As filed with the Securities and Exchange Commission on February 20, 2002
Registration No.333-76956
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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VAIL RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 7990 51-0291762
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of incorporation Industrial Classification Identification
or organization) Code Number) Number)
-----------------------
137 Benchmark Road
Avon, Colorado 81620
(970) 845-2500
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
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See Table of Additional Registrants
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Martha D. Rehm, Esq.
Senior Vice President and General Counsel
Vail Resorts, Inc.
137 Benchmark Road
Avon, Colorado 81620
(970) 845-2500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
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Approximate date of commencement of proposed issuance of the securities
to the public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
Additional Registrants
Exact name of registrant as State or other jurisdiction of Primary Standard Industrial I.R.S. Employer
specified in its charter incorporation or organization Classification Code Number Identification No.
- ---------------------------------- ------------------------------- --------------------------- ------------------
Beaver Creek Associates, Inc. Colorado 71392 84-0677537
Beaver Creek Consultants, Inc. Colorado 56151 84-0760348
Beaver Creek Food Services, Inc. Colorado 72231 84-0815288
Breckenridge Resort Properties, Colorado 531311 N/A
Inc.
Complete Telecommunications, Inc. Colorado 7385 84-1533678
GHTV, Inc. Delaware 551112 39-1284459
Gillett Broadcasting, Inc. Delaware 551112 37-0920781
Grand Teton Lodge Company Wyoming 7211 83-0161154
Jackson Hole Golf and Tennis Wyoming 7997 N/A
Club, Inc.
JHL&S LLC Wyoming 7211 83-0332983
Keystone Conference Services, Inc. Colorado 72111 84-1075280
Keystone Development Sales, Inc. Colorado 53121 43-1463384
Keystone Food and Beverage Company Colorado 72231 84-0678950
Keystone Resort Property Colorado 531311 84-0705922
Management Company
Larkspur Restaurant & Bar, LLC Colorado 7223 84-1510919
Lodge Properties, Inc. Colorado 72111 84-0607010
Lodge Realty, Inc. Colorado 53121 13-3051423
Property Management Acquisition Tennessee 531311 62-1634422
Corp., Inc.
Rockresorts Casa Madrona, LLC Delaware 7211 84-1606603
Rockresorts Cheeca, LLC Delaware 7211 84-1606605
Rockresorts Equinox, Inc. Vermont 7211 06-1634157
Rockresorts International, LLC Delaware 7211 84-1606606
Rockresorts LaPosada, LLC Delaware 7211 84-1606604
Rockresorts LLC Delaware 7211 75-2829919
Rockresorts Rosario, LLC Delaware 7211 84-1606602
Teton Hospitality LLC Wyoming 7211 83-0332997
Teton Hospitality Services, Inc. Wyoming 7211 83-0332998
The Vail Corporation Colorado 71392 84-0601461
The Village at Breckenridge Tennessee 72111 62-1633660
Acquisition Corp., Inc.
Vail Associates Consultants, Inc. Colorado 53121 84-0738502
Vail Associates Holdings, Ltd. Colorado 53139 84-1214955
Vail Associates Management Company Colorado 531311 84-1248614
Vail Associates Real Estate, Inc. Colorado 53121 84-1013094
Vail Food Services, Inc. Colorado 72231 84-0596378
Vail Holdings, Inc. Colorado 551112 84-0568230
Vail Resorts Development Company Colorado 23311 84-1242948
Vail Summit Resorts, Inc. Colorado 71392 43-1273996
Vail Trademarks, Inc. Colorado 541199 84-1253320
Vail/Arrowhead, Inc. Colorado 23311 84-1253319
Vail/Battle Mountain, Inc. Colorado 53139 84-1146997
Vail/Beaver Creek Resort Colorado 531311 52-1479879
Properties, Inc.
VAMHC, Inc. Colorado 7211 N/A
Vail RR, Inc. Colorado 7211 84-1606210
VA Rancho Mirage I, Inc. Colorado 7211 84-1606209
VA Rancho Mirage II, Inc. Colorado 7211 84-1606208
VA Rancho Mirage Resort, L.P. Delaware 7211 78-2578150
The information in this prospectus is not complete and may be changed. We may
not consummate the exchange offer until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these notes and is not soliciting an offer to acquire these notes
in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 20, 2002
VAIL RESORTS, INC.
Exchange Offer
for
$160,000,000 Aggregate Principal Amount
of
8 3/4% Senior Subordinated Notes due 2009
--------------------------------
Terms of Exchange Offer:
o Expires 5:00 p.m., New York City time, on , 2002 unless extended.
o Subject to certain customary conditions which may be waived by us.
o All outstanding 8 3/4% Senior Subordinated Notes due 2009 that are
validly tendered and not withdrawn will be exchanged.
o Tenders of outstanding notes may be withdrawn any time prior to the
expiration of this exchange offer.
o The exchange of the outstanding notes will not be a taxable exchange
for U.S. federal income tax purposes.
o We will not receive any cash proceeds from the exchange offer.
o The terms of the notes to be issued in exchange for the outstanding
notes are substantially identical to the outstanding notes, except for
certain transfer restrictions and registration rights relating to the
outstanding notes.
o Any outstanding notes not validly tendered will remain subject to
existing transfer restrictions.
See "Risk Factors," beginning on page 17, for a discussion of certain
factors that should be considered by holders before tendering their outstanding
notes in the exchange offer.
There has not previously been any public market for the exchange notes that
will be issued in the exchange offer. We do not intend to list the exchange
notes on any national stock exchange or on the Nasdaq National Market. There can
be no assurance that an active market for such exchange notes will develop.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is February , 2002.
TABLE OF CONTENTS
Page
Notice to United Kingdom Residents...........................................i
Where You Can Find More Information..........................................i
Forward-Looking Statements..................................................ii
Prospectus Summary...........................................................1
Summary Consolidated Financial and Operating Data...........................14
Risk Factors................................................................17
Use of Proceeds.............................................................25
Capitalization..............................................................26
The Exchange Offer..........................................................27
Description of Notes........................................................38
Description of Certain Indebtedness.........................................76
Plan of Distribution........................................................78
Certain Federal Income Tax Considerations...................................79
Legal Matters...............................................................83
Independent Public Accountants..............................................83
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
NOTICE TO UNITED KINGDOM RESIDENTS
The notes will not be offered or sold to persons in the United Kingdom,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995. This prospectus may only be
issued or passed on in or into the United Kingdom to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemption) Order 1996 or after 30 November 2001, in Article 19
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001,
or is a person to whom such document may otherwise lawfully be issued or passed
on.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. The Exchange Act file number for our
Commission filings is 001-09614. You may read and copy any document we file at
the Commission public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the public reference room
by calling the Commission at 1-800-SEC-0330. We file information electronically
with the Commission. Our Commission filings are available from the Commission's
Internet site at http://www.sec.gov, which
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contains reports, proxy and information statements, and other information
regarding issuers that file electronically.
The Commission allows us to "incorporate by reference" certain documents we
file with it, which means that we can disclose important information to you by
referring you to those documents. We are incorporating by reference the
documents listed below and any future filings we will make with the Commission
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
o Annual Report on Form 10-K for the year ended July 31, 2001;
o Quarterly Report on Form 10-Q for the period ended October 31, 2001,
filed on December 13, 2001; and
o Proxy Statement on Schedule 14A for the fiscal 2001 Annual Meeting of
Shareholders.
The information in the documents incorporated by reference is considered to
be part of this prospectus, and information in documents that we file later with
the Commission will automatically update and supersede such information.
Any statement contained in a document incorporated or deemed to by
incorporated by reference in this prospectus is modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded does not, except as so
modified or superseded, constitute a part of this prospectus.
We will provide a copy of the documents we incorporate by reference, at
no cost, to any person who receives this prospectus, including any beneficial
owner of our common stock. To request a copy of any or all of these documents,
you should write or telephone us at the following address and telephone number:
Vail Resorts, Inc.
Post Office Box 7
Vail, Colorado 81658
Telephone: (970) 845-2500
Attention: Investor Relations
http://www.vailresorts.com
To obtain timely delivery, you must make your request no later than , 2002
(five business days prior to the expiration date for the exchange offer).
FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference 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
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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. These statements are contained in
sections entitled "Prospectus Summary," "Risk Factors" and other sections of
this prospectus, and in the documents incorporated by reference in this
prospectus.
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 are set forth below and elsewhere in this prospectus,
including under the section headed "Risk Factors." Such factors include, among
others, economic downturns; terrorist acts upon the United States; unfavorable
weather conditions; our ability to obtain financing on terms acceptable to us to
finance our capital expenditure and growth strategy; our ability to develop our
resort and real estate operations; competition in our resort businesses; our
reliance on government permits for our use of federal land; our ability to
integrate and successfully operate future acquisitions; and adverse changes in
the real estate market. All forward-looking statements attributable to us or any
persons acting on our behalf are expressly qualified in their entirety by these
cautionary statements.
Our risks are more specifically described in "Risk Factors" and in our
Annual Report on Form 10-K, which is incorporated by reference in this
prospectus. 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. We will not update these
forward-looking statements, even if new information, future events or other
circumstances have made them incorrect or misleading.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in connection with, the more detailed information and consolidated financial
statements (including the notes thereto) appearing elsewhere in, or incorporated
by reference into, this prospectus. The terms "Vail," "the Company," "we," "us"
and "our" as used in this prospectus refer to Vail Resorts, Inc. and its
subsidiaries and predecessors as a combined entity, except where it is clear
from the context that such term means only the parent company. Our fiscal year
end is July 31. Unless otherwise specified, "ski season" shall mean the period
from the opening of any of our mountains for skiing to the closing of our last
mountain for skiing, typically late October to early May, and "skier visit"
shall mean one guest accessing a ski mountain for all or any part of a day or
night and includes both paid and complimentary tickets and ski passes. "Beaver
Creek" and other designated trademarks are registered trademarks of Vail
Resorts, Inc.
The Company
Vail Resorts is one of the leading resort operators in North America.
Through our premier properties we provide a comprehensive resort experience
throughout the year to a diverse clientele with an attractive demographic
profile. Included within our resort portfolio are four owned and operated
mountain resorts in the Colorado Rocky Mountains:
o Vail Mountain-- the largest and most popular single ski mountain
complex in North America;
o Beaver Creek Resort-- one of the world's premier family-oriented
mountain resorts;
o Breckenridge Mountain-- an attractive destination resort with numerous
apres-ski activities and an extensive bed base; and
o Keystone Resort -- a year-round family vacation destination.
We are one of the most profitable mountain resort operators due to the
following competitive strengths:
o ownership of premium resorts;
o attractive guest demographics;
o strong brand franchise;
o scope, diversity and quality of our complementary activities and guest
services; and
o proximity of our ski resorts to both Denver International Airport and
Vail/Eagle County Airport.
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All of our ski resorts were rated among the top twelve ski resorts in North
America in SKI Magazine's October 2001 readers survey, with Vail Mountain rated
as the number two ski resort destination in North America. We had an 8.7% share
of skier visits in the United States for the 2000-01 ski season, with an 8.3%
increase in skier visits at our four ski resorts from the 1999-00 ski season. In
addition, Vail, Breckenridge and Keystone were the three most visited ski
resorts in the United States for the 2000-01 ski season. Our ski resorts are
located within 50 miles of each other, which enables us to offer guests the
opportunity to visit each ski resort during one vacation stay and participate in
common loyalty programs.
We also own leading non-ski destination resorts and hotels and operate a
premier hospitality management company:
o Grand Teton Lodge Company -- premier summer resort properties in and
around Grand Teton National Park in Wyoming; and
o Rockresorts International, LLC -- a luxury hotel management company
currently with 10 properties under management.
We also own substantial real estate proximate to our resorts from which we
derive significant strategic benefits and cash flow. In addition, we develop and
sell technology-based products and services for the hospitality and resort
industries.
For the quarter ended October 31, 2001, our revenue from resort operations
and Resort EBITDA was $57.4 million and a loss of $24.6 million, respectively.
It is normal for us to experience losses in resort operations in our first
fiscal quarter due to the seasonal nature of our business. For the quarter ended
October 31, 2001, our revenue from real estate operations and technology
operations was $15.9 million and $1.1 million, respectively.
Resort, Real Estate &Technology
Resort
Vail Mountain
Located 100 miles west of Denver, Vail is the largest and most popular
single ski mountain complex in North America, offering over 5,200 acres of
unique and varied ski terrain interconnected by a large network of high-speed
chairlifts. Vail's offerings include the world-famous Back Bowls, a top rated
ski and snowboard school and a wide variety of lodging, dining and retail
venues. Over the past two years, we have made significant investments in capital
improvements, primarily to open Blue Sky Basin, which increased Vail's skiable
terrain by approximately 645 acres, as well as to renovate The Lodge at Vail and
to fund the expansion and upgrade of Vail's snowmaking systems and grooming
equipment. Vail hosted the 1999 and 1989 World Alpine Ski Championships, the
first time a North American ski resort has been selected to host this
prestigious event twice. For ten of the last fourteen years, Vail has been rated
the number one ski resort in North America by SKI Magazine. Vail was the most
visited ski resort in the United States for the 2000-01 ski season, attracting
in excess of 1.6 million skier visits.
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Beaver Creek Resort
Located ten miles west of Vail, Beaver Creek is one of the world's premier
family-oriented mountain resorts, offering its guests a superior level of
service in a pristine alpine setting. Known for its unique diversity,
European-style village-to-village skiing, exceptional snow quality and an
award-winning ski and snowboard school, Beaver Creek offers more than 1,600
acres of skiable terrain, and operates 13 lifts connecting the Beaver Creek,
Bachelor Gulch and Arrowhead villages. We have a significant presence of
retailing and dining options in Beaver Creek Village and also own and operate
two hotels, the Inn at Beaver Creek and The Pines Lodge. In addition, a joint
venture, of which we are a partner, has recently commenced the construction of
the Ritz-Carlton, Bachelor Gulch, which will be a 5-star hotel with 238 rooms
and 23 luxury condominium residences, providing further high-end lodging options
for our destination guests. This premier property is scheduled to open in the
2002-03 ski season. Beaver Creek has become one of the most popular resorts in
the United States, attracting in excess of 675,000 skier visits in the 2000-01
ski season, its best ski season in its 20 year history. Beaver Creek was rated
the number six ski resort in North America in SKI Magazine's October 2001
readers survey.
Breckenridge Mountain
Located approximately 85 miles west of Denver and 40 miles east of Vail,
Breckenridge offers over 2,000 acres of skiing on four different mountain peaks,
including open bowl skiing and excellent beginner and intermediate ski terrain.
The Town of Breckenridge, situated adjacent to the ski area, has numerous
apres-ski activities and an extensive and growing bed base, making it an
attractive destination resort for national and international skiers. Since
acquiring Breckenridge in 1997, we have made significant capital improvements to
the resort, including one high-speed double loading six passenger chairlift, two
high-speed quadruple chairlifts, a 50% increase in snowmaking capacity, and the
opening of the first new on-mountain restaurant at Breckenridge in more than 12
years. We own and operate two lodging properties in the Town of
Breckenridge--The Great Divide Lodge, which has undergone a substantial
renovation, and the Village at Breckenridge, a resort property that includes
lodging, condominiums and commercial space and serves as the primary portal to
Breckenridge Mountain. With more than 1.4 million skier visits, Breckenridge was
second only to Vail in terms of skier visits during the 2000-01 ski season.
Breckenridge was rated the tenth most popular ski resort in North America in SKI
Magazine's October 2001 readers survey.
Keystone Resort
Located 70 miles west of Denver and 15 miles from Breckenridge, Keystone
features over 1,850 acres of skiing on three mountains interconnected by a
network of 22 lifts, including two high-speed gondolas, one high speed six
passenger chairlift and six high-speed quadruple chairlifts. Keystone has a
large and advanced snowmaking system, which provides snowmaking coverage for
more than 50% of its skiable terrain and which enables Keystone to be one of the
first Rocky Mountain ski resorts to open each ski season and one of the last to
close. As the largest single-mountain night skiing experience in North America,
with 17 lighted trails including a halfpipe and terrain park, Keystone provides
a 12.5-hour ski day. Keystone is a planned family-oriented community that offers
numerous year-round activities and amenities, such as the Keystone Conference
Center, where capacity was recently doubled, and The River Course, Keystone's
second golf course, which opened in
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2000. During the 2000-01 ski season, Keystone attracted more than 1.2 million
skier visits, the third most visited ski resort in the United States. Keystone
was rated the twelfth most popular ski resort in North America in SKI Magazine's
October 2001 readers survey.
Grand Teton Lodge Company
Based in the Jackson Hole valley in Wyoming, Grand Teton owns and operates
four premier summer seasonal destination resort properties in and around Grand
Teton National Park. Within the park, we operate the Jackson Lake Lodge, a
full-service 385-room lodge with conference facilities that can accommodate up
to 650 people; the Jenny Lake Lodge, a AAA four-diamond 37-cabin lodge; and
Colter Bay Village, a family-oriented facility with 166 log cabins as well as
extensive camping and recreational facilities. Outside the park, we own and
operate the Jackson Hole Golf and Tennis Club, which has the number one rated
golf course (by Golf Digest magazine) in the State of Wyoming. We also operate
and have a majority ownership interest in Snake River Lodge & Spa, which has 95
deluxe hotel rooms and 75 luxury condominium bedrooms. Located in Teton Village,
Snake River Lodge operates year-round due to its desirable location at the base
of the Jackson Hole ski area.
Rockresorts International
We recently completed the acquisition of a majority interest in Rockresorts
International, a luxury resort hotel management company. In connection with this
acquisition, we have secured contracts to manage five leading resort hotels
across the United States: the Cheeca Lodge in the Florida Keys, The Equinox in
Manchester Village, Vermont, La Posada Resort & Spa in Sante Fe, New Mexico,
Rosario Resort in the San Juan islands and Casa Madrona in Sausalito,
California. We have also flagged and manage six of our existing hotels under the
Rockresorts brand: The Great Divide Lodge in Breckenridge, The Lodge at Vail,
The Keystone Lodge, The Pines Lodge in Beaver Creek, the Snake River Lodge & Spa
and the Lodge at Rancho Mirage. We believe Rockresorts provides a powerful brand
name that we can leverage across our existing hotel portfolio and will create
additional hotel management opportunities.
The Lodge at Rancho Mirage
We recently completed the acquisition of the Ritz-Carlton, Rancho Mirage, a
four-star hotel located in the Palm Springs area of California. With its variety
of luxury amenities, including a full service spa, salon and fitness center,
outdoor swimming pool, three restaurants and 12,000 feet of meeting space, the
Rancho Mirage caters to the same attractive demographic profile as our ski
properties, thereby offering numerous cross-selling opportunities. The hotel has
been renamed the Lodge at Rancho Mirage and re-flagged under our Rockresorts
brand, expanding our portfolio of premier Rockresorts hotels.
Vail Marriott Mountain Resort
We acquired the Vail Marriott Mountain Resort from Host Marriott
Corporation in December 2001. The Vail Marriott, which we operate, is located
150 yards from Vail's gondola and is the largest hotel in the Vail Valley with
349 rooms and amenities, which include a restaurant and bar, over
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16,500 square feet of meeting space, indoor and outdoor pools, a full service
spa, a 3,600 square foot fitness center, four tennis courts, and over 4,500
square feet of retail space.
Real Estate
We also benefit from our extensive holdings of real property in proximity
to our resorts. Our real estate operations include the planning, oversight,
marketing, infrastructure improvement and development of our real property
holdings. As of October 31, 2001, the book value of our real estate held for
sale was approximately $173.0 million. In addition to the substantial cash flow
generated from real estate sales, our resort operations benefit from these
development activities through:
o the creation of additional resort lodging which is available to our
guests;
o the ability to control the architectural theming of our resorts;
o the creation of unique facilities and venues which provide us with the
opportunity to create new sources of recurring revenue; and
o the expansion of our property management and brokerage operations,
which are the preferred providers of these services for developments
on our land.
In order to facilitate the development and sale of its real estate
holdings, Vail Resorts Development Company, a wholly owned subsidiary of the
Company, also invests in mountain improvements such as ski lifts, snowmaking
equipment and trail construction. These mountain improvements enhance the value
of the real estate held for sale and also benefit resort operations. Generally,
we seek to minimize our exposure to development risks and maximize the long-term
value of our real property holdings by selling land to third party developers
for cash payments prior to the commencement of construction, while retaining
approval of the development plans as well as an interest in the developer's
profit. We also typically retain the option to purchase any commercial space
created in a development. We are able to secure these benefits from third party
developers as a result of the high property values and strong demand associated
with property in close proximity to our world-class mountain resort facilities.
Technology
In addition, we develop and sell technology-based products and services for
the hospitality and resort industries. We own a 51% ownership interest in Resort
Technology Partners LLC, which develops and sells, among other products, a
comprehensive proprietary point-of-sale system tailored to the needs of resort
companies. We also have a 49% equity investment in Lowther Ltd., a joint venture
with Datalex plc, a leading provider of e-business solutions for the global
travel industry.
Business Strategy
Internal Growth Initiatives. A key component of the business strategy for
our mountain resorts has been to expand and enhance our core ski operations,
while at the same time increasing the scope, diversity and quality of the
complementary activities and services offered to our skiing
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and non-skiing guests throughout the year. Our resorts derive revenue through a
combination of activities available to guests, including lift ticket sales, ski
and snowboard lesson packages, a large inventory of resort accommodations,
retail and equipment rental outlets, a variety of dining venues, meeting and
event planning services and other recreational activities such as golf, tennis,
horseback riding, guided fishing, float trips, and on-mountain activities
centers. As a result of this strategy, non-lift ticket revenue as a percentage
of total Resort revenue has increased to approximately 70% of total Resort
revenue in fiscal 2001, as compared to 52% in fiscal 1996.
Our focus on developing a comprehensive destination resort experience has
also allowed us to attract a diverse guest population with an attractive
demographic and economic profile, including a significant number of affluent and
family-oriented destination guests, who tend to generate higher and more
diversified revenues per guest than day skiers from local population centers.
While our Resort revenue per skier visit is currently among the highest in the
industry, we estimate that we currently capture only a portion of the total
vacation expenditures of an average destination guest at our resorts.
In connection with this strategy, we have completed numerous internal
growth initiatives over the past several years to add new attractions and
improve on-mountain facilities, including:
o the addition of Vail's new Blue Sky Basin, 645 acres of natural,
gladed ski terrain serviced by four high-speed quadruple chairlifts;
o the opening of The River Course at Keystone, Keystone's second 18-hole
championship golf course; and
o the development of the Red Sky Ranch golf community, located
approximately 10 miles west of Beaver Creek, which will include 87
homesites and two championship golf courses.
We will also continue to enhance our existing hotel portfolio by completing
selective capital improvements on room upgrades and adding hotel facilities,
such as spas, meeting rooms, restaurants and other amenities. These expenditures
are designed to enhance the overall guest experience, thereby enabling us to
increase occupancy rates and average room rates and improve operations.
Selective Acquisitions of New Resorts and Properties. We will continue to
seek potential acquisitions of additional ski and other destination resorts and
properties, which we believe can be successfully integrated into our existing
operations, enhance our ability to attract destination guests to all of our
resorts and benefit from our capital investment and management expertise.
Our 1997 acquisition of Breckenridge and Keystone exemplifies this
strategy. We believe we have successfully broadened the appeal of these resorts
to destination guests and improved their operating performance through capital
investment, coordinated marketing, improved central reservations and common,
four-resort lift tickets. We have also realized efficiencies in our purchasing,
information systems, accounting and legal areas by sharing these functions
across all of our resorts.
With our acquisition of Grand Teton in 1999, we capitalized on an
opportunity to further leverage our hospitality, dining, retail and recreation
expertise while geographically diversifying our re-
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sort operations to the state of Wyoming. Furthermore, with its peak season from
the late Spring to early Fall, Grand Teton has also significantly increased our
summer Resort revenue.
We will also continue to selectively acquire hotel properties proximate to
our resorts that we believe allow us to broaden our participation in the
services available to our guests, increase our ability to offer "package"
vacation products and, with respect to our ski resorts, increase Resort revenue
per skier visit. The recent acquisition of the Vail Marriott reflects our
implementation of this strategy.
