of Net Funded Debt to
Adjusted EBITDA, as follows:
|
Ratio
of Net Funded Debt to Adjusted EBITDA
|
Applicable
Percentage
|
|
|
I
|
Less
than 1.50 to 1.00
|
0.100%
|
|
II
|
Greater
than or equal to 1.50 to 1.00, but less than 2.00 to 1.00
|
0.125%
|
|
III
|
Greater
than or equal to 2.00 to 1.00, but less than 2.50 to 1.00
|
0.150%
|
|
IV
|
Greater
than or equal to 2.50 to 1.00, but less than 3.00 to 1.00
|
0.200%
|
|
V
|
Greater
than or equal to 3.00 to 1.00, but less than 3.50 to 1.00
|
0.250%
|
|
VI
|
Greater
than or equal to 3.50 to 1.00, but less than 4.00 to 1.00
|
0.250%
|
|
VII
|
Greater
than or equal to 4.00 to 1.00
|
0.375%
|
Prior to
Administrative Agent’s receipt of the Companies’ consolidated Financial
Statements for the Companies’ fiscal quarter ended January 31, 2007, the ratio
of Net Funded Debt to Adjusted EBITDA (which shall be determined as described in
the definition of “Applicable
Margin”) shall be fixed at Level III.
Annex
B to
Limited
Waiver, Release, and Third Amendment
ANNEX C
Schedule
1
Borrower
and all other Companies
The Vail
Corporation
390
Interlocken Crescent, Suite 1000
Broomfield,
CO 80021
Contact:
Jeffrey P. Jones
Senior
Executive Vice President and Chief Financial Officer
Phone: 303/404-1802
FAX: 303/404/6403
Wire
Instructions:
Location
of account: U.S. Bank National Association
ABA
No.: 102000021
City/State: Denver,
Colorado
Account
No.: 122705422295
Copy to:
Fiona E. Arnold
Deputy General Counsel
Phone: 303/404-1892
FAX: 303/648-4787
Administrative Agent, L/C Issuer, and Swing Line
Lender
Bank of
America, N.A.
Mail
Code: TX1-492-64-01
901 Main
Street, 64th Floor
Dallas,
Texas 75202
Credit
Contact:
David L.
McCauley
Mail
Code: TX1-492-64-01
901 Main
Street, 64th Floor
Dallas,
Texas 75202
Phone: 214/209-0940
FAX: 214/209-0905
|
|
Agency
Contact:
|
Rosanne
Parsill
231 S.
LaSalle Street,
Chicago,
IL 60697
Phone: 312/923-1639
|
|
FAX: 877/206-8429
|
Annex
C to
Limited
Waiver, Release, and Third Amendment
|
|
Swing Line
Contact:
|
Arlene
Minor
Mail
Code: TX1-492-14-12
901 Main
Street, 14th Floor
Dallas,
Texas 75202
Phone: 214/209-9177
|
|
FAX: 214/290-9412
|
|
|
Operations
Contact:
|
Arlene
Minor
Mail
Code: TX1-492-14-12
901 Main
Street, 14th Floor
Dallas,
Texas 75202
Phone: 214/209-9177
FAX: 214/290-9412
|
|
L/C
Contact:
|
|
|
Stella
Rosales
|
Mail
Code: CA9-703-19-23
333 S.
Beaudry Avenue
Los
Angeles, California 90017-1466
Phone:
213/345-0141
Fax:
213/345-6684
Wire
Instructions:
Bank of
America, N.A.
ABA
No.: 111000012
City/State: Dallas,
Texas
Account
No.: 1292000883
Attn: Credit
Services
Ref: The
Vail Corp
Copy to:
Haynes
and Boone, LLP.
901 Main
Street, Suite 3100
Dallas,
Texas 75202-3789
Attn: Karen
S. Nelson
Phone: 214/651-5648
FAX:: 214/200-0673
Swing
Line Lender
U.S. Bank
National Association
918 17th
Street, 4th Floor
Denver,
Co 80202
Annex
C to
Limited
Waiver, Release, and Third Amendment
Credit
Contact:
Jennifer
Kaufman
950 17th
Street, 8th Floor
Denver,
Colorado 80202
Phone:
303/585-4202
Fax:
303/585-6949
|
|
Swing Line
Contact:
|
|
|
Hanny
Nawawi
|
555 SW
Oak
Portland,
Oregon 97204
Phone: 503/275-7894
|
|
Fax: 503/275-8181
|
Wire
Instructions:
U.S. Bank
National Association
ABA
No.: 123000220
BNF: Commercial
Loan Services - West
Account
No.: 00340012160600
Attn: Hanny
Nawawi
Ref: The
Vail Corporation
L/C
Issuer
Wells
Fargo Bank, National Association
Credit
Contact:
Debbie
Wright/Susan Petri
1740
Broadway
Denver,
Colorado 80274
Phone:
303/863-4829
Fax:
303/863-6670
|
|
L/C
Contact:
|
Debbie
Wright/Susan Petri
1740
Broadway
Denver,
Colorado 80274
Phone:
303/863-4829
|
|
Fax:
303/863-6670
|
Wire
Instructions:
Wells
Fargo Bank, National Association
ABA
No.: 121000248
City/State: Denver,
Colorado
Account
No.: 029650720
Attn: WLS
Denver
Ref: Vail
Corporation
Annex
C to
Limited
Waiver, Release, and Third Amendment
Lenders
and Commitments
|
LENDER
|
COMMITMENT
|
COMMITMENT
PERCENTAGE
|
|
Bank
of America, N.A.
|
$55,000,000
|
18.3%
|
|
U.S.
Bank National Association
|
$50,000,000
|
16.7%
|
|
Wells
Fargo Bank,
National
Association
|
$50,000,000
|
16.7%
|
|
Deutsche
Bank Trust
Company
Americas
|
$40,000,000
|
13.3%
|
|
LaSalle
Bank
National
Association
|
$40,000,000
|
13.3%
|
|
JPMorgan
Chase Bank, NA
|
$20,000,000
|
6.7%
|
|
Colorado
State Bank & Trust
|
$15,000,000
|
5.0%
|
|
Compass
Bank
|
$15,000,000
|
5.0%
|
|
Comerica
West Incorporated
|
$15,000,000
|
5.0%
|
|
Totals
|
$300,000,000
|
100.0000000%
|
Annex
C to
Limited
Waiver, Release, and Third Amendment
ANNEX D
Schedule
7.1
|
ITEM
|
DATE
FOR COMPLIANCE
|
|
|
1.Borrower
shall seek written consent from the United States Department of the
Interior, National Park Service (“Park
Service”) to the pledge by National Park Hospitality
Company (“NPHC”)
to the Administrative Agent (for the benefit of the Lenders) of the
capital stock of Grand Teton Lodge Company, a Wyoming corporation (“Grand
Teton”), issued to NPHC (the “Park
Service Consent”).
|
Not
later than 30 days after the date upon which the Park Service consents to
the transfer of ownership of Grand Teton from Borrower to
NPHC.
|
|
|
2.NPHC
shall execute and deliver to Administrative Agent a Pledge Agreement
pledging the capital stock issued by Grand Teton to NPHC, accompanied by a
certificate (or other instrument evidencing the capital stock) and a stock
power or similar instrument of transfer or assignment duly executed in
blank, each in form and substance satisfactory to Administrative
Agent
|
On
or before the thirtieth (30th) day after the date NPHC receives the Park
Service Consent
|
Annex
D to
Limited
Waiver, Release, and Third Amendment
ANNEX E
Schedule
8.2
(Attached)
Schedule
8.2
To
Bank of America Forth Amended and
Restated
Credit Agreement
|
Corporation
|
State
of Incorp.
|
Affiliated
Parent / LLC Member
(%
of Ownership)
|
|
Beaver
Creek Associates, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Beaver
Creek Consultants, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Beaver
Creek Food Services, Inc.
|
CO
|
Beaver
Creek Associates, Inc. (100%)
|
|
Boulder/Beaver,
LLC
|
CO
|
Beaver
Creek Food Services, Inc. (86%)
|
|
Breckenridge
Resort Properties, Inc.
|
CO
|
VRDC
(100%)
|
|
Colter
Bay Corporation
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Complete
Telecommunications, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Eagle
Park Reservoir Company
|
CO
(non-profit)
|
The
Vail Corporation (55%)
|
|
Forest
Ridge Holdings, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Gillett
Broadcasting, Inc.
|
DE
|
Vail
Resorts, Inc. (100%)
|
|
Grand
Teton Lodge Company
|
WY
|
The
Vail Corporation (100%)
|
|
Gros
Ventre Utility Company
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Heavenly
Valley, Limited Partnership
|
NV
|
VR
Heavenly I, Inc. & VR Heavenly II, Inc. (together,
100%)
|
|
Jackson
Hole Golf & Tennis Club
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
Jenny
Lake Lodge, Inc.
|
WY
|
Grand
Teton Lodge Company (100%)
|
|
JHL&S
LLC
|
WY
|
Teton
Hospitality Services, Inc. (51%)
|
|
Keystone
Conference Services, Inc.
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Development Sales, Inc.
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Food and Beverage Company
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Keystone
Resort Property Management Company
|
CO
|
Vail
Summit Resorts, Inc. (100%)
|
|
Larkspur
Restaurant & Bar, LLC
|
CO
|
The
Vail Corporation (83% + or -)
|
|
Lodge
Properties, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Lodge
Realty, Inc.
|
CO
|
Lodge
Properties, Inc. (100%)
|
|
Mountain
Thunder, Inc.
|
CO
|
VR
Holdings, Inc. (100%)
|
|
Property
Management Acquisition Corp., Inc.
|
TN
|
Vail
Summit Resorts, Inc. (100%)
|
|
RTP,
LLC
|
CO
|
The
Vail Corporation (54.5%)
|
|
RT
Partners, Inc.
|
DE
|
RTP,
LLC (51%)
|
|
Rockresorts
Casa Madrona, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Cheeca, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Equinox, Inc.
|
VT
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
International, LLC
|
DE
|
Vail
RR, Inc. (100%)
|
|
Rockresorts
LaPosada, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Rosario, LLC
|
DE
|
Rockresorts
International LLC (100%)
|
|
Rockresorts
Wyoming, LLC
|
WY
|
Rockresorts
International, LLC (100%)
|
|
SSI
Venture LLC
|
CO
|
The
Vail Corporation (52%)
|
|
Teton
Hospitality Services, Inc.
|
WY
|
The
Vail Corporation (100%)
|
|
Timber
Trail, Inc.
|
CO
|
VR
Holdings, Inc. (100%)
|
|
Vail/Arrowhead,
Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Associates Holdings, Ltd.
|
CO
|
Vail
Resorts Development Company (100%)
|
|
Vail
Associates Investments, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Associates Real Estate, Inc.
|
CO
|
Vail
Resorts Development Company (100%)
|
|
Vail/Beaver
Creek Resort Properties, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Corporation, The
|
CO
|
Vail
Holdings, Inc. (100%)
|
|
Vail
Food Services, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Holdings, Inc.
|
CO
|
Vail
Resorts, Inc. (100%)
|
|
Vail
Resorts Development Company
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Resorts, Inc.
|
DE
|
Publicly
traded on the NYSE
|
|
Vail
RR, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Summit Resorts, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
Vail
Trademarks, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VAMHC,
Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage I, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage II, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VA
Rancho Mirage Resort, L.P.
|
DE
|
VA
Rancho Mirage I, Inc. – GP
VA
Rancho Mirage II, Inc. – LP
(100%)
|
|
The
Village at Breckenridge Acquisition Corp., Inc.
|
TN
|
Vail
Summit Resorts, Inc. (100%)
|
|
VR
Heavenly I, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VR
Heavenly II, Inc.
|
CO
|
The
Vail Corporation (100%)
|
|
VR
Holdings, Inc.
|
CO
|
Vail/Arrowhead,
Inc. (100%)
|
ANNEX F
Annex A to Exhibit
D
CREDIT
FACILITY COVENANTS CALCULATIONS
Subject
Period: ___________________, 200_
|
Months
Ended - -
|
|
|
10.8(m) INVESTMENTS
IN PERSONS
|
|
|
(i)Investments
during Subject Period in Unrestricted Subsidiaries, Housing Districts and
Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses:
|
$
|
|
(ii)Investments
during prior Subject Periods in Unrestricted Subsidiaries, Housing
Districts and Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses:
|
$
|
|
(iii) Investments
set forth on part
(b) of Schedule
10.8:
|
$
|
|
(iv)(10.8(m)(i)
plus 10.8(m)(ii)
plus 10.8(m)(iii)):
|
$
|
|
(v) $75,000,000:
|
$75,000,000
|
|
(vi) Book
value of Total Assets:
|
$
|
|
(vii) 10%
of 10.8(m)(vi):
|
$
|
|
(viii) Investment
Limit (10.8(m)(v)
plus 10.8(m)(vii)):
|
$
|
|
(ix) Net
reductions in investments permitted under Section
10.8(m) in an aggregate amount not to exceed 10.8(m)(viii):
|
$
|
|
(x)Maximum
permitted investments in Unrestricted Subsidiaries, Housing Districts and
Metro Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses permitted after the Closing Date, and
investments set forth on part (b)
of Schedule
10.8 (10.8(m)(viii)
plus 10.8(m)(ix)):
|
$
|
|
(xi) Fair
market value of all assets owned by Restricted Subsidiaries on the Closing
Date which have been contributed to Unrestricted
Subsidiaries:
|
$
|
|
(xii) Is
10.8(m)(xi)
less than $75,000,000?
|
Yes/No
|
|
(xiii)Are
investments in Unrestricted Subsidiaries, Housing Districts and Metro
Districts not otherwise permitted under Section
10.8(j)(ii), and other Persons (other than Restricted Subsidiaries)
involved in Similar Businesses, and investments set forth on part
(b) of Schedule
10.8 (10.8(m)(iv)), less
than or equal to the maximum amount permitted (10.8(m)(x))?
|
Yes/No
|
|
10.9(d) DISTRIBUTIONS,
LOANS, ADVANCES, AND INVESTMENTS
|
|
|
(i)Distributions
under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 during Subject Period:
|
$
|
|
(ii)Distributions
under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 during prior Subject Periods:
|
$
|
|
(iii)Aggregate
Distributions under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 (the sum of 10.9(d)(i)
plus 10.9(d)(ii)):
|
$
|
|
(iv)Aggregate
amount of Restricted Payments (as defined in the VRI Indenture) that VRI
and its Restricted Subsidiaries are permitted to make under, and in
accordance with, Section
4.10 of the VRI Indenture, as set forth in detail on Schedule I
attached hereto:
|
$
|
|
(v) Are
aggregate Distributions under Section
10.9(d), and loans, advances, and investments made, which are not
otherwise permitted under Section
10.8 (10.9(d)(iii))
less than the maximum amount of Restricted Payments permitted (10.9(d)(iv))?
|
Yes/No
|
|
11.1 RATIO
OF NET FUNDED DEBT TO ADJUSTED EBITDA:
|
|
|
(i)All
obligations of the Companies for borrowed money:
|
$
|
|
(ii)Minus all obligations of the Unrestricted
Subsidiaries for borrowed money (the sum of items
11.1(ii)(A) through 11.1(ii)(W)
below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)Arrabelle
at Vail Square, LLC
|
($_____________ )
|
|
(L)Gore
Creek Place, LLC
|
($_____________ )
|
|
(M)The
Chalets at the Lodge at Vail, LLC
|
($_____________ )
|
|
(N)RCR
Vail, LLC
|
($_____________ )
|
|
(O) Colter
Bay Convenience Store, LLC
|
($_____________ )
|
|
(P) Colter
Bay General Store, LLC
|
($_____________ )
|
|
(Q) Colter
Bay Marina, LLC
|
($_____________ )
|
|
(R) Colter
Bay Cafe Court, LLC
|
($_____________ )
|
|
(S) Jenny
Lake Store, LLC
|
($_____________ )
|
|
(T) Jackson
Hole Golf & Tennis Club Snack Bar, LLC
|
($_____________ )
|
|
(U) Stampede
Canteen, LLC
|
($_____________ )
|
|
(V) Crystal
Peak Lodge of Breckenridge, Inc.