Expanding Hospitality Business. The personal creation of Laurence
Rockefeller in the 1950s, Rockresorts is one of the most storied resort brands
in the United States. We believe that leveraging this powerful brand name will
enable superior cross-marketing and form the basis for building a luxury resort
hospitality business. Our 11 hotel properties currently under Rockresorts
management provide us with a coast-to-coast presence, with 1,742 rooms in the
aggregate.
We believe the acquisition of Rockresorts provides us with an excellent
platform for further national and international expansion of our hospitality
business either through third party management contracts, management contracts
secured with minority equity investments or direct property ownership. Future
expansion of our hospitality business will be focused on identifying properties
that exhibit superior attributes consistent with the positioning of the
Rockresorts brand, including desirable locations, attractive guest demographic
profiles and reputation for high quality guest services.
Our principal executive offices are located at 137 Benchmark Road, Avon,
Colorado 81620 and our telephone number is (970) 845-2500.
-7-
The Exchange Offer
Registration Rights....................... You are entitled to exchange your outstanding notes for freely
tradeable exchange notes with substantially
identical terms. The exchange offer is intended to
satisfy your exchange rights. After the exchange
offer is complete, you will no longer be entitled
to any exchange or registration rights with respect
to your outstanding notes. Accordingly, if you do
not exchange your outstanding notes, you will not
be able to reoffer, resell or otherwise dispose of
your outstanding notes unless you comply with the
registration and prospectus delivery requirements
of the Securities Act, or there is an exemption
available.
The Exchange Offer........................ We are offering to exchange $1,000 principal amount of our
8 3/4% Senior Subordinated Notes due 2009, which
have been registered under the Securities Act, for
$1,000 principal amount of our outstanding 8 3/4%
Senior Subordinated Notes due 2009, which were
issued in a private offering on November 21, 2001.
As of the date of this prospectus, there are $160.0
million principal amount at maturity of outstanding
notes. We will issue exchange notes promptly after
the expiration of the exchange offer.
Resales................................... We believe that the exchange notes issued in the exchange offer
may be offered for resale, resold or otherwise
transferred by you without compliance with the
registration and prospectus delivery requirements
of the Securities Act, provided that:
o you are acquiring the exchange notes in the
ordinary course of your business;
o you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate in a
distribution of the exchange notes; and
o you are not an "affiliate" of ours. If you do not
meet the above criteria you will have to comply
with the registration and prospectus delivery
requirements of the Securities Act in connection
with any reoffer, resale or other disposition of
your exchange notes.
-8-
Each broker or dealer that receives exchange notes
for its own account in exchange for outstanding notes that
were acquired as a result of market-making or other
trading activities must acknowledge that it will
deliver this prospectus in connection with any sale
of exchange notes.
Expiration Date........................... 5:00 p.m., New York City time, on , 2002, unless
we extend the expiration date.
Conditions to the Exchange Offer.......... The exchange offer is subject to certain customary conditions,
which may be waived by us. The exchange offer is
not conditioned upon any minimum principal amount
of outstanding notes being tendered.
Procedures for Tendering Outstanding Notes If you wish to tender outstanding notes, you must
complete, sign and date the letter of transmittal,
or a facsimile of it, in accordance with its
instructions and transmit the letter of
transmittal, together with your notes to be
exchanged and any other required documentation, to
The Bank of New York, who is the exchange agent, at
the address set forth in the letter of transmittal
to arrive by 5:00 p.m., New York City time, on the
expiration date. See "The Exchange
Offer--Procedures for Tendering Outstanding Notes."
By executing the letter of transmittal, you will
represent to us that you are acquiring the exchange
notes in the ordinary course of your business, that
you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate in the
distribution of exchange notes, and that you are
not an "affiliate" of ours. See "The Exchange
Offer--Procedures for Tendering Outstanding Notes."
Special Procedures for Beneficial Holders. If you are the beneficial holder of outstanding
notes that are registered in the name of your
broker, dealer, commercial bank, trust company or
other nominee, and you wish to tender in the
exchange offer, you should contact the person in
whose name your outstanding notes are registered
promptly and instruct such person to tender on your
behalf. See "The Exchange Offer--Outstanding
Notes."
Guaranteed Delivery Procedures............ If you wish to tender your outstanding notes and you cannot
deliver such notes, the letter of transmittal or
any other required documents to the exchange agent
before the expiration date, you may tender your
outstanding notes ac-
-9-
cording to the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights......................... Tenders may be withdrawn at any time before 5:00 p.m., New York
City time, on the expiration date.
Acceptance of Outstanding Notes and
Delivery of Exchange Notes............. Subject to certain conditions, we will accept for exchange any
and all outstanding notes which are properly
tendered in the exchange offer before 5:00 p.m.,
New York City time, on the expiration date. The
exchange notes will be delivered promptly after the
expiration date. See "The Exchange Offer--Terms of
the Exchange Offer."
Certain Federal Income Tax Considerations. The exchange of outstanding notes for exchange
notes will not be a taxable event for federal
income tax purposes. You will not recognize any
taxable gain or loss as a result of exchanging
outstanding notes for exchange notes, and you will
have the same tax basis and holding period in the
exchange notes as you had in the outstanding notes
immediately before the exchange. See "Certain
Federal Income Tax Considerations."
Use of Proceeds........................... We will not receive any proceeds from the issuance of the
exchange notes.
Exchange Agent............................ The Bank of New York is serving as exchange agent in connection
with the exchange offer. The address, telephone
number and facsimile number of the exchange agent
are set forth in "The Exchange Offer--Exchange
Agent."
-10-
Summary of the Exchange Notes
The summary below describes the principal terms of the exchange notes.
Certain of the terms and conditions described below are subject to important
limitations and exceptions. The "Description of Notes" section of this
prospectus contains a more detailed description of the terms and conditions of
the exchange notes.
Issuer..................................... Vail Resorts, Inc.
Notes Offered.............................. $160,000,000 aggregate principal amount of 8 3/4% Senior
Subordinated Notes due 2009.
Interest Payment Dates..................... Interest will accrue in the exchange notes from the last
interest payment date on which interest was paid on
the outstanding notes surrendered in exchange
therefor or if no interest has been paid on the
outstanding notes, from November 21, 2001 and will
be payable semi-annually on May 15 and November 15
of each year, commencing May 15, 2002.
Maturity................................... May 15, 2009.
Original Issue Discount.................... The outstanding Notes were offered at an original issue discount
for federal income tax purposes. The exchange notes
will have original issue discount identical to that
of the outstanding notes. Original issue discount
has accrued from the issue date of the outstanding
Notes and will continue to accrue and will be
included as interest income periodically in a
holder's gross income for U.S. federal income tax
purposes in advance of receipt of the cash payments
to which the income is attributable. See "Certain
Federal Income Tax Considerations."
Guarantees................................. Certain of our subsidiaries other than those treated as
Unrestricted Subsidiaries will guarantee the
exchange notes on a senior subordinated basis.
Future subsidiaries which are deemed restricted
subsidiaries will also be required to guarantee the
exchange notes if they guarantee any of our other
debt. See "Description of Notes--Guarantees."
Ranking.................................... The exchange notes will be unsecured senior subordinated
obligations and will be subordinated to all our
existing and future senior debt. The exchange notes
will rank equally with all our other existing and
future senior subordinated debt, including the
existing notes, and will rank senior to all our
subordinated indebtedness.
-11-
Our subsidiaries' guarantees with respect to the
exchange notes will be general unsecured senior
subordinated obligations of such guarantors and
will be subordinated to all of such guarantors'
existing and future senior debt. The guarantees
will rank equally with any senior subordinated
indebtedness of the guarantors, including their
guarantees of the existing notes, and will rank
senior to such guarantors' subordinated debt.
Because the exchange notes are subordinated, in the
event of bankruptcy, liquidation or dissolution,
holders of the exchange notes will not receive any
payment until holders of senior indebtedness have
been paid in full. The term "senior debt" is
defined in the "Description of Exchange
Notes--Subordination" section of this prospectus.
At January 31, 2002, after giving effect to the
offering and the application of the net proceeds,
we had approximately $122.1 million of senior debt
outstanding on a consolidated basis.
Redemption................................. We may redeem the exchange notes, in whole or in part, at any
time on or after May 15, 2004, at the declining
redemption prices set forth in this prospectus plus
accrued interest.
Optional Redemption........................ On or prior to May 15, 2002, we may redeem up to 35% of the
exchange notes with the net proceeds of certain
equity offerings at 108.75% of the principal amount
thereof, plus accrued interest, if at least 65% of
the aggregate principal amount of the exchange
notes remains outstanding. See "Description of
Exchange Notes--Optional Redemption." Prior to May
15, 2004, we may also redeem the exchange notes, in
whole or in part, upon the occurrence of a change
of control at a make-whole price as described under
"Description of Exchange Notes--Optional
Redemption."
Change of Control.......................... Upon certain change of control events, if we do not redeem the
exchange notes, each holder of exchange notes may
require us to repurchase all or a portion of its
exchange notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued
interest. Our ability to repurchase the exchange
notes upon a change of control event will be
limited by the terms of our debt agreements,
including our Credit Facility. We cannot assure you
that we
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will have the financial resources to repurchase the
exchange notes. See "Description of Exchange
Notes--Repurchase at the Option of Holders--Change
of Control."
Certain Covenants.......................... The indenture governing the exchange notes will contain
covenants that, among other things, will limit our
ability and the ability of certain of our
subsidiaries to:
o incur additional indebtedness;
o pay dividends on, redeem or repurchase our
capital stock;
o make investments;
o engage in transactions with affiliates;
o create certain liens;
o sell assets; or
o consolidate, merge or transfer all or
substantially all our assets and the assets of our
subsidiaries on a consolidated basis.
These covenants are subject to important exceptions
and qualifications, which are described in the
"Description of Exchange Notes" section of this
prospectus.
Risk Factors............................... See "Risk Factors" for a discussion of factors you should
carefully consider before deciding to invest in the
exchange notes.
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The summary historical data for the fiscal years 1997, 1998, 1999, 2000 and
2001 is derived from actual audited results for such years. On September 1,
1997, we changed our fiscal year end from September 30 to July 31. Accordingly,
our fiscal year 1998 ended on July 31, 1998 and consisted of ten months. See the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section and our consolidated financial statements and the notes
thereto included in our Annual Report on Form 10-K incorporated by reference
herein. The summary historical data for the three months ended October 31, 2001
and 2000 is derived from our unaudited consolidated financial statements, which
included all adjustments management considers necessary to present fairly the
financial results for this interim period. All of these adjustments were of a
normal recurring nature. The results of such interim periods are not necessarily
indicative of results to be expected for the full year due to the highly
seasonal nature of our business (which ordinarily produces losses for the first
and fourth quarters). See "Risk Factors--Our business is seasonal in Nature."
Fiscal Fiscal Three Three
Ten Year Months Months
Months Ended Ended Ended
Ended September October October
Fiscal Year Ended July 31, July 31, 30, 31, 31,
2001 2000 1999 1998 1997 2001 2000
----------- -------- ----------- ---------- --------- ------- --------
(Unaudited)
(In thousands, except per share, per skier visit, percentage and ratio data)
Statement of Operations
Data:
Revenues:
Resort---------------- $520,762 $499,415 $431,788 $336,547 $259,038 $57,421 $60,708
Real estate----------- 35,243 51,684 43,912 73,722 71,485 15,850 8,976
Technology------------ 3,274 1,960 -- -- -- 1,059 743
--------- -------- -------- -------- -------- ------- -------
Total revenues------ 559,279 553,059 475,700 410,269 330,523 74,330 70,427
Operating expenses:
Resort---------------- 402,662 386,637 345,687 222,201 177,378 81,973 79,331
Real estate----------- 22,971 42,066 34,386 62,619 66,307 9,539 4,309
Technology------------ 5,046 1,676 -- -- -- 1,123 622
Depreciation and
amortization---------- 65,167 61,435 53,256 36,838 34,044 15,362 15,643
--------- -------- -------- -------- -------- ------- -------
Total operating
expenses------------ 495,846 491,814 433,329 321,658 277,729 107,997 99,905
--------- -------- -------- -------- -------- ------- -------
Income (loss) from
operations--------------- 63,433 61,245 42,371 88,611 52,794 (33,667) (29,478)
Net income (loss)-------- 18,700 15,338 12,791 41,018 19,698 (24,420) (21,181)
Diluted net income
(loss) per Common $0.53 $0.44 $0.37 $1.18 $0.64 $(0.70) $(0.61)
Share---------------
Other Data:
Resort
Resort EBITDA (1)----- $118,100 $112,778 $86,101 $114,346 $81,660 $(24,552) $(18,623)
Resort EBITDA margin-- 22.7% 22.6% 19.9% 34.0% 31.5% (42.8)% (30.7)%
Skier visits (2)------ 4,975 4,595 4,606 4,717 4,273 10 8
Resort revenue per
skier visit (3)------- $98.65 $102.35 $91.16 $71.35 $60.62
Real Estate
Real estate operating
income (4)------------ 12,272 9,618 9,526 11,103 5,178 6,311 4,667
Real estate held for
sale and investment 159,177 147,172 152,508 138,916 154,925 172,962 152,364
(5)-----------------
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Technology
Technology operating
income (loss)------- (1,772) 284 -- -- -- (64) 121
Total EBITDA (6)--------- 128,600 122,680 95,627 125,449 86,838 (18,305) (13,835)
Resort capital
expenditures (7)--------- 57,814 77,656 65,168 80,454 51,020 21,173 16,612
Total debt to Resort
EBITDA------------------- 3.29 3.50 4.62 2.48 3.25
Resort EBITDA to
interest expense--------- 3.69 3.21 3.43 6.43 4.02
Resort EBITDA to pro
forma interest expense 2.93
(8)----------------------
Total debt to Total 3.02 3.21 4.16 2.26 3.05
EBITDA-------------------
Total EBITDA to interest
expense------------------ 4.01 3.49 3.80 7.05 4.28
Total EBITDA to pro
forma interest expense 3.19
(8)----------------------
Ratio of earnings to
fixed charges (9)-------- 1.77 1.61 1.71 4.85 2.62
Pro forma ratio of
earnings to fixed 1.48
charges (10)-------------
Balance Sheet Data (at period end):
Total assets---------- 1,180,965 1,127,818 1,089,239 912,122 855,949 1,194,367 1,143,742
Long-term debt
(including current
maturities)--------- 388,380 394,235 398,186 284,014 265,062 418,166 422,030
Stockholders' equity-- $519,171 $493,755 $476,775 $462,624 $405,666 $494,894 $475,405
- -----------------------
(1) Resort EBITDA (earnings before interest expense, income tax expense,
depreciation and amortization) is defined as revenues from resort
operations less resort operating expenses. Resort EBITDA is not a term that
has an established meaning under generally accepted accounting principles
("GAAP"), and it might not be comparable to similarly titled measures
reported by other companies. We have included the information concerning
Resort EBITDA because our management believes it is an indicative measure
of a resort company's operating performance and is generally used by
investors to evaluate companies in the resort industry. Resort EBITDA does
not purport to represent cash provided by operating activities, and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. For information regarding our
historical cash flows from operating, investing and financing activities,
see our consolidated financial statements included elsewhere in this
prospectus.
(2) A skier visit represents one guest accessing a ski mountain for all or any
part of a day or night and includes both paid and complimentary tickets and
ski passes.
(3) Resort revenue per skier visit excludes revenue generated by Grand Teton
Lodge Company and Snake River Lodge & Spa from the calculation because
those business do not support any of our ski areas.
(4) Real estate operating income is defined as revenue from real estate
operations less real estate costs and expenses, which include selling and
holding costs, operating expenses, and an allocation of the land,
infrastructure, mountain improvement and other costs relating to property
sold. Real estate costs and expenses exclude charges for depreciation and
amortization, as we have determined that the portion of those expenses
allocable to real estate is not significant.
(5) 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.
(6) Total EBITDA represents earnings before interest expense, income tax
expense, depreciation and amortization. EBITDA is presented because
management believes it provides useful information regarding a company's
ability to incur and service debt. EBITDA should not be considered in
isolation or as a substitute for net income or cash flows prepared in
accordance with GAAP, nor should it be used as a measure of our
profitability or liquidity.
(7) We typically categorize approximately $25 million to $35 million per
calendar year of total resort capital expenditures as maintenance capital
expenditures.
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(8) Pro forma interest expense gives effect to the offering of the notes and
the repayment of indebtedness under our old credit facility (which may be
reborrowed) with the proceeds thereof as if it occurred on July 31, 2001.
Pro forma interest expense does not give effect to the interest rates in
effect under the Credit Facility, see "Description of Certain
Indebtedness."
(9) The ratio of earnings to fixed charges represents the number of times fixed
charges were covered by pre-tax earnings before provision for interest
expense. Fixed charges consist of interest expense, capitalized interest,
amortization of debt issuance costs, and a portion of the operating lease
expense deemed to be representative of the interest factor. The ratio is
not presented for the three months ended October 31, 2001 and 2000 as the
ratio is negative for these periods due to the seasonal nature of the
Company's business and is not indicative of results to be expected for a
full fiscal year.
(10) The pro forma ratio of earnings to fixed charges incorporates the use of
pro forma interest expense described in (8) in the calculation of the ratio
of earnings to fixed charges.
-16-
RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus before deciding to invest in the notes.
We are highly leveraged. At October 31, 2001, we had $418.2 million of
indebtedness, representing approximately 45.8% of our total capitalization. See
"Capitalization." Furthermore, subject to certain restrictions in our Credit
Facility and the indenture governing the notes and the existing notes, we, along
with our subsidiaries, may incur additional indebtedness from time to time to
finance acquisitions, provide for working capital or capital expenditures or for
other purposes.
Our high level of indebtedness could have important consequences to you,
including limiting our ability to:
o obtain additional financing for acquisitions, working capital, capital
expenditures or other purposes;
o use operating cash flow in other areas of our business because we must
dedicate a substantial portion of these funds to make principal
payments and fund debt service;
o borrow additional funds or dispose of assets;
o compete with others who are not as highly leveraged; and
o react to changing market conditions, changes in our industry and
economic downturns.
We currently expect that we will be able to service our indebtedness out of
cash flow from operations. If we are unable to generate sufficient cash flow to
meet our debt service obligations, we will have to pursue one or more
alternatives, such as reducing or delaying capital expenditures, refinancing
debt, selling assets or raising equity capital. Each of these alternatives is
dependent upon financial, business and other general economic factors that
affect us, many of which are beyond our control. We cannot assure you that any
of these alternatives could be accomplished on satisfactory terms or that they
would yield sufficient funds to retire the notes and the indebtedness senior to
the notes. While we believe that our cash flow from operations will provide an
adequate source of long-term liquidity, a significant drop in operating cash
flows resulting from economic conditions, competition or other uncertainties
beyond our control would increase the need for alternative sources of liquidity.
See the "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources" section of our Annual Report on
Form 10-K incorporated by reference herein.
Our future growth requires additional capital whose availability is not
assured. We intend to make significant investments in our resorts to maintain
our competitive position. We spent approximately $57.8 million and $77.7 million
in the fiscal years ended July 31, 2001 and 2000, respectively, on resort
capital expenditures and expect to continue making substantial resort capital
expenditures. We could finance future expenditures from any of the following
sources:
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o cash flow from operations;
o bank borrowings;
o public offerings of debt or equity;
o private placements of debt or equity; or
o some combination of the above.
We might not be able to obtain financing for future expenditures on
favorable terms.
Our recent or future acquisitions might not be successful. In recent years,
we have acquired several major ski resorts and other destination resorts and
hotel properties, including the Ritz-Carlton, Rancho Mirage, the Vail Marriott
and a number of real estate developments. Although we believe we have enhanced
our earnings and achieved cost savings by integrating these acquisitions into
our operations, we cannot assure you that we will be able to continue this
successful integration, manage these acquired properties profitably or increase
our profits from these operations. We continually evaluate and are currently
evaluating potential acquisitions and intend to actively pursue acquisition
opportunities, some of which could be significant. We would face various risks
from additional acquisitions, including:
o inability to integrate acquired businesses into our operations;
o potential goodwill impairment;
o diversion of our management's attention; and
o unanticipated problems or liabilities.
These problems from future acquisitions could adversely affect our
operations and financial performance.
Terrorist acts upon the United States could have a material adverse effect
on us. The terrorist acts carried out against the United States on September 11,
2001 have had an adverse effect on the global travel and leisure industry. We
cannot guarantee if or when normal travel and vacation patterns will resume.
Furthermore, additional terrorist acts against the United States and the
declaration of war by the United States could result in further degradation of
discretionary travel upon which our operations are highly dependent. Such
degradation could have a material adverse impact on our results of operations.
Due to the revenue cancellations and shortfalls relating to September 11th and
the weak economy, Resort EBITDA for the first quarter of fiscal 2002 was less
than Resort EBITDA in the first quarter of fiscal 2001. As of the date of this
prospectus, we anticipate that Resort EBITDA for fiscal 2002, excluding fiscal
2002 acquisitions, will be less than fiscal 2001 Resort EBITDA.
-18-
Our future development might not be successful. We have significant
development plans for our resort and real estate operations. We could experience
significant difficulties completing these projects, including:
o delays in completion;
o inaccurate cost estimates;
o difficulty in receiving the necessary regulatory approvals; or
o we may not benefit from the projects as we expected.
We may not be able to fund these projects with cash flow from operations
and borrowings under our Credit Facility if we faced these difficulties.
We face significant competition. The number of people who ski in the United
States (as measured in skier visits) has increased by approximately 10% since
the 1985-86 ski season and there is substantial competition among ski resorts
for these customers. The factors that we believe are important to these
customers include:
o proximity to population centers;
o availability and cost of transportation to ski areas;
o ease of travel to ski areas (including direct flights by major
airlines);
o pricing of our products and services;
o snowmaking facilities;
o type and quality of skiing offered;
o duration of the ski season;
o weather conditions;
o number, quality and price of related services and lodging; and
o reputation.
We have many competitors for our ski vacationers, including ski resorts in
Utah, California, Nevada, New England and the other major resorts in Colorado.
Our destination guests can choose from any of these alternatives, as well as
non-skiing vacation destinations around the world. Our day skier customers can
choose from a number of nearby competitors, including Copper Mountain,
Telluride, Steamboat Springs, Winter Park and the Aspen resorts, as well as
other forms of leisure such as attendance at movies, sporting events and
participation in other indoor and outdoor recreational ac-
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tivities. This competition may adversely affect our skier visits and the pricing
of our products and services.
We rely on government permits. Virtually all of our ski trails and related
activities on Vail, Breckenridge and Keystone and a substantial portion on
Beaver Creek are located on federal land. The United States Forest Service has
granted us permits to use these lands, but maintains the right to review and
approve the location, design and construction of improvements in these areas and
on many
operational matters. The Forest Service can terminate most of these permits if
required in the public interest. Although we do not know of any permit used by a
major ski resort then in operation that has been terminated by the Forest
Service over the opposition of the permitee, a termination of any of our permits
would adversely affect our business and operations.
We have applied for several new permits or other approvals for improvements
and new development. While these efforts, if not successful, could impact our
expansion efforts as currently contemplated, we do not believe they would
adversely affect our results of operations or financial condition. Furthermore,
Congress may increase the fees we pay to the Forest Service for use of these
federal lands.
We operate three resort properties within Grand Teton National Park under a
concession contract with the National Park Service. The concession contract
expires at the end of December 2002, at which time the contract renewal will be
subject to a competitive bidding process. Should we not receive the renewal of
the concession contract, we would be compensated for the value of our
"possessory interest" in the assets of the three resort properties operated
under the concession contract, which is generally defined as the replacement
cost of such assets less depreciation.
We are subject to economic downturns. Skiing and tourism are discretionary
recreational activities that can be impacted by a significant economic slowdown,
which, in turn, could impact our operating results. Although historically
economic downturns have not had an adverse impact on our operating results,
there can be no assurance that a decrease in the amount of discretionary
spending by the public in the future would not have an adverse effect on us.
We are subject to unfavorable weather conditions. The ski industry's
ability to attract visitors to its resorts is influenced by weather conditions
and the amount and timing of snowfall during the ski season. Unfavorable weather
conditions can adversely affect skier visits. In the past 20 years our ski
resorts have averaged between 20 and 30 feet of annual snowfall, significantly
in excess of the average for U.S. ski resorts. However, there is no assurance
that our resorts will receive seasonal snowfalls near the historical average in
the upcoming or future ski seasons. Also, the early ski season snow conditions
and skier perceptions of early ski season snow conditions influence the momentum
and success of the overall ski season. We believe that poor snow conditions
early in the ski season during the 1998-99 and 1999-00 ski seasons had an
adverse effect on operating results for those periods. There is no way for us to
predict future weather patterns or the impact that weather patterns may have on
results of operations or visitation.
We are dependent on a seasonal workforce. Our resort operations are largely
dependent on a seasonal workforce. We recruit worldwide to fill staffing needs
each ski season, and utilize H2B visas to enable the use of foreign workers. In
addition, we manage seasonal wages and timing of the
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hiring process to ensure the appropriate workforce is in place. While we do not
currently foresee the need to increase seasonal wages to attract employees, we
cannot guarantee that such an increase would not be necessary in the future. In
addition, we cannot guarantee that we will be able to obtain the visas necessary
to hire foreign workers, who are an important source for the seasonal workforce.
Increased seasonal wages or an inadequate workforce could have an adverse impact
on our results of operations; however, we are unable to predict with any
certainty whether such situations will arise or the potential impact to results
of operations.
Our business is seasonal in nature. Our ski and resort operations are
seasonal in nature. In particular, revenues and profits at our ski resorts are
substantially lower and historically result in losses in the summer months due
to the closure of its ski operations. Snake River Lodge & Spa, while open
year-round, generates the majority of its revenues during the winter season.
Conversely, Grand Teton Lodge Company's peak operating season occurs during the
summer months while the winter season generally results in operating losses due
to closure of all revenue generating operations. However, revenues and profits
generated by Grand Teton Lodge Company's summer operations are not sufficient to
fully offset our off-season losses from our ski resorts. During the 2001 fiscal
year, 76.5% of total resort revenues were earned during the second and third
fiscal quarters. Quarterly results may be materially affected by the timing of
snowfall and the integration of acquisitions. Therefore, the operating results
for any three-month period are not necessarily indicative of the results that
may be achieved for any subsequent fiscal quarter or for a full fiscal year. We
are taking steps to smooth our earnings cycle by investing in additional summer
activities, such as golf course development, and also through the acquisition of
new resorts, such as Grand Teton Lodge Company. (See Note 13 of the Notes to
Consolidated Financial Statements for Selected Quarterly Financial Data included
in our Annual Report on Form 10-K incorporated by reference herein.) Apollo Ski
Partners has influence over us. Apollo Ski Partners owns approximately 99.9% of
our outstanding shares of Class A Common Stock, giving them approximately 21% of
the combined voting power with respect to all matters submitted for a vote of
all stockholders. The holders of Class A Common Stock elect a class of directors
that constitutes two-thirds of our board of directors. Accordingly, Apollo Ski
Partners and, indirectly, Apollo Advisors, L.P. (which indirectly controls
Apollo Ski Partners) will be able to elect two-thirds of our board of directors
and control the approval of matters requiring approval by the board of
directors, including mergers, liquidations and asset acquisitions and
dispositions. In addition, Apollo Ski Partners and Apollo Advisors, L.P. may be
able to significantly influence decisions on matters submitted for stockholder
consideration.
Future changes in the real estate market could affect the value of our
investments. We have extensive real estate holdings in proximity to our mountain
resorts. We have made capital expenditures of approximately $40.4 million and
$39.2 million in fiscal years 2000 and 2001, respectively, in our real estate
operations. We plan to make significant additional investments in developing
property at all our resorts. The value of our real property and the revenue from
related development activities may be adversely affected by a number of factors,
including:
o national and local economic climate;
o local real estate conditions (such as an oversupply of space or a
reduction in demand for real estate in an area);
o attractiveness of the properties to prospective purchasers and
tenants;
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o competition from other available property or space;
o our ability to obtain adequate insurance;
o unexpected construction costs;
o government regulations and changes in real estate, zoning or tax laws;
o interest rate levels and the availability of financing; and
o potential liabilities under environmental and other laws.
In addition, we run the risk that our new acquisitions may fail to perform
in accordance with our expectations, and that our estimates of the costs of
improvements for such properties may prove inaccurate. While we attempt to
mitigate our exposure to these risks by selling multi-family development parcels
to third-party developers who assume the risk of construction or by pre-selling
single-family homesites or condominium residences to individual purchasers prior
to the start of our construction projects, we cannot assure you that we will
continue to do so in the future. Although we believe that the current market for
the sale of our resort property is strong, we cannot assure you that such market
conditions will continue. See the "Business--Real Estate" section in our Annual
Report on From 10-K incorporated by reference herein.
Your claims are subordinated to our and our subsidiaries' senior debt.
Payments on the notes and the guarantees are subordinated to all of our and the
guarantors' existing and future indebtedness, including amounts under our Credit
Facility, other than the existing notes and other than any future indebtedness
that expressly provides that it is equal to or subordinated in right of payment
to the notes and the guarantees. As a result, upon any distribution to our
creditors in a bankruptcy, liquidation or reorganization or similar proceeding
with respect to us or our property, the holders of our senior debt and our
guarantors' senior debt will be entitled to be paid in full before any payment
may be made with respect to the notes and the guarantees. Claims in respect of
the notes will be effectively subordinated to all liabilities, including trade
payables, of any of our subsidiaries that are not subsidiary guarantors. At
January 31, 2002, after giving effect to the offering and the application of the
net proceeds, we had approximately $122.1 million of senior debt outstanding on
a consolidated basis.
Our subsidiary, The Vail Corporation, is the borrower under our $421.0
million revolving Credit Facility and its obligations are guaranteed by us and
certain of our subsidiaries. At January 31, 2002, after giving effect to the
offering and the application of the net proceeds, we had approximately $13.0
million outstanding, $122.9 million of letters of credit issued thereunder and
remaining availability of $285.1 million (subject to limitation by the financial
covenants of the Credit Facility).
At October 31, 2001, SSI Venture, LLC, in which we have a 51.9% ownership
interest, had $20.2 million outstanding under the $25 million SSI Venture Credit
Facility, all of which was guaranteed by one of our subsidiaries.
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See the "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" section in our Annual
Report on Form 10-K incorporated by reference herein.
Guarantees may be unenforceable due to fraudulent conveyance statutes.
Although laws differ among various jurisdictions, in general, under fraudulent
conveyance laws, a court could subordinate or avoid any subsidiary guarantee if
it found that:
o the guarantee was incurred with actual intent to hinder, delay or
defraud creditors; or
o the guarantor did not receive fair consideration or reasonably
equivalent value for the guarantee and the guarantor was any of the
following:
o insolvent or rendered insolvent because of the guarantee;
o engaged in business or transactions for which its remaining assets
constituted unreasonably small capital; or
o intended to incur, or believed that it would incur, debts beyond its
ability to pay at maturity.
If a court avoided a guarantee as a result of fraudulent conveyance, or
held it unenforceable for any other reason, noteholders would cease to have a
claim against the guarantor and would be creditors solely of Vail Resorts and
the remaining guarantors.
There are restrictions imposed by the terms of our indebtedness. The
operating and financial restrictions and covenants in our Credit Facility may
adversely affect our ability to finance future operations or capital needs or to
engage in other business activities. Our Credit Facility includes covenants that
will require us to meet certain financial ratios and financial conditions which
may require that we take action to reduce debt or to act in a manner contrary to
our business objectives. 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 be unable to borrow funds thereunder without a waiver.
A breach could cause a default under the 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 notes.
In addition, the indenture governing the notes restricts, among other
things, our ability to:
o borrow money;
o pay dividends on stock or make certain other restricted payments;
o use assets as security in other transactions;
o make investments;
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o enter into certain transactions with our affiliates; and
o sell certain assets or merge with other companies.
If we fail to comply with these covenants, we would be in default under the
indenture governing the notes, and the principal and accrued interest on the
notes would become due and payable. See "Description of Notes--Certain
Covenants."
There are possible implications from original issue discount. The
outstanding notes were issued at an original issue discount ("OID") for U.S.
federal income tax purposes. OID is the excess of (i) the stated redemption
price at maturity of the notes over (ii) the issue price of the notes. U.S.
holders will be required to include the OID in income as it accrues in advance
of the receipt of cash payments attributable to such income, regardless of such
holders' regular method of accounting for United States federal income tax
purposes. The exchange notes will have original issue discount identical to that
of the outstanding notes. In addition, if a bankruptcy case is commenced by or
against us under the U.S. Bankruptcy Code after the issuance of the notes, the
claim of a holder of notes may be limited to an amount equal to the sum of (i)
the issue price and (ii) that portion of the OID which is not deemed to
constitute "unmatured interest" for purposes of the U.S. Bankruptcy Code. Any
OID that was not amortized as of the date of any such bankruptcy filing would
constitute "unmatured interest." See "Certain Federal Income Tax Considerations"
for a more detailed discussion of the U.S. federal income tax consequences to
the holders of notes of the purchase, ownership and disposition of the notes.
We may not be able to purchase the notes upon a change of control. Upon
certain change of control events, each holder of notes may require us to
repurchase all or a portion of its notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued interest. Our ability to repurchase
the notes upon a change of control event could be limited by the terms of our
debt agreements. Upon a change of control event, we may be required to repay the
outstanding principal and any accrued interest on any other amounts owed by us
under our credit facility. We cannot assure you that we would be able to repay
amounts outstanding under our credit facility or obtain necessary consents under
such facilities to repurchase these notes. Any requirement to offer to purchase
any outstanding notes may result in our having to refinance our outstanding
indebtedness, which we may not be able to do. In addition, even if we were able
to refinance such indebtedness, such financing may be on terms unfavorable to
us. Certain provisions in our credit facility may delay, defer or prevent a
merger, tender offer or other takeover attempt. The term "Change of Control" is
defined in "Description of Notes--Certain Definitions."
The exchange notes will be new securities for which there is currently no
public market. We do not intend to list the exchange notes on any national
securities exchange or quotation system. The initial purchasers in the offering
of outstanding notes have advised us that they currently intend to make a market
in the exchange notes, but they are not obligated to do so and, if commenced,
may discontinue such market making at any time. Accordingly, no market may
develop for the exchange notes, and if a market does develop, it may have
limited or no liquidity.
Failure to exchange your outstanding notes will leave them subject to
transfer restrictions. If you do not exchange your outstanding notes for
exchange notes, you will continue to be
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subject to the restrictions on transfer of your outstanding notes set forth in
their legend because the outstanding notes were issued pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. In general, outstanding notes may not be offered or sold, unless
registered under the Securities Act , except pursuant to an exemption from, or
in a transaction not subject to, the Securities Act and applicable state
securities laws. We currently do not anticipate registering the outstanding
notes under the Securities Act. As outstanding notes are tendered and accepted
in the exchange offer, the aggregate principal amount of outstanding notes will
decrease, which will decrease their liquidity.
USE OF PROCEEDS
The exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement. We will not receive any cash proceeds from
the exchange offer.
The net proceeds from the original sale of the outstanding notes were
$148.1 million. We used the net proceeds from the sale of the outstanding notes
to repay indebtedness under our Credit Facility (thereby increasing our
borrowing capacity under the Credit Facility).
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CAPITALIZATION
The following table sets forth our capitalization as of October 31, 2001,
and as adjusted to reflect the sale of the notes and the application of the
estimated net proceeds of this offering. See "Description of Certain
Indebtedness."
As
Actual Adjusted
---------------------------
(In thousands, except
share amounts)
Cash........................................................................ $21,044 $38,190
=========== ===========
Debt:
Short-term debt............................................................. $3,143 $3,143
Industrial Development Bonds................................................ 61,700 61,700
Credit facilities(1)........................................................ 150,150 19,150
Notes offered hereby(2)..................................................... -- 152,646
Existing Notes.............................................................. 200,000 200,000
Other....................................................................... 3,173 3,173
----------- ----------
Total debt......................................................... 418,166 439,812
Stockholders' equity:
Class A common stock, $0.01 par value, 20,000,000 shares authorized,
7,439,834 shares issued and outstanding................................ 74 74
Common stock, $0.01 par value, 80,000,000 shares authorized,
27,693,821 shares issued and outstanding............................... 277 277
Additional paid-in capital............................................... 411,418 411,418
Retained earnings........................................................ 83,125 83,125
----------- ---------
Total stockholders' equity......................................... 494,894 494,894
----------- ---------
Total capitalization........................................................ $913,060 $934,706
=========== =========
- -------------------------
(1) At January 31, 2002, we had approximately $13.0 million outstanding under
the Credit Facility and approximately $17.9 million outstanding under the
SSI Venture Credit Facility.
(2) Total principal amount $160 million net of Original Issue Discount of $7.4
million.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
Exchange Offer Registration Statement. We issued the outstanding notes on
November 21, 2001. The initial purchasers have advised us that they subsequently
resold the outstanding notes to "qualified institutional buyers" in reliance on
Rule 144A under the Securities Act and to certain persons in offshore
transactions in reliance on Regulation S under the Securities Act. As a
condition to the offering of the outstanding notes, we entered into a
registration rights agreement dated November 21, 2001, pursuant to which we
agreed, for the benefit of all holders of the outstanding notes, at our own
expense, to do the following:
(1) to file the registration statement of which this prospectus is a
part with the Commission on or prior to 60 days after the closing date of
the outstanding notes,
(2) to use our commercially reasonable best efforts to cause the
registration statement to be declared effective under the Securities Act on
or prior to 180 days after the closing date of the outstanding notes,
(3) to use our commercially reasonable best efforts to keep the
registration statement effective until the closing of the exchange offer,
and
(4) to use our commercially reasonable best efforts to issue, on or
prior to 60 days after the date on which the exchange offer registration
statement was declared effective by the Commission, exchange notes in
exchange for all outstanding notes tendered prior thereto.
Further, we agreed to keep the exchange offer open for acceptance for not
less than the minimum period required under applicable Federal and state
securities laws. For each outstanding Note validly tendered pursuant to the
exchange offer and not withdrawn, the holder of the outstanding Note will
receive an exchange note having a principal amount equal to that of the tendered
outstanding Note. Interest on each exchange note will accrue from the last date
on which interest was paid on the tendered outstanding Note in exchange therefor
or, if no interest was paid on such outstanding Note, from the issue date.
The following is a summary of the registration rights agreement. It does
not purport to be complete and it does not contain all of the information you
might find useful. For further information you should read the registration
rights agreement, a copy of which has been filed as an exhibit to the
registration statement. The exchange offer is intended to satisfy certain of our
obligations under the registration rights agreement.
Transferability. We issued the outstanding notes on November 21, 2001 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws. Accordingly, the outstanding notes may not be
offered or sold in the United States unless registered or pursuant to an
applicable exemption under the Securities Act and applicable state securities
laws. Based on no-action letters issued by the staff of the Commission with
respect to similar transactions, we believe that the exchange notes issued
pursuant to the exchange offer in exchange for outstanding notes may be offered
for resale, resold and otherwise transferred by holders of notes who are not our
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affiliates without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that:
(1) any exchange notes to be received by the holder were acquired in the
ordinary course of the holder's business;
(2) at the time of the commencement of the exchange offer the holder has
no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the
exchange notes; and
(3) the holder is not an "affiliate" of the Company, as defined in Rule
405 under the Securities Act, or, if it is an affiliate, that it will
comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable.
However, we have not sought a no-action letter with respect to the exchange
offer and we cannot assure you that the staff of the Commission would make a
similar determination with respect to the exchange offer. Any holder who tenders
his outstanding notes in the exchange offer with any intention of participating
in a distribution of exchange notes (1) cannot rely on the interpretation by the
staff of the Commission, (2) will not be able to validly tender outstanding
notes in the exchange offer and (3) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transactions.
In addition, each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The letter of
transmittal accompanying this prospectus states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
acting in the capacity of an "underwriter" within the meaning of Section 2(11)
of the Securities Act. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
exchange notes received in exchange for outstanding notes where the outstanding
notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Pursuant to the registration rights
agreement, we agreed to make this prospectus available to any such broker-dealer
for use in connection with any such resale.
Shelf Registration Statement. We will, at our cost, (a) file with the
Commission a shelf registration statement covering resales of the outstanding
notes as soon as practicable, but, in any event, on or prior to the 60th day
after the date we become obligated to file the shelf registration statement, (b)
use our commercially reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act on or prior to the
180th day after the date we become obligated to file the shelf registration
statement and (c) use our commercially reasonable best efforts to keep the shelf
registration statement continually effective, supplemented and amended to the
extent necessary to ensure that it is available for resales of notes by the
holders of Transfer Restricted Securities for a period of at least two years
following the effective date of such shelf registration statement (or shorter
period that will terminate when all the Notes covered by such shelf registration
statement have been sold pursuant to such shelf registration statement or are
otherwise no longer Transfer Restricted Securities), if:
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(1) we are not required to file the exchange offer registration
statement or not permitted to consummate the exchange offer because the
exchange offer is not permitted by applicable law or Commission policy or
(2) any initial purchaser that is a holder of Transfer Restricted
Securities notifies us prior to the 20th day following consummation of the
exchange offer that (a) it is prohibited by law or Commission policy from
participating in the exchange offer or (b) it may not resell the exchange
notes acquired by it in the exchange offer to the public without delivering
a prospectus and the prospectus contained in the exchange offer
registration statement is not appropriate or available for such resales.
We will, in the event of the filing of the shelf registration statement,
provide to each holder of the outstanding notes copies of the prospectus which
is a part of the shelf registration statement, notify each such holder when the
shelf registration statement for the outstanding notes has become effective and
take certain other action as is required to permit unrestricted resales of the
outstanding notes. A holder of outstanding notes who sells such outstanding
notes pursuant to the shelf registration statement generally will (1) be
required to be named as a selling security holder in the related prospectus, (2)
be required to deliver the prospectus to purchasers, (3) be subject to certain
of the civil liability provisions under the Securities Act in connection with
such sales and (4) be bound by the provisions of the registration rights
agreement which are applicable to the holder (including certain indemnification
obligations). In addition, each holder of the outstanding notes will be required
to deliver information to be used in connection with the shelf registration
statement and to provide comments on the shelf registration statement within the
time periods set forth in the registration rights agreement in order to have
their outstanding notes included in the shelf registration statement and to
benefit from the provisions regarding the increase in interest rate set forth in
the following paragraph.
Terms of the Exchange Offer
Upon satisfaction or waiver of all the conditions of the exchange offer, we
will accept any and all outstanding notes properly tendered and not withdrawn
prior to the expiration date and will issue the exchange notes promptly after
acceptance of the outstanding notes. See "--Conditions to the Exchange Offer"
and "Procedures for Tendering Private Notes." We will issue $1,000 principal
amount of exchange notes in exchange for each $1,000 principal amount of
outstanding notes accepted in the exchange offer. As of the date of this
prospectus, $160,000,000 aggregate principal amount of the notes are
outstanding. Holders may tender some or all of their outstanding notes pursuant
to the exchange offer. However, outstanding notes may be tendered only in
integral multiples of $1,000.
The exchange notes are identical to the outstanding notes except for the
elimination of certain transfer restrictions, registration rights, restrictions
on holding notes in certificated form and liquidated damages provisions. The
exchange notes will evidence the same debt as the outstanding notes and will be
issued pursuant to, and entitled to the benefits of, the indenture pursuant to
which the outstanding notes were issued and will be deemed one issue of notes,
together with the outstanding notes.
This prospectus, together with the letter of transmittal, is being sent to
all registered holders and to others believed to have beneficial interests in
the outstanding notes. Holders of outstanding
-29-
notes do not have any appraisal or dissenters' rights under the indenture in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations of the Commission promulgated thereunder.
For purposes of the exchange offer, we will be deemed to have accepted
validly tendered private notes when, and as if, we have given oral or written
notice thereof to the exchange agent. The exchange agent will act as our agent
for the purpose of distributing the exchange notes from us to the tendering
holders. If we do not accept any tendered outstanding notes because of an
invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, we will return the unaccepted outstanding notes,
without expense, to the tendering holder thereof as promptly as practicable
after the expiration date.
Holders who tender private notes in the exchange offer will not be required
to pay brokerage commissions or fees or, except as set forth below under
"--Transfer Taxes," transfer taxes with respect to the exchange of outstanding
notes pursuant to the exchange offer. We will pay all charges and expenses,
other than certain applicable taxes, in connection with the exchange offer. See
"--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time, on ,
2002, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" shall mean the latest date and time to which the
exchange offer is extended. In order to extend the exchange offer, we will
notify the exchange agent by oral or written notice and each registered holder
by means of press release or other public announcement of any extension, in each
case, prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. We reserve the right, in our sole
discretion, (1) to delay accepting any outstanding notes, (2) to extend the
exchange offer, (3) to terminate the exchange offer if the conditions set forth
below under "--Conditions" shall not have been satisfied, or (4) to amend the
terms of the exchange offer in any manner. We will notify the exchange agent of
any delay, extension, termination or amendment by oral or written notice. We
will additionally notify each registered holder of any amendment. We will give
to the exchange agent written confirmation of any oral notice.
Exchange Date
As soon as practicable after the close of the exchange offer we will accept
for exchange all outstanding notes properly tendered and not validly withdrawn
prior to 5:00 p.m., New York City time, on the expiration date in accordance
with the terms of this prospectus and the letters of transmittal.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, and subject to
our obligations under the registration rights agreement, we (1) shall not be
required to accept any outstanding notes for exchange, (2) shall not be required
to issue exchange notes in exchange for any outstanding notes
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and (3) may terminate or amend the exchange offer if, at any time before the
acceptance of such exchange notes for exchange, any of the following events
shall occur:
(1) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair our ability to proceed with the exchange offer;
(2) any change, or any development involving a prospective change, in
our business or financial affairs or any of our subsidiaries has occurred
which, in our sole judgment, might materially impair our ability to proceed
with the exchange offer or materially impair the contemplated benefits of
the exchange offer to us;
(3) any law, statute, rule or regulation is proposed, adopted or
enacted which, in our sole judgment, might materially impair our ability to
proceed with the exchange offer or materially impair the contemplated
benefits of the exchange offer to us;
(4) any governmental approval has not been obtained, which approval we
shall, in our sole discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby; or
(5) the exchange offer will violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any outstanding notes
tendered, and no exchange notes will be issued in exchange for any such
outstanding notes if at such time any stop order shall be threatened by the
Commission or be in effect with respect to the registration statement of which
this prospectus is a part or the qualification of the indenture under the Trust
Indenture Act of 1939, as amended.
The exchange offer is not conditioned on any minimum aggregate principal
amount of outstanding notes being tendered for exchange.
Consequences of Failure to Exchange
Any outstanding notes not tendered pursuant to the exchange offer will
remain outstanding and continue to accrue interest. The outstanding notes will
remain "restricted securities" within the meaning of the Securities Act.
Accordingly, prior to the date that is one year after the later of the issue
date and the last date on which we or any of our affiliates was the owner of the
outstanding notes, the outstanding notes may be resold only (1) to us, (2) to a
person who the seller reasonably believes is a "qualified institutional buyer"
purchasing for its own account or for the account of another "qualified
institutional buyer" in compliance with the resale limitations of Rule 144A, (3)
to an Insti-
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tutional Accredited Investor that, prior to the transfer, furnishes to the
trustee a written certification containing certain representations and
agreements relating to the restrictions on transfer of the notes (the form of
this letter can be obtained from the trustee), (4) pursuant to the limitations
on resale provided by Rule 144 under the Securities Act, (5) pursuant to the
resale provisions of Rule 904 of Regulation S under the Securities Act, (6)
pursuant to an effective registration statement under the Securities Act, or (7)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to compliance with
applicable state securities laws. As a result, the liquidity of the market for
non-tendered outstanding notes could be adversely affected upon completion of
the exchange offer. The foregoing restrictions on resale will no longer apply
after the first anniversary of the issue date of the outstanding note or the
purchase of the outstanding notes from us or an affiliate.