|
($_____________ )
|
|
(W) Hunkidori
Land Company, LLC
|
($_____________ )
|
|
(iii)Plus the principal portion of all Capital
Lease obligations of the Companies:
|
$_____________
|
|
(iv)Minus the principal portion of the Capital
Lease obligations for the following Unrestricted Subsidiaries (the sum of
items 11.1(iv)(A)
through 11.1(iv)(W)
below):
|
($____________)
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)Arrabelle
at Vail Square, LLC
|
($_____________ )
|
|
(L)Gore
Creek Place, LLC
|
($_____________ )
|
|
(M)The
Chalets at the Lodge at Vail, LLC
|
($_____________ )
|
|
(N)RCR
Vail, LLC
|
($_____________ )
|
|
(O) Colter
Bay Convenience Store, LLC
|
($_____________ )
|
|
(P) Colter
Bay General Store, LLC
|
($_____________ )
|
|
(Q) Colter
Bay Marina, LLC
|
($_____________ )
|
|
(R) Colter
Bay Cafe Court, LLC
|
($_____________ )
|
|
(S) Jenny
Lake Store, LLC
|
($_____________ )
|
|
(T) Jackson
Hole Golf & Tennis Club Snack Bar, LLC
|
($_____________ )
|
|
(U) Stampede
Canteen, LLC
|
($_____________ )
|
|
(V) Crystal
Peak Lodge of Breckenridge, Inc.
|
($_____________ )
|
|
(W) Hunkidori
Land Company, LLC
|
($_____________)
|
|
(v) Plus reimbursement obligations and undrawn
amounts under Bond
L/Cs
supporting Bonds (other than Existing Housing Bonds) issued
by
Unrestricted Subsidiaries:
|
$
|
|
(vi)Minus Debt under Existing Housing
Bonds:
|
$
|
|
(vii)Funded
Debt of the Restricted Companies (11.1(i)
minus 11.1(ii)
plus 11.1(iii)
minus 11.1(iv)
plus 11.1(v)
minus 11.1(vi)):
|
$
|
|
(viii) Cash
of the Companies:
|
$
|
|
(ix) Minus cash of the Unrestricted Subsidiaries
(the sum of items
11.1(ix)(A) through 11.1(ix)(W)
below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)Arrabelle
at Vail Square, LLC
|
($_____________ )
|
|
(L)Gore
Creek Place, LLC
|
($_____________ )
|
|
(M)The
Chalets at the Lodge at Vail, LLC
|
($_____________ )
|
|
(N)RCR
Vail, LLC
|
($_____________ )
|
|
(O) Colter Bay Convenience Store,
LLC
|
($_____________ )
|
|
(P) Colter
Bay General Store, LLC
|
($_____________ )
|
|
(Q) Colter
Bay Marina, LLC
|
($_____________ )
|
|
(R) Colter
Bay Cafe Court, LLC
|
($_____________ )
|
|
(S) Jenny
Lake Store, LLC
|
($_____________ )
|
|
(T) Jackson
Hole Golf & Tennis Club Snack Bar, LLC
|
($_____________ )
|
|
(U) Stampede
Canteen, LLC
|
($_____________ )
|
|
(V) Crystal
Peak Lodge of Breckenridge, Inc.
|
($_____________ )
|
|
(W) Hunkidori
Land Company, LLC
|
($_____________)
|
|
(x) Investments
of the Companies in marketable obligations issued or unconditionally
guaranteed by the U.S. or issued by any of its agencies and backed by the
full faith and credit of the U.S., in each case maturing within one year
from the date of acquisition:
|
$
|
|
(xi) Investments
of the Companies in short-term
investment grade domestic and eurodollar certificates of deposit or time
deposits that are fully insured by the Federal Deposit Insurance
Corporation or are issued by commercial banks organized under the Laws of
the U.S. or any of its states having combined capital, surplus, and
undivided profits of not less than $100,000,000 (as shown on its most
recently published statement of condition):
|
$
|
|
(xii) Investments
of the Companies in commercial paper and similar obligations rated “P-1” by Moody’s or
“A-1” by
S&P:
|
$
|
|
(xiii)Investments
of the Companies in readily marketable Tax-free municipal bonds of a
domestic issuer rated “A-2” or better by
Moody’s or “A” or
better by S&P, and maturing within one year from the date of
issuance:
|
$
|
|
(xiv) Investments
of the Companies in mutual funds or money marketaccounts investing primarily in items
described in items
11.1(x) through (xiii)
above:
|
$
|
|
(xv)Investments
of the Companies in demand deposit accounts maintained in the ordinary
course of business:
|
$
|
|
(xvi)Investments
of the Companies in short-term repurchase agreements with major banks and
authorized dealers, fully collateralized to at least 100% of market value
by marketable obligations issued or unconditionally guaranteed by the U.S.
or issued by any of its agencies and backed by the full faith and credit
of the U.S.:
|
$
|
|
(xvii)Investments
of the Companies in short-term variable rate demand notes that invest in
tax-free municipal bonds of domestic issuers rated “A-2” or better by
Moody’s or “A” or
better by S&P that are supported by irrevocable letters of credit
issued by commercial banks organized under the laws of the U.S. or any of
its states having combined capital, surplus, and undivided profits of not
less than $100,000,000:
|
$
|
|
(xviii)Temporary
Cash Investments of the Companies (11.1(x)
plus 11.1(xi)
plus 11.1(xii)
plus 11.1(xiii)
plus 11.1(xiv)
plus 11.1(xv) plus 11.1(xvi)
plus 11.1(xvii)):
|
$
|
|
(xix) Minus Temporary Cash Investments of the
Unrestricted Subsidiaries (the
sum of items
11.1(xix)(A) through 11.1(xix)(W) below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners, Inc.
|
($_____________ )
|
|
(K)Arrabelle
at Vail Square, LLC
|
($_____________ )
|
|
(L)Gore
Creek Place, LLC
|
($_____________ )
|
|
(M)The
Chalets at the Lodge at Vail, LLC
|
($_____________ )
|
|
(N)RCR
Vail, LLC
|
($_____________ )
|
|
(O) Colter Bay Convenience Store,
LLC
|
($_____________ )
|
|
(P) Colter
Bay General Store, LLC
|
($_____________ )
|
|
(Q) Colter
Bay Marina, LLC
|
($_____________ )
|
|
(R) Colter
Bay Cafe Court, LLC
|
($_____________ )
|
|
(S) Jenny
Lake Store, LLC
|
($_____________ )
|
|
(T) Jackson
Hole Golf & Tennis Club Snack Bar, LLC
|
($_____________ )
|
|
(U) Stampede
Canteen, LLC
|
($_____________ )
|
|
(V) Crystal
Peak Lodge of Breckenridge, Inc.
|
($_____________ )
|
|
(W) Hunkidori
Land Company, LLC
|
($_____________ )
|
|
(xx) Unrestricted
Cash of the Restricted Companies (11.1(viii)
minus 11.1(ix)
plus 11.1(xviii)
minus 11.1(xix)):
|
$
|
|
(xxi) Unrestricted
Cash of the Restricted Companies in excess of$10,000,000:
|
$
|
|
(xxii) Net
Funded Debt (11.1(vii)
minus 11.1(xxi)):
|
$
|
|
(xxiii)EBITDA
of the Companies for the last four fiscal quarters:
|
$
|
|
(xxiv)Plus insurance proceeds (up to a maximum of
$10,000,000 in the aggregate for any fiscal year) received by the
Restricted Companies under policies of business interruption insurance (or
under policies of insurance which cover losses or claims of the same
character or type):
|
$
|
|
(xxv)Plus pro forma EBITDA for
assets acquired during such period:
|
$
|
|
(xxvi)Minus pro forma EBITDA for
assets disposed of during such period:
|
($_____________ )
|
|
(xxvii)Minus EBITDA for such period attributable
to the following Unrestricted Subsidiaries (sum of items 11.1(xxvii)(A)
through 11.1(xxvii)(W)
below):
|
($_____________ )
|
|
(A)SSI
Venture LLC (weighted average of the membership interest not held by a
Company) (if SSI is not a Restricted Subsidiary)
|
($_____________ )
|
|
(B)Eagle
Park Reservoir Company
|
($_____________ )
|
|
(C)Boulder/Beaver,
LLC
|
($_____________ )
|
|
(D)Colter
Bay Corporation
|
($_____________ )
|
|
(E)Gros
Ventre Utility Company
|
($_____________ )
|
|
(F)Jackson
Lake Lodge Corporation
|
($_____________ )
|
|
(G)Jenny
Lake Lodge, Inc.
|
($_____________ )
|
|
(H)Forest
Ridge Holdings, Inc.
|
($_____________ )
|
|
(I)Resort
Technology Partners, LLC
|
($_____________ )
|
|
(J)RT
Partners Inc.
|
($_____________ )
|
|
(K)Arrabelle
at Vail Square, LLC
|
($_____________ )
|
|
(L)Gore
Creek Place, LLC
|
($_____________ )
|
|
(M)The
Chalets at the Lodge at Vail, LLC
|
($_____________ )
|
|
(N)RCR
Vail, LLC
|
($_____________ )
|
|
(O) Colter Bay Convenience Store,
LLC
|
($_____________ )
|
|
(P) Colter
Bay General Store, LLC
|
($_____________ )
|
|
(Q) Colter
Bay Marina, LLC
|
($_____________ )
|
|
(R) Colter
Bay Cafe Court, LLC
|
($_____________ )
|
|
(S) Jenny
Lake Store, LLC
|
($_____________ )
|
|
(T) Jackson
Hole Golf & Tennis Club Snack Bar, LLC
|
($_____________ )
|
|
(U) Stampede
Canteen, LLC
|
($_____________ )
|
|
(V) Crystal
Peak Lodge of Breckenridge, Inc.
|
($_____________ )
|
|
(W) Hunkidori
Land Company, LLC
|
($_____________)
|
|
(xxviii)Adjusted
EBITDA (11.1(xxiii)
plus 11.1(xxiv)
plus 11.1(xxv)
minus 11.1(xxvi)
minus 11.1(xxvii)):
|
$
|
|
(xxix)Ratio
of Net Funded Debt to Adjusted EBITDA
(Ratio of 11.1(xxii)
to 11.1(xxviii)):
|
|
|
(xxx)Maximum
ratio of Net Funded Debt to Adjusted EBITDA permitted:
|
4.50
: 1.00
|
|
(xxxi)Is
the ratio of Net Funded Debt to Adjusted EBITDA less than the maximum
ratio permitted?
|
Yes/No
|
|
11.2 [RESERVED]
|
|
|
11.3 MINIMUM
NET WORTH:
|
|
|
(a)Shareholders’
Equity determined in accordance with GAAP:
|
$
|
|
(b)$414,505,800:
|
$414,505,800
|
|
(c)Restricted
Companies’ Net Income, if positive, for each fiscal year completed after
October 31, 2004:
|
$
|
|
(d)75%
of the total from 11.3(c):
|
$
|
|
(e)Net
Proceeds received by any Restricted Company (other than from another
Company) from the offering, issuance, or sale of equity securities of a
Restricted Company afterOctober 31, 2004:
|
$
|
|
(f)Minimum
shareholders’ equity permitted
(11.3(b)
plus 11.3(d)
plus 11.3(e)):
|
$
|
|
(g)Does
Shareholders’ Equity exceed the minimum permitted?
|
Yes/No
|
|
11.4 INTEREST
COVERAGE RATIO
|
|
|
(a)Adjusted
EBITDA for the last four fiscal quarters (11.1(xxviii)):
|
$
|
|
(b)Interest
on Funded Debt for the last four fiscal quarters:
|
$
|
|
(c) Amortization
of deferred financing costs and original issue discounts:
|
$
|
|
(d) 11.4(b)
minus 11.4(c):
|
$
|
|
(e) Interest
Coverage Ratio (Ratio of 11.4(a)
to 11.4(d)):
|
|
|
(f) Minimum
Interest Coverage Ratio permitted:
|
2.50
: 1.00
|
|
(g)Does
the Interest Coverage Ratio exceed the minimum ratio
permitted?
|
Yes/No
|
|
11.5 CAPITAL
EXPENDITURES
|
|
|
(a)Aggregate
capital expenditures of the Restricted Companies in the ordinary course of
the business (excluding (i) normal replacements and maintenance which are
properly charged to current operations, and (ii) such expenditures
relating to real estate held for resale) during each fiscal
year:
|
$
|
|
(b)Total
Assets of the Restricted Companies as of the last day of the fiscal
year:
|
$
|
|
(c)Maximum
capital expenditures permitted (10% of Total Assets of the Restricted
Companies set forth in 11.5(b)):
|
$
|
|
(d)Are
aggregate capital expenditures less than the maximum amount
permitted?
|
Yes/No
|
|
LETTERS
OF CREDIT
|
|
|
Set
forth on Schedule
1 attached hereto is a list of all issued and outstanding letters
of credit issued for the account of any of the Companies, and the drawn
and undrawn amounts thereunder
|
Annex
F to
Limited
Waiver, Release, and Third Amendment
SUMMARY OF VAIL RESORTS, INC.
DIRECTOR COMPENSATION1
PER
SUMMARY PREPARED BY CHAIRMAN OF THE BOARD, EFFECTIVE 8/1/03;
LAST
REVISED BY COMPENSATION COMMITTEE 3/10/09
CASH
AND EQUITY COMPENSATION (Excludes CEO)
|
Description
of Compensation
|
To
Whom
|
Amount
|
|
Annual
Cash Retainer
|
Directors
|
$28,000
|
|
Additional
Compensation
|
Chairman
of the Board
|
$50,000
|
|
for
Other Services
|
Audit
Committee Chair
|
$25,000
|
|
Audit
Committee Members
|
$15,000
|
|
|
Compensation
Committee Chair
|
$7,500
|
|
|
Nominating
Committee Chair
|
$7,500
|
|
|
Lead
Director
|
$25,000
|
|
|
Meeting
Fees (Per Meeting)
|
Directors
(In Person)
|
$5,000
|
|
(Not
Including Actions
|
Directors
(By Telephone)
|
$1,000
|
|
Taken
by Consent)
|
Compensation/Nominating
Committee
|
$1,000
|
|
Audit
Committee Meeting
|
$2,000
|
|
|
Equity
Compensation
|
All
Directors
|
$119,025
Restricted Stock Units*
|
* The grant value is
determined and approved each year by the Compensation Committee; on September
23, 2008, the Compensation Committee granted each Board member RSUs with a value
of $119,025. Based on the closing price of the Company’s stock on the
date of grant each director was issued 2,968 RSUs which vest in full on
September 23, 2009.
PERQUISITES
Each
director is entitled to an annual $30,000 allowance to be used at the Company’s
resorts in accordance with the terms of the Company’s Executive Perquisite Fund
Program, filed as Exhibit 10.27 of the Company’s annual report on Form 10-K
for the fiscal year ended July 31, 2007. Directors may draw
against the account to pay for services, at the market rate for the applicable
resort or services. Unused funds in each director’s account at the
end of each fiscal year will be forfeited.