Fees and Expenses
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees.
Expenses incurred in connection with the exchange offer will be paid by us.
Such expenses include, among others, the fees and expenses of the trustee and
the exchange agent, accounting and legal fees, printing costs and other
miscellaneous fees and expenses.
Accounting Treatment
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expenses of the
exchange offer as additional interest expense over the term of the exchange
notes.
Procedures for Tendering Outstanding Notes
The tender of outstanding notes pursuant to any of the procedures set forth
in this prospectus and in the letter of transmittal will constitute a binding
agreement between the tendering holder and us in accordance with the terms and
subject to the conditions set forth in this prospectus and in the letter of
transmittal. The tender of outstanding notes will constitute an agreement to
deliver good and marketable title to all tendered outstanding notes prior to the
expiration date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
Except as provided in "--Guaranteed Delivery Procedures," unless the
outstanding notes being tendered are deposited by you with the exchange agent
prior to the expiration date and are accompanied by a properly completed and
duly executed letter of transmittal, we may, at our option, reject the tender.
Issuance of exchange notes will be made only against deposit of tendered
outstanding notes and delivery of all other required documents. Notwithstanding
the foregoing, DTC participants tendering through its Automated Tender Offer
Program ("ATOP") will be deemed to have made valid delivery where the exchange
agent receives an agent's message prior to the expiration date.
Accordingly, to properly tender outstanding notes, the following procedures
must be followed:
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Notes held through a Custodian. Each beneficial owner holding outstanding
notes through a DTC participant must instruct the DTC participant to cause its
outstanding notes to be tendered in accordance with the procedures set forth in
this prospectus.
Notes held through DTC. Pursuant to an authorization given by DTC to the
DTC participants, each DTC participant holding outstanding notes through DTC
must (1) electronically transmit its acceptance through ATOP, and DTC will then
edit and verify the acceptance, execute a book-entry delivery to the exchange
agent's account at DTC and send an agent's message to the exchange agent for its
acceptance, or (2) comply with the guaranteed delivery procedures set forth
below and in a notice of guaranteed delivery. See "--Guaranteed Delivery
Procedures--Notes held through DTC."
The exchange agent will (promptly after the date of this prospectus)
establish accounts at DTC for purposes of the exchange offer with respect to
outstanding notes held through DTC. Any financial institution that is a DTC
participant may make book-entry delivery of interests in outstanding notes into
the exchange agent's account through ATOP. However, although delivery of
interests in the outstanding notes may be effected through book-entry transfer
into the exchange agent's account through ATOP, an agent's message in connection
with such book-entry transfer, and any other required documents, must be, in any
case, transmitted to and received by the exchange agent at its address set forth
under "--Exchange Agent," or the guaranteed delivery procedures set forth below
must be complied with, in each case, prior to the expiration date. Delivery of
documents to DTC does not constitute delivery to the exchange agent. The
confirmation of a book-entry transfer into the exchange agent's account at DTC
as described above is referred to herein as a "Book-Entry Confirmation."
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the book-entry
confirmation, which states that DTC has received an express acknowledgment from
each DTC participant tendering through ATOP that such DTC participants have
received a letter of transmittal and agree to be bound by the terms of the
letter of transmittal and that we may enforce such agreement against such DTC
participants.
Cede & Co., as the holder of the global note, will tender a portion of the
global note equal to the aggregate principal amount due at the stated maturity
for which instructions to tender are given by DTC participants.
By tendering, each holder and each DTC participant will represent to us
that, among other things, (1) it is not our affiliate, (2) it is not a
broker-dealer tendering outstanding notes acquired directly from us for its own
account, (3) it is acquiring the exchange notes in its ordinary course of
business and (4) it is not engaged in, and does not intend to engage in, and has
no arrangement or understanding with any person to participate in, a
distribution of the exchange notes.
We will not accept any alternative, conditional, irregular or contingent
tenders (unless waived by us). By executing a letter of transmittal or
transmitting an acceptance through ATOP, as the case may be, each tendering
holder waives any right to receive any notice of the acceptance for purchase of
its outstanding notes.
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We will resolve all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tendered outstanding notes, and
such determination will be final and binding. We reserve the absolute right to
reject any or all tenders that are not in proper form or the acceptance of which
may, in the opinion of our counsel, be unlawful. We also reserve the absolute
right to waive any condition to the exchange offer and any irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer (including the instructions in
the letter of transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as we
shall determine. We, along with the exchange agent, shall be under no duty to
give notification of defects in such tenders and shall not incur liabilities for
failure to give such notification. Tenders of outstanding notes will not be
deemed to have been made until such irregularities have been cured or waived.
Any outstanding notes received by the exchange agent that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the exchange agent to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
LETTERS OF TRANSMITTAL AND OUTSTANDING NOTES MUST BE SENT ONLY TO THE
EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OUTSTANDING NOTES TO US OR
DTC.
The method of delivery of outstanding notes, letters of transmittal, any
required signature guaranties and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or letters of
transmittal and, except as otherwise provided in the applicable letter of
transmittal, delivery will be deemed made only when actually received by the
exchange agent. If delivery is by mail, it is suggested that the holder use
properly insured, registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the expiration date to permit
delivery to the exchange agent prior to the expiration date.
Guaranteed Delivery Procedures
Notes held through DTC. DTC participants holding outstanding notes through
DTC who wish to cause their outstanding notes to be tendered, but who cannot
transmit their acceptances through ATOP prior to the expiration date, may cause
a tender to be effected if:
(1) guaranteed delivery is made by or through a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act, including:
o a bank;
o a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker;
o a credit union;
o a national securities exchange, registered securities association or
clearing agency; or
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o a savings institution that is a participant in a Securities Transfer
Association recognized program;
(2) prior to the expiration date, the exchange agent receives from any of the
above institutions a properly completed and duly executed notice of
guaranteed delivery (by mail, hand delivery, facsimile transmission or
overnight courier) substantially in the form provided with this prospectus;
and
(3) book-entry confirmation and an agent's message in connection therewith are
received by the exchange agent within three NYSE trading days after the
date of the execution of the notice of guaranteed delivery.
Notes held by Holders. Holders who wish to tender their outstanding notes
but (1) whose outstanding notes are not immediately available and will not be
available for tendering prior to the expiration date, or (2) who cannot deliver
their outstanding notes, the letter of transmittal, or any other required
documents to the exchange agent prior to the expiration date, may effect a
tender if:
o the tender is made by or through any of the above-listed institutions;
o prior to the expiration date, the exchange agent receives from any
above-listed institution a properly completed and duly executed notice
of guaranteed delivery, whether by mail, hand delivery, facsimile
transmission or overnight courier, substantially in the form provided
with this prospectus; and
o a properly completed and executed letter of transmittal, as well as
the certificate(s) representing all tendered outstanding notes in
proper form for transfer, and all other documents required by the
letter of transmittal, are received by the exchange agent within three
NYSE trading days after the date of the execution of the notice of
guaranteed delivery.
Withdrawal Rights
You may withdraw tenders of outstanding notes, or any portion of your
outstanding notes, in integral multiples of $1,000 principal amount due at the
stated maturity, at any time prior to 5:00 p.m., New York City time, on the
expiration date. Any outstanding notes properly withdrawn will be deemed to be
not validly tendered for purposes of the exchange offer.
Notes held through DTC. DTC participants holding outstanding notes who have
transmitted their acceptances through ATOP may, prior to 5:00 p.m., New York
City time, on the expiration date, withdraw the instruction given thereby by
delivering to the exchange agent, at its address set forth under "--Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal of such
instruction. Such notice of withdrawal must contain the name and number of the
DTC participant, the principal amount due at the stated maturity of outstanding
notes to which such withdrawal relates and the signature of the DTC participant.
Receipt of such written notice of withdrawal by the exchange agent effectuates a
withdrawal.
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Notes held by Holders. Holders may withdraw their tender of outstanding
notes, prior to 5:00 p.m., New York City time, on the expiration date, by
delivering to the exchange agent, at its address set forth under "--Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal. Any such
notice of withdrawal must (1) specify the name of the person who tendered the
outstanding notes to be withdrawn, (2) contain a description of the outstanding
notes to be withdrawn and identify the certificate number or numbers shown on
the particular certificates evidencing such outstanding notes and the aggregate
principal amount due at the stated maturity represented by such outstanding
notes and (3) be signed by the holder of such outstanding notes in the same
manner as the original signature on the letter of transmittal by which such
outstanding notes were tendered (including any required signature guaranties),
or be accompanied by (x) documents of transfer in a form acceptable to us, in
our sole discretion, and (y) a properly completed irrevocable proxy that
authorized such person to effect such revocation on behalf such holder. If the
outstanding notes to be withdrawn have been delivered or otherwise identified to
the exchange agent, a signed notice of withdrawal is effective immediately upon
written, telegraphic or facsimile notice of withdrawal even if physical release
is not yet effected. All signatures on a notice of withdrawal must be guaranteed
by a recognized participant in the Securities Transfer Agents Medalion Program,
the New York Stock Exchange Medallion Signature Program or the Stock Exchange
Medallion Program; provided, however, that signatures on the notice of
withdrawal need not be guaranteed if the outstanding notes being withdrawn are
held for the account of any of the institutions listed above under "--Guaranteed
Delivery Procedures."
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC participant or a holder of outstanding notes, as the case may be, in
the same manner as the person's name appears on its transmission through ATOP or
letter of transmittal, as the case may be, to which such withdrawal relates. If
a notice of withdrawal is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person must so indicate
when signing and must submit with the revocation appropriate evidence of
authority to execute the notice of withdrawal. A DTC participant or a holder may
withdraw an instruction or a tender, as the case may be, only if such withdrawal
complies with the provisions of this prospectus.
A withdrawal of a tender of outstanding notes by a DTC participant or a
holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new letter of
transmittal, as the case may be, in accordance with the procedures described
herein.
Exchange Agent
The Bank of New York has been appointed as exchange agent for the exchange
offer. Questions, requests for assistance and requests for additional copies of
this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:
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By Registered or Certified Mail:
The Bank of New York,
c/o United States Trust Company of New York
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
By Hand Delivery to 4:30 p.m.:
The Bank of New York
c/o United States Trust Company of New York
30 Broad Street, B-Level
New York, NY 10004-2304
By Overnight Courier and by Hand Delivery After 4:30 p.m of Expiration Date:
The Bank of New York
c/o United States Trust Company of New York
30 Broad Street, 14th Floor
New York, New York 10004-2304
Facsimile: (646) 458-8111
Telephone: (800) 548-6565
Attention: Customer Service
The exchange agent also acts as trustee under the Indenture.
Transfer Taxes
Holders of outstanding notes who tender their outstanding notes for
exchange notes will not be obligated to pay any transfer taxes in connection
therewith, except that holders who instruct us to register exchange notes in the
name of, or request that outstanding notes not tendered or not accepted in the
exchange offer be returned to, a person other than the registered tendering
holder will be responsible for the payment of any applicable transfer tax
thereon.
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DESCRIPTION OF NOTES
General
The outstanding notes were and the exchange notes will be issued pursuant
to an Indenture (the "Original Indenture"), dated as of November 21, 2001, as
amended by the First Supplemental Indenture, dated as of January 16, 2002 (the
"Supplemental Indenture" and together with the Original Indenture, the
"Indenture"), among the Company, as Issuer, The Vail Corporation, Vail Holdings,
Inc. and each of the other Guarantors, as guarantors, and The Bank of New York,
as trustee (the "Trustee"). The terms of the exchange notes are identical in all
material respects to the outstanding notes, except that the exchange notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not contain certain provisions providing for
liquidated damages under certain circumstances described in the Registration
Rights Agreement, the provisions of which will terminate upon the consummation
of the exchange offer. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following summary of the material
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. Copies of the Indenture and Registration Rights
Agreement can be requested by prospective investors from the Company at the
address and telephone number set forth under "Where You Can Find More
Information." The definitions of certain terms used in the following summary are
set forth below under "Certain Definitions." For purposes of this "Description
of Notes," the term "Company" refers only to Vail Resorts, Inc. and not to any
of its Subsidiaries and the term "Notes" refers to both the outstanding notes
and the exchange notes.
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all existing and future Senior Debt of the
Company. As of October 31, 2001, after giving pro forma effect to the offering
of the outstanding notes (the "Offering") and the application of the net
proceeds therefrom, the Company and the Guarantors would have had consolidated
Senior Debt of approximately $87.2 million outstanding. The Indenture, subject
to certain limitations, permits the incurrence of additional Senior Debt in the
future. As of the date of the Indenture, all of the Company's consolidated
Subsidiaries will be Restricted Subsidiaries, other than Boulder/Beaver, LLC,
Colter Bay Corporation, Eagle Park Reservoir Company, Forest Ridge Holdings,
Inc., Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake
Lodge, Inc., Mountain Thunder, Inc., Resort Technology Partners, LLC, RT
Partners, Inc., SSI Venture, LLC, Vail Associates Investments, Inc. and VR
Holdings, Inc. However, under certain circumstances, the Company is able to
designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
The obligations of the Company under the Notes are guaranteed, jointly and
severally on a senior subordinated basis, by the Guarantors. The Subsidiary
Guarantee of each Guarantor is subordinated in right of payment to all existing
and future Senior Debt of such Guarantor. See "--Subsidiary Guarantees."
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Principal, Maturity and Interest
The Notes are limited in aggregate principal amount to $300,000,000 (of
which $160,000,000 were issued in the Offering) and will mature on May 15, 2009.
Interest on the Notes will accrue at the rate of 8 3/4% per annum and will be
payable semi-annually in arrears on May 15 and November 15 of each year,
commencing on May 15, 2002, to Holders of record on the immediately preceding
May 1 and November 1, respectively. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months. Principal of and premium,
if any, interest and Liquidated Damages, if any, on the Notes will be payable at
the office or agency of the Company maintained for such purpose or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders of the Notes at their respective addresses set forth
in the register of Holders of Notes; provided that all payments of principal,
premium, if any, interest and Liquidated Damages, if any, with respect to Notes
the Holders of which have given wire transfer instructions to the Company will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of $1,000
and integral multiples thereof.
Subordination
The payment (by set-off, redemption, repurchase or otherwise) of principal
of and premium, if any, interest and Liquidated Damages, if any, on the Notes
(including with respect to any repurchases of the Notes) is subordinated in
right of payment, as set forth in the Indenture, to the prior payment in full in
cash or, at the option of the holders of Senior Debt of the Company, in Cash
Equivalents of all Obligations in respect of Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of the Company upon any liquidation,
dissolution or winding up of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, whether voluntary or involuntary, an assignment for the benefit of
creditors or any marshalling of the Company's assets and liabilities, the
holders of Senior Debt of the Company are entitled to receive payment in full in
cash or, at the option of the holders of Senior Debt of the Company, in Cash
Equivalents of all Obligations due or to become due in respect of such Senior
Debt (including interest after the commencement of any such proceeding, at the
rate specified in the applicable Senior Debt) before the Holders of Notes are
entitled to receive any payment of principal of or premium, if any, interest or
Liquidated Damages, if any, on the Notes, and until all Obligations with respect
to Senior Debt of the Company are paid in full in cash or, at the option of the
holders of Senior Debt of the Company, in Cash Equivalents, any distribution of
any kind or character to which the Holders of Notes would be entitled shall be
made to the holders of Senior Debt of the Company (except that Holders of Notes
may receive Permitted Junior Securities and payments made from the trust
described under "--Legal Defeasance and Covenant Defeasance" or "--Satisfaction
and Discharge of Indenture").
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The Company also shall not, directly or indirectly, (x) make any payment of
principal of or premium, if any, interest or Liquidated Damages, if any, on the
Notes (except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance" or "--Satisfaction and Discharge of
Indenture," if no default of the kind referred to in clause (i) below had
occurred and was continuing, and no Payment Blockage Notice (as defined below)
was in effect, at the time amounts were deposited with the Trustee as described
therein) or (y) acquire any of the Notes for cash or property or otherwise or
make any other distribution with respect to the Notes if (i) any default occurs
and is continuing in the payment when due, whether at maturity, upon any
redemption, by declaration or otherwise, of any principal of, or premium, if
any, or interest on, any Designated Senior Debt of the Company or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt of the
Company that permits holders of the Designated Senior Debt of the Company as to
which such default relates to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the holders of such
Designated Senior Debt of the Company. Payments on the Notes may and shall be
resumed (a) in the case of a payment default, upon the date on which such
default is cured or waived or otherwise has ceased to exist and (b) in the case
of a nonpayment default, upon the earlier of the date on which such nonpayment
default is cured or waived or otherwise has ceased to exist or 179 days after
the date on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt of the Company has been accelerated and
such acceleration remains in full force and effect. No new period of payment
blockage may be commenced unless and until 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such nonpayment default shall have been waived
for a period of not less than 90 days. Each Holder by such Holder's acceptance
of a Note irrevocably agrees that if any payment or payments shall be made
pursuant to the Indenture and the amount or total amount of such payment or
payments exceeds the amount, if any, that such Holder would be entitled to
receive upon the proper application of the subordination provisions of the
Indenture, then such Holder will be obliged to pay over the amount of such
excess payment to the holders of Senior Debt of the Person that made such
payment or payments or their representative or representatives, as instructed in
a written notice of such excess payment, within ten days of receiving such
notice.
The Indenture further requires that the Company promptly notify holders of
Senior Debt of the Company and the Guarantors if payment of the Notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. On a pro forma basis,
after giving effect to the Offering and the application of the net proceeds
therefrom, the principal amount of consolidated Senior Debt of the Company and
Guarantors outstanding at October 31, 2001 would have been approximately $87.2
million. The Indenture limits, through certain financial tests, the amount of
additional Indebtedness, including Senior Debt, that the Company and its
Restricted Subsidiaries can incur. See "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
"Designated Senior Debt" of any Person means (i) any Indebtedness of such
Person outstanding under the Credit Agreement and (ii) any other Senior Debt of
such Person, the principal
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amount of which is $25 million or more and that has been designated by the
Company as "Designated Senior Debt" of such Person.
"Permitted Junior Securities" means Equity Interests (other than
Disqualified Stock) in the Company or debt securities that are subordinated to
all Senior Debt of the issuer of such debt securities (and any debt securities
issued in exchange for Senior Debt of the issuer of such debt securities) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt.
"Senior Debt" of any Person means (i) the Obligations of such Person under
the Credit Agreement, including, without limitation, Hedging Obligations and
reimbursement obligations in respect of letters of credit and bankers
acceptances, and (ii) any other Indebtedness of such Person, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes.
Notwithstanding anything to the contrary in the foregoing, Senior Debt of a
Person will not include (u) any Indebtedness represented by the Existing Notes
or by any Guarantee of the Existing Notes, (v) any obligation to, in respect of
or imposed by any environmental, landfill, waste management or other regulatory
governmental agency, statute, law or court order, (w) any liability for federal,
state, local or other taxes, (x) any Indebtedness of such Person to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness
that is incurred by such Person in violation of the Indenture (except to the
extent that the original holder thereof relied in good faith after being
provided with a copy of the Indenture upon an Officer's Certificate of such
Person to the effect that the incurrence of such Indebtedness did not violate
the Indenture).
Subsidiary Guarantees
The Company's payment obligations under the Notes are jointly and severally
guaranteed (the "Subsidiary Guarantees") by all of the Company's consolidated
Subsidiaries existing on the Closing Date, other than Boulder/Beaver, LLC,
Colter Bay Corporation, Eagle Park Reservoir Company, Forest Ridge Holdings,
Inc., Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake
Lodge, Inc., Mountain Thunder, Inc., Resort Technology Partners, LLC, RT
Partners, Inc., SSI Venture, LLC, Vail Associates Investments, Inc. and VR
Holdings, Inc. See Note 14 to "Consolidated Financial Statements" included in
our Annual Report on Form 10-K incorporated by reference herein. In addition, VA
Rancho Mirage Resort, L.P. and Rockresorts International, LLC (and its
subsidiaries), each of which was acquired by the Company on November 15, 2001,
and VAMHC, Inc., which was acquired by the Company on December 17, 2001, became
Guarantors pursuant to the Supplemental Indenture on January 16, 2002. The
Subsidiary Guarantee of each Guarantor are subordinated in right of payment to
the same extent as the obligations of the Company in respect of the Notes, as
set forth in the Indenture, to the prior payment in full in cash or, at the
option of the holders of Senior Debt of such Guarantor, in Cash Equivalents of
all Senior Debt of such Guarantor, which would include any Guarantee issued by
such Guarantor that constitutes Senior Debt of such Guarantor, including
Guarantees of Indebtedness under the Credit Agreement. The Indenture provides
that if the Company or any of its Restricted Subsidiaries shall acquire or
create another Restricted Subsidiary after the Closing Date, or any Unrestricted
Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a
Restricted Subsidiary, then, unless such Subsidiary is not required to guarantee
and has not guaranteed the Company's Obligations under the Credit Agreement
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and has not guaranteed any other Indebtedness of the Company or any Restricted
Subsidiary, such Subsidiary shall become a Guarantor in accordance with the
terms of the Indenture. A Subsidiary shall, without limitation, be deemed to
have guaranteed Indebtedness of another Person if such Subsidiary has
Indebtedness of the kind described in clause (ii) or clause (iii) of the
definition of the term "Indebtedness." The obligations of each Guarantor under
its Subsidiary Guarantee will be limited to the maximum amount that would not
result in the obligations of such Guarantor under its Subsidiary Guarantee
constituting a fraudulent conveyance under applicable law.
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person) another Person,
whether or not affiliated with such Guarantor, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another Person, unless (i) the
Person formed by or surviving such consolidation or merger (if other than such
Guarantor) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a Person organized and existing under
the laws of the United States of America, any state thereof or the District of
Columbia and expressly assumes all the obligations of such Guarantor, pursuant
to a supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes and the Indenture and (ii) immediately after giving
effect to such transaction, no Default or Event of Default exists. The
provisions of clause (i) of the preceding sentence shall not apply if the Person
formed by or surviving the relevant consolidation or merger or to which the
relevant sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is the Company, a Guarantor or a Person that is not, after
giving effect to such transaction, a Restricted Subsidiary of the Company.
The Indenture provides that in the event of (i) a merger or consolidation
to which a Guarantor is a party, then the Person formed by or surviving such
merger or consolidation (if, after giving effect to such transaction, other than
the Company or a Restricted Subsidiary of the Company) shall be released and
discharged from the obligations of such Guarantor under its Subsidiary
Guarantee, (ii) a sale or other disposition (whether by merger, consolidation or
otherwise) of all of the Equity Interests of a Guarantor at the time owned by
the Company and its Restricted Subsidiaries to any Person that, after giving
effect to such transaction, is neither the Company nor a Restricted Subsidiary
of the Company, or (iii) the release and discharge of a Guarantor from all
obligations under Guarantees of (x) Obligations under the Credit Agreement and
(y) any other Indebtedness of the Company or any of its Restricted Subsidiaries,
then in each such case such Guarantor shall be released and discharged from its
obligations under its Subsidiary Guarantee; provided that, in the case of each
of clauses (i) and (ii), (a) the relevant transaction is in compliance with the
Indenture, and (b) the Person being released and discharged shall have been
released and discharged from all obligations it might otherwise have under
Guarantees of Indebtedness of the Company or any of its Restricted Subsidiaries
and, in the case of each of clauses (i), (ii) and (iii), immediately after
giving effect to such transaction, no Default or Event of Default shall exist.
Optional Redemption
Except as described below, the Notes are not redeemable at the Company's
option prior to May 15, 2004. Thereafter, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid inter-
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est and Liquidated Damages, if any, thereon to the applicable redemption date,
if redeemed during the twelve-month period beginning on May 15 of the years
indicated below:
Year Percentage
---- ----------
2004........................................... 104.375%
2005........................................... 102.916%
2006........................................... 101.458%
2007 and thereafter............................ 100.000%
Notwithstanding the foregoing, at any time on or prior to May 15, 2002, the
Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes theretofore issued under the Indenture at a redemption
price equal to 108.75% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date, with
the net cash proceeds of one or more Equity Offerings; provided that (i) at
least 65% of the aggregate principal amount of Notes theretofore issued remain
outstanding immediately following each such redemption and (ii) such redemption
shall occur within 60 days of the closing of any such Equity Offering.