1 All
taxes on director compensation are to be paid by Board member
Adopted
December 29 2008;
Effective
with respect to all amounts
deferred
on or after January 1, 2005
TABLE OF
CONTENTS
Selection
by Committee
Page
|
1
|
Article
1 Definitions
|
|
5
|
Article
2 Selection, Enrollment, Eligibility
|
|
5
|
2.1
|
Selection
by Committee
|
|
|
5
|
2.2
|
Enrollment
and Eligibility Requirements; Commencement of
Participation
|
|
|
6
|
2.3
|
Failure
of Eligibility
|
|
|
6
|
Article
3 Deferral Elections /Company Contribution Amounts/ Minimum and Maximum
Deferrals/Vesting/Crediting/Taxes
|
|
6
|
3.1
|
Election
to Defer; Effect of Election Form
|
|
|
8
|
3.2
|
Minimum
Deferrals
|
|
|
8
|
3.3
|
Maximum
Deferral
|
|
|
9
|
3.4
|
Withholding
and Crediting of Annual Deferral Amounts
|
|
|
10
|
3.5
|
Company
Contribution Amount
|
|
|
10
|
3.6
|
Crediting
of Amounts after Benefit Distribution
|
|
|
10
|
3.7
|
Vesting
|
|
|
11
|
3.8
|
Crediting/Debiting
of Account Balances
|
|
|
13
|
3.9
|
FICA
and Other Taxes
|
|
|
13
|
Article
4 Scheduled Distribution; Unforeseeable Emergencies
|
|
13
|
4.1
|
Scheduled
Distribution
|
|
|
14
|
4.2
|
Postponing
Scheduled Distributions
|
|
|
14
|
4.3
|
Other
Benefits Take Precedence Over Scheduled
Distributions
|
|
|
14
|
4.4
|
Unforeseeable
Emergencies
|
|
|
15
|
Article
5 Separation Benefit
|
|
15
|
5.1
|
Separation
Benefit
|
|
|
15
|
5.2
|
Payment
of Separation Benefit
|
|
|
16
|
Article
6 Disability Benefit
|
|
16
|
6.1
|
Disability
Benefit
|
|
|
16
|
6.2
|
Payment
of Disability Benefit
|
|
|
16
|
Article
7 Survivor Benefit
|
|
16
|
7.1
|
Survivor
Benefit
|
|
|
16
|
7.2
|
Payment
of Survivor Benefit
|
|
|
16
|
Article
8 Beneficiary Designation
|
|
16
|
8.1
|
Beneficiary
|
|
|
16
|
8.2
|
Beneficiary
Designation; Change; Spousal Consent
|
|
|
17
|
8.3
|
Acknowledgment
|
|
|
17
|
8.4
|
No
Beneficiary Designation
|
|
|
17
|
8.5
|
Doubt
as to Beneficiary
|
|
|
17
|
8.6
|
Discharge
of Obligations
|
|
|
17
|
Article
9 Leave of Absence
|
|
17
|
9.1
|
Paid
Leave of Absence
|
|
|
17
|
9.2
|
Unpaid
Leave of Absence
|
|
|
18
|
9.3
|
Leaves
Resulting in Separation from Service
|
|
|
18
|
Article
10 Termination of Plan, Amendment or
Modification
|
|
18
|
10.1
|
Termination
of Plan
|
|
|
18
|
10.2
|
Amendment
|
|
|
19
|
10.3
|
Plan
Agreement
|
|
|
19
|
10.4
|
Effect
of Payment
|
|
|
19
|
Article
11 Administration
|
|
19
|
11.1
|
Committee
Duties
|
|
|
19
|
11.2
|
Administration
Upon Change In Control
|
|
|
19
|
11.3
|
Agents
|
|
|
19
|
11.4
|
Binding
Effect of Decisions
|
|
|
20
|
11.5
|
Indemnity
of Committee
|
|
|
20
|
11.6
|
Employer
Information
|
|
|
20
|
Article
12 Other Benefits and Agreements
|
|
20
|
12.1
|
Coordination
with Other Benefits
|
|
|
20
|
Article
13 Claims Procedures
|
|
20
|
13.1
|
Presentation
of Claim
|
|
|
20
|
13.2
|
Notification
of Decision
|
|
|
21
|
13.3
|
Review
of a Denied Claim
|
|
|
21
|
13.4
|
Decision
on Review
|
|
|
21
|
13.5
|
Legal
Action
|
|
|
22
|
Article
14 Trust
|
|
22
|
14.1
|
Establishment
of the Trust
|
|
|
22
|
14.2
|
Interrelationship
of the Plan and the Trust
|
|
|
22
|
14.3
|
Distributions
From the Trust
|
|
|
22
|
Article
15 Miscellaneous
|
|
22
|
15.1
|
Status
of Plan
|
|
|
22
|
15.2
|
Unsecured
General Creditor
|
|
|
22
|
15.3
|
Employer’s
Liability
|
|
|
22
|
15.4
|
Nonassignability
|
|
|
23
|
15.5
|
Not
a Contract of Employment
|
|
|
23
|
15.6
|
Furnishing
Information
|
|
|
23
|
15.7
|
Terms
|
|
|
23
|
15.8
|
Captions
|
|
|
23
|
15.9
|
Governing
Law
|
|
|
23
|
15.10
|
Notice
|
|
|
|
23
|
15.11
|
Successors
|
|
|
23
|
15.12
|
Validity
|
|
|
23
|
15.13
|
Incompetent
|
|
|
24
|
15.14
|
Court
Order
|
|
|
24
|
15.15
|
Distribution
in the Event of Income Inclusion Under 409A
|
|
|
24
|
15.16
|
Deduction
Limitation on Benefit Payments
|
|
|
24
|
15.17
|
Insurance
|
|
|
25
|
15.18
|
Legal
Fees To Enforce Rights
|
|
|
1
|
APPENDIX
A Limited Transition Relief made Available in Accordance with
Code Section 409a and Related Treasury Guidance and
Regulations
|
|
1
|
Opportunity
to Make New Distribution Elections
|
|
|
1
|
Termination
of Plan Participation/Cancellation of Deferral
Elections
|
|
THE
VAIL CORPORATION
2005
DEFERRED COMPENSATION PLAN
Purpose
The
purpose of this Plan is to provide specified benefits to a select group of
management or highly compensated Employees who contribute materially to the
continued growth, development and future business success of The Vail
Corporation, d/b/a Vail Associates, Inc., a Colorado corporation, and any of its
affiliates or subsidiaries that adopts this Plan as a participating
employer. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
The terms
of this Plan shall govern all amounts deferred on or after January 1, 2005,
including (i) any amounts previously credited to the Vail Corporation Deferred
Compensation Plan adopted on September 15, 2000 (“Frozen Plan”) that
remained unvested after December 31, 2004 (the “Transfer Amount”), and (ii)
any amounts that are deemed subject to Section 409A as a result of a
modification of the Frozen Plan. This Plan is intended to comply with
all applicable law, including Code Section 409A and related Treasury
guidance and Regulations, and shall be operated and interpreted in accordance
with this intention. Consistent with the foregoing, and in order to
transition the Plan to the requirements of Code Section 409A and related
Treasury guidance and Regulations, the Committee has made available, or will
make available, to Participants certain transition relief described more fully
in Appendix A of this Plan.
ARTICLE
1
Definitions
For the
purposes of this Plan, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated
meanings:
|
1.1
|
“Account
Balance” shall mean, with respect to a Participant, an entry on the
records of the Employer equal to the sum of (i) the Participant’s
Annual Accounts, and (ii) the Participant’s Transfer Amount, if any,
along with related earnings. The Account Balance shall be a
bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to a Participant,
or his or her designated Beneficiary, pursuant to this
Plan.
|
|
1.2
|
“Annual
Account” shall mean, with respect to a Participant, an entry on the
records of the Employer equal to the following
amount: (i) the sum of the Participant’s Annual Deferral
Amount and Company Contribution Amount for any one Plan Year, plus
(ii) amounts credited or debited to such amounts pursuant to this
Plan, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the Annual Account
for such Plan Year. The Annual Account shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement
and determination of the amounts to be paid to a Participant, or his or
her designated Beneficiary, pursuant to this
Plan.
|
|
1.3
|
“Annual
Deferral Amount” shall mean that portion of a Participant’s Base Salary
(including any 401(k) Refund Offset, as defined below), Bonus and Director
Fees that a Participant defers in accordance with Article 3 for any one
Plan Year, without regard to whether such amounts are withheld and
credited during such Plan Year. In the event of a Participant’s
Separation from Service, Disability or death prior to the end of a Plan
Year, such year’s Annual Deferral Amount shall be the actual amount
withheld prior to such event.
|
|
1.4
|
“Annual
Installment Method” shall be an annual installment payment over the number
of years selected by the Participant in accordance
with this Plan, calculated as follows: (i) for the first
annual installment, the vested portion of each Annual Account shall be
calculated as of the close of business on or around the Participant’s
Benefit Distribution Date, as determined by the Committee in its sole
discretion, and (ii) for
remaining annual installments, the vested portion of each applicable
Annual Account shall be calculated on or around the first business day of
each Plan Year following the Plan Year in which the Participant’s first
installment payment was distributed. Each annual installment
shall be calculated by multiplying this balance by a fraction, the
numerator of which is one and the denominator of which is the remaining
number of annual payments due to the Participant. By way of
example, if the Participant elects a ten (10) year Annual Installment
Method as the form of Separation Benefit for an Annual Account, the first
payment shall be 1/10 of the vested balance of such Annual Account,
calculated as described in this definition. The following year,
the payment shall be 1/9 of the vested balance of such Annual Account,
calculated as described in this
definition.
|
|
1.5
|
“Base
Salary” shall mean the Participant’s base cash compensation for services
performed during any Plan Year, which, for purposes of clarity, excludes
distributions from nonqualified deferred compensation plans, bonuses,
commissions, overtime, fringe benefits, stock options and other equity
incentive awards, relocation expenses, incentive payments, non-monetary
awards, director fees and other fees, and automobile and other allowances
paid to a Participant for employment services rendered (whether or not
such allowances are included in the Employee’s gross
income). Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or nonqualified plans of any Employer and shall
be calculated to include amounts not otherwise included in the
Participant’s gross income under Code Sections 125, 402(e)(3),
402(h), or 403(b) pursuant to plans established by any Employer; provided,
however, that all such amounts will be included in Base Salary only to the
extent that had there been no such plan, the amount would have been
payable in cash to the Employee.
|
|
1.6
|
“Beneficiary”
shall mean one or more persons, trusts, estates or other entities,
designated in accordance with Article 8, that are entitled to receive
benefits under this Plan upon the death of a
Participant.
|
|
1.7
|
“Beneficiary
Designation Form” shall mean the form, which may be electronic,
established from time to time by the Committee, that a Participant
completes and returns to the Committee to designate one or more
Beneficiaries.
|
|
1.8
|
“Benefit
Distribution Date” shall mean a date that triggers distribution of a
Participant’s vested benefits upon Separation from Service, death, or
Disability. A Benefit Distribution Date for a Participant shall
be determined upon the occurrence of any one of the
following:
|
|
(a)
|
If
the Participant experiences a Separation from Service, the Benefit
Distribution Date for his or her vested Account Balance shall be the last
day of the six-month period immediately following the date on which the
Participant experiences a Separation from Service; provided, however, in
the event the Participant either changes the form of payment or postpones
the time of payment of the Separation Benefit for one or more Annual
Accounts in accordance with Section 5.2(c), the Benefit Distribution
Date for such Annual Account(s) shall be postponed in accordance with such
section 5.2(c); or
|
|
(b)
|
If
the Participant dies prior to the complete distribution of his or her
vested Account Balance, the Participant’s Benefit Distribution Date shall
be the date on which the Committee is provided with proof that is
satisfactory to the Committee of the Participant’s death;
or
|
|
(c)
|
If
the Participant becomes Disabled, the Participant’s Benefit Distribution
Date shall be the date on which the Participant becomes
Disabled.
|
|
1.9
|
“Board”
shall mean the board of directors of the
Company.
|
|
1.10
|
“Bonus”
shall mean compensation earned by a Participant under any Employer’s cash
bonus plans, and shall specifically include amounts described in
Section 3.1(d), 3.1(e), and
3.1(f).
|
|
1.11
|
“Change
in Control” shall mean any “change in control event” as defined in
accordance with Code Section 409A and related Treasury guidance and
Regulations.
|
|
1.12
|
“Claimant”
shall have the meaning set forth in
Section 13.1.
|
|
1.13
|
“Class
1 Participant” shall mean a Participant who has a salary grade level of 30
or above.
|
|
1.14
|
“Class
2 Participant” shall mean a Participant who has a salary grade level of
less than 30.
|
|
1.15
|
“Code”
shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time.
|
|
1.16
|
“Committee”
shall mean the committee described in Article
11.
|
|
1.17
|
“Company”
shall mean The Vail Corporation, d/b/a Vail Associates, Inc., a Colorado
corporation, and any successor to all or substantially all of the
Company’s assets or business.
|
|
1.18
|
“Company
Contribution Amount” shall mean, for any one Plan Year, the amount
determined in accordance with
Section 3.5.
|
|
1.19
|
“Director”
shall mean any member of the board of directors of any
Employer.
|
|
1.20
|
“Director
Fees” shall mean the fees otherwise payable in cash to a Director by any
Employer, including cash retainer fees and cash meetings fees, as
compensation for serving on the board of
directors.
|
|
1.21
|
“Disability”
or “Disabled” shall mean that a Participant is (i) unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less
than 12 months, or (ii) by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not
less than 3 months under an accident or health plan covering
employees of the Participant’s Employer. For purposes of this
Plan, a Participant shall be deemed Disabled if determined to be totally
disabled by the Social Security Administration, or if determined to be
disabled in accordance with the applicable disability insurance program of
such Participant’s Employer, provided that the definition of “disability”
applied under such disability insurance program complies with the
requirements in the preceding
sentence.
|
|
1.22
|
“Disability
Benefit” shall mean the benefit set forth in Article
6.
|
|
1.23
|
“Election
Form” shall mean the form, which may be in electronic format, established
from time to time by the Committee in its sole discretion, that a
Participant completes and returns to the Committee in order to make
elections under the Plan.
|
|
1.24
|
“Employee”
shall mean a person who is a common-law employee of any
Employer. Notwithstanding the foregoing, the term Employee
shall not
include any individual (a) who provides services to the Employer under an
agreement, contract, or any other arrangement pursuant to which the
individual is initially classified as an independent contractor, or (b)
whose remuneration for services has not been treated initially as subject
to the withholding of federal income tax pursuant to Code section 3401,
even if the individual is subsequently reclassified as a common law
employee as a result of a final decree of a court of competent
jurisdiction or the settlement of an administrative or judicial
proceeding.
|
|
1.25
|
“Employer(s)”
shall mean the Company and/or any of its affiliates or subsidiaries (now
in existence or hereafter formed or acquired) that have been selected by
the Board to participate in the Plan and have adopted the Plan as a
participating employer.
|
|
1.26
|
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
|
|
1.27
|
“401(k)
Plan” shall mean, with respect to an Employer, a plan qualified under Code
Section 401(a) that contains a cash or deferred arrangement described
in Code Section 401(k), adopted by the Employer, as it may be amended
from time to time, or any successor
thereto.
|
|
1.28
|
“Participant”
shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who completes the Enrollment
Requirements and becomes eligible to participate in the Plan in accordance
with Section 2.2, and (iii) whose Plan Agreement (if any) has
not terminated.
|
|
1.29
|
“Plan”
shall mean The Vail Corporation 2005 Deferred Compensation Plan, which
shall be evidenced by this instrument and by each Plan Agreement, as they
may be amended from time to time.
|
|
1.30
|
“Plan
Agreement” shall mean an agreement, which may be amended from time to
time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement between a Participant and the
Participant’s Employer shall provide for the entire benefit to which such
Participant is entitled under the Plan; should there be more than one Plan
Agreement, the Plan Agreement bearing the latest date of acceptance by the
Employer shall supersede all previous Plan Agreements in their entirety
and shall govern such entitlement. The terms of any Plan
Agreement may be different for any Participant, and any Plan Agreement may
provide additional benefits or distribution options not set forth in the
Plan or limit the benefits or distribution options otherwise provided
under the Plan; provided, however, that any such additional benefits or
distribution options, or benefit limitations or distribution limitations,
shall comply with Code Section 409A and must be agreed to by both the
Employer and the Participant.
|
|
1.31
|
“Plan
Year” shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar
year.
|
|
1.32
|
“Scheduled
Distribution” shall mean the distribution set forth in
Section 4.1.
|
|
1.33
|
“Separation
Benefit” shall mean the benefit set forth in Article
5.
|
|
1.34
|
“Separation
from Service” shall mean the separation from service with all Employers,
voluntarily or involuntarily, for any reason other than Disability or
death, as determined in accordance with Code Section 409A and related
Treasury guidance and Regulations. If a Participant is both an
Employee and a Director, then, except as otherwise required by Code
Section 409A and related Treasury guidance and Regulations, a Separation
from Service shall not occur prior to the termination of his or her
services as both an Employee and a
Director.
|
|
1.35
|
“Survivor
Benefit” shall mean the benefit set forth in Article
7.
|
|
1.36
|
“Terminate
the Plan” or “Termination of the Plan” shall mean a determination by an
Employer’s board of directors that (i) all of its Participants shall
no longer be eligible to participate in the Plan, (ii) no new
deferral elections for such Participants shall be permitted, and
(iii) such Participants shall no longer be eligible to receive
company contributions under this
Plan.
|
|
1.37
|
“Trust”
shall mean one or more trusts established by the Company in accordance
with Article 14.
|
|
1.38
|
“Unforeseeable
Emergency” shall mean a severe financial hardship of the Participant
resulting from (i) an illness or accident of the Participant, the
Participant’s spouse, or the Participant’s dependent (as defined in Code
Section 152(a)), (ii) a loss of the Participant’s property due
to casualty, or (iii) such other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole discretion of
the Committee.
|
ARTICLE
2
Selection, Enrollment,
Eligibility
|
2.1
|
Selection by
Committee
|
. Participation
in the Plan shall be limited to Directors (who shall be eligible on and after
January 1, 2007) and, as determined by the Committee in its sole discretion, a
select group of management or highly compensated Employees. From that
group, the Committee shall select, in its sole discretion, those individuals who
are eligible to participate in this Plan and the date on which such individuals
become eligible to participate.
|
2.2
|
Enrollment and
Eligibility Requirements; Commencement of
Participation
|
.
|
(a)
|
As
a condition of participation, each Director or selected Employee who is
eligible to participate in the Plan must (i) complete and return to the
Committee an Election Form, and (ii) must complete such other enrollment
requirements as the Committee determines, in its sole discretion (together
the “Enrollment Requirements”), which, on and after January 1, 2007, shall
include the completion and return to the Committee of a Plan Agreement and
a Beneficiary Designation Form.
|
|
(b)
|
A
Director or selected Employee who is eligible to participate in the Plan
effective as of the first day of a Plan Year shall complete the Enrollment
Requirements prior to the first day of such Plan Year, or such other
earlier deadline as may be established by the Committee in its sole
discretion. Assuming timely completion of the Enrollment
Requirements, as determined by the Committee in its sole discretion, the
Director or selected Employee shall commence participation in the Plan as
of such first day of the Plan Year.
|
|
(c)
|
A
Director or selected Employee who first becomes eligible to participate in
this Plan after the first day of a Plan Year must complete the Enrollment
Requirements within thirty (30) days after he or she first becomes
eligible to participate in the Plan, or within such other earlier deadline
as may be established by the Committee, in its sole discretion. The
Director or selected Employee shall commence participation in the Plan on
the date that the Committee determines, in its sole discretion, that the
Director or selected Employee has timely satisfied the Enrollment
Requirements. Notwithstanding the foregoing, the Committee
shall process such Participant’s deferral election as soon as
administratively practicable after such deferral election is submitted to
and accepted by the Committee.
|
|
(d)
|
If
a Director or a selected Employee fails to satisfy timely the Enrollment
Requirements within the relevant period required, the Director or selected
Employee shall not be eligible to participate in the Plan during such Plan
Year and shall not commence participation until the first day of the Plan
Year next following the date on which the Director or selected Employee
does complete the Enrollment
Requirements.
|
|
2.3
|
Failure of
Eligibility
|
. If
the Committee determines, in its sole and absolute discretion, that any
Participant (i) shall no longer be eligible to participate in the Plan, or
(ii) no longer qualifies as a member of a select group of management or
highly compensated employees of the Employer, then the Participant shall cease
active participation in the Plan and all contributions by or on the
Participant’s behalf shall cease on the date determined by the Committee, in its
sole and absolute discretion, after taking into account (1) the requirements of
Code Section 409A and related Treasury guidance and Regulations, and (2)
the intent of the Plan to be a “top-hat” plan complying with Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA. The Committee’s determination shall
be final and binding on all persons.
ARTICLE
3
Deferral Elections /Company
Contribution Amounts/
Minimum and Maximum
Deferrals/Vesting/Crediting/Taxes
|
3.1
|
Election to Defer;
Effect of Election Form
|
.
|
(a)
|
First
Year of Plan Participation. In connection with a
Participant’s commencement of participation in the Plan, the Participant
shall make an irrevocable election to defer Base Salary, Bonus, and/or
Director Fees (as applicable) for the Plan Year in which the Participant
commences participation in the Plan. For the election to be valid, the
Election Form must be completed by the Participant and delivered timely to
(and accepted by) the Committee along with the remainder of the Enrollment
Requirements in accordance with Section 2.2
above.
|
The
Participant’s election shall not apply to
compensation paid with respect to services performed prior to the date the
Participant commences participation in the Plan, except to the extent
permissible under Code Section 409A and related Treasury guidance or
Regulations. For compensation that is earned based upon a specified
performance period, the Participant’s deferral election will apply solely to the
portion of such compensation that is equal to (i) the total amount of
compensation for the performance period, multiplied by (ii) a fraction, the
numerator of which is the number of days remaining in the service period after
the Participant commences participation in the Plan, and the denominator of
which is the total number of days in the performance period.
|
(b)
|
Subsequent
Plan Years. For each succeeding Plan Year, a Participant
may elect to defer Base Salary, Bonus, and/or Director Fees (as
applicable), and make such other elections as the Committee deems
necessary or desirable under the Plan, by delivering timely a new Election
Form to the Committee, in accordance with its rules and procedures, before
the December 31st
preceding the Plan Year in which such compensation is earned, or before
such earlier deadline established by the Committee in accordance with the
requirements of Code Section 409A and related Treasury guidance or
Regulations.
|
Any
deferral election(s) made in accordance with this Section 3.1(b) shall be
irrevocable; provided, however, that if the Committee requires Participants to
make a deferral election for “performance-based compensation,” “compensation
subject to forfeiture,” or “fiscal year compensation” by the deadline(s)
described above, it may, in its sole discretion, and in accordance with Code
Section 409A and related Treasury guidance or Regulations, permit a
Participant to subsequently change his or her deferral election for such
compensation by submitting an Election Form to the Committee no later than the
deadline established by the Committee pursuant to Section 3.1(d), (e), or
(f) below.
|
(c)
|
401(k)
Refund Offset. In connection with each Participant’s
deferral election under the Plan for each Plan Year, the Participant shall
be permitted to elect to defer an amount of Base Salary equal to the
refund, if any, that the Participant receives from the Employer’s 401(k)
Plan during such Plan Year (the “401(k) Refund
Offset’).
|
|
(d)
|
Performance-Based
Compensation. Notwithstanding
anything to the contrary herein, the Committee may, in its sole
discretion, determine that an irrevocable deferral election pertaining to
“performance-based compensation” based on services performed over a period
of at least twelve (12) months, may be made by delivering timely an
Election Form to the Committee, in accordance with its rules and
procedures, no later than six (6) months before the end of the performance
service period. “Performance-based compensation” shall be
compensation, the payment or amount of which is contingent on
pre-established organizational or individual performance criteria, which
satisfies the requirements of Code Section 409A and related Treasury
guidance or Regulations. In order to be eligible to make a
deferral election for performance-based compensation, a Participant must
perform services continuously from a date no later than the date upon
which the performance criteria for such compensation are established
through the date upon which the Participant makes a deferral election for
such compensation. In no event shall an election to defer
performance-based compensation be permitted after such compensation has
become both substantially certain to be paid and readily
ascertainable. For purposes of this Plan, including the minimum
and maximum deferral limits below, “performance based compensation”
deferred pursuant to this Section shall be treated as part of a
Participant’s Bonus and Annual Deferral Amount for the Plan Year in which
the performance service period
ends.
|
|
(e)
|
Compensation
Subject to Risk of Forfeiture. With respect to
compensation (i) to which a Participant has a legally binding right
to payment in a subsequent year, and (ii) that is subject to a
forfeiture condition requiring the Participant’s continued services for a
period of at least twelve (12) months from the date the Participant
obtains the legally binding right, the Committee may, in its sole
discretion, determine that an irrevocable deferral election for such
compensation may be made by delivering timely an Election Form to the
Committee in accordance with its rules and procedures, no later than the
30th
day after the Participant obtains the legally binding right to the
compensation, provided that the election is made at least twelve (12)
months in advance of the earliest date at which the forfeiture condition
could lapse. For purposes of this Plan, including the minimum
and maximum deferral limits below, compensation deferred pursuant to this
Section shall be treated as part of a Participant’s Bonus and Annual
Deferral Amount for the Plan Year in which the forfeiture condition
lapses.
|
|
(f)
|
Fiscal
Year Compensation. With respect to any Participant whose
Employer uses a fiscal year other than the calendar year, the Committee
may, in its sole discretion, permit the Participant to defer compensation
relating to a period of service coextensive with one or more consecutive
fiscal years of such Employer (of which no amount is paid or payable
during the service period), by delivering timely an Election Form with
respect to such compensation to the Committee not later than the close of
the Employer’s fiscal year next preceding the first fiscal year in which
are performed any services for which such compensation is payable. For
purposes of the Plan, including the minimum and maximum deferral limits
below, compensation deferred pursuant to this Section shall be treated as
part of a Participant’s Bonus and Annual Deferral Amount for the Plan Year
during which the payment is earned.
|
|
3.2
|
Minimum
Deferrals
|
.
|
(a)
|
Annual
Deferral Amount.
|
|
(i)
|
Effective
for Plan Years beginning prior to January 1, 2007, a Participant cannot
elect to defer as his or her Annual Deferral Amount less than the
following minimum amounts of Base Salary and
Bonus:
|
|
Deferral
|
Minimum
Amount
|
|
Base
Salary (including any 401(k) Refund
Offset) and/or Bonus
|
$1,000
aggregate
|
|
(ii)
|
Effective
for Plan Years beginning on and after January 1, 2007 through December 31,
2008, a Participant cannot defer as his or her Annual Deferral Amount less
than the following minimum amounts of Base Salary, Bonus, and/or Director
Fees:
|
|
Deferral
|
Minimum
Amount
|
|
Base
Salary (including any 401(k) Refund
Offset) and/or Bonus
|
$2,000
aggregate
|
|
Director
Fees
|
$0
|
|
(iii)
|
If
the Committee determines, in its sole discretion, prior to the beginning
of a Plan Year that a Participant has made an election for less than the
stated minimum amounts, or if no election is made, the amount deferred
shall be zero. If the Committee determines, in its sole
discretion, at any time after the beginning of a Plan Year that a
Participant has deferred less than the stated minimum amounts for that
Plan Year, any amount credited to the Participant’s applicable Annual
Account as the Annual Deferral Amount for that Plan Year shall, to the
extent permitted by Code Section 409A and related Treasury guidance and
Regulations, be distributed to the Participant within sixty (60) days
after the last day of the Plan Year in which the Committee determination
was made.
|
|
(b)
|
First
Year of Plan Participation. Notwithstanding the
foregoing, if a Participant first becomes a Participant after the first
day of a Plan Year beginning on or after January 1, 2007, the minimum deferral
amounts shall be equal to the minimums set forth above, multiplied by a
fraction, the numerator of which is the number of complete months
remaining in the Plan Year and the denominator of which
is 12.
|
|
3.3
|
Maximum
Deferral
|
.
|
(a)
|
Annual
Deferral Amount.
|
|
(i)
|
Effective
for Plan Years beginning prior to January 1, 2007, a Participant cannot
elect to defer as his or her Annual Deferral Amount, compensation in
excess of the following maximum
amounts/percentages:
|
|
CLASS
1 PARTICIPANTS
|
|
|
Deferral
|
Maximum
Percentage
|
|
401(k)
Refund Offset
|
100%
|
|
Base
Salary (not including any 401(k)
Refund Offset)
|
95%
|
|
Bonus
|
95%
|
|
CLASS
2 PARTICIPANTS
|
|
|
Deferral
|
Maximum
Percentage
|
|
401(k)
Refund Offset
|
100%
|
|
Base
Salary (not including any 401(k)
Refund Offset)
|
0%
|
|
Bonus
|
0%
|
|
(ii)
|
Effective
for Plan Years beginning on and after January 1, 2007, a Participant
cannot defer as his or her Annual Deferral Amount, compensation in excess
of the following maximum
percentages:
|
|
Deferral
|
Maximum
Percentage
|
|
401(k)
Refund Offset
|
100%
|
|
Base
Salary (not including any 401(k)
Refund Offset)
|
80%
|
|
Bonus
|
100%
|
|
Director
Fees
|
100%
|
|
(b)
|
First
Year of Plan Participation. Notwithstanding the
foregoing, in the Participant’s first year of Plan participation, the maximum
deferral percentages above shall be applied to (i) prospective
compensation and
(ii) amounts earned prior to the deferral election, as long as (ii) can be
permissibly deferred under Code Section 409A (e.g. performance-based
compensation). For compensation that is earned based upon a
specified performance period, the portion of such compensation earned with
respect to services performed after the date the Participant commences
participation in the Plan shall be deemed to include (i) the total
amount of compensation for the performance period, multiplied by
(ii) a fraction, the numerator of which is the number of days
remaining in the service period after the Participant commences
participation in the Plan, and the denominator of which is the total
number of days in the performance
period.
|
|
3.4
|
Withholding and
Crediting of Annual Deferral
Amounts
|
. For
each Plan Year, the Base Salary portion of the Annual Deferral Amount (excluding any 401(k)
Refund Offset) shall be withheld from each regularly scheduled Base Salary
payroll on a pro-rata basis. The 401(k) Refund Offset portion of the
Annual Deferral Amount shall be withheld in full from the regularly scheduled
Base Salary paydate next following the date on which the 401(k) refund is paid.