In addition, upon the occurrence of a Change of Control (as defined below)
at any time prior to May 15, 2004, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice given within 30 days following such Change of
Control, at the Make-Whole Price, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any note is to be redeemed in part only, the notice of redemption
that relates to such note shall state the portion of the principal amount
thereof to be redeemed. A new note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest shall
cease to accrue on Notes or portions of Notes called for redemption.
Mandatory Redemption
Except as set forth below under "--Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
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Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, unless notice of redemption of
the notes in whole has been given pursuant to the provisions of the Indenture
described above under "Optional Redemption," the Company will be obligated to
make an offer (a "Change of Control Offer") to each Holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control, the Company will mail a
notice to each Holder with a copy to the Trustee describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. In addition, the Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail or deliver to each Holder of Notes
so tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Company is not required to make a Change of Control Offer following a
Change of Control if a third party makes such a Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all notes validly tendered and not withdrawn pursuant to such Change
of Control Offer.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction. However, restrictions in the Indenture described herein on
the ability of the Company and its Restricted Subsidiaries to incur additional
Indebtedness, to grant Liens on their respective properties, to make Restricted
Payments and to make Asset Sales may also make more difficult or
-44-
discourage a takeover of the Company, whether favored or opposed by the
management of the Company. Consummation of any such transaction in certain
circumstances may require repurchase of the Notes, and there can be no assurance
that the Company or the acquiring party will have sufficient financial resources
to effect such repurchase. Such restrictions and the restrictions on
transactions with Affiliates may, in certain circumstances, make more difficult
or discourage any leveraged buyout of the Company or any of its Subsidiaries by
their management. While such restrictions cover a wide variety of arrangements
which have traditionally been used to effect highly leveraged transactions, the
Indenture may not afford the Holders of Notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
The Credit Agreement prohibits the Company from repurchasing any Notes
without the prior written consent of lenders holding a majority of the
commitments under the Credit Agreement. Any other credit agreements or other
agreements governing indebtedness to which the Company becomes a party may
contain similar restrictions and provisions and may, like the Credit Agreement,
provide that certain change of control events with respect to the Company would
constitute events of default thereunder. In the event a Change of Control occurs
at a time when the Company is prohibited from repurchasing Notes, the Company
could seek the consent of its lenders to the repurchase of Notes or could
attempt to refinance or repay the borrowings that contain such prohibition. If
the Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from repurchasing Notes. In such case, the Company's
failure to repurchase tendered Notes would constitute an Event of Default under
the Indenture which would, in turn, constitute a default under the Credit
Agreement. In such circumstances, the subordination provisions in the Indenture
would likely restrict payments to the Holders of the Notes.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset
Sale unless (i) the Company (or such Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a Board Resolution) of the assets or Equity Interests
issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of (x) cash or Cash Equivalents or (y) a controlling interest in
another business or fixed or other long-term assets, in each case, in a Similar
Business; provided that the amount of (a) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets or Equity
Interests such that the Company or such Restricted Subsidiary are released from
further liability and (b) any securities,
-45-
Notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary into cash within 90 days or are guaranteed (by means of a letter of
credit or otherwise) by an institution specified in the definition of "Cash
Equivalents" (to the extent of the cash received or the obligations so
guaranteed) shall be deemed to be cash or Cash Equivalents for purposes of this
provision, subject to application as provided in the following paragraph.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company, at its option, may (i) apply such Net Proceeds to permanently
prepay, repay or reduce any Senior Debt of the Company (and to correspondingly
reduce commitments with respect thereto in the case of revolving borrowings) or
(ii) apply such Net Proceeds to the acquisition of a controlling interest in
another business, the making of a capital expenditure or the acquisition of
other long-term assets, in each case, in a Similar Business, or determine to
retain such Net Proceeds to the extent such Net Proceeds constitute such a
controlling interest or long-term asset in a Similar Business. Pending the final
application of any such Net Proceeds, the Company may invest such Net Proceeds
in any manner that is not prohibited by the Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10 million, the Company will be
required to make an offer to all Holders of Notes (and holders of other
Indebtedness of the Company, including the Existing Notes, to the extent
required by the terms of such other Indebtedness) (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes (and such other Indebtedness)
that does not exceed the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
principal amount of Notes (and such other Indebtedness) tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes (and such other Indebtedness) tendered exceeds the
amount of Excess Proceeds, the Notes (and such other Indebtedness) to be
purchased will be selected on a pro rata basis. Upon completion of an Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero. The Asset Sale
Offer must be commenced within 60 days following the date on which the aggregate
amount of Excess Proceeds exceeds $10 million and remain open for at least 30
and not more than 40 days (unless otherwise required by applicable law). The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of notes
pursuant to an Asset Sale Offer.
The Credit Agreement prohibits the Company from repurchasing any Notes
without the prior written consent of lenders holding a majority of the
commitments under the Credit Agreement. Any other credit agreements or other
agreements governing indebtedness to which the Company becomes a party may
contain similar restrictions and provisions. In the event the Company is
required to make an Asset Sale Offer at a time when the Company is prohibited
from repurchasing Notes, the Company could seek the consent of its lenders to
the repurchase of Notes or could attempt to refinance or repay the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company will remain prohibited from repurchasing
Notes. In such case, the Company's failure to repurchase tendered Notes would
constitute an Event of Default under the Indenture which would, in turn,
constitute a default under the Credit Agreement. In such circum-
-46-
stances, the subordination provisions in the Indenture would likely restrict
payments to the Holders of the Notes.
Any other credit agreements or other agreements governing indebtedness to
which the Company becomes a party may require that the Company and its
Subsidiaries apply all proceeds from certain asset sales to repay in full
outstanding obligations thereunder prior to the application of such proceeds to
repurchase outstanding Notes.
Certain Covenants
Restricted Payments
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to any direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company, (b) payable in Capital Stock or assets of an
Unrestricted Subsidiary of the Company or (c) payable to the Company or any
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company, or any Equity Interests of any of its Restricted Subsidiaries held by
any Affiliate of the Company (other than any such Equity Interests owned by the
Company or any Restricted Subsidiary of the Company, any Equity Interests then
being issued by the Company or a Restricted Subsidiary of the Company or any
Investment in a Person that, after giving effect to such Investment, is a
Restricted Subsidiary of the Company); (iii) make any payment on or with respect
to, or purchase, redeem, repay, defease or otherwise acquire or retire for
value, any Indebtedness of the Company or any Guarantor that is subordinated in
right of payment to the Notes or any Guarantee thereof, except a regularly
scheduled payment of interest or principal or sinking fund payment (other than
the purchase or other acquisition of such subordinated Indebtedness made in
anticipation of satisfying any sinking fund payment due within one year from the
date of acquisition); or (iv) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Interest Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
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(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made by the Company and its
Restricted Subsidiaries after May 11, 1999 (without duplication and
excluding Restricted Payments permitted by clauses (ii) and (iii) of the
following paragraph), is less than the sum of (1) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting period)
from the beginning of the first fiscal quarter commencing after May 11,
1999 to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit); plus (2) 100% of the aggregate net
cash proceeds and the fair market value of any assets or property (as
determined in good faith by the Board of Directors of the Company) received
by the Company from the issue or sale since May 11, 1999 of Equity
Interests of the Company (other than Disqualified Stock), or of
Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests or
Disqualified Stock or convertible debt securities sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock); plus (3) with
respect to Restricted Investments made after May 11, 1999, the net
reduction of such Restricted Investments as a result of (x) any disposition
of any such Restricted 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 the Company) received, (y) dividends, repayment of loans or advances or
other transfers of assets to the Company or any Restricted Subsidiary of
the Company or (z) the portion (proportionate to the Company's 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 the Company (but only to the extent not included
in subclause (1) of this clause (c)); provided that the sum of items (x),
(y) and (z) of this subclause (3) shall not exceed, in the aggregate, the
aggregate amount of such Restricted Investments made after May 11, 1999.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture, (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, Equity Interests of the
Company (other than any Disqualified Stock, except to the extent that such
Disqualified Stock is issued in exchange for other Disqualified Stock or the net
cash proceeds of such Disqualified Stock is used to redeem, repurchase, retire
or otherwise acquire other Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)(2)
of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness in exchange for, or out of the
net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv)
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company held
by any employees, officers or directors of the Company or any of its Restricted
Subsidiaries or, upon the death, disability or termination of employment of such
officers, directors and employees, their authorized representatives in an
aggregate amount not to exceed in any twelve month
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period, $2.0 million plus the aggregate net cash proceeds from any issuance
during such period of Equity Interests by the Company to such employees,
officers, directors, or representatives plus the aggregate net cash proceeds
from any payments on life insurance policies in which the Company or its
Restricted Subsidiaries is the beneficiary with respect to such employees,
officers or directors the proceeds of which are used to repurchase, redeem or
acquire Equity Interests of the Company held by such employees, officers,
directors or representative; (v) the repurchase of Equity Interests of the
Company deemed to occur upon the exercise of stock options or similar
arrangement if such Equity Interests represents a portion of the exercise price
thereof; or (vi) additional Restricted Payments in an amount not to exceed $15
million (less the amount, if any, of any Restricted Payments made after May 11,
1999 and on or prior to the Closing Date that would not have been permitted
under any of the foregoing clauses); provided, however, that at the time of, and
after giving effect to, any Restricted Payment permitted under clause (iv) or
(vi) no Default or Event of Default shall have occurred and be continuing.
In the case of any Restricted Payments made other than in cash, the amount
thereof shall be the fair market value on the date of such Restricted Payment of
the asset(s) or securities proposed to be transferred or issued by the Company
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any such asset(s) or securities shall be
determined in good faith by the Board of Directors of the Company. Where the
amount of any Investment made other than in cash is otherwise required to be
determined for purposes of the Indenture, then unless otherwise specified such
amount shall be the fair market value thereof on the date of such Investment,
and fair market value shall be determined in good faith by the Board of
Directors of the Company.
Designation of Unrestricted Subsidiaries
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments (including without limitation any direct or indirect obligation to
subscribe for additional Equity Interests or maintain or preserve such
subsidiary's financial condition or to cause such person to achieve any
specified level of operating results) by the Company and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so designated will
be deemed to be Investments at the time of such designation and, except to the
extent, if any, that such Investments are Permitted Investments at such time,
will reduce the amount otherwise available for Restricted Payments. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Investment would be
permitted at such time and if such Restricted Subsidiary otherwise meets (or
would meet concurrently with the effectiveness of such designation) the
definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a Board Resolution giving
effect to such designation. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the cove-
-49-
nant described under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock," and (ii) no Default or Event of Default would be in existence
following such designation.
To the extent that Unrestricted Subsidiaries were designated as such under
the Existing Note Indenture after the issuance of the Existing notes on May 11,
1999 and on or prior to the date of the Indenture, and such designation resulted
in or constituted Restricted Payments and/or Permitted Investments under the
Existing note Indenture, such designations shall be deemed to have resulted in
or constituted Restricted Payments and/or Permitted Investments under the
Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company's Restricted Subsidiaries will not issue any
shares of Preferred Stock (other than to the Company or a Restricted Subsidiary
of the Company); provided, however, that the Company and the Restricted
Subsidiaries may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been equal to or greater than 2 to 1, determined on a pro forma
basis, as if the additional Indebtedness had been incurred at the beginning of
such four-quarter period and no Event of Default shall have occurred and be
continuing after giving effect on a pro forma basis to such incurrence.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness under the Credit Agreement in an aggregate amount outstanding
(with letters of credit being deemed for all purposes of the Indenture to
have a principal amount equal to the maximum potential liability of the
Company and its Restricted Subsidiaries in respect thereof) at any time not
to exceed the greater of (x) $450 million and (y) 3.5 times Consolidated
Resort EBITDA for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such Indebtedness is being incurred less, in
each case, the aggregate amount of such Indebtedness permanently repaid
with the Net Proceeds of any Asset Sale;
(ii) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness represented by (x) the Notes (including the exchange notes),
the Guarantees thereof and the Indenture in the principal amount of Notes
originally issued on the Closing Date and (y) the Existing notes, the
Guarantees thereof and the Existing note Indenture;
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
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(iv) the incurrence by the Company and its Restricted Subsidiaries of
additional Indebtedness (other than Hedging Obligations) after May 11, 1999
in an aggregate principal amount not to exceed $50 million at any time
outstanding;
(v) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness after May 11, 1999 in connection with the acquisition of
assets or a new Restricted Subsidiary (including Indebtedness that was
incurred by the prior owner of such assets or by such Restricted Subsidiary
prior to such acquisition by the Company and its Restricted Subsidiaries);
provided that the aggregate principal amount of Indebtedness incurred after
May 11, 1999 pursuant to this clause (v) does not exceed $20 million at any
time outstanding;
(vi) the incurrence by the Company and its Restricted Subsidiaries of
Permitted Refinancing Indebtedness;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
its Restricted Subsidiaries; provided, however, that any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary of the Company, and any sale or other transfer of any such
Indebtedness to a Person that is not the Company or a Restricted Subsidiary
of the Company, shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the
case may be;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations incurred for the purpose of hedging
against fluctuations in currency values or for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
of the Company or any of its Restricted Subsidiaries permitted by the
Indenture; provided that the notional principal amount of any Hedging
Obligations does not significantly exceed the principal amount of
Indebtedness to which such agreement relates;
(ix) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company permitted by the Indenture;
(x) the incurrence of Indebtedness arising from agreements providing
for indemnification, adjustment of purchase price, earn out or other
similar obligations, in each case incurred in connection with the
acquisition or disposition of any business or assets or subsidiaries of the
Company permitted by the Indenture;
(xi) the Indebtedness incurred from time to time under a revolving
Credit Facility of SSI Venture in an aggregate amount outstanding at any
time not to exceed $10 million, so long as SSI Venture remains a Restricted
Subsidiary of the Company (as of the Closing Date, SSI Venture is an
Unrestricted Subsidiary); and
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(xii) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness not covered by any other clause of this paragraph which is
outstanding on the Closing Date and was incurred subsequent to May 11, 1999
in compliance with the Existing Note Indenture.
For purposes of determining the amount of any Indebtedness of any Person
under this covenant, (a) the principal amount of any Indebtedness of such Person
arising by reason of such Person having granted or assumed a Lien on its
property to secure Indebtedness of another Person shall be the lower of the fair
market value of such property and the principal amount of such Indebtedness
outstanding (or committed to be advanced) at the time of determination; (b) the
amount of any Indebtedness of such Person arising by reason of such Person
having Guaranteed Indebtedness of another Person where the amount of such
Guarantee is limited to an amount less than the principal amount of the
Indebtedness so Guaranteed shall be such amount as so limited; and (c)
Indebtedness shall not include a non-recourse pledge by the Company or any of
its Restricted Subsidiaries of Investments in any Person that is not a
Restricted Subsidiary of the Company to secure the Indebtedness of such Person.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company, in its sole discretion, either (a) shall classify (and may later
reclassify) such item of Indebtedness in one of such categories in any manner
that complies with this covenant or (b) shall divide and classify (and may later
redivide and reclassify) such item of Indebtedness into more than one of such
categories pursuant to such first paragraph.
Liens
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness on any asset now owned or here after
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness or other obligations owed
to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries, (iii) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries or (iv) guarantee the Notes or any renewals or refinancings
thereof, in each case except for such encumbrances or restrictions (other than
encumbrances and restrictions in respect of clause (iv) of this sentence)
existing under or by reason of (a) Existing Indebtedness as in effect on May 11,
1999, (b) the Credit Agreement (as defined in the Existing Note Indenture) as in
effect on May 11, 1999, and any amendments, modifications, re-
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statements, renewals, increases, supplements, refundings, replacements or
refinancings thereof; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the Credit Agreement (as defined in
the Existing Note Indenture) as in effect on May 11, 1999, (c) (x) the Existing
notes, any Guarantee thereof and the Existing note Indenture and (y) the Notes,
any Guarantee thereof and the Indenture, (d) applicable law, (e) any instrument
governing Indebtedness or Equity Interests of a Person acquired by the Company
or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness or Equity Interests were
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the Equity
Interests, properties or assets of any Person, other than the Person, or the
Equity Interests, property or assets of the Person, so acquired; provided that,
in the case of Indebtedness, such Indebtedness was permitted by the Indenture,
(f) by reason of customary nonassignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired or proceeds therefrom, (h) customary restrictions in asset
or stock sale agreements limiting transfer of such assets or stock pending the
closing of such sale, (i) customary non-assignment provisions in contracts
entered into in the ordinary course of business, or (j) Permitted Refinancing
Indebtedness; provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving Person), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
unless (i) the Company is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a Person organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after giving effect to such transaction no Default or Event of Default exists;
and (iv) except in the case of a merger of the Company with or into a Restricted
Subsidiary of the Company, the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made, (a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company, immediately
preceding the transaction and (b) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage
Ratio test set forth in the first paragraph of the covenant described above
under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock."
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Nothing contained in the foregoing paragraph shall prohibit (i) any
Restricted Subsidiary from consolidating with, merging with or into, or
transferring all or part of its properties and assets to the Company or (ii) the
Company from merging with an Affiliate for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits; provided,
however, that in connection with any such merger, consolidation or asset
transfer no consideration, other than common stock (that is not Disqualified
Stock) in the surviving Person or the Company shall be issued or distributed.
Transactions with Affiliates
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate payments or consideration in excess of $5.0 million, a Board
Resolution authorizing and determining the fairness of such Affiliate
Transaction approved by a majority of the independent members of the Board of
Directors of the Company and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate payments or
consideration in excess of $15.0 million, an opinion as to the fairness to the
Company or such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing.
The foregoing provisions will not prohibit (i) reasonable fees and
compensation paid to and indemnity provided on behalf of officers, directors,
employees, agents or consultants of the Company or any Restricted Subsidiary of
the Company as determined in good faith by the Company's Board of Directors or
senior management including, without limitation, any issuance of Equity
Interests of the Company pursuant to stock option, stock ownership or similar
plans; (ii) transactions between or among the Company and/or its Restricted
Subsidiaries; (iii) any agreement or arrangement as in effect on May 11, 1999
and publicly disclosed or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) in any replacement
agreement or arrangement thereto so long as any such amendment or replacement
agreement or arrangement is not more disadvantageous to the Company or its
Restricted Subsidiaries, as the case may be, in any material respect than the
original agreement as in effect on May 11, 1999; (iv) loans or advances to
employees and officers of the Company and its Restricted Subsidiaries not in
excess of $5 million at any time outstanding; and (v) any Permitted Investment
or any Restricted Payment that is permitted by the provisions of the Indenture
described above under the caption "Restricted Payments."
Limitation on Layering Debt
The Indenture provides that (a) the Company will not, directly or
indirectly, incur, create, issue, assume, guarantee or otherwise become liable
for any Indebtedness that is by its terms subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in
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right of payment to the Notes and (b) no Guarantor will, directly or indirectly,
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is by its terms subordinate or junior in right of payment to
any Senior Debt of such Guarantor and senior in any respect in right of payment
to the Subsidiary Guarantee of such Guarantor.
Additional Subsidiary Guarantees
The Indenture provides that if any Restricted Subsidiary of the Company
after the date of the Indenture shall become or be required to become a
guarantor under the Credit Agreement or shall become a guarantor of any other
Indebtedness of the Company or any Restricted Subsidiary, then such Restricted
Subsidiary shall become a Guarantor, in accordance with the terms of the
Indenture; provided that if such Restricted Subsidiary is released and
discharged from all obligations under such guarantees, it shall be released and
discharged from its obligations under its Subsidiary Guarantee as described
under "--Subsidiary Guarantees" above.
Payments for Consent
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
forms and, with respect to the annual information only, a report thereon by the
Company's certified independent accountants and (ii) all current reports that
would be required to be filed with the Commission on Form 8-K if the Company
were required to file such reports. In addition, whether or not required by the
rules and regulations of the Commission, the Company will file a copy of all
such information and reports with the Commission for public availability (unless
the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, the Company and its Restricted Subsidiaries will agree that, for so
long as any Notes remain outstanding, they will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the Act.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii) default in
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payment when due (whether payable at maturity, upon redemption or repurchase or
otherwise) of the principal of or premium, if any, on the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (iii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
described under the caption "Merger, Consolidation or Sale of Assets"; (iv)
failure by the Company to comply with the provisions described under the
captions "Change of Control" or "Asset Sale" (whether or not prohibited by the
subordination provisions of the Indenture) (other than a failure to purchase
notes pursuant to an offer commenced under such provisions, which shall be
subject to clause (ii) above) for 30 days after written notice by the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes;
(v) failure by the Company or any of its Restricted Subsidiaries for 60 days
after written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with any of its other agreements
in the Indenture or the Notes other than those referred to in clauses (i), (ii),
(iii) or (iv) above; (vi) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Significant Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the Closing Date, which default (a) is caused by a failure to
pay principal after final maturity of such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10 million or more without such Indebtedness being
discharged or such acceleration having been cured, waived or rescinded within 30
days of acceleration; (vii) failure by the Company or any of its Significant
Subsidiaries to pay final judgments aggregating in excess of $10 million and
either (a) any creditor commences enforcement proceedings upon any such judgment
or (b) such judgments are not paid, discharged or stayed for a period of 60
days; (viii) except as permitted by the Indenture, any Guarantee of the Notes by
a Significant Subsidiary shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect, or any Guarantor which is a Significant Subsidiary or any Person acting
on behalf of any such Guarantor, shall deny or disaffirm its obligations under
its Guarantee of the Notes; and (ix) certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes and all other Obligations thereunder to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal, premium, if any, interest or Liquidated Damages, if any) if it
determines that withholding notice is in their interest.
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In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company or any
Guarantor with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
principal, premium, if any, interest or Liquidated Damages, if any, on the
Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees, Incorporators and
Stockholders
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or such Guarantor under the Notes, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of and premium, if any, interest
and Liquidated Damages, if any, on the Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
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In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of and premium, if any, interest and Liquidated Damages, if
any, on the outstanding Notes on the Stated Maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date; (ii) in
the case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (a) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (b) since the Closing Date, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes, as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit); (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day following the deposit,
the trust fund will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company must deliver to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Satisfaction and Discharge of the Indenture
The obligations of the Company and the other Guarantors under the Indenture
will terminate when (i) either (a) all outstanding Notes have been delivered to
the Trustee for cancellation, or (b) all such Notes not theretofore delivered to
the Trustee for cancellation have become due and payable, will become due and
payable within one year or are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name and at the expense of the Company and the
Company has irrevocably deposited or caused to be deposited with the Trustee, in
trust, funds in an amount sufficient to pay and discharge the entire
indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, to the date of maturity
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or date of redemption, (ii) the Company has paid or caused to be paid all sums
payable by the Company under the Indenture, and (iii) the Company has delivered
an Officers' Certificate and an Opinion of Counsel relating to compliance with
the conditions set forth in the Indenture.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, or the Notes thereof may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any note
or alter the provisions with respect to the price to be paid, or the timing of
redemption or payment, upon redemption of the Notes or, after the Company has
become obligated to make a Change of Control Offer or an Asset Sale Offer,
amend, change or modify the obligation of the Company to make or consummate such
Change of Control Offer or Asset Sale Offer; (iii) reduce the rate of or change
the time for payment of interest or Liquidated Damages, if any, on any Note;
(iv) waive a Default or Event of Default in the payment of principal of or
premium, interest or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration); (v) make any Note payable in money other than
that stated in the Notes; (vi) except pursuant to the terms of the Indenture,
release any Guarantor from its Guarantee of the Notes; (vii) make any change in
the subordination provisions in the Indenture that adversely affects the rights
of any Holder of any Notes in any material respect or any change to any other
provision thereof that adversely affects the rights of any Holder of Notes under
the subordination provisions of the Indenture in any material respect (it being
understood that amendments to the provisions of the Indenture described above
under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock" which may have the effect of increasing the amount of Senior
Debt that the Company and its Restricted Subsidiaries may incur shall not, for
purposes of this clause (vii), be deemed to be a change that adversely affects
in a material respect the rights of any Holder of Notes
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under the subordination provisions of the Indenture); or (viii) make any change
in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture, the Notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of Notes in the case of a merger, consolidation or sale of assets, to
provide security for the Notes, to add a Guarantor, to make any change that
would provide any additional rights or benefits to the Holders of Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder in any material respect, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
The consent of the Holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
Concerning the Trustee
The Trustee has been appointed by the Company as Registrar and Paying Agent
with respect to the Notes.