The Bonus portion of the Annual Deferral Amount shall be withheld at the time
the Bonus otherwise would be paid to the Participant, whether or not this occurs
during the Plan Year itself. Director Fees shall be withheld on a
pro-rata basis from regularly scheduled payments of retainer fees, or when such
fees and any cash meeting fees are paid, as determined by the Committee, in its
sole discretion. Annual Deferral Amounts shall be credited to the
Participant’s Annual Account for such Plan Year at the time such amounts would
otherwise have been paid to the Participant.
|
3.5
|
Company Contribution
Amount
|
.
|
(a)
|
For
each Plan Year, an Employer may be required to credit amounts to a
Participant’s Annual Account in accordance with employment or other
agreements entered into between the Participant and the Employer, which
amounts shall be part of the Participant’s Company Contribution Amount for
that Plan Year. Such amounts shall be credited to the
Participant’s Annual Account for the applicable Plan Year on the date or
dates prescribed by such
agreements.
|
|
(b)
|
For
each Plan Year, an Employer, in its sole discretion, may, but is not
required to, credit any amount it desires to any Participant’s Annual
Account under this Plan, which amount shall be part of the Participant’s
Company Contribution Amount for that Plan Year. The amount so
credited to a Participant may be smaller or larger than the amount
credited to any other Participant, and the amount credited to any
Participant for a Plan Year may be zero, even though one or more other
Participants receive a Company Contribution Amount for that Plan
Year. The Company Contribution Amount described in this
Section 3.5(b), if any, shall be credited to the Participant’s Annual
Account for the applicable Plan Year on a date or dates to be determined
by the Committee, in its sole
discretion.
|
|
3.6
|
Crediting of Amounts
after Benefit Distribution
|
. Notwithstanding
any provision in this Plan to the contrary, should the complete distribution of
a Participant’s vested Account Balance occur as a result of the Participant’s
Separation from Service, death, or Disability, prior to the date on which any
portion of (i) the Annual Deferral Amount that a Participant has elected to
defer in accordance with Section 3.1, or (ii) the Company Contribution
Amount would otherwise be credited to the Participant’s Account Balance, such
amounts shall not be credited to the Participant’s Account Balance, but shall be
paid to the Participant in a manner determined by the Committee, in its sole
discretion.
|
3.7
|
Vesting
|
.
|
(a)
|
A
Participant shall at all times be 100% vested in his or her deferrals of
Base Salary, Bonus and Director
Fees.
|
|
(b)
|
A
Participant shall be vested in the portion of his or her Account Balance
attributable to any Company Contribution Amounts, plus amounts credited or
debited on such amounts (pursuant to Section 3.8), in accordance with
the vesting schedule(s) set forth in his or her Plan Agreement, employment
agreement or any other agreement entered into between the Participant and
his or her Employer. If not addressed in such agreements, a
Participant shall vest in the portion of his or her Account Balance
attributable to any Company Contribution Amounts, plus amounts credited or
debited on such amounts (pursuant to Section 3.8), in accordance with
the vesting schedule declared by the Committee in its sole
discretion. The Employer and the Committee may accelerate the
vesting schedules of one or more Participants, at any time and for any
reason, in their sole discretion.
|
|
(c)
|
Notwithstanding
anything to the contrary contained in this Section 3.7, in the event
of a Change in Control, or upon a
Participant’s death while employed by an Employer, or Disability, any amounts that
are not vested in accordance with the vesting schedules set forth in this
Section 3.7, shall immediately become 100% vested (if it is not
already vested in accordance with the above vesting
schedules).
|
|
(d)
|
Notwithstanding
subsection 3.7(c) above, and except as set forth in
Section 3.7(e) below, the vesting schedules set forth in this
Section 3.7 shall not be accelerated upon a Change in Control to the
extent that the Committee determines that such acceleration would cause
the deduction limitations of Section 280G of the Code to become
effective where they otherwise would not be. In the event of
such a determination, the Participant may request independent verification
of the Committee’s calculations with respect to the application of
Section 280G. In such case, the Committee must provide to
the Participant within ninety (90) days of such a request an opinion from
a nationally recognized accounting firm selected by the Participant (the
“Accounting Firm”). The opinion shall state the Accounting
Firm’s opinion that any limitation in the vested percentage hereunder is
necessary to avoid the limits of Section 280G and contain supporting
calculations. The cost of such opinion shall be paid for by the
Company.
|
|
(e)
|
Section 3.7(b)
shall not apply if an employment agreement or other agreement between the
Participant and the Employer (including any change in control severance
plan or similar plan) contains provisions regarding the treatment of
amounts that could be subject to Section 280G and the excise tax
under Section 4999.
|
|
3.8
|
Crediting/Debiting of
Account Balances
|
. In
accordance with and subject to the rules and procedures that are established
from time to time by the Committee, in its sole discretion, amounts shall be
credited or debited to a Participant’s Account Balance in accordance with the
following rules:
|
(a)
|
Measurement
Funds. The Committee shall select from time to time
certain mutual funds, insurance company separate accounts, indexed rates
or other methods (the “Measurement Funds”) for purposes of crediting or
debiting additional amounts to Participants’ Account
Balances. The Committee may discontinue, substitute or add a
Measurement Fund, provided however, that (1) any decision to retain,
discontinue or substitute a Measurement Fund shall be made in good faith
and (2) there shall at all times be a minimum of eight Measurement
Funds of materially different risk and return
characteristics. Any discontinuance of a Measurement Fund will
take effect not earlier than the first day of the first calendar quarter
that begins at least thirty (30) days after the day on which the Committee
gives Participants advance notice of such change, unless such advance
notice cannot be given due to reasons beyond the control of the Company or
the Committee, in which case notice of the change shall be given as soon
as administratively practical.
|
|
(b)
|
Election
of Measurement Funds. A Participant, in connection with
his or her initial deferral election in accordance with
Section 3.1(a) above, shall elect, on the Election Form, one or more
Measurement Fund(s) (as described in Section 3.8(a) above) to be used
to determine the amounts to be credited or debited to his or her Account
Balance. If a Participant does not elect any of the Measurement
Funds as described in the previous sentence, the Participant’s Account
Balance may automatically be allocated into a default Measurement Fund
which is selected by the Committee. A Participant may (but is
not required to) elect, by submitting an Election Form to the Committee
that is accepted by the Committee or by any other procedure approved by
the Committee, to add or delete one or more Measurement Fund(s) to be used
to determine the amounts to be credited or debited to the Participant’s
Account Balance, or to change the portion of the Participant’s Account
Balance allocated to each previously or newly elected Measurement
Fund. If an election is made in accordance with the previous
sentence, it shall be implemented as soon as practical after receipt by
the Committee and shall continue thereafter for each subsequent day in
which there is an Account Balance with respect to the Participant, unless
changed in accordance with the previous sentence. The Committee
may limit the number of Measurement Fund changes that a Participant may
elect, provided that a Participant shall be entitled to elect such a
change not less frequently than quarterly. The Committee may provide that
any change shall not take effect until a date that is not later than the
first business day of the calendar quarter following the Committee’s
receipt of such an election.
|
|
(c)
|
Proportionate
Allocation. In making any election described in
Section 3.8(b) above, the Participant shall specify on the Election
Form, in increments of one percent (1%), the percentage of his or her
Account Balance or Measurement Fund, as applicable, to be
allocated/reallocated.
|
|
(d)
|
Crediting
or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined by the
Committee based on the performance of the Measurement Funds
themselves. A Participant’s Account Balance shall be credited
or debited not less frequently than on a monthly basis based on the
performance of each selected Measurement Fund for the corresponding period
of time.
|
|
(e)
|
No
Actual Investment. Notwithstanding any other provision
of this Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a Participant’s
election of any such Measurement Fund, the allocation of his or her
Account Balance thereto, the calculation of additional amounts and the
crediting or debiting of such amounts to a Participant’s Account Balance
shall not be considered or construed in any manner as an actual investment
of his or her Account Balance in any such Measurement Fund. In
the event that the Company or the Trustee (as that term is defined in the
Trust), in its own discretion, decides to invest funds in any or all of
the investments on which the Measurement Funds are based, no Participant
shall have any rights in or to such investments
themselves. Without limiting the foregoing, a Participant’s
Account Balance shall at all times be a bookkeeping entry only and shall
not represent any investment made on his or her behalf by the Company or
the Trust; the Participant shall at all times remain an unsecured creditor
of the Company.
|
|
(f)
|
Plan
Expenses. The Committee may, but need not, deduct from
Participants’ Account Balances expenses incurred in the administration and
maintenance of the Plan. In such case, the Committee shall
deduct expenses as follows:
|
|
(i)
|
expenses
that are attributable solely to an individual Participant may be deducted
solely from that Participant’s Account Balance or may be apportioned as
Plan level expenses, below.
|
|
(ii)
|
expenses
that are not attributable solely to an individual Participant shall be
plan level expenses that shall be deducted from all of the Account
Balances of all Participants in the Plan in one of the following two
methods, as selected by the Committee in its sole and absolute
discretion:
|
|
(A)
|
on
a pro-rata basis from all of the Account Balances in the Plan based on the
amount then held in each Account Balance in relation to the
aggregate amount then held in all of the Account Balances under the
Plan.
|
|
(B)
|
equally
among all of the Account Balances in the
Plan
|
|
3.9
|
FICA and Other
Taxes
|
.
|
(a)
|
Annual
Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Participant’s
Employer(s) shall withhold from that portion of the Participant’s Base
Salary and/or Bonus that is not being deferred, in a manner determined by
the Employer(s), the Participant’s share of FICA and other employment
taxes on such Annual Deferral Amount. If necessary, the
Committee may reduce the Annual Deferral Amount in order to comply with
this Section 3.9.
|
|
(b)
|
Company
Contribution Amounts. When a Participant becomes vested
in a portion of his or her Account Balance attributable to any Company
Contribution Amounts, the Participant’s Employer(s) shall withhold from
that portion of the Participant’s Base Salary and/or Bonus that is not
deferred, in a manner determined by the Employer(s), the Participant’s
share of FICA and other employment taxes on such amounts. If
necessary, the Committee may reduce the vested portion of the
Participant’s Company Contribution Amount, as applicable, in order to
comply with this Section 3.9.
|
|
(c)
|
Distributions. The
Participant’s Employer(s), or the trustee of the Trust, shall withhold
from any payments made to a Participant under this Plan all federal, state
and local income, employment and other taxes required to be withheld by
the Employer(s), or the trustee of the Trust, in connection with such
payments, in amounts and in a manner to be determined in the sole
discretion of the Employer(s) and the trustee of the
Trust.
|
ARTICLE
4
Scheduled Distribution;
Unforeseeable Emergencies
|
4.1
|
Scheduled
Distribution
|
. In
connection with each election to defer an Annual Deferral Amount, a Participant
may irrevocably elect to receive a Scheduled Distribution, in the form of a lump
sum payment from the Plan. Unless otherwise provided on an Election
Form approved by the Committee in its sole discretion, a Scheduled Distribution
election shall apply to 100% of a Participant’s Annual Deferral
Amount. The amount of a Scheduled Distribution shall be equal to the
portion of the Annual Deferral Amount the Participant elected to have
distributed as a Scheduled Distribution, plus amounts credited or debited in the
manner provided in Section 3.8 above on that amount, calculated as of the
close of business on or around the date on which the Scheduled Distribution
becomes payable, as determined by the Committee in its sole
discretion. Subject to the other terms and conditions of this Plan,
each Scheduled Distribution elected shall be paid out during a sixty (60) day
period commencing immediately after the first day of any Plan Year designated by
the Participant (the “Scheduled Distribution Date”). The Plan Year
designated by the Participant must be at least three (3) Plan Years after the
end of the Plan Year to which the Participant’s deferral election described in
Section 3.1 relates, unless otherwise provided on an Election Form approved
by the Committee in its sole discretion. By way of example, if a
Scheduled Distribution is elected for Annual Deferral Amounts for the Plan Year
commencing January 1, 2007, the earliest Scheduled Distribution Date that
may be designated by a Participant would be January 1, 2011, and the
Scheduled Distribution would become payable during the sixty (60) day period
commencing immediately after such Scheduled Distribution Date.
|
4.2
|
Postponing Scheduled
Distributions
|
. A
Participant may elect to postpone a Scheduled Distribution described in
Section 4.1 above, and have such amount paid out during a sixty (60) day
period commencing immediately after an allowable alternative distribution date
designated by the Participant in accordance with this
Section 4.2. In order to make this election, the Participant
must submit a new Scheduled Distribution Election Form to the Committee in
accordance with the following criteria:
|
(a)
|
Such
Scheduled Distribution Election Form must be submitted to and accepted by
the Committee in its sole discretion at least twelve (12) months prior to
the Participant’s previously designated Scheduled Distribution
Date;
|
|
(b)
|
The
new Scheduled Distribution Date selected by the Participant must be the
first day of a Plan Year, and must be at least five years after the
previously designated Scheduled Distribution Date;
and
|
|
(c)
|
The
election of the new Scheduled Distribution Date shall have no effect until
at least twelve (12) months after the date on which the election is
made.
|
|
4.3
|
Other Benefits Take
Precedence Over Scheduled
Distributions
|
. Should
a Benefit Distribution Date occur that triggers a benefit under Articles 5,
6 or 7, any Annual Deferral Amount that is subject to a Scheduled Distribution
election under Section 4.1 shall not be paid in accordance with
Section 4.1, but shall be paid in accordance with the other applicable
Article. Notwithstanding the foregoing, the Committee shall interpret
this Section 4.3 in a manner that is consistent with Code Section 409A
and related Treasury guidance and Regulations.
|
4.4
|
Unforeseeable
Emergencies
|
.
|
(a)
|
If
the Participant experiences an Unforeseeable Emergency, the Participant
may petition the Committee to receive a partial or full payout from the
Plan, subject to the provisions set forth
below.
|
|
(b)
|
The
payout, if any, from the Plan shall not exceed the lesser of (i) the
Participant’s vested Account Balance, calculated as of the close of
business on or around the date on which the amount becomes payable, as
determined by the Committee in its sole discretion, or (ii) the
amount necessary to satisfy the Unforeseeable Emergency, plus amounts
necessary to pay Federal, state, or local income taxes or penalties
reasonably anticipated as a result of the
distribution. Notwithstanding the foregoing, a Participant may
not receive a payout from the Plan to the extent that the Unforeseeable
Emergency is or may be relieved (A) through reimbursement or
compensation by insurance or otherwise, (B) by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would
not itself cause severe financial hardship or (C) by cessation of
deferrals under this Plan.
|
|
(c)
|
If
the Committee, in its sole discretion, approves a Participant’s petition
for payout from the Plan, the Participant shall receive a payout from the
Plan within sixty (60) days of the date of such approval, and the
Participant’s deferrals under the Plan shall be terminated as of the date
of such approval.
|
|
(d)
|
In
addition, a Participant’s deferral elections under this Plan shall be
terminated to the extent the Committee determines, in its sole discretion,
that termination of such Participant’s deferral elections is required
pursuant to Treas. Reg. § 1.401(k)-1(d)(3) for the Participant to
obtain a hardship distribution from an Employer’s 401(k)
Plan. If the Committee determines, in its sole discretion, that
a termination of the Participant’s deferrals is required in accordance
with the preceding sentence, the Participant’s deferrals shall be
terminated as soon as administratively practicable following the date on
which such determination is made.
|
|
(e)
|
Notwithstanding
the foregoing, the Committee shall interpret all provisions relating to a
payout and/or termination of deferrals under this Section 4.4 in a
manner that is consistent with Code Section 409A and related Treasury
guidance and Regulations.
|
ARTICLE
5
Separation
Benefit
|
5.1
|
Separation
Benefit
|
. A
Participant who experiences a Separation from Service shall receive, as a
Separation Benefit, his or her vested Account Balance, calculated as of the
close of business on or around the Participant’s Benefit Distribution Date, as
determined by the Committee in its sole discretion.
|
5.2
|
Payment of Separation
Benefit
|
.
|
(a)
|
In
connection with a Participant’s election to defer an Annual Deferral
Amount, the Participant shall elect the form in which his or her Annual
Account for such Plan Year will be paid. The Participant may
elect to receive each Annual Account in the form of a lump sum or pursuant
to an Annual Installment Method of up to ten (10) years. If a
Participant does not make any election with respect to the payment of an
Annual Account, then the Participant shall be deemed to have elected to
receive such Annual Account as a lump
sum.
|
|
(b)
|
A
Participant may subsequently elect to either change the form of payment or
postpone the timing of payment for an Annual Account by submitting an
Election Form to the Committee in accordance with the following
criteria:
|
|
(i)
|
The
election shall have no effect until at least twelve (12) months after the
date on which the election is made;
and
|
|
(ii)
|
The
first payment related to such Annual Account shall be delayed at least
five (5) years from the originally scheduled Benefit Distribution Date for
such Annual Account, as described in
Section 1.8(a).
|
For
purposes of applying the requirements above, the right to receive an Annual
Account in installment payments shall be treated as the entitlement to a single
payment. The Committee shall interpret all provisions relating to an
election described in this Section 5.2 in a manner that is consistent with
Code Section 409A and related Treasury guidance or
Regulations.
|
(c)
|
The
Election Form most recently accepted by the Committee that has become
effective shall govern the payout of the applicable Annual Account;
provided, however, that if the total value of Participant’s vested Account
Balance is less than $10,000 at the time of the Participant’s Benefit
Distribution Date, the Participant’s entire vested Account Balance shall
be distributed to the Participant in a lump sum payment notwithstanding a
Participant’s election to receive one or more Annual Accounts in
installment payments.
|
|
(d)
|
The
lump sum payment shall be made, or installment payments shall commence, no
later than sixty (60) days after the Benefit Distribution
Date. Remaining installments, if any, shall continue in
accordance with the Participant’s election for each Annual Account, and
shall be paid no later than sixty (60) days after the first day of each
Plan Year following the Plan Year in which the Participant’s first
installment payment for such Annual Account was
distributed.
|
ARTICLE
6
Disability
Benefit
|
6.1
|
Disability
Benefit
|
. Upon
a Participant’s Disability, the Participant shall receive a Disability Benefit,
which shall be equal to the Participant’s vested Account Balance, calculated as
of the close of business on or around the Participant’s Benefit Distribution
Date, as selected by the Committee in its sole discretion.
|
6.2
|
Payment of Disability
Benefit
|
. The Disability Benefit
shall be paid to the Participant in a lump sum payment no later than sixty (60)
days after the Participant’s Benefit Distribution Date.