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days and apply to the Commission for permission to
continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to the Trustee against any loss,
liability or expense.
Book-Entry, Delivery and Form
Book-Entry
The outstanding notes were sold to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) in reliance on Rule 144A under
the Securities Act. The outstanding notes are represented by a note in
registered, global form without interest coupons (the "Rule 144A Global Note").
The Rule 144A Global Note was deposited upon issuance with the Trustee as
custodian for the Depositary Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee of DTC, for credit to the accounts of DTC participants or
indirect participants (each as defined below).
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The new notes will be represented by one or more notes in registered, global
form without interest coupons (the "Exchange Global Notes" and, together with
the Rule 144A Global Note, the "Global Notes"). The Exchange Global Notes will
be deposited on the date of the acceptance for exchange of the outstanding notes
and the issuance of the exchange notes with the Trustee as custodian for DTC and
registered in the name of Cede & Co. as nominee of DTC, in each case for credit
to the accounts of DTC "participants" and "indirect participants" (each as
defined below).
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Certificated Certificates."
The Exchange Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
the Company nor the initial purchasers take any responsibility for these
operations or procedures, and we urge you to contact the relevant system or one
of its participants directly to discuss these matters.
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Exchange Global Notes, DTC or its custodian will credit, on
its internal system, the principal amount at maturity of the individual
beneficial interests represented by such Exchange Global Notes to the respective
accounts of persons who have accounts with such depositary and (ii) ownership of
beneficial interests in the Exchange Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Ownership of beneficial interests in the Exchange Global Notes will be limited
to persons who have accounts with DTC ("participants") or persons who hold
interests through participants ("indirect participants"). Holders may hold their
interests in the Exchange Global Notes directly through DTC if they are
participants in such system, or indirectly through organizations that are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Exchange Global
Notes for all purposes under the indenture. No beneficial owner of an interest
in the Global Notes will be able to transfer that interest except in accordance
with DTC's procedures, in addition to those provided for under the indenture
with respect to the Notes.
Payments of the principal of, premium (if any), interest (including
Liquidated Damages) on, the Exchange Global Notes will be made to DTC or its
nominee, as the case may be, as the registered owner thereof. Neither the
Company, the Trustee or any Paying Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial owner-
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ship interests in the Exchange Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, interest (including Liquidated Damages) on the
Exchange Global Notes, will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Exchange Global Notes as shown on the records of DTC or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in the Exchange Global Notes held through such participants
will be governed by standing instructions and customary practice, as is now the
case with securities held for the accounts of customers registered in the names
of nominees for such customers. Such payments will be the responsibility of such
participants.
Redemption notices will be sent to DTC. If less than all of the Exchange
Notes are to be redeemed, DTC's practice is to determine by lot the amount of
the interest of each Participant in issues like the Exchange Notes to be
redeemed. Consequently, the Exchange Notes may not be redeemed pro rata from
each holder of securities entitlements in the Exchange Notes.
The Company expects that transfers between participants in DTC will be
effected in the ordinary way through DTC's same-day funds system in accordance
with DTC rules and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Because of time zone differences, the securities amount of a Euroclear or
Clearstream participant purchasing a security entitlement in a Exchange Global
Note from a Participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day (which must be a business day for Euroclear
and Clearstream) immediately following the settlement date of DTC. Cash received
in Euroclear or Clearstream as a result of sales of security entitlements in a
Global Security by or through a Euroclear or Clearstream participant to a
Participant in DTC will be received with value on the settlement date of DTC but
will be available in the relevant Euroclear or Clearstream cash account only as
of the business day for Euroclear or Clearstream following DTC's settlement
date.
If a holder requires physical delivery of a Certificated Security for any
reason, including to sell Notes to persons in states which require physical
delivery of the Notes, or to pledge such securities, such holder must transfer
its interest in a Exchange Global Note, in accordance with the normal procedures
of DTC and with the procedures set forth in the indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Exchange Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of Exchange Notes as to which such participant or participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Notes for Certificated Securities, which it will
distribute to its participants and which will be legended as set forth under
"Transfer Restrictions."
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Subject to compliance with the transfer restrictions applicable to the
Exchange Notes, cross-market transfers between the Participants in DTC, on the
one hand, and Euroclear or Clearstream participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving security entitlements in the relevant Exchange
Global Notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositories for Euroclear or Clearstream.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations, including
Euroclear and Clearstream. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures in order to facilitate transfers of interests in the Global Note
among participants of DTC, Euroclear and Clearstream, they are under no
obligation to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee will have any responsibility
for the performance by DTC, Euroclear and Clearstream or their respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
Certificated Securities
Certificated Securities shall be issued in exchange for beneficial
interests in the Exchange Global Notes (i) if requested by a holder of such
interests, (ii) the Company, at its option, notifies the trustee in writing that
it elects to cause the issuance of Certificated Exchange Notes under the
indenture or (iii) if DTC is at any time unwilling or unable to continue as a
depositary for the Exchange Global Notes and a successor depositary is not
appointed by the Company within 90 days. Neither the Company nor the trustee
shall be liable for any delay by DTC or any Participant or Indirect Participant
in identifying the owners of security entitlements in the related Exchange Notes
and the Company and the trustee may conclusively rely on, and shall be protected
in relying on, instructions from DTC for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Exchange Notes to be issued).
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Transfer Agent, Registrar, Paying Agent and Exchange Agent
The Trustee acts as the transfer agent, registrar, paying agent and
exchange agent for the Notes. The Trustee, in its capacity as the paying agent,
may appoint co-paying agents, which must be acceptable to the Company.
Registration of transfers or exchanges of the Notes are effected without
charge by or on behalf of the Company, but any holder transferring any interest
in a note is required to pay to the trustee or the Company, as appropriate, any
tax or other governmental charges that may be imposed in connection with that
transfer or exchange. The Company is not required to register or cause to be
registered the transfer of any note after it has been called for redemption.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness or preferred stock of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness or preferred stock incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
(collectively, "dispositions") of any assets or rights (including, without
limitation, by way of a Sale and Leaseback Transaction), other than dispositions
of inventory or sales or leases of real estate constituting Real Estate Held for
Sale in the ordinary course of business, and (ii) the issuance of Equity
Interests by any Restricted Subsidiary or the disposition by the Company or a
Restricted Subsidiary of Equity Interests in any of the Company's Restricted
Subsidiaries (other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a Restricted
Subsidiary of the Company), in the case of either clause (i) or (ii), whether in
a single transaction or a series of related transactions (a) that have a fair
market value in excess of $3.0 million or (b) for net proceeds in excess of $3.0
million. Notwithstanding the foregoing, the following will be deemed not to be
Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary
or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary; (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary; (iii) a Permitted Investment or
Restricted Payment that is permitted by the covenant described above under the
caption "Restricted
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Payment"; (iv) a disposition of Cash Equivalents solely for cash or other Cash
Equivalents; (v) a disposition in the ordinary course of business of used,
worn-out, obsolete, damaged or replaced equipment; (vi) the grant of licenses to
third parties in respect of intellectual property in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, as applicable;
(vii) any disposition of properties or assets that is governed by the provisions
described under "Change of Control" or "Merger, Consolidation or Sale of Asset";
and (viii) the granting or incurrence of any Permitted Lien.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of determination
and certified as such by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (a) 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; (b) 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); (c) commercial paper and
similar obligations rated "P-1" by Moody's Investors Service, Inc. ("Moody's")
or "A-1" by Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc. ("S & P"); (d) readily marketable tax-free municipal bonds of
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; and (e) mutual funds or
money market accounts investing primarily in items described in clauses (a)
through (d) above.
"Change of Control" means, with respect to the Company or any successor
Person permitted under the covenant "Merger, Consolidation or Sale of Assets,"
the occurrence of any of the following: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than
Apollo and its Affiliates, acquires "beneficial ownership" (as determined in
accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than 50% of the total outstanding shares of Voting Stock (as defined)
except to the extent that, and so long as, Apollo and its affiliates hold the
right, by voting power, contract or otherwise, to elect or designate, and do so
elect or designate, a majority of the Company's Board of Directors; (b) the
Company consolidates with or merges into any other corporation, or conveys,
transfers or leases all or substantially all of its assets to any person, or any
other corporation merges into the Company and, in the case of any such
transaction, the outstanding common stock of the Company is changed or exchanged
as a result, unless the
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shareholders of the Company immediately before such transaction own, directly or
indirectly, at least 51% of the outstanding shares of Voting Stock of the
corporation resulting from such transaction in substantially the same proportion
as their ownership of the Voting Stock immediately before such transaction
(except to the extent that, and so long as, Apollo and its affiliates hold the
right, by voting power or otherwise, to elect or designate, and do so elect or
designate, a majority of the Board of Directors of the corporation resulting
from such transaction); or (c) the first day on which more than a majority of
the members of the Board of Directors of the Company are not Continuing
Directors.
"Closing Date" means the date of the closing of the sale of the notes
initially issued pursuant to the Indenture.
"Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing such Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, (iii) Consolidated Interest Expense,
and (iv) depreciation and amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income, minus (v)
non-cash items increasing such Consolidated Net Income, in each case, for such
period without duplication on a consolidated basis and determined in accordance
with GAAP.
"Consolidated Interest Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Resort EBITDA of such Person for such
period to the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, redeems, repays or
otherwise retires any Indebtedness (other than revolving credit borrowings)
subsequent to the commencement of the period for which the Consolidated Interest
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"), then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption, repayment or retirement of Indebtedness as if the same had occurred
at the beginning of the applicable four-quarter reference period. In addition,
for purposes of making the computation referred to above, (i)(a) acquisitions
that have been made by the Company or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related financing
transactions and (b) other transactions consummated by the Company or any of its
Restricted Subsidiaries with respect to which pro forma effect may be given
pursuant to Article 11 of Regulation S-X under the Securities Act, in each case
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Resort EBITDA
for such reference period shall be calculated without giving effect to clause
(iii) of the proviso set forth in the definition of Consolidated Net Income,
(ii) the Consolidated Resort EBITDA attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded and (iii) the Con-
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solidated Interest Expense attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent (x)
that the obligations giving rise to such Consolidated Interest Expense will not
be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date, or (without duplication) (y) such Consolidated
Interest Expense is less than the Consolidated Resort EBITDA attributable to
such discontinued operations for the same period.
"Consolidated Interest Expense" means with respect to any Person for any
period the sum, without duplication, of (i) the consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period, (iii) any interest expense for such
period on Indebtedness of another Person that is guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is
called upon), in each case, on a consolidated basis and in accordance with GAAP,
and (iv) any Preferred Stock dividends paid in cash by the Company or any of its
Restricted Subsidiaries to a Person other than the Company or any of its
Restricted Subsidiaries, determined, in each case, on a consolidated basis and
in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the net income (but not loss) of any Person that is not a
Restricted Subsidiary of such Person or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash by such Person during such period to the
referent Person or a Restricted Subsidiary thereof, (ii) the net income (but not
loss) of any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that net income is not at the date of determination permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the consolidated stockholders' equity of such Person and its consolidated
Restricted Subsidiaries as of such date, less (without duplication) amounts
attributable to Disqualified Stock of such Person, in each case determined in
accordance with GAAP.
"Consolidated Resort EBITDA" means, with respect to any Person for any
period, the Consolidated EBITDA of such Person for such period minus
consolidated real estate revenue of such Person and its Restricted Subsidiaries
for such period plus consolidated real estate operating expenses of such Person
and its Restricted Subsidiaries for such period minus any portion of such
Consolidated
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EBITDA attributable to Unrestricted Subsidiaries of such Person for such period,
in each case as reported on such Person's consolidated statement of operations
and determined on a consolidated basis and in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on May 11, 1999 or (ii) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.
"Credit Agreement" means that certain Second Amended and Restated Credit
Agreement, dated as of November 13, 2001, by and among The Vail Corporation, the
Lenders named therein, Bank of America, N.A., as Agent, and Banc of America
Securities LLC, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date that is 91 days after the date on which the Notes
mature; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring on or prior to 91
days after the date on which the Notes mature shall not constitute Disqualified
Stock if (1) the "asset sale" or "change of control" provisions applicable to
such Capital Stock are not more favorable in any respect to the holders of such
Capital Stock than the terms applicable to the Notes and described under the
captions "Repurchase at the Option of Holders--Asset Sales" and "Repurchase at
the Option of Holders--Change of Control"; and (2) any such requirement only
becomes operative after compliance with such terms applicable to the Notes,
including the purchase of any Notes tendered pursuant thereto.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means (1) a public or private sale of Capital Stock of
the Company and (ii) the sale of other securities convertible or exchangeable
into Capital Stock (other than Disqualified Stock) of the Company; provided, an
Equity Offering shall be deemed to occur with respect to all or a portion of
such securities only upon the conversion or exchange of such securities into
Capital Stock.
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"Existing Indebtedness" means Indebtedness of the Company and the Company's
Subsidiaries (other than Indebtedness under the Credit Agreement and the
Existing Notes) in existence on May 11, 1999.
"Existing Note Indenture" means the Indenture dated as of May 11, 1999
among the Company, the trustee named therein and the guarantors named therein
relating to the Existing Notes, as supplemented on or before the Closing Date.
"Existing Notes" means the $200.0 million aggregate principal amount of 8
3/4% Senior Subordinated Notes due 2009 issued by the Company under the Existing
Note Indenture and outstanding on the Closing Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect in the United States from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor" means (i) each of the Company's Restricted Subsidiaries that is
a party to the Indenture on the date of execution and delivery of the Indenture
and (ii) each other Person that becomes a guarantor of the obligations of the
Company under the Notes and the Indenture from time to time in accordance with
the provisions of the Indenture described under the caption "Certain
Covenants--Additional Subsidiary Guarantees," and their respective successors
and assigns; provided, however, that "Guarantor" shall not include any Person
that is released from its Guarantee of the obligations of the Company under the
Notes and the Indenture as described under "Subsidiary Guarantees."
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap, cap or collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange or interest rates.
"Indebtedness" means, with respect to any Person, without duplication, (i)
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
bankers' acceptances or representing Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property (which purchase price
is due more than one year after taking title to such property) or services or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP; (ii) all indebtedness of others se-
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cured by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person the amount of such obligation, to the extent it is
without recourse to such Person, being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured); (iii) to
the extent not otherwise included, the Guarantee by such Person of any
Indebtedness of any other Person; provided, however, that (1) the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP; and (2) Indebtedness shall not include any liability
for federal, state, local or other taxes; and (iv) with respect to any
Restricted Subsidiary of the Company, Preferred Stock of such Person (in an
amount equal to the greater of (x) the sum of all obligations of such Person
with respect to redemption, repayment or repurchase thereof and (y) the book
value of such Preferred Stock as reflected on the most recent financial
statements of such Person).
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
excluding, however, trade accounts receivable and bank deposits made in the
ordinary course of business consistent with past practice. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted Subsidiary of the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the penultimate paragraph of the
covenant described above under the caption "Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional, sale or other title retention agreement, any lease
in the nature thereof, and any option or other agreement to sell or give a
Lien).
"Make-Whole Amount" means, with respect to any note, an amount equal to the
excess, if any, of (a) the present value of the remaining principal, premium, if
any, and interest (other than accrued interest otherwise payable upon
redemption) payments that would be payable with respect to such note if such
note were redeemed on May 15, 2004, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (b) the principal amount of such note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to May 15, 2004.
"Make-Whole Price" means, with respect to any Note, the greater of (a) the
sum of the principal amount of and Make-Whole Amount with respect to such Note,
and (b) the redemption price of such note on May 15, 2004.
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"Net Income" means, with respect to any Person, the net income (or loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (or
loss), together with any related provision for taxes on such gain (or loss),
realized in connection with (a) any Asset Sale (including, without limitation,
dispositions pursuant to Sale and Leaseback Transactions) or (b) the disposition
of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (or loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (or loss).
"Net Proceeds" means the aggregate cash proceeds or Cash Equivalents
proceeds received by the Company or any of its Restricted Subsidiaries in
respect of any Asset Sale (including, without limitation, any cash received upon
the sale or other disposition of any non-cash consideration received in any
Asset Sale, but only as and when received, and any proceeds deemed to be cash or
Cash Equivalents pursuant to clause (b) of the first paragraph under the caption
"Asset Sales"), net of (i) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result thereof,
(ii) taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), (iii)
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of such Asset Sale, (iv) all
distributions and other payments required to be made to minority interest
holders of a Restricted Subsidiary or joint venture as a result of such Asset
Sale, and (v) any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"Obligations" means any principal, interest (including post-petition
interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Permitted Holder" means Apollo Advisors, L.P., a Delaware limited
partnership, or any fund, investment vehicle or account managed, advised or
controlled by Apollo Advisors, L.P., or any of its Affiliates.
"Permitted Investments" means (i) any Investment in the Company or a
Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company and, to the extent required under the
Indenture, a Guarantor or (b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company; (iv) any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the covenant
described above under the caption "Repurchase at the Option of Holders--Asset
Sales"; (v) any acquisition of assets received solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) any Investment in a Similar Business (including any Investment made in any
Unrestricted Subsidiaries in a Similar Business) if, after giving effect to such
Investment, the aggregate amount of all Investments made after May 11, 1999
pursuant to this clause (vi) then constituting Unrestricted Investments
Outstanding does not exceed the greater of (x) $75 million and (y) 7.5% of Total
Consolidated Assets of the Company at the time of such Investment; (vii)
contributions of Real
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Estate Held for Sale to Real Estate Joint Ventures; provided, in the case of any
Investment made pursuant to this clause (vii) or the preceding clause (vi), that
after giving effect to such Investment (a) no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof, and (b)
the Company would, at the time of such Investment and after giving pro forma
effect thereto as if such Investment had been made at the beginning of the
applicable four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test set forth in the first paragraph of the covenant described under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock"; and (viii)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries.
"Permitted Liens" means (i) Liens in favor of the Company or any of its
Restricted Subsidiaries; (ii) Liens securing Senior Debt of the Company or any
Restricted Subsidiary of the Company; (iii) Liens on property or Equity
Interests of a Person existing at the time such Person is merged into or
consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets or Equity Interests
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such acquisition; (v) Liens
incurred or pledges and deposits made in connection with worker's compensation,
unemployment insurance and other social security benefits, statutory
obligations, bid, surety or appeal bonds, performance bonds or other obligations
of a like nature incurred in the ordinary course of business (other than
contracts in respect of borrowed money and other Indebtedness); (vi) Liens
existing on May 11, 1999; (vii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefore; (viii) Liens
securing the Notes or any Guarantee thereof; (ix) Liens securing Permitted
Refinancing Indebtedness to the extent that the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded was permitted to be secured
by a Lien; provided that such Liens do not extend to any assets other than those
that secured the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (x) Liens incurred in the ordinary course of business of
the Company or any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Restricted Subsidiary; (xi) Liens securing Capital Lease
Obligations; provided that such Liens do not extend to any property or assets
which are not leased property subject to such Capitalized Lease Obligation;
(xii) judgment liens not giving rise to an Event of Default so long as such Lien
is adequately bonded and any appropriate legal proceedings that may have been
duly initiated for the review of such judgment, degree or order shall not have
been finally terminated or the period within such proceedings may be initiated
shall not have expired; (xiii) Liens securing obligations of the Company under
Hedging Obligations; (xiv) purchase money Liens securing Purchase Money
Obligations; provided that the related Indebtedness shall not be secured by any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets so acquired pursuant to such Purchase Money Obligation; (xv)
Liens upon specific
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items of inventory or other goods and proceeds of any Person securing such
Person's obligations in respect of bankers' acceptances issued or created for
the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods; (xvi) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Restricted Subsidiaries, including
rights of offset and set-off; (xvii) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; provided that such Liens
do not extend to any property or assets which are not leased property subject to
such leases or subleases; and (xviii) Liens created for the benefit of all of
the Notes and/or any Guarantees thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Hedging Obligations and other than
Indebtedness permitted to be incurred pursuant to clause (i), clause (iv) or
clause (vii) of the second paragraph under "--Incurrence of Indebtedness and
Issuance of Preferred Stock") of the Company or any of its Restricted
Subsidiaries; provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus premium and accrued
interest on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date equal to or later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes or any Guarantee thereof, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Notes or such Guarantee
on terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary that is an obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means an individual, limited or general partnership, corporation,
limited liability company, association, unincorporated organization, trust,
joint stock company, joint venture or other entity, or a government or any
agency or political subdivisions thereof.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Purchase Money Obligations" of any Person means any obligations of such
Person or any of its Subsidiaries to any seller or any other person incurred or
assumed in connection with the purchase of real or personal property to be used
in the business of such person or any of its subsidiaries within 180 days of
such purchase.
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"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 on May 11, 1999 or thereafter
acquired as Real Estate Held for Sale.
"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).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation was in effect on
the date of the Existing Note Indenture.
"Similar Business" means any business conducted by the Company or any of
its Subsidiaries as of May 11, 1999 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 or a
reasonable extension, development or expansion thereof or is reasonably
ancillary thereto.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of at least a majority of the
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Total Consolidated Assets" means, with respect to any Person as of any
date, the book value of the assets of such Person and its Restricted
Subsidiaries as shown on the most recent consolidated balance sheet of such
Person.
"Treasury Rate" means, at any time of computation, the yield to maturity at
such time (as compiled by and published in the most recent statistical release
(or any successor release) of the Fed-
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eral Reserve Bank of New York, which has become publicly available at least two
business days prior to the date of the redemption notice or, if such statistical
release (or successor release) is no longer published, any generally recognized
publicly available source of similar market data) of United States Treasury
securities with a constant maturity most nearly equal to the Make-Whole Average
Life; provided, however, that if the Make-Whole Average Life is not equal to the
constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Make-Whole Average Life is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Unrestricted Investments Outstanding" means, at any time of determination,
in respect of all Permitted Investments made pursuant to clause (vi) of the
definition of the term Permitted Investments, the excess, if any, of (i) the sum
of all Permitted Investments theretofore made by the Company or any Restricted
Subsidiary on or after May 11, 1999 pursuant to clause (vi) of the definition of
Permitted Investments over (ii) the amount of all cash, and the fair market
value of any assets or property, distributed as dividends and distributions to
the Company or a Restricted Subsidiary of the Company (to the extent that the
Company does not elect to include the amount of such dividends and distributions
in the computation of Consolidated Net Income pursuant to the parenthetical of
clause (i) of the definition thereof at the time of determination), and all
repayments of the principal amount of loans or advances, the net cash proceeds,
and the fair market value of assets or property, received from sales or
transfers, in respect of such Investments to the Company or any of its
Restricted Subsidiaries and any other reduction made in cash of such Investments
in such Person.
"Unrestricted Subsidiary" means Boulder/Beaver, LLC, Colter Bay
Corporation, Eagle Park Reservoir Company, Forest Ridge Holdings, Inc., Gros
Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake Lodge, Inc.,
Mountain Thunder, Inc., Resort Technology Partners, LLC, RT Partners, Inc., SSI
Venture, LLC, Vail Associates Investments, Inc. and VR Holdings, Inc. and any
other Subsidiary that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding comply with the
covenant set forth under "Transactions with Affiliates."
"Voting Stock" of any Person as of any date means classes of the Capital
Stock of such Person that is at the time entitled to vote in the election of at
least a majority of the directors, managers, trustees or other governing body of
such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
New Credit Facility
On November 13, 2001, we entered into a revolving Credit Facility (the
"Credit Facility") to replace our existing Credit Facility. Our subsidiary, The
Vail Corporation, is the borrower under the Credit Facility, with Bank of
America, N.A., as agent (the "Agent"), certain other financial institutions, as
lenders, and Banc of America Securities LLC. The Credit Facility provides for
debt financing up to an aggregate principal amount of $421.0 million. The
proceeds of the loans made under the Credit Facility may be used to fund our
working capital needs, capital expenditures, permitted investments and other
general corporate purposes, including the issuance of letters of credit.