ARTICLE
7
Survivor
Benefit
|
7.1
|
Survivor
Benefit
|
. The
Participant’s Beneficiary(ies) shall receive a Survivor Benefit upon the
Participant’s death which will be equal to the Participant’s vested Account
Balance, calculated as of the close of business on or around the Participant’s
Benefit Distribution Date, as selected by the Committee in its sole
discretion.
|
7.2
|
Payment of Survivor
Benefit
|
. The
Survivor Benefit shall be paid to the Participant’s Beneficiary(ies) in a lump
sum payment no later than sixty (60) days after the Participant’s Benefit
Distribution Date.
ARTICLE
8
Beneficiary
Designation
|
8.1
|
Beneficiary
|
. Each
Participant shall have the right, at any time, to designate his or her
Beneficiary(ies) (both primary as well as contingent) to receive any benefits
payable under the Plan upon the death of a Participant. The
Beneficiary designated under this Plan may be the same as or different from the
Beneficiary designation under any other plan of an Employer in which the
Participant participates.
|
8.2
|
Beneficiary
Designation; Change; Spousal
Consent
|
.
|
(a)
|
General. A
Participant shall designate his or her Beneficiary by completing the
Beneficiary Designation Form and returning it to the Committee or its
designated agent. A Participant shall have the right to change
a Beneficiary by completing, and otherwise complying with, the terms of
the Beneficiary Designation Form and the Committee’s rules and procedures,
as in effect from time to time. If the Participant names
someone other than his or her current spouse as a Beneficiary, spousal
consent shall be required to be provided in a form designated by the
Committee, executed by such Participant’s spouse and returned to the
Committee, in order for the designation to be valid. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be
canceled. The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her
death.
|
|
(b)
|
Divorce. If
a Participant has designated his spouse as his Beneficiary, and the
Participant and this spouse subsequently divorce, then the Beneficiary
designation shall be void and of no effect on the day such divorce is
final. The Participant may, however, re-designate such former
spouse as a Beneficiary on a Beneficiary Designation Form completed after
the divorce is final.
|
|
(c)
|
Death. In
the event a Beneficiary predeceases the Participant, then such Beneficiary
shall cease to be a Beneficiary and shall cease to have any interest in
the Participant’s benefits hereunder as of the Beneficiary’s
death. For avoidance of doubt, the foregoing provisions shall
supersede any inconsistent state law, and any putative state law interest
in the benefits hereunder of a Beneficiary (including the Participant’s
spouse) who has predeceased the Participant shall automatically revert to
the Participant (or shall, if applicable, automatically pass to the
Participant’s remaining and/or contingent Beneficiaries if the same would
be consistent with the intent of the Participant’s Beneficiary Designation
Form); no such interest shall be transferable by the deceased Beneficiary
in any manner, including but not limited to such Beneficiary’s will, nor
shall such interest pass under the laws of intestate
succession.
|
|
8.3
|
Acknowledgment
|
. No
designation or change in designation of a Beneficiary shall be effective until
received and acknowledged in writing by the Committee or its designated
agent.
|
8.4
|
No Beneficiary
Designation
|
. If
a Participant fails to designate a Beneficiary as provided in Sections 8.1,
8.2 and 8.3 above or, if all designated Beneficiaries predecease the Participant
or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary shall be the same as the Participant’s
beneficiary under the Vail Resorts 401(k) Retirement Plan, or if none, the
Beneficiary shall be the executor or personal representative of the
Participant’s estate.
|
8.5
|
Doubt as to
Beneficiary
|
. If
the Committee has any doubt as to the proper Beneficiary to receive payments
pursuant to this Plan, the Committee shall have the right, exercisable in its
discretion, to cause the Participant’s Employer to withhold such payments until
this matter is resolved to the Committee’s satisfaction.
|
8.6
|
Discharge of
Obligations
|
. The
payment of benefits under the Plan to a Beneficiary shall fully and completely
discharge all Employers and the Committee from all further obligations under
this Plan with respect to the Participant and his or her designated Beneficiary
under the Plan, and that Participant’s Plan Agreement shall terminate upon such
full payment of benefits.
ARTICLE
9
Leave of
Absence
|
9.1
|
Paid Leave of
Absence
|
. If
a Participant is authorized by the Participant’s Employer to take a paid leave
of absence from the employment of the Employer, and such leave of absence does
not constitute a Separation from Service, as determined by the Committee,
(i) the Participant shall continue to be considered eligible for the
benefits provided in Article 4, Article 5, Article 6 or Article 7 in accordance
with the provisions of those Articles, and (ii) the Annual Deferral
Amount shall
continue to be withheld during such paid leave of absence in accordance with
Section 3.1.
|
9.2
|
Unpaid Leave of
Absence
|
. If
a Participant is authorized by the Participant’s Employer to take an unpaid
leave of absence from the employment of the Employer for any reason, and such
leave of absence does not constitute a Separation from Service, as determined by
the Committee, such Participant shall continue to be eligible for the benefits
provided in Article 4, Article 5, Article 6 or Article 7 in accordance with the
provisions of those Articles. However, the Participant shall be excused from
fulfilling his or her Annual Deferral Amount commitment that would otherwise
have been withheld during the remainder of the unpaid leave of absence, and, to
the extent permitted under Code Section 409A and related Treasury guidance and
Regulations, for the remainder of the Plan Year in which the unpaid leave of
absence is taken. During the unpaid leave of absence, the Participant
shall not be allowed to make any additional deferral
elections. However, if the Participant returns to employment, the
Participant may elect to defer an Annual Deferral Amount for the Plan Year
following his or her return to employment and for every Plan Year thereafter
while a Participant in the Plan, provided such deferral elections are otherwise
allowed and an Election Form is delivered to and accepted by the Committee for
each such election in accordance with Section 3.1 above.
|
9.3
|
Leaves Resulting in
Separation from Service
|
. In
the event that a Participant’s leave of absence from his or her Employer
constitutes a Separation from Service, as determined by the Committee, the
Participant’s vested Account Balance shall be distributed to the Participant in
accordance with Article 5 and/or any other applicable provisions of this
Plan.
ARTICLE
10
Termination of Plan,
Amendment or Modification
|
10.1
|
Termination of
Plan
|
. Although
each Employer anticipates that it will continue the Plan for an indefinite
period of time, there is no guarantee that any Employer will continue the Plan
or will not terminate the Plan at any time in the
future. Accordingly, each Employer reserves the right to Terminate
the Plan. In the event of a Termination of the Plan, the Measurement
Funds available to affected Participants following the Termination of the Plan
shall thereafter be comparable in number and type to those Measurement Funds
available to affected Participants immediately prior to the Termination of the
Plan. Following a
Termination of the Plan, affected Participant Account Balances shall remain in
the Plan until the Participant becomes eligible for the benefits provided in
Article 4, Article 5, Article 6 or Article 7 in accordance with the provisions
of those Articles. The Termination of the
Plan shall not adversely affect any Participant or Beneficiary who has become
entitled to the payment of any benefits under the Plan as of the date of
termination. Notwithstanding the foregoing, to the extent permissible
under Code Section 409A and related Treasury guidance or Regulations,
during the thirty (30) days preceding or within twelve (12) months following a
Change in Control, an Employer shall be permitted to (i) terminate the Plan
by action of its board of directors, and (ii) distribute the vested Account
Balances to Participants in a lump sum no later than twelve (12) months after
the Change in Control, provided that all other substantially similar
arrangements sponsored by such Employer (and such related Employers as are
required to be taken into account under Code Section 409A and related
Treasury guidance and Regulations) are also terminated and all balances in such
arrangements are distributed within twelve (12) months of the termination of
such arrangements.
|
10.2
|
Amendment
|
.
|
(a)
|
The
Company may, at any time, amend or modify the Plan in whole or in part,
provided that (i) no amendment or modification shall be effective to
decrease the value of a Participant’s vested Account Balance in existence
at the time the amendment or modification is made, and (ii) no
amendment or modification of this Section 10.2 or Section 11.2
of the Plan shall be effective.
|
|
(b)
|
Notwithstanding
Section 10.2, in the event that the Company determines that any
provision of the Plan may cause amounts deferred under the Plan to become
immediately taxable to any Participant under Code Section 409A and
related Treasury guidance or Regulations, the Company may (i) adopt
such amendments to the Plan and appropriate policies and procedures,
including amendments and policies with retroactive effect, that the
Company determines necessary or appropriate to preserve the intended tax
treatment of the Plan benefits provided by the Plan and/or (ii) take
such other actions as the Company determines necessary or appropriate to
comply with the requirements of Code Section 409A and related
Treasury guidance or Regulations.
|
|
10.3
|
Plan
Agreement
|
. Despite
the provisions of Sections 10.1 and 10.2 above, if a Participant’s Plan
Agreement contains benefits or limitations that are not in this Plan document,
the Participant’s Employer shall have the sole authority to amend or terminate
such provisions, but only with the written consent of the
Participant.
|
10.4
|
Effect of
Payment
|
. The
full payment of the Participant’s vested Account Balance under Article 4,
Article 5, Article 6 or Article 7 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries under this
Plan, and the Participant’s Plan Agreement shall terminate.
ARTICLE
11
Administration
|
11.1
|
Committee
Duties
|
. Except
as otherwise provided in this Article 11, this Plan shall be administered by a
Committee, which shall consist of the Board, or such committee as the Board
shall appoint. Members of the Committee may be Participants under
this Plan. The Committee shall have the discretion and authority to
(i) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan, and (ii) decide or resolve
any and all questions, including benefit entitlement determinations and
interpretations of this Plan, as may arise in connection with the
Plan. Any individual serving on the Committee who is a Participant
shall not vote or act on any matter relating solely to himself or
herself. When making a determination or calculation, the Committee
shall be entitled to rely on information furnished by a Participant, the
Company, or any Employer.
|
11.2
|
Administration Upon
Change In Control
|
. Within
one hundred and twenty (120) days following a Change in Control, the individuals
who comprised the Committee immediately prior to the Change in Control (whether
or not such individuals are members of the Committee following the Change in
Control) may, by written consent of the majority of such individuals, appoint an
independent third party administrator (the “Administrator”) to perform any or
all of the Committee’s duties described in Section 11.1 above, including
without limitation, the power to determine any questions arising in connection
with the administration or interpretation of the Plan, and the power to make
benefit entitlement determinations. Upon and after the effective date
of such appointment, (i) the Company must pay all reasonable administrative
expenses and fees of the Administrator, and (ii) the Administrator may only
be terminated with the written consent of the majority of Participants with an
Account Balance in the Plan as of the date of such proposed
termination.
|
11.3
|
Agents
|
. In
the administration of this Plan, the Committee or the Administrator, as
applicable, may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel.
|
11.4
|
Binding Effect of
Decisions
|
. The
decisions or actions of the Committee or Administrator, as applicable, with
respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
|
11.5
|
Indemnity of
Committee
|
. All
Employers shall indemnify and hold harmless the members of the Committee, any
Employee to whom the duties of the Committee may be delegated, and the
Administrator against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this Plan,
except in the case of willful misconduct by the Committee, any of its members,
any such Employee or the Administrator.
|
11.6
|
Employer
Information
|
. To
enable the Committee and/or Administrator to perform its functions, the Company
and each Employer shall supply full and timely information to the Committee
and/or Administrator, as the case may be, on all matters relating to the Plan,
the Trust, the Participants and their Beneficiaries, the Account Balances of the
Participants, the compensation of its Participants, the date and
circumstances of the Separation from Service, Disability or death of its
Participants, and such other pertinent information as the Committee or
Administrator may reasonably require.
ARTICLE
12
Other Benefits and
Agreements
|
12.1
|
Coordination with
Other Benefits
|
. The
benefits provided for a Participant and Participant’s Beneficiary under the Plan
are in addition to any other benefits available to such Participant under any
other plan or program for employees of the Participant’s
Employer. The Plan shall supplement and shall not supersede, modify
or amend any other such plan or program except as may otherwise be expressly
provided therein.
ARTICLE
13
Claims
Procedures
|
13.1
|
Presentation of
Claim
|
. Any
Participant or Beneficiary of a deceased Participant (such Participant or
Beneficiary being referred to below as a “Claimant”) may deliver to the
Committee a written claim for benefits with respect to the Plan. If
such a claim relates to the contents of a notice received by the Claimant, the
claim must be made within sixty (60) days after such notice was received by
the Claimant. All other claims must be made within 180 days of
the date on which the event that caused the claim to arise
occurred. The claim must state with particularity the determination
desired by the Claimant.
|
13.2
|
Notification of
Decision
|
. The
Committee shall consider a Claimant’s claim within a reasonable time, but no
later than ninety (90) days after receiving the claim. If the
Committee determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the
Claimant prior to the termination of the initial ninety (90) day
period. In no event shall such extension exceed a period of ninety
(90) days from the end of the initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render the benefit
determination. The Committee shall notify the Claimant in
writing:
|
(a)
|
that
the Claimant’s requested determination has been made, and that the claim
has been allowed in full; or
|
|
(b)
|
that
the Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in
a manner calculated to be understood by the
Claimant:
|
|
(i)
|
the
specific reason(s) for the denial of the claim, or any part of
it;
|
|
(ii)
|
specific
reference(s) to pertinent provisions of the Plan upon which such denial
was based;
|
|
(iii)
|
a
description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary;
|
|
(iv)
|
an
explanation of the claim review procedure set forth in Section 13.3
below; and
|
|
(v)
|
a
statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on
review.
|
|
13.3
|
Review of a Denied
Claim
|
. On
or before sixty (60) days after receiving a notice from the Committee that
a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly
authorized representative) may file with the Committee a written request for a
review of the denial of the claim. The Claimant (or the Claimant’s
duly authorized representative):
|
(a)
|
may,
upon request and free of charge, have reasonable access to, and copies of,
all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claim for
benefits;
|
|
(b)
|
may
submit written comments or other documents;
and/or
|
|
(c)
|
may
request a hearing, which the Committee, in its sole discretion, may
grant.
|
|
13.4
|
Decision on
Review
|
. The
Committee shall render its decision on review promptly, and no later than sixty
(60) days after the Committee receives the Claimant’s written request for a
review of the denial of the claim. If the Committee determines that
special circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period. In no event shall
such extension exceed a period of sixty (60) days from the end of the initial
period. The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Committee expects to
render the benefit determination. In rendering its decision, the
Committee shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination. The decision must be written in a manner calculated to
be understood by the Claimant, and it must contain:
|
(a)
|
specific
reasons for the decision;
|
|
(b)
|
specific
reference(s) to the pertinent Plan provisions upon which the decision was
based;
|
|
(c)
|
a
statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to
the Claimant’s claim for benefits;
and
|
|
(d)
|
a
statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a).
|
|
13.5
|
Legal
Action
|
. A
Claimant’s compliance with the foregoing provisions of this Article 13 is a
mandatory prerequisite to a Claimant’s right to commence any legal action with
respect to any claim for benefits under this Plan.
ARTICLE
14
Trust
|
14.1
|
Establishment of the
Trust
|
. In
order to provide assets from which to fulfill its obligations to the
Participants and their Beneficiaries under the Plan, the Company may establish a
trust by a trust agreement with a third party, the trustee, to which each
Employer may, in its discretion, contribute cash or other property, including
securities issued by the Company, to provide for the benefit payments under the
Plan (the “Trust”).
|
14.2
|
Interrelationship of
the Plan and the Trust
|
. The
provisions of the Plan and the Plan Agreement shall govern the rights of a
Participant to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the Employers, Participants
and the creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to carry out
its obligations under the Plan.
|
14.3
|
Distributions From the
Trust
|
. Each
Employer’s obligations under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust, and any such distribution shall
reduce the Employer’s obligations under this Plan.
ARTICLE
15
Miscellaneous
|
15.1
|
Status of
Plan
|
. The
Plan is intended to be a plan that is not qualified within the meaning of Code
Section 401(a) and that “is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees” within the meaning of ERISA
Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be
administered and interpreted (i) to the extent possible in a manner
consistent with the intent described in the preceding sentence, and (ii) in
accordance with Code Section 409A and related Treasury guidance and
Regulations.
|
15.2
|
Unsecured General
Creditor
|
. Participants
and their Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interests or claims in any property or assets of an
Employer. For purposes of the payment of benefits under this Plan,
any and all of an Employer’s assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. An Employer’s obligation under
the Plan shall be merely that of an unfunded and unsecured promise to pay money
in the future.
|
15.3
|
Employer’s
Liability
|
. An
Employer’s liability for the payment of benefits shall be defined only by the
Plan and the Plan Agreement, as entered into between the Employer and a
Participant. An Employer shall have no obligation to a Participant
under the Plan except as expressly provided in the Plan and his or her Plan
Agreement.
|
15.4
|
Nonassignability
|
. Neither
a Participant nor any other person shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are expressly declared to be, unassignable and non-transferable. No
part of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or
any other person’s bankruptcy or insolvency or be transferable to a spouse other
than pursuant to an order that would be a domestic relations order, as defined
in Code Section 414(p)(1)(B), if this Plan were a tax-qualified retirement
plan under Code Section 401(a).
|
15.5
|
Not a Contract of
Employment
|
. The
terms and conditions of this Plan shall not be deemed to constitute a contract
of employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an “at will” employment relationship
that can be terminated at any time for any reason, or no reason, with or without
cause, and with or without notice, unless expressly provided in a written
employment agreement. Nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of any Employer, either as
an Employee or a Director, or to interfere with the right of any Employer to
discipline or discharge the Participant at any time.
|
15.6
|
Furnishing
Information
|
. A
Participant or his or her Beneficiary will cooperate with the Committee by
furnishing any and all information requested by the Committee and take such
other actions as may be requested in order to facilitate the administration
of the Plan and the payments of benefits hereunder, including but not limited to
taking such physical examinations as the Committee may deem
necessary.
|
15.7
|
Terms
|
. Whenever
any words are used herein in the masculine, they shall be construed as though
they were in the feminine in all cases where they would so apply; and whenever
any words are used herein in the singular or in the plural, they shall be
construed as though they were used in the plural or the singular, as the case
may be, in all cases where they would so apply.
|
15.8
|
Captions
|
. The
captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.
|
15.9
|
Governing
Law
|
. Subject
to ERISA, the provisions of this Plan shall be construed and interpreted
according to the internal laws of the State of Colorado without regard to its
conflicts of laws principles.
|
15.10
|
Notice
|
. Any
notice or filing required or permitted to be given to the Committee under this
Plan shall be sufficient if in writing and hand-delivered, or sent by registered
or certified mail, to the address below:
|
The
Vail Corporation
|
|
Attn:
2005 Deferred Compensation Plan Committee
|
|
390
Interlocken Crescent, Suite 1000
|
|
Broomfield,
CO 80021
|
Any
notice or filing required or permitted to be given to a Participant under this
Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to
the last known address of the Participant.
Notices
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification.
|
15.11
|
Successors
|
. The
provisions of this Plan shall bind and inure to the benefit of the Participant’s
Employer and its successors and assigns and the Participant and the
Participant’s designated Beneficiaries.
|
15.12
|
Validity
|
. In
case any provision of this Plan shall be illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining parts hereof, but this
Plan shall be construed and enforced as if such illegal or invalid provision had
never been inserted herein.
|
15.13
|
Incompetent
|
. If
the Committee determines in its discretion that a benefit under this Plan is to
be paid to a minor, a person declared incompetent or to a person incapable of
handling the disposition of that person’s property, the Committee may direct
payment of such benefit to the guardian, legal representative or person having
the care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the
account of the Participant and the Participant’s Beneficiary, as the case may
be, and shall be a complete discharge of any liability under the Plan for such
payment amount.
|
15.14
|
Court
Order
|
. The
Committee is authorized to comply with any court order in any action in which
the Plan or the Committee has been named as a party, including any action
involving a determination of the rights or interests in a Participant’s benefits
under the Plan. Notwithstanding the foregoing, the Committee shall
interpret this provision in a manner that is consistent with Code
Section 409A and other applicable tax law. In addition, if
necessary to comply with an order that would be a domestic relations order, as
defined in Code Section 414(p)(1)(B), if this Plan were a tax-qualified
retirement plan under Code Section 401(a), pursuant to which a court has
determined that a spouse or former spouse of a Participant has an interest in
the Participant’s benefits under the Plan, the Committee, in its sole
discretion, shall have the right to distribute immediately the spouse’s or
former spouse’s interest in the Participant’s benefits under the Plan to such
spouse or former spouse.
|
15.15
|
Distribution in the
Event of Income Inclusion Under
409A
|
. If
any portion of a Participant’s Account Balance under this Plan is required to be
included in income by the Participant prior to receipt due to a failure of this
Plan to meet the requirement of Code Section 409A and related Treasury
guidance or Regulations, the Participant may petition the Committee or
Administrator, as applicable, for a distribution of that portion of his or her
Account Balance that is required to be included in his or her
income. Upon the grant of such a petition, which grant shall not be
unreasonably withheld, the Participant’s Employer shall distribute to the
Participant immediately available funds in an amount equal to the portion of his
or her Account Balance required to be included in income as a result of the
failure of the Plan to meet the requirements of Code Section 409A and
related Treasury guidance or Regulations, which amount shall not exceed the
Participant’s unpaid vested Account Balance under the Plan. If the
petition is granted, such distribution shall be made within ninety (90) days of
the date when the Participant’s petition is granted. Such a
distribution shall affect and reduce the Participant’s benefits to be paid under
this Plan.
|
15.16
|
Deduction Limitation
on Benefit Payments
|
. If
an Employer reasonably anticipates that the Employer’s deduction with respect to
any distribution from this Plan would be limited or eliminated by application of
Code Section 162(m), then to the extent deemed necessary by the Employer to
ensure that the entire amount of any distribution from this Plan is deductible,
the Committee may delay payment of any amount that would otherwise be
distributed from this Plan. Any amounts for which distribution is
delayed pursuant to this Section shall continue to be credited/debited with
additional amounts in accordance with Section 3.8 above. The
delayed amounts (and any amounts credited thereon) shall be distributed to the
Participant (or his or her Beneficiary in the event of the Participant’s death)
at the earliest date the Employer reasonably anticipates that the deduction of
the payment of the amount will not be limited or eliminated by application of
Code Section 162(m).
|
15.17
|
Insurance
|
. The
Employers, on their own behalf or on behalf of the trustee of the Trust, and, in
their sole discretion, may apply for and procure insurance on the life of the
Participant, in such amounts and in such forms as they may
choose. The Employers or the trustee of the Trust, as the case may
be, shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any
such policy or policies, and at the request of the Employers shall submit to
medical examinations and supply such information and execute such documents as
may be required by the insurance company or companies to whom the Employers have
applied for insurance.
|
15.18
|
Legal Fees To Enforce
Rights
|
. The
Company and each Employer is aware that upon the occurrence of a Change in
Control, the Board or the board of directors of a Participant’s Employer (which
might then be comprised of new members), the Committee, or a shareholder of the
Company, the Participant’s Employer, or any successor corporation might cause or
attempt to cause the Company, the Participant’s Employer, or such successor
corporation to refuse to comply with its obligations under the Plan and/or to
seek to deny Participants the benefits intended under the Plan. In
these circumstances, the purpose of the Plan would be
frustrated. Accordingly, if, following a Change in Control, a
Participant or Beneficiary institutes any litigation or other legal action which
seeks to recover benefits under the Plan or which otherwise asserts that the
Committee, the Company, the Employer or any successor entity to the Company or
the Employer has failed to comply with any of its obligations under the Plan or
any agreement thereunder with respect to such Participant or Beneficiary, or if
the Committee, the Company, the Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any Participant or
Beneficiary the benefits intended to be provided under the Plan, and the
Participant or Beneficiary retains counsel in connection with such litigation or
legal action, then (unless and until there is a final decision of a court of
competent jurisdiction or arbitrator that the Participant or Beneficiary’s
initiation or defense of such litigation or legal action was frivolous, based on
the information known to the Participant or Beneficiary at the time of the
initiation or defense) the Company and such Employer (who shall be jointly and
severally liable) or their successors shall be required to pay the reasonable
attorneys fees and expenses of the Participant or Beneficiary that are incurred
during their lifetimes in connection with the initiation or defense of such
litigation or legal action with respect to such matters, whether by or against
the Committee, the Company, the Employer or any director, officer, shareholder
or other person affiliated with the Company, the Employer or any successor
thereto in any jurisdiction. The reasonable attorneys fees and
expenses, if any, that become due and owing to the Participant (or Beneficiary)
in accordance with this Section shall be paid no later than December 31st of
the year following the year in which the fees and expenses were incurred, or, if
sooner, on the tenth (10th)
business day following the final decision of an arbitrator or court of competent
jurisdiction with respect to such legal action (or if none, following the date
on which the matter has been finally settled, dismissed, or otherwise terminated
with prejudice). In the event that reimbursement is made in
accordance with this paragraph and a court of competent jurisdiction or
arbitrator later determines that the Participant or Beneficiary’s initiation or
defense of such litigation or legal action was frivolous, based on the
information known to the Participant or Beneficiary at the time of the
initiation or defense, the Participant or Beneficiary shall repay such fees and
costs to the Company (or its successor, as the case may be) within 30 days of
such determination.
IN WITNESS WHEREOF, the Company has
caused its authorized officer to execute this Plan document on this 29 day of
December, 2008.
|
“Company”
|
||
|
The
Vail Corporation, d/b/a Vail Associates, Inc., a
|
||
|
Colorado
corporation
|
||
|
By:
|
/s/ Jeffrey W. Jones | |
|
Title:
|
Senior Executive Vice President and | |
| Chief Financial Officer | ||
APPENDIX
A
LIMITED TRANSITION RELIEF
MADE AVAILABLE IN ACCORDANCE WITH CODE SECTION 409A AND RELATED TREASURY
GUIDANCE AND REGULATIONS
Unless
otherwise provided below, the capitalized terms below shall have the same
meaning as provided in Article 1 of the Plan.
|
1.
|
Opportunity to Make
New Distribution Elections
|
. Notwithstanding
the required deadline for the submission of an initial distribution election
described in Article 5, the Committee may, as permitted by Code
Section 409A and related Treasury guidance or Regulations, provide a
limited period in which Participants may make new distribution elections, by
submitting an Election Form on or before the deadline established by the
Committee, which in no event shall be later than December 31,
2008. Any distribution election made in accordance with the
requirements established by the Committee, pursuant to this section, shall not
be treated as a change in the form or timing of a Participant’s benefit payment
for purposes Code Section 409A or the Plan.
The
Committee shall interpret all provisions relating to an election submitted in
accordance with this section in a manner that is consistent with Code
Section 409A and related Treasury guidance or Regulations. If
any distribution election submitted prior to December 31, 2006 in
accordance with this section either (i) relates to payments that a
Participant would otherwise receive in 2006, or (ii) would cause payments
to be made in 2006, such election shall not be effective. If any
distribution election submitted on or after January 1, 2007 and prior to
December 31, 2007 in accordance with this section either (i) relates
to payments that a Participant would otherwise receive in 2007, or
(ii) would cause payments to be made in 2007, such election shall not be
effective. If any distribution election submitted on or after
January 1, 2008 and prior to December 31, 2008 in accordance with this
section either (i) relates to payments that a Participant would otherwise
receive in 2008, or (ii) would cause payments to be made in 2008, such
election shall not be effective.
|
2.
|
Termination of Plan
Participation/Cancellation of Deferral
Elections
|
. As permitted by
Q&A-20 of Notice 2005-1, the Committee provided a limited period in
which one or more Participants could elect to (i) terminate participation
in the Plan for certain amounts subject to Code Section 409A, or
(ii) cancel, in whole or in part, his or her deferral elections for certain
amounts subject to Code Section 409A, as more fully described on an
Election Form approved and accepted by the Committee prior to the deadline
established by the Committee, but in no event later than December 31,
2005. All amounts subject to such an election shall be includible in
the applicable Participant’s income during 2005, or, if later, in the first
taxable year in which the amounts become earned and vested.
Exhibit 21
SUBSIDIARIES
1
OF
VAIL RESORTS,
INC.
|
NAME
|
STATE
OF INCORPORATION / FORMATION
|
DOING
BUSINESS AS
|
|
ARRABELLE
AT VAIL SQUARE, LLC
|
Colorado
|
|
|
AVON
PARTNERS II LIMITED LIABILITY COMPANY
|
Colorado
|
|
|
BEAVER
CREEK ASSOCIATES, INC.
|
Colorado
|
BEANO
AT BEAVER CREEK, INC.
HAY
MEADOW AT BEAVER CREEK, INC.
LATIGO
AT BEAVER CREEK, INC.
MCCOY
PARK AT BEAVER CREEK, INC.
RED
TAIL AT BEAVER CREEK, INC.
SPRUCE
SADDLE RESTAURANT, INC.