Borrowings under the Credit Facility bear interest annually at the
borrower's option at the rate of (i) LIBOR (the London interbank offered rate
for a given interest period) plus a margin (ranging from 1.50% to 2.50%) or (ii)
the Base Rate (defined as the higher of the Federal Funds Rate, as published by
the Federal Reserve Bank of New York, plus 0.50%, or the Agent's prime lending
rate) plus a margin of up to 0.75%. In addition, the borrower must pay a fee on
the face amount of each commercial letter of credit equal to 1/8 of 1.0% of the
actual daily available amount under each such letter of credit and for each
standby letter of credit the borrower must pay a rate equal to the applicable
margin for LIBOR loans times the actual daily amount available to be drawn under
such letter of credit. The borrower must also pay a quarterly unused commitment
fee ranging from 0.35% to 0.50%. The interest margins and fees described in this
paragraph fluctuate based upon the ratio of Funded Debt (as defined) to Adjusted
EBITDA (as defined). The Credit Facility terminates on November 13, 2004.
The Vail Corporation's obligations under the Credit Facility are guaranteed
by us and certain of our subsidiaries. In addition, The Vail Corporation's
obligations under the Credit Facility are secured by a pledge of all of the
capital stock of The Vail Corporation and substantially all of its subsidiaries.
The Credit Facility contains various covenants that limit, among other
things, subject to certain exceptions, indebtedness, liens, transactions with
affiliates, loans, advances and investments, acquisitions, mergers, and
dissolutions, sales of assets, management fees and distributions and certain
other business activities. The Credit Facility also contains certain financial
covenants, including Funded Debt to Adjusted EBITDA, Senior Debt to EBITDA, a
Minimum Fixed Charge Coverage Ratio, an Interest Coverage Ratio and limitations
on the types and amounts of Capital Expenditures (each as defined in the Credit
Facility).
Industrial Revenue Bonds
Pursuant to an indenture (the "IRB Indenture") dated as of April 1, 1998,
between Eagle County, Colorado, as issuer (the "IRB Issuer"), and U.S. Bank
National Association, as trustee (the "IRB Trustee"), $41.2 million aggregate
principal amount of industrial revenue bonds (the "IRBs") were issued for the
purpose of providing funds to The Vail Corporation d/b/a Vail Associates, Inc.
("VAI") to refinance certain existing industrial revenue bonds. Pursuant to a
financing agreement (the "IRB Agreement") dated as of April 1, 1998, among the
IRB Issuer and VAI, the IRB Issuer
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loaned to VAI the proceeds of the issuance of the IRBs and VAI agreed to make
payments in the aggregate amount, bearing interest at rates and payable at
times, corresponding to the principal amount of, interest rates on and due dates
under the IRBs. The obligations of VAI under the IRB Indenture, the IRB
Agreement and the IRBs are secured by certain multi-party agreements between
VAI, the IRB Trustee and the U.S. Forest Service (the "Permit Agreements")
relating to the Vail Mountain and Beaver Creek Mountain Forest Service Permits
(the "Permits"). The Permit Agreements provide that the U.S. Forest Service will
cooperate with the IRB Trustee in obtaining a new holder of the Permits
(acceptable to the U.S. Forest Service in its sole discretion) in the event of a
default by VAI with respect to its obligations under the IRBs. However, the
Permit Agreements expressly provide that no security interest is created in or
collateral assignment made with respect to the Permits.
The IRBs mature, subject to prior redemption, on August 1, 2019. The IRBs
bear interest at the rate of 6.95% per annum, with interest payable
semi-annually on February 1 and August 1. The IRBs are subject to redemption at
the option of VAI, at any time and from time to time on or after August 1, 2008,
and are subject to mandatory redemption if interest payments on the IRBs lose
their tax exempt status. Furthermore, in the event that VAI or one of its
affiliates incurs additional indebtedness with (1) senior or superior rights to
the Permits or (2) equivalent rights with respect to the Permits above an
aggregate principal amount of $250,000,000 (including the unpaid principal
amount of the IRBs) the IRBs will bear an interest rate of 7.45% per annum or,
under certain limited circumstances, may be subject to mandatory redemption.
We also have indebtedness in connection with $22.0 million of outstanding
industrial revenue bonds which we assumed in connection with our acquisition of
Keystone and Breckenridge. These IRBs consist of two series of refunding bonds
which were originally issued to finance the cost of sports and recreational
facilities at Keystone. The Series 1990 Sports Facilities Refunding Revenue
Bonds have an aggregate outstanding principal amount of $19.0 million. The
principal matures in installments in 2006 and 2008. These bonds bear interest at
a rate of 7.75% for bonds maturing in 2006 and 7.875% for bonds maturing in
2008. The Series 1991 Sports Facilities Refunding Revenue Bonds have an
aggregate outstanding principal amount of $3 million and bear interest at 7.125%
for bonds maturing in 2002 and 7.375% for bonds maturing in 2010.
SSI Venture Credit Facility
SSI Venture has a credit facility that provides debt financing up to an
aggregate principal amount of $25 million. The SSI Venture Credit Facility
consists of (i) a $15 million Tranche A Revolving Credit Facility and (ii) a $10
million Tranche B Term Loan Facility (of which $7.3 million was outstanding as
of October 31, 2001). The SSI Venture Credit Facility matures on the earlier of
December 31, 2003 or the termination date of the Credit Facility discussed
above. The Vail Corporation guarantees the SSI Venture Credit Facility. Minimum
amortization under the Tranche B Term Loan Facility is $1 million in each of
fiscal 2002 and 2003 and the outstanding due on the termination date. The SSI
Venture Credit Facility bears interest annually at the rates prescribed above
for the Credit Facility. SSI Venture also pays a quarterly unused commitment fee
at the same rates as the unused commitment fee for the Credit Facility.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. We have agreed that for a period of 30 days after effectiveness of
the exchange offer registration statement, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of exchange notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. By
acceptance of the exchange offer, each broker-dealer that receives exchange
notes pursuant to the exchange offer hereby agrees to notify us prior to using
this prospectus in connection with the sale or transfer of exchange notes, and
acknowledges and agrees that, upon receipt of notice from us of the happening of
any event which makes any statement in this prospectus untrue in any material
respect or which requires the making of any changes in this prospectus in order
to make the statements herein not misleading (which notice we agree to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of this
prospectus until we have amended or supplemented the prospectus to correct such
misstatement or omission and have furnished copies of the amended or
supplemented prospectus to such broker-dealer.
For a period of 30 days after effectiveness of the exchange offer
registration statement, we will promptly upon request send additional copies of
this prospectus and any amendment or supplement thereto to any broker-dealer
that requests such documents in the letter of transmittal. We have agreed to pay
all expenses incident to the exchange offer (including the expenses of any one
special counsel for the Holders of the Notes) other than commissions or
concessions of any brokers or dealers and will indemnify the Holders of the
Notes participating in the exchange offer (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a discussion of certain U.S. federal income tax and estate
tax consequences of the ownership and disposition of the exchange notes by
holders who acquired the exchange notes in the exchange offer. For purposes of
this discussion, a "U.S. Holder" is a Holder that is for U.S. federal income tax
purposes an individual who is a citizen or resident of the United States, a
corporation that is organized in or under the laws of the United States or any
state thereof, an estate the income of which is includable in gross income for
U.S. tax purposes regardless of its source or, a trust (1) the administration of
which is subject to the primary supervision of a United States court and as to
which one or more United States persons have the authority to control all
substantial decisions of the trust or (2) which has made a valid election to be
treated as a U.S. person. A "Non-U.S. Holder" is a Holder that for U.S. federal
income tax purposes is a non-resident alien or a corporation, estate or trust
that is not a U.S. Holder. For United States federal income tax purposes, income
earned through a foreign or domestic partnership or similar entity is generally
attributed to the entity's owners. This summary applies only to exchange notes
held as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"). It does not discuss all of the
tax consequences that may be relevant to a holder in light of its particular
circumstances or to holders subject to special rules, such as tax-exempt
organizations, dealers in securities or foreign currencies, financial
institutions, partnerships or other pass-through entities, life insurance
companies, or regulated investment companies, or to holders whose functional
currency is not the United States dollar or who hold the exchange notes as part
of a synthetic security, conversion transaction, or certain "straddle" or
hedging transactions.
The U.S. federal income tax and estate tax considerations set forth below
are based upon the Code and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified, possibly with retroactive effect, so as to result in U.S. federal
income tax consequences different from those presented below.
Exchange Offer. The exchange of outstanding notes for exchange notes will
not be a taxable event for federal income tax purposes. A holder will not be
recognize any taxable gain or loss as a result of exchanging outstanding notes
for exchange notes, and the holder will have the same tax basis and holding
period in the exchange notes as he had in the outstanding notes immediately
before exchange.
U.S. Holders
Stated Interest. Stated interest on an exchange note will be taxable to a
U.S. Holder as ordinary interest income in accordance with the U.S. Holder's
method of accounting for U.S. federal income tax purposes.
Original Issue Discount. The outstanding notes were issued with OID for
U.S. federal income tax purposes. Because the exchange notes will be treated as
a continuation of the U.S. Holder's investment in the outstanding notes, the
exchange notes will also be considered as issued with OID. OID is the excess of
(i) the stated redemption price at maturity of a note over (ii) its issue price.
The
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amount of OID is deemed to be zero if such excess is less than a de minimis
amount (generally 1/4 of 1% of the note's stated redemption price at maturity
multiplied by the number of complete years to its maturity from its issue date).
The "stated redemption price at maturity" of a note is the sum of all
payments provided by the instrument, other than qualified stated interest. The
"issue price" of a note is the first price at which a substantial amount of the
notes are sold to the public (excluding sales to bond houses, brokers or similar
persons or organizations acting in the capacity as underwriters, placement
agents or wholesalers). The term "qualified stated interest" generally means
stated interest that is unconditionally payable in cash or property (other than
debt instruments of the issuer) at least annually at a single fixed rate. The
stated interest payable on the exchange notes will be qualified stated interest
and the amount of OID on the exchange notes will not be de minimis.
Since the exchange notes will be issued with OID in excess of a de minimis
amount, a U.S. Holder will be required to include OID in gross income as
ordinary interest as it accrues under a constant yield method in advance of
receipt of the cash payments attributable to such income, regardless of such
U.S. Holder's regular method of accounting. In general, the amount of OID
included in income by the holder of a note is the sum of the daily portions of
OID for each day during the taxable year (or portion of the taxable year) on
which such holder held such note, including the purchase date and excluding the
disposition date. The "daily portion" is determined by allocating the OID for an
accrual period equally to each day in that accrual period. The "accrual period"
for a note may be of any length and may vary in length over the term of a note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the first or final day of an
accrual period.
The amount of OID for an accrual period is generally equal to the excess of
(i) the product of the note's adjusted issue price at the beginning of such
accrual period and its yield to maturity over (ii) the qualified stated interest
allocable to such accrual period. The "adjusted issue price" of a note at the
beginning of any accrual period is the sum of the issue price of the note plus
the amount of OID allocable to all prior accrual periods minus the amount of any
prior payments on the note (other than payments of qualified stated interest).
Under those rules, a U.S. Holder generally will have to include in income
increasingly greater amounts of OID in successive accrual periods. The "yield to
maturity" of a note is the discount rate that, when used in computing the
present value of all payments to be made on a note, produces an amount equal to
the issue price of the note.
Sale, Exchange or Redemption of a Note. A U.S. Holder will recognize gain
or loss, if any, on the sale, redemption or other taxable disposition of an
exchange note in an amount equal to the difference, if any, between the U.S.
Holder's adjusted tax basis in the exchange note and the amount received
therefor (other than amounts attributable to accrued and unpaid interest on the
notes, which will be taxable as ordinary income unless previously included in
income). A U.S. Holders adjusted tax basis in a exchange note generally will
equal the cost of the outstanding Note which it was exchanged to the U.S. Holder
increased by any OID included in income through the date of disposition and
decreased by any payments received on the notes (other than payments of
qualified stated interest). Subject to the market discount rules noted under
"--U.S. Holders--Market Discount and Bond Premium" below, gain or loss, if any,
recognized on the sale, redemption or other taxable disposition
-80-
of a exchange note generally should be long-term capital gain or loss if the
exchange note was held as a capital asset and was held for more than one year as
of the date of disposition.
Market Discount and Acquisition Premium. If a U.S. Holder acquires an note
(or purchased an outstanding Note for which the exchange not was exchanged
subsequent to its original issuance) and the note's adjusted issue price at the
time of purchase exceeds the U.S. Holder's initial tax basis in the note by more
than a de minimis amount, the U.S. Holder will be treated as having acquired the
note at a "market discount" equal to such excess. In addition, if a U.S.
Holder's initial tax basis in a note exceeds the adjusted issue price of the
note, the U.S. Holder will generally be treated as having acquired the note with
"premium" or "acquisition premium" in an amount equal to such excess. U.S.
Holders should consult their tax advisors regarding the existence, if any, and
the tax consequences of market discount, premium and acquisition premium.
Backup Withholding and Information Reporting. A U.S. Holder of an note may
be subject to information reporting and possible backup withholding. If
applicable, backup withholding would apply at a rate of 30.5% (30% after
December 31, 2001 and subject to periodic reductions through 2006) with respect
to interest on (including OID), or the proceeds of a sale, exchange, redemption,
retirement, or other disposition of, such exchange note, unless such U.S. Holder
(i) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable backup withholding rules.
We will furnish annually to the IRS and to record holders of the notes (to
whom it is required to furnish such information) information relating to the
amount of OID and interest, as applicable.
Non-U.S. Holders
The Exchange Notes. The payment of interest (including OID) on an exchange
note will generally not be subject to U.S. federal income tax (or to withholding
of tax), if (1) the interest and/or OID is not effectively connected with the
conduct of a trade or business within the United States or, if a tax treaty
applies, the interest is not attributable to a permanent establishment or fixed
base in the United States, (2) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of our stock entitled to vote, (3) the Non-U.S. Holder is not a controlled
foreign corporation that is related to us actually or constructively through
stock ownership and (4) either (i) the beneficial owner of the exchange note
certifies to us or our agent, under penalties of perjury, that it is not a U.S.
Holder and provides its name and address on U.S. Treasury Form W-8 BEN (or on a
suitable substitute form) or (ii) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the
exchange note certifies under penalties of perjury that such a Form W-8 BEN (or
suitable substitute form) has been received from the beneficial owner or a
qualified intermediary by it and furnishes the payer with a copy thereof.
A Non-U.S. Holder will generally not be subject to U.S. federal income tax
on any gain realized in connection with the sale, exchange, retirement, or other
disposition of an exchange note, unless (i) the gain is effectively connected
with a trade or business of the Non-U.S. Holder in the United States (or, if a
tax treaty applies, the gain is attributable to a permanent establishment or a
fixed base
-81-
in the United States); (ii) in the case of a Non-U.S. Holder who is an
individual and holds the exchange note as a capital asset, such holder is
present in the United States for 183 or more days in the taxable year of the
disposition and either (a) has a "tax home" for United States federal income tax
purposes in the United States or (b) has an office or other fixed place of
business in the United States to which the gain is attributable; or (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of United States
federal income tax laws applicable to certain United States expatriates.
An exchange note held directly by an individual who, at the time of death,
is not a citizen or resident of the United States should not be includable in
such individual's gross estate for U.S. estate tax purposes as a result of such
individual's death if the individual does not actually or constructively own 10%
or more of the total combined voting power of all classes of our stock entitled
to vote and, at the time of the individual's death, if payments with respect to
such exchange note would not have been effectively connected with the conduct by
such individual of a trade or business in the United States. Even if the
exchange note was includable in the gross estate under the foregoing rules, the
exchange note may be excluded under the provisions of an applicable estate tax
treaty.
Backup Withholding and Information Reporting. We must report annually to
the IRS and to each Non-U.S. Holder the amount of interest paid on an exchange
note, regardless of whether withholding was required, and any tax withheld with
respect to the interest. Under the provisions of an income tax treaty and other
applicable agreements, copies of these information returns may be made available
to the tax authorities of the country in which the Non-U.S. Holder resides.
Interest payments on the exchange notes made by us or any paying agent of
ours to Non-U.S. Holders generally will not be subject to "backup withholding"
if the certification described under "--Non-U.S. Holders--The Exchange Notes"
above is received or an exemption is otherwise established, provided in each
case that the payer does not have actual knowledge that the holder is a U.S.
Holder.
Payment of proceeds from a sale of an exchange note to or through the U.S.
office of a broker is subject to information reporting and backup withholding
unless the Non-U.S. Holder certifies as to its non-U.S. status or otherwise
establishes an exemption from information reporting and backup withholding.
Payment outside the United States of the proceeds of the sale of an exchange
note to or through a foreign office of a "broker" (as defined in applicable U.S.
Treasury Regulations) should not be subject to information reporting or backup
withholding, except that if the broker is a U.S. person, a controlled foreign
corporation for U.S. federal income tax purposes or a foreign person 50% or more
of whose gross income is from a U.S. trade or business, information reporting
should apply to such payment unless the broker has documentary evidence in its
records that the beneficial owner is not a U.S. Holder and certain other
conditions are met or the beneficial owner otherwise establishes an exemption.
THE U.S. FEDERAL INCOME TAX AND ESTATE TAX DISCUSSION SET FORTH ABOVE IS
INTENDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO A PARTICULAR
HOLDER'S SITUATION. PERSONS CONSIDERING A PURCHASE OF THE NOTES SHOULD CONSULT
THEIR OWN TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF PURCHASING,
OWNING AND DISPOSING OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
LOCAL OR FOREIGN
-82-
LAWS AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES (POSSIBLY INCLUDING
RETROACTIVE CHANGES) IN U.S. FEDERAL AND OTHER TAX LAWS.
LEGAL MATTERS
Certain legal matters with respect to the exchange notes and the guarantees
will be passed upon for us by Cahill Gordon & Reindel, New York, New York and by
Martha D. Rehm, Esq., General Counsel to the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of Vail Resorts, Inc. and
subsidiaries as of July 31, 2000 and 2001, included in our Annual Report on Form
10-K incorporated by reference herein have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, which is incorporated by reference in reliance upon the authority of
said firm as experts in giving said report. The financial statements of Olympus
Rancho Mirage, L.P. and Vail Marriott Mountain Resort, included in the
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said rerpots.
-83-
INDEX TO FINANCIAL STATEMENTS
Olympus Rancho Mirage, L.P.
Report of Independent Public Accountants..................................... F-2
Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000....
F-3
Statements of Operations for the Nine Months Ended September 30, 2001
(unaudited) and 2000 (unaudited) and the Years Ended December 31, 2000
and 1999................................................................. F-4
Statements of Changes in Partners' Capital for the Nine Months Ended
September 30, 2001 (unaudited) and the Years Ended December 31, 2000 and
1999..................................................................... F-5
Statements of Cash Flows for the Nine Months Ended September 30, 2001
(unaudited) and 2000 (unaudited) and the Years Ended December 31, 2000
and 1999................................................................. F-6
Notes to Financial Statements................................................ F-7
Vail Marriott Mountain Resort
Report of Independent Public Accountants..................................... F-15
Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000....
F-16
Statements of Operations and Owner's Capital for the Nine Months Ended
September 30, 2001 (unaudited) and 2000 (unaudited) and the Year Ended
December 31, 2000........................................................ F-17
Statements of Cash Flows for the Nine Months Ended September 30, 2001
(unaudited) and 2000 (unaudited) and the Year Ended December 31,
2000. F-18
Notes to Financial Statements................................................ F-19
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Olympus Rancho Mirage, L.P.:
We have audited the accompanying balance sheets of Olympus Rancho Mirage,
L.P. (a Delaware limited partnership) (the "Partnership") as of December 31,
2000 and 1999, and the related statements of operations, changes in partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Olympus Rancho Mirage, L.P.
as of December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
The financial statements of Olympus Rancho Mirage, L.P. as of September 30,
2001, and for the nine months ended September 30, 2001 and 2000, were not
audited by us and, accordingly, we do not express an opinion on them.
ARTHUR ANDERSEN LLP
Dallas, Texas,
January 26, 2001.
F-2
OLYMPUS RANCHO MIRAGE, L.P.
BALANCE SHEETS
September 30, December 31,
2001 2000 1999
--------------- --------------- --------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 8,486,538 $ 7,870,401 $ 5,854,984
Accounts receivable, net 640,701 2,284,849 1,154,244
Inventories 301,888 402,570 405,032
Prepaid expenses 149,718 235,084 169,519
--------------- --------------- --------------
Total current assets 9,578,845 10,792,904 7,583,779
--------------- --------------- --------------
PROPERTY AND EQUIPMENT:
Land 3,033,988 3,033,988 3,033,988
Building and improvements 18,765,281 18,765,281 18,765,281
Furniture, fixtures, and equipment 12,830,003 11,470,117 10,356,277
Construction in progress 5,046,266 4,732,643 4,071,974
--------------- --------------- --------------
39,675,538 38,002,029 36,227,520
Accumulated depreciation (13,219,663) (12,030,513) (10,056,649)
--------------- --------------- --------------
Total property and equipment, net 26,455,875 25,971,516 26,170,871
--------------- --------------- --------------
RESTRICTED CASH 535,700 447,903 649,538
--------------- --------------- --------------
Total assets $ 36,570,420 $ 37,212,323 $ 34,404,188
=============== =============== ==============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,022,234 $ 2,783,167 $ 2,089,158
Accrued interest 70,309 113,839 102,714
Advance deposits 603,780 929,622 880,450
Current portion of capital lease obligation 86,275 - -
Mortgage note payable 12,824,000 13,064,000 13,328,000
--------------- --------------- --------------
Total current liabilities 14,606,598 16,890,628 16,400,322
COMMITMENTS AND CONTINGENCIES
LONG-TERM LIABILITIES:
Capital lease obligation 648,820 - -
--------------- --------------- --------------
Total liabilities 15,255,418 16,890,628 16,400,322
--------------- --------------- --------------
PARTNERS' CAPITAL 21,315,002 20,321,695 18,003,866
--------------- --------------- --------------
Total liabilities and partners' capital $ 36,570,420 $ 37,212,323 $ 34,404,188
=============== =============== ==============
The accompanying notes are an integral part of these statements.
F-3
OLYMPUS RANCHO MIRAGE, L.P.
STATEMENTS OF OPERATIONS
For the Nine Months Ended For the Years Ended
September 30, December 31,
2001 2000 2000 1999
------------ -------------- -------------- --------------
(Unaudited) (Unaudited)
REVENUES:
Rooms $ 10,234,083 $ 10,075,272 $ 13,322,420 $ 12,404,137
Food and beverage 7,542,518 8,608,317 11,952,599 11,374,347
Other departments 2,872,450 3,121,752 4,190,744 4,150,511
------------ -------------- -------------- --------------
Total revenues 20,649,051 21,805,341 29,465,763 27,928,995
------------ -------------- -------------- --------------
OPERATING COSTS AND EXPENSES:
Departmental costs and expenses-
Rooms 2,945,643 2,932,266 3,864,319 3,845,571
Food and beverage 5,843,334 6,112,656 8,477,422 8,688,149
Other departments 1,661,304 1,807,796 2,364,620 2,379,289
OTHER OPERATING EXPENSES:
Administrative and general 1,526,610 1,583,993 2,121,098 2,086,075
Marketing 1,938,853 2,071,398 2,780,479 2,410,058
Property operation and maintenance 945,225 907,471 1,216,882 1,142,086
Utilities 632,745 440,250 593,251 544,181
Management fees 417,737 517,449 855,754 765,062
Administrative fee 155,376 150,401 203,593 207,200
Property taxes and insurance 798,294 762,493 1,037,803 1,098,875
Other 730,766 341,497 584,947 418,342
Depreciation and amortization 1,189,150 1,605,865 1,973,864 2,565,323
------------ -------------- -------------- --------------
Total operating costs and
expenses 18,785,037 19,233,535 26,074,032 26,150,211
------------ -------------- -------------- --------------
INCOME FROM OPERATIONS 1,864,014 2,571,806 3,391,731 1,778,784
INTEREST EXPENSE 870,707 859,241 1,073,902 1,113,928
------------ -------------- -------------- --------------
NET INCOME $ 993,307 $ 1,712,565 $ 2,317,829 $ 664,856
============ ============== ============== ==============
The accompanying notes are an integral part of these statements.