STRAWBERRY
PARK AT BEAVER CREEK, INC.
|
|
BEAVER
CREEK CONSULTANTS, INC.
|
Colorado
|
|
|
BEAVER
CREEK FOOD SERVICES, INC.
|
Colorado
|
GUNDER’S
|
|
BLACK
DIAMOND INSURANCE, INC.
|
Arizona
|
|
|
BRECKENRIDGE
RESORT PROPERTIES, INC.
|
Colorado
|
BRECKENRIDGE
RESORT PROPERTIES
|
|
BRECKENRIDGE
TERRACE, LLC
|
Colorado
|
|
|
BRYCE
CANYON LODGE COMPANY
|
Colorado
|
BRYCE
CANYON NATIONAL PARK LODGE COMPANY
|
|
COLTER
BAY CAFÉ COURT, LLC
|
Wyoming
|
|
|
COLTER
BAY CONVENIENCE STORE, LLC
|
Wyoming
|
|
|
COLTER
BAY CORPORATION
|
Wyoming
|
|
|
COLTER
BAY GENERAL STORE, LLC
|
Wyoming
|
|
|
COLTER
BAY MARINA, LLC
|
Wyoming
|
|
|
CRYSTAL
PEAK LODGE OF BRECKENRIDGE, INC.
|
Colorado
|
CRYSTAL
PEAK LODGE
|
|
DELIVERY
ACQUISITION, INC.
|
Colorado
|
COLORADO
MOUNTAIN EXPRESS
CME
CME
PREMIER
RESORT
EXPRESS
TRANSPORTATION
MANAGEMENT SYSTEMS
PREMIER
VIP TRANSPORTATION
WHEELS
OF FORTUNE
DESTINATIONS
WEST
CME
DESTINATIONS WEST
SKIER’S
CONNECTION
CMECOUPONS
CMECOUPONS.COM
CME
PARTNERS
ROCKY
MOUNTAIN ART GUIDE
ROCKY
MOUNTAIN DINING GUIDE
|
|
EAGLE
PARK RESERVOIR COMPANY
|
Colorado
|
|
|
EVER
VAIL, LLC
|
Colorado
|
|
|
FOREST
RIDGE HOLDINGS, INC.
|
Colorado
|
|
|
GILLETT
BROADCASTING, INC.
|
Delaware
|
|
|
GORE
CREEK PLACE, LLC
|
Colorado
|
|
|
GRAND
TETON LODGE COMPANY
|
Wyoming
|
|
|
GROS
VENTRE UTILITY COMPANY
|
Wyoming
|
|
|
HEAVENLY
VALLEY, LIMITED PARTNERSHIP
|
Nevada
|
HEAVENLY
MOUNTAIN RESORT
|
|
HUNKIDORI
LAND COMPANY, LLC
|
Colorado
|
|
|
JACKSON
HOLE GOLF AND TENNIS CLUB, INC.
|
Wyoming
|
|
|
JACKSON
HOLE GOLF AND TENNIS CLUB SNACK SHACK, LLC
|
Wyoming
|
|
|
JACKSON
LAKE LODGE CORPORATION
|
Wyoming
|
|
|
JENNY
LAKE LODGE, INC.
|
Wyoming
|
|
|
JENNY
LAKE STORE, LLC
|
Wyoming
|
|
|
JHL&S
LLC
|
Wyoming
|
|
|
KEYSTONE
CONFERENCE SERVICES, INC.
|
Colorado
|
|
|
KEYSTONE
DEVELOPMENT SALES, INC.
|
Colorado
|
|
|
KEYSTONE
FOOD AND BEVERAGE COMPANY
|
Colorado
|
ALPENTOP
DELI, INC.
KEYSTONE
LODGE & SPA
ONE
SKI HILL PLACE
THE
CROW’S NEST, INC.
|
|
KEYSTONE
RESORT PROPERTY MANAGEMENT COMPANY
|
Colorado
|
KEYSTONE
CENTRAL RESERVATIONS, INC.
KEYSTONE
MOUNTAIN RESERVATIONS, INC.
KEYSTONE
PROPERTY MANAGEMENT, INC.
|
|
KEYSTONE/INTRAWEST,
LLC
|
Delaware
|
KEYSTONE
REAL ESTATE DEVELOPMENTS
|
|
KEYSTONE/INTRAWEST
REAL ESTATE, LLC
|
Colorado
|
|
|
LA
POSADA BEVERAGE SERVICE, LLC
|
Delaware
|
|
|
LARKSPUR
RESTAURANT & BAR, LLC
|
Colorado
|
|
|
LODGE
PROPERTIES, INC.
|
Colorado
|
THE
LODGE AT VAIL
|
|
LODGE
REALTY, INC.
|
Colorado
|
|
|
MESA
VERDE LODGE COMPANY
|
Colorado
|
|
|
MOUNTAIN
THUNDER, INC.
|
Colorado
|
|
|
NATIONAL
PARK HOSPITALITY COMPANY
|
Colorado
|
|
|
ONE
RIVER RUN, LLC
|
Colorado
|
|
|
ONE
SKI HILL PLACE, LLC
|
Colorado
|
|
|
PROPERTY
MANAGEMENT ACQUISITION CORP., INC.
|
Tennessee
|
ROCKY
MOUNTAIN RESORT LODGING COMPANY
|
|
RCR
VAIL, LLC
|
Colorado
|
ROCKY
MOUNTAIN RESIDENCES, LLC
|
|
ROCKRESORTS
ARRABELLE, LLC
|
Colorado
|
|
|
ROCKRESORTS
CHEECA, LLC
|
Delaware
|
|
|
ROCKRESORTS
CORDILLERA LODGE COMPANY, LLC
|
Colorado
|
|
|
ROCKRESORTS
DR, LLC
|
Delaware
|
|
|
ROCKRESORTS
EQUINOX, INC.
|
Vermont
|
|
|
ROCKRESORTS
HOTEL JEROME, LLC
|
Colorado
|
|
|
ROCKRESORTS
INTERNATIONAL, LLC
|
Delaware
|
|
|
ROCKRESORTS
INTERNATIONAL MANAGEMENT COMPANY
|
Colorado
|
|
|
ROCKRESORTS
LAPOSADA, LLC
|
Delaware
|
|
|
ROCKRESORTS
ROSARIO, LLC
|
Delaware
|
|
|
ROCKRESORTS
SKI TIP, LLC
|
Colorado
|
|
|
ROCKRESORTS
(ST. LUCIA) INC.
|
St.
Lucia
|
|
|
ROCKRESORTS
TEMPO, LLC
|
Florida
|
|
|
ROCKRESORTS
THIRD TURTLE, LTD.
|
Turks
& Caicos Islands
|
|
|
ROCKRESORTS
WYOMING, LLC
|
Wyoming
|
|
|
ROCKRESORTS,
LLC
|
Delaware
|
|
|
SLIFER
SMITH & FRAMPTON/VAIL ASSOCIATES REAL ESTATE, LLC
|
Colorado
|
|
|
SOHO
DEVELOPMENT, LLC
|
Colorado
|
|
|
SSV
HOLDINGS, INC.
|
Colorado
|
|
|
SSI
VENTURE, LLC
|
Colorado
|
SPECIALTY
SPORTS VENTURE LLC
SPECIALTY
SPORTS NETWORK
BREEZE,
INC.
BREEZE
SKI RENTALS, INC.
BREEZE
SKI & SPORT
|
|
STAGECOACH
DEVELOPMENT, LLC
|
Nevada
|
|
|
STAMPEDE
CANTEEN, LLC
|
Wyoming
|
|
|
TCRM
COMPANY
|
Delaware
|
|
|
TENDERFOOT
SEASONAL HOUSING, LLC
|
Colorado
|
|
|
TETON
HOSPITALITY SERVICES, INC.
|
Wyoming
|
|
|
THE
CHALETS AT THE LODGE AT VAIL, LLC
|
Colorado
|
THE
LODGE AT VAIL CHALETS
|
|
THE
VAIL CORPORATION
|
Colorado
|
ARROWHEAD
ALPINE CLUB
AVAIL
ADVENTURE OUTFITTERS, LTD.
BACHELOR
GULCH CLUB
BACHELOR
GULCH, INC.
BEAVER
CREEK CLUB
PASSPORT
CLUB
PRATER
LANE PLAY SCHOOL
RED
SKY GOLF CLUB
RED
SKY GOLF CLUB GUEST CLUBHOUSE
PRO
SHOP
RED
SKY GOLF CLUB MEMBER PRO SHOP
THE
PASSPORT CLUBHOUSE AT GOLDEN PEAK
THE
YOUNGER GENERATION, INC.
VAIL
ASSOCIATES, INC.
VAIL
CONSULTANTS, INC.
VAIL
RESORTS MANAGEMENT COMPANY
VAIL
SNOWBOARD SUPPLY
|
|
THE
VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
|
Tennessee
|
|
|
TIMBER
TRAIL, INC.
|
Colorado
|
|
|
VA
RANCHO MIRAGE I, INC.
|
Colorado
|
|
|
VA
RANCHO MIRAGE II, INC.
|
Colorado
|
|
|
VA
RANCHO MIRAGE RESORT, L.P.
|
Delaware
|
|
|
VAIL
ASSOCIATES HOLDINGS, LTD.
|
Colorado
|
|
|
VAIL
ASSOCIATES INVESTMENTS, INC.
|
Colorado
|
WARREN
LAKES VENTURE, LTD.
|
|
VAIL
ASSOCIATES REAL ESTATE, INC.
|
Colorado
|
|
|
VAIL
FOOD SERVICES, INC.
|
Colorado
|
BISTRO
14
EXTRA
EXTRA
FOX
HOLLOW GOLF COURSE CLUBHOUSE, INC.
GOLDEN
PEAK GRILL
GOLDEN
PEAK RESTAURANT AND CANTINA, INC.
IN
THE DOG HAUS INC.
ONE
ELK RESTAURANT, INC.
SALSA'S,
INC.
THE
LIONS DEN BAR & GRILL
TWO
ELK RESTAURANT, INC.
VAIL
MOUNTAIN DINING COMPANY
WILDWOOD
SMOKEHOUSE, INC.
|
|
VAIL
HOLDINGS, INC.
|
Colorado
|
APRES
LOUNGE, INC.
AVON
AT BEAVER CREEK, INC.
AVON-VAIL
COMPANY
BEAVER
CREEK ADVERTISING AGENCY, INC.
BEAVER
CREEK RESERVATION SERVICE, INC.
BEAVER
CREEK SKI AND SPORTS, INC.
BEAVER
CREEK SKI AREA, INC.
BEAVER
CREEK SKI CORPORATION
BEAVER
CREEK SKIING CORPORATION
BEAVER
CREEK SKI PATROL, INC.
BEAVER
CREEK SKI RENTAL, INC.
BEAVER
CREEK SKI REPAIR, INC.
BEAVER
CREEK SKI RESORT, INC.
BEAVER
CREEK SKI SCHOOL, INC.
BEAVER
CREEK SKI SERVICE, INC.
BEAVER
CREEK SKI SHOPS, INC.
BEAVER
CREEK SPORTING GOODS, INC.
BEAVER
CREEK SPORT SHOP, INC.
BEAVER
CREEK SPORTS, INC.
BEAVER
CREEK VACATION RESORT, INC.
GAME
CREEK CLUB, INC.
LODGE
AT BEAVER CREEK, INC.
THE
INN AT BEAVER CREEK, INC.
THE
ENCLAVE RESTAURANT, INC.
THE
INN AT BEAVER CREEK, INC.
TRAIL'S
END BAR, INC.
VAIL
ASSOCIATES DEVELOPMENT CORPORATION
VAIL/BEAVER
CREEK CENTRAL RESERVATIONS
VAIL-BEAVER
CREEK COMPANY
VAIL
BEAVER CREEK REAL ESTATE, INC.
VAIL
MOUNTAIN CLUB, INC.
VAIL
MOUNTAIN RESORT AND CONFERENCE CENTER, INC.
VAIL
MOUNTAIN RESORT, INC.
VAIL
PRODUCTIONS, INC.
WILDWOOD
SHELTER, INC
|
|
VAIL
HOTEL MANAGEMENT COMPANY, LLC
|
Colorado
|
|
|
VAIL
RESORTS DEVELOPMENT COMPANY
|
Colorado
|
VAIL
ASSOCIATES REAL ESTATE GROUP, INC.
|
|
VAIL
RESORTS LODGING COMPANY
|
Delaware
|
VAIL
RESORTS HOSPITALITY
|
|
VAIL
RR, INC.
|
Colorado
|
|
|
VAIL
SUMMIT RESORTS, INC.
|
Colorado
|
BEAVER
CREEK VILLAGE TRAVEL, INC.
BRECKENRIDGE
HOSPITALITY
BRECKENRIDGE
LODGING & HOSPITALITY
BRECKENRIDGE
MOUNTAIN RESORT,INC.
BRECKENRIDGE
SKI RESORT
BRECKENRIDGE
SKI RESORT CORPORATION
BRECKENRIDGE
SKI RESORT, INC.
COLORADO
VACATIONS, INC.
KEYSTONE
LODGE & SPA
KEYSTONE
RESORT
KEYSTONE
RESORT, INC.
KEYSTONE
TRAVEL
RESERVATIONS
FOR THE SUMMIT
ROCKY
MOUNTAIN RESORT RESERVATIONS
ROCKY
MOUNTAIN RESORT VACATIONS
ROCKY
MOUNTAIN SKI CONSOLIDATORS
VAIL/BEAVER
CREEK CENTRAL
RESERVATIONS,
INC.
VAIL/BEAVER
CREEK RESERVATIONS, INC.
VAIL/BEAVER
CREEK TRAVEL, INC.
|
|
VAIL
TRADEMARKS, INC.
|
Colorado
|
|
|
VAIL/ARROWHEAD,
INC.
|
Colorado
|
|
|
VAIL/BEAVER
CREEK RESORT PROPERTIES, INC.
|
Colorado
|
ARROWHEAD
PROPERTY MANAGEMENT
COMPANY,
INC.
BACHELOR
GULCH PROPERTY MANAGEMENT
COMPANY,
INC.
BEAVER
CREEK RESORT PROPERTIES
BEAVER
CREEK TENNIS CENTER, INC.
TRAPPER'S
CABIN, INC.
|
|
VAMHC,
INC.
|
Colorado
|
|
|
VR
HEAVENLY CONCESSIONS, INC.
|
California
|
|
|
VR
HEAVENLY I, INC.
|
Delaware
|
|
|
VR
HEAVENLY II, INC.
|
Delaware
|
|
|
VR
HOLDINGS, INC.
|
Colorado
|
|
|
ZION
LODGE COMPANY
|
Colorado
|
1
Includes only those entities owned 50% or greater.
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We hereby
consent to the incorporation by reference in the Registration Statement on Form
S-3 (No. 333-112601) and on Forms S-8 (Nos. 333-38321 and 333-145934) of Vail
Resorts, Inc. of our report dated September 23, 2009 relating to the financial
statements, financial statement schedule and the effectiveness of internal
control over financial reporting, which appears in this Form 10-K.
/s/
PricewaterhouseCoopers LLP
Denver,
Colorado
September
23, 2009
Exhibit
31.1
CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER
PURSUANT
TO SECTION 302 OF THE
SARBANES-OXLEY
ACT OF 2002
I, Robert
A. Katz, certify that:
|
1.
|
I
have reviewed this annual report on Form 10-K of Vail Resorts,
Inc.;
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
|
Date:
September 24, 2009
|
/s/ ROBERT A. KATZ
|
|
Robert
A. Katz
|
|
Chief
Executive Officer
|
Exhibit
31.2
CERTIFICATION
OF THE CHIEF FINANCIAL OFFICER
PURSUANT
TO SECTION 302 OF THE
SARBANES-OXLEY
ACT OF 2002
I,
Jeffrey W. Jones, certify that:
|
1.
|
I
have reviewed this annual report on Form 10-K of Vail Resorts,
Inc.;
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
|
Date:
September 24, 2009
|
/s/ JEFFREY W. JONES
|
|
Jeffrey
W. Jones
|
|
Senior
Executive Vice President and
|
|
Chief
Financial Officer
|
Exhibit
32
CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER
AND
THE CHIEF FINANCIAL OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby
certifies in his capacity as an officer of Vail Resorts, Inc. (the “Company”)
that the Company’s Annual Report on Form 10-K for the year ended July 31, 2009
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that the information contained in such
Report fairly presents, in all material respects, the financial condition and
the results of operations of the Company at the end of and for the periods
covered by such Report.
Date:
September 24, 2009
|
/s/ ROBERT A. KATZ
|
|
Robert
A. Katz
|
|
Chief
Executive Officer
|
Date:
September 24, 2009
|
/s/ JEFFREY W. JONES
|
|
Jeffrey
W. Jones
|
|
Senior
Executive Vice President and
|
|
Chief
Financial Officer
|
This
certification is being furnished solely pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, is not a part of the Form 10-K to which it refers,
and is, to the extent permitted by law, provided by each of the above
signatories to the extent of his respective knowledge. This
certification is not deemed filed with the Securities and Exchange Commission
and is not to be incorporated by reference into any filing of Vail Resorts, Inc.
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended (whether made before or after the date of the Form 10-K),
irrespective of any general incorporation language contained in such
filing. A signed original of this written statement required by
Section 906 has been provided to Vail Resorts, Inc. and will be furnished to the
Securities and Exchange Commission or its staff upon request.