F-4
OLYMPUS RANCHO MIRAGE, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
General Limited
Partners Partners Total
-------- -------- -----
BALANCE, December 31, 1998 $ 173,390 $ 17,165,620 $ 17,339,010
Net income 6,649 658,207 664,856
------------- -------------- ----------------
BALANCE, December 31, 1999 180,039 17,823,827 18,003,866
Net income 23,178 2,294,651 2,317,829
------------- -------------- ----------------
BALANCE, December 31, 2000 203,217 20,118,478 20,321,695
Net income (unaudited) 9,933 983,374 993,307
------------- -------------- ----------------
BALANCE, September 30, 2001 (unaudited) $ 213,150 $ 21,101,852 $ 21,315,002
============= ============== ================
The accompanying notes are an integral part of these statements.
F-5
OLYMPUS RANCHO MIRAGE, L.P.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended For the Years Ended
September 30, December 31,
----------------------------- ------------------------------
2001 2000 2000 1999
------------ ------------ ------------ -------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 993,307 $ 1,712,565 $ 2,317,829 $ 664,856
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation expense 1,189,150 1,605,865 1,973,864 2,457,403
Amortization of deferred costs and
other assets - - - 107,920
(Increase) decrease in accounts
receivable, net 1,644,148 (230,856) (1,130,605) 1,008,763
(Increase) decrease in inventories 100,682 16,605 2,462 (97,942)
(Increase) decrease in prepaid expenses 85,366 (200,274) (65,565) 33,811
Increase in other assets - - - 205,140
Increase (decrease) in accounts payable
and accrued liabilities and accrued (1,804,463) 95,146 705,134 418,996
interest
Increase (decrease) in advance deposits (325,842) (163,832) 49,172 168,936
------------ ------------ ------------ -------------
Net cash provided by operating
activities 1,882,348 2,835,219 3,852,291 4,967,883
------------ ------------ ------------ -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property and equipment (885,709) (1,247,954) (1,774,509) (2,725,499)
(Increase) decrease in restricted cash (87,797) 113,976 201,635 2,805
------------ ------------ ------------ -------------
Net cash used in investing activities (973,506) (1,133,978) (1,572,874) (2,722,694)
------------ ------------ ------------ -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on mortgage note payable (240,000) (216,000) (264,000) (288,000)
Payments on capital lease obligation (52,705) - - -
------------ ------------ ------------ -------------
Net cash used in financing activities (292,705) (216,000) (264,000) (288,000)
------------ ------------ ------------ -------------
NET INCREASE IN CASH AND 616,137 1,485,241 2,015,417 1,957,189
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
beginning of period 7,870,401 5,854,984 5,854,984 3,897,795
------------ ------------ ------------ -------------
CASH AND CASH EQUIVALENTS,
end of period $ 8,486,538 $ 7,340,225 $ 7,870,401 $ 5,854,984
============ ============ ============ =============
CASH PAID FOR INTEREST $ 914,237 $ 853,252 $ 1,062,777 $ 1,145,119
============ ============ ============ =============
PROPERTY AND EQUIPMENT ADDITIONS FINANCED
THROUGH A CAPITAL LEASE
$ 787,800 $ - $ - $ -
============ ============ ============ =============
The accompanying notes are an integral part of these statements.
F-6
OLYMPUS RANCHO MIRAGE, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ORGANIZATION:
Olympus Rancho Mirage, L.P. (the "Partnership"), was formed on January 17,
1995, for the purpose of owning and operating the Ritz-Carlton, Rancho Mirage
Hotel (the "Hotel") in Rancho Mirage, California.
The Partnership was originally formed with one general partner and three
limited partners. These partners made cash contributions to fund all of the
working capital assets and liabilities of the Hotel and initial operations of
the Hotel. The partners contributed cash of $12,010,200 and funded a loan in the
amount of $15,000,000 (the "Partner Loan"). On August 3, 1995, $14,000,000 of
the Partner Loan was repaid with proceeds from a mortgage note payable (Note 4).
The remaining $1,000,000 Partner Loan balance was converted to capital.
Since the initial acquisition, the partners have made additional cash
contributions totaling $1,375,121.
During 1995, the partnership agreement was amended to provide for the
admission of an additional general partner and additional limited partners, the
withdrawal of certain limited partners, and granting of interests in residual
profits for services rendered by certain partners. In connection with the
amendment, transfers of interests occurred, in addition to and including the
transfer of interests in residual profits, all of which were effective January
17, 1995.
Effective March 29, 1996, the partnership agreement was amended to provide
for the admission of an additional limited partner. In connection with the
amendment, additional transfers of interests occurred, including the transfer of
residual profits interests. Effective as of the amendment date, the Partnership
consists of two general partners, Olympus Rancho Mirage, Inc. (ORMI) and HMTF/O
Rancho Mirage, L.P. (HMTF/O RMLP), and various limited partners.
The Hotel's liquor licenses are held by an entity whose sole shareholder is
an employee of an affiliate of the Partnership (the "Concession Entity"). The
Partnership has leased the food and beverage operations of the Hotel to the
Concession Entity, which has contracted with the Hotel's manager to manage the
food and beverage operations. The rental payments received under the lease
approximate the net profit generated by the food and beverage operations. Since
the Partnership receives all the economic benefit of the food and beverage
operations, the accompanying financial statements are shown on a gross basis and
include all food and beverage activity.
F-7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Use of Estimates
The accompanying financial statements were prepared in conformity with
accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
At December 31, 2000 and 1999, there were cash balances with banks in
excess of the FDIC-insured limits by $7,362,492 and $4,755,293, respectively. At
September 30, 2001, there were cash balances with banks in excess of
FDIC-insured limits by $7,456,557 (unaudited). The Partnership has not
experienced any losses in its cash accounts and believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Restricted Cash
The Partnership is required to maintain funds for the replacement of
furniture, fixtures, and equipment. A provision of the Partnership's loan
agreement requires regular deposits to a reserve for a certain percentage of
gross revenues, as defined (Note 4).
Inventories
Inventories consist primarily of food, beverages, merchandise, and
operating supplies and are stated at the lower of cost (generally first-in,
first-out) or market.
Property and Equipment
Property and equipment is stated at the lower of depreciated cost or net
realizable value. Net realizable value for financial reporting purposes is
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the Hotel may not be recoverable. Impairment is
recognized when estimated expected future cash flows (undiscounted and without
interest charges) are less than the carrying amount of the Hotel. The estimation
of expected future net cash flows is inherently uncertain and relies to a
considerable extent on assumptions regarding current and future economics and
market conditions and the availability of capital. If, in future periods, there
are changes in the estimates or assumptions incorporated into the impairment
review analysis, the changes could result in an adjustment to the carrying
amount of the Partnership's long-lived assets. To the extent that an impairment
has occurred, the excess of the carrying amount of the Hotel over its
F-8
estimated fair value, less estimated selling costs, would be charged to income.
As of September 30, 2001, management of the Partnership believed there was no
impairment of the carrying value of the Hotel.
Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the assets. The estimated lives are as
follows:
Building and improvements 40 years
Furniture, fixtures, and equipment 5 years
The cost of building and improvements includes the purchase price of the
Hotel, associated legal fees, and acquisition costs.
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments that extend the economic useful
life of assets are capitalized.
The Partnership is currently planning to develop an 18-hole golf course in
the general area of the Hotel. As such, the Partnership has started to
accumulate land parcels on which the course will be built and retained various
consultants to assist in the entitlement, planning, and development of the
planned golf course (see Note 7). As of December 31, 2000 and 1999, total costs
of $4,732,643 and $4,071,974, respectively, had been incurred related to the
planned golf course and are included in construction in progress on the
accompanying balance sheets. As of September 30, 2001, total costs of $5,046,266
(unaudited) had been incurred related to the planned golf course and are
included in construction in progress on the accompanying balance sheet.
Income Taxes
No provision for income taxes has been recorded in the financial statements
as the partners are required to report their share of the Partnership's earnings
in their respective income tax returns. The Partnership's tax returns and the
amounts of allocable income or loss are subject to examination by federal and
state taxing authorities. If such examinations result in changes to income or
loss, the tax liability of the partners could be changed accordingly.
Revenue Recognition
Revenue is recognized as earned. Ongoing credit evaluations are performed
and an allowance for doubtful accounts has been provided for the portion of
accounts receivable which is estimated to be uncollectible.
Advertising Costs
Advertising costs are expensed the first time the advertising takes place.
F-9
Earnings Per Share
The provisions of SFAS No. 128, "Earnings Per Share" are not applicable to
the Partnership. As such, the items required for presentation pursuant to SFAS
No. 128 are not reflected in the accompanying financial statements.
Fair Value of Financial Instruments
The recorded amounts for cash and cash equivalents, receivables, other
current assets, and payables and liabilities approximate fair value due to their
short-term nature. The fair value of the mortgage note payable approximates book
value due to the variable nature of the interest rate associated with that debt.
Distributions of Cash Flow and Allocation of Net Income (Loss)
No distributions were made to the partners during the nine months ended
September 30, 2001 (unaudited), or the years ended December 31, 2000 and 1999.
Net income (loss) of the Partnership is allocated in accordance with the
terms of the partnership agreement.
3. MANAGEMENT AND ASSET MANAGEMENT AGREEMENTS:
On January 19, 1995, the Partnership entered into an operating agreement
with Ritz-Carlton Hotel Company (the "Manager") for the management and
operations of the Hotel. The operating agreement has a term of fifteen years,
which expires in January 2010. Under the operating agreement, the Partnership is
required to pay the Manager a base fee equal to 2% of Gross Revenues, as
defined. The Partnership incurred a base fee of $588,470 and $556,820 for the
years ended 2000 and 1999, respectively. The Partnership incurred a base fee of
$417,737 (unaudited) and $436,309 (unaudited) for the nine months ended
September 30, 2001 and 2000, respectively. Additionally, the Partnership is
required to pay the Manager a group service fee of up to 1% of Gross Revenues,
as defined, which totaled $294,710 and $211,766 for the years ended 2000 and
1999, respectively. The group service fee totaled $208,869 (unaudited) and
$218,629 (unaudited) for the nine months ended September 30, 2001 and 2000,
respectively. The group service fee is included in operating expenses in the
accompanying financial statements. The Partnership is also required to pay an
incentive fee equal to 10% of Net Cash Flow, as defined, up to $1,000,000, and
10% of Net Cash Flow over $1,000,000, until such time the Partnership has
received a 15% internal rate of return, in which case the Manager will receive
15% of Net Cash Flow over $1,000,000. The Partnership incurred incentive fees of
$267,284 and $208,242 for the years ended 2000 and 1999, respectively. For the
nine months ended September 30, 2000, the Partnership incurred incentive fees of
$81,140 (unaudited). No such fees were incurred for the nine months ended
September 30, 2001.
On February 1, 2000, the Partnership entered into an asset management
agreement with Gemstone Hospitality, LLC ("Gemstone"). In accordance with this
agreement, the Partnership is required to pay Gemstone a monthly fee of $16,667
along with reasonable expense reimbursements. The agreement has an original term
of nine months but can be extended on a month-to-month basis. The agreement has
been extended through September 2001. For the year ended December 31, 2000, the
F-10
Partnership incurred and paid approximately $194,000 to Gemstone under this
agreement. For the nine months ended September 30, 2001 and 2000, the
Partnership incurred and paid approximately $171,000 (unaudited) and $141,000
(unaudited), respectively, to Gemstone under this agreement.
4. MORTGAGE NOTE PAYABLE:
On August 3, 1995, the Partnership executed a loan agreement and related
promissory note with a French banking corporation (the "Bank") to refinance a
portion of the acquisition cost of the Hotel (the "Mortgage Note"). The Mortgage
Note has a face amount of $14,000,000, an initial maturity date of July 31,
1999, and an extended maturity date of July 31, 2000, if certain conditions are
met. The Partnership met all the conditions during 1999 and extended the
maturity to July 31, 2000. In 2000, the Partnership negotiated with the Bank to
extend the Mortgage Note for an additional year to July 31, 2001. During 2001,
the maturity date was extended again to June 29, 2002 (unaudited). Management is
considering a number of alternatives regarding the refinancing of the Mortgage
Note. These alternatives include refinancing the mortgage note with the current
lender or arranging financing with a new lender. Management believes that
current operations of the Hotel are such that they will be able to refinance or
otherwise payoff the existing mortgage debt prior to maturity.
As of September 30, 2001, future minimum principal payments through the
maturity date are as follows (unaudited):
2001 $ 72,000
2002 12,752,000
-------------
$ 12,824,000
=============
Interest on the Mortgage Note is payable monthly in arrears. The initial
rate of interest pursuant to the loan agreement was the greater of bank prime or
the Federal Funds Rate plus .5%. Pursuant to the terms of the loan agreement,
the Partnership exercised its option to convert to an interest rate of LIBOR
plus 3% (6.58% (unaudited), 9.82%, and 8.16% at September 30, 2001, December 31,
2000 and 1999, respectively). As a condition to the loan agreement, the
Partnership was required to obtain interest rate protection. To meet this
requirement, the Partnership entered into an interest rate cap agreement (the
"Cap") with the Bank on August 7, 1995. The Cap was effective beginning on
August 1, 1996, and continuing until July 31, 1999. The Cap had an initial
notional amount of $14,000,000 and amortized to an amount of $13,448,000 on July
31, 1999. The Cap provided for a maximum rate for LIBOR of 9.0%.
Pursuant to the loan agreement, the Partnership must establish and maintain
a capital expenditure reserve (the "CAPEX Reserve"). On the date of funding of
the Mortgage Note, the Partnership established a CAPEX Reserve by depositing
$250,000 into a separate bank account. Commencing November 1, 1995, and on the
31st day following each calendar quarter thereafter, the Partnership is required
to deposit 3% of the Gross Revenues of the Hotel, as defined, into the CAPEX
Reserve. The CAPEX Reserve is to be used to complete the improvements specified
in the loan agreement, other capital improvements, and for the purchase of
furniture, fixtures, and equipment. This balance is $447,903 and $649,538 as of
December 31, 2000 and 1999, respectively. As of September 30, 2001, this balance
is $535,700 (unaudited).
F-11
The Mortgage Note is collateralized by, among other things, the Hotel and
related property, the assignment of leases, the assignment of management
agreements for the operation of the Hotel and the concession entity, a cash
collateral agreement, the amenities agreement, an environmental indemnity, and
the pledge of stock in the Concession Entity.
The Mortgage Note provides for the maintenance of certain financial and
nonfinancial covenants. At December 31, 2000, management believed the
Partnership was in compliance with these covenants.
5. RELATED-PARTY TRANSACTIONS:
Pursuant to the administrative fee agreement and related amendment, the
Partnership is required to pay to an Olympus affiliate an annual administrative
fee equal to .75% of the Cost of the Acquired Asset, as defined, for
administrative services. For the years ended December 31, 2000 and 1999, the
Partnership incurred and paid administrative fees of $203,593 and $207,200,
respectively. For the nine months ended September 30, 2001 and 2000, the
Partnership incurred and paid administrative fees of $155,376 (unaudited) and
$150,401 (unaudited), respectively.
6. FUTURE RENTAL RECEIPTS:
The Partnership entered into lease agreements with three tenants to lease
retail space in the Hotel. The agreements have initial terms ranging from one to
five years with the longest lease ending December 31, 2002. Future minimum base
rentals, under noncancelable leases, due to the Partnership as of December 31,
2000, are as follows:
2001 $ 77,180
2002 19,750
---------
$ 96,930
=========
In addition to base rent, the tenants are required to pay their pro rata
share of Operating Costs, as defined, and percentage rent based on criteria
defined in their respective lease agreements.
7. COMMITMENTS AND CONTINGENCIES:
Operating Leases
During 2001, the Partnership entered into a lease agreement to lease
equipment under operating leases with terms ranging from two to five years.
Future minimum lease payments under noncancelable operating leases as of
December 31, 2000, are as follows:
2001 $ 113,953
2002 109,092
2003 95,302
2004 85,452
2005 14,242
--------
$ 418,041
========
F-12
Capital Leases
The Partnership leases equipment under a capital lease with a remaining
term of seven years. Future minimum payments under the capital lease obligation
as of September 30, 2001 (unaudited), are as follows:
2001 $ 39,847
2002 159,387
2003 159,387
2004 159,387
2005 159,387
Thereafter 332,129
---------
Total minimum lease payments 1,009,524
Less-Amounts representing interest (274,429)
----------
Present value of minimum lease payments $ 735,095
========
All operating and capital leases are collateralized by the respective lease
equipment.
Other Commitments and Contingencies
The Partnership may be obligated for an additional $2,000,000 (the
"Deferred Purchase Price") in connection with the acquisition of the Hotel if
the Partnership, or an affiliate, has built an 18-hole golf course located in
the general area of the Hotel and is available for use by Hotel guests on a
nonexclusive basis. The Deferred Purchase Price obligation terminates if the
golf course has not been completed on or before the earlier of (a) ten years
after the initial acquisition or (b) the sale of the Hotel to an unrelated third
party any time after five years from the date of the Initial Acquisition.
The Partnership has retained consultants to assist in the entitlement,
planning, and development of the planned golf course. On October 20, 1995, the
Partnership entered into a Development Management/Construction Management
Agreement with Winchester Development Company, L.L.C. ("Winchester"). This
agreement was amended effective in June 1997. Pursuant to the amended agreement,
prior to the construction of the golf course, Winchester is paid a fee equal to
the lessor of (i) $150 per hour for all hours worked by Winchester employees as
approved by the Partnership or (ii) $16,000 per month. Upon commencement of golf
course construction, Winchester is to be paid a fee equal to the lesser of (i)
5% of the cost to construct the golf course or (ii) $450,000 and the lesser of
(i) 8% of the cost of the clubhouse or (ii) $160,000. If the golf course is
partially or completely abandoned at any time during the term of the above
discussed agreement, Olympus, in its sole discretion, may terminate all or a
portion of the agreement by giving 30 days prior written notice. The Partnership
has paid approximately $75,000 and $91,000 for the years ended December 31, 2000
and 1999, respectively, to Winchester under the amended agreement. For the nine
months ended September 30, 2001 and 2000, the Partnership has paid approximately
$75,000 (unaudited) and $73,000 (unaudited), respectively. The Partnership has
incurred total costs related to the golf course of approximately $661,000 and
$1,476,000 for the years ended December 31, 2000 and 1999, respectively. The
Partnership has incurred total costs related to the golf course of approximately
$313,623 (unaudited) and $457,390 (unaudited) for the nine months ended
September 30, 2001 and 2000, re-
F-13
spectively. All of these costs, including fees paid to Winchester, have been
capitalized and are included in construction in progress on the accompanying
balance sheets.
The Partnership may be subject to certain litigation and claims in the
ordinary course of business, which are generally covered by insurance policies.
In management's opinion, litigation and claims will not have a material adverse
effect upon the financial position or results of operations of the Partnership.
8. SUBSEQUENT EVENT (UNAUDITED):
In November 2001, the Partnership sold the Hotel and related assets and
liabilities to a wholly owned subsidiary of Vail Resorts, Inc. for a total sales
price of approximately $45 million in cash. $20 million was received at closing
with the remaining $25 million to be received approximately two years from
closing.
F-14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management of
Vail Resorts, Inc.:
We have audited the accompanying balance sheets of the Vail Marriott
Mountain Resort (a wholly-owned subsidiary of Host Marriott L.P. - the "Hotel")
as of December 31, 2000, and the related statements of operations and changes in
owner's capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Hotel's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Vail Marriott Mountain
Resort as of December 31, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.
The financial statements of the Vail Marriott Mountain Resort as of
September 30, 2001, and for the nine months ended September 30, 2001 and 2000,
were not audited by us and, accordingly, we do not express an opinion on them.
ARTHUR ANDERSEN LLP
Denver, Colorado
January 11, 2002.
F-15
VAIL MARRIOTT MOUNTAIN RESORT
BALANCE SHEETS
September 30, December 31,
2001 2000
---------------- ----------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 315,449 $ 682,779
Accounts receivable, net 2,108,237 862,458
Other receivables 13,000,000 20,242,488
Due from Parent 321,269 2,782,413
Inventories 77,853 75,010
Other current assets 17,984 66,301
---------------- ----------------
Total current assets 15,840,792 24,711,449
---------------- ----------------
PROPERTY AND EQUIPMENT:
Land 4,407,150 4,407,150
Building and improvements 20,860,027 20,850,939
Furniture, fixtures, equipment and vehicles 4,285,354 4,266,231
Construction-in-progress 11,933,307 -
---------------- ----------------
41,485,838 29,524,320
Accumulated depreciation (7,058,222) (6,363,395)
---------------- ----------------
Total property and equipment, net 34,427,616 23,160,925
---------------- ----------------
Total assets $ 50,268,408 $ 47,872,374
================ ================
LIABILITIES AND OWNER'S CAPITAL
-------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 370,790 $ 886,634
Advance deposits 337,515 900,148
Advance insurance proceeds - 2,285,013
Total current liabilities 708,305 4,071,795
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
OWNER'S CAPITAL 49,560,103 43,800,579
---------------- ----------------
Total liabilities and owner's capital $ 50,268,408 $ 47,872,374
================ ================
The accompanying notes are an integral part of these statements.
F-16
VAIL MARRIOTT MOUNTAIN RESORT
STATEMENTS OF OPERATIONS AND OWNER'S CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2001 2000 2000
--------------- -------------- --------------
(Unaudited) (Unaudited)
REVENUES:
Rooms $ 7,215,943 $ 11,226,382 $ 12,721,393
Food and beverage 2,905,611 3,544,321 4,134,808
Other departments 4,014,998 916,594 1,815,970
--------------- -------------- --------------
Total revenues 14,136,552 15,687,297 18,672,171
OPERATING COSTS AND EXPENSES:
Departmental costs and expenses
Rooms 2,868,813 3,549,493 4,536,696
Food and beverage 2,089,909 2,555,848 3,129,390
Other departments 2,669,177 571,411 772,267
OTHER OPERATING EXPENSES:
Administrative and general 1,394,952 1,488,889 1,940,222
Marketing 932,605 1,045,322 1,282,150
Property operation and maintenance 756,173 855,943 1,103,017
Utilities 305,590 275,865 352,083
Management fees 1,057,579 777,206 982,585
Property taxes and insurance 293,603 262,270 383,830
Other 149,426 150,703 167,364
Depreciation and amortization 764,983 1,113,774 1,490,934
--------------- -------------- --------------
Total operating costs and expenses 13,282,810 12,646,724 16,140,538
--------------- -------------- --------------
INCOME FROM OPERATIONS 853,742 3,040,573 2,531,633
--------------- -------------- --------------
OTHER EXPENSES:
Gain recognized on fire - - (12,766,046)
Loss on disposal of fixed assets 70,441 - -
--------------- -------------- --------------
Total other expenses 70,441 - (12,766,046)
--------------- -------------- --------------
NET INCOME 783,301 3,040,573 15,297,679
OWNER'S CAPITAL - BEGINNING 43,800,579 32,488,179 32,488,179
CASH RECEIVED FROM (PAID TO) OWNER, net
4,976,223 (4,016,074) (3,985,279)
--------------- -------------- --------------
OWNER'S CAPITAL - ENDING $ 49,560,103 $ 31,512,678 $ 43,800,579
=============== ============== ==============
The accompanying notes are an integral part of these statements.
F-17
VAIL MARRIOTT MOUNTAIN RESORT
STATEMENTS OF CASH FLOWS
Nine Months Ended Year Ended
September 30, December 31,
2001 2000 2000
-------------- ------------- -------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 783,301 $ 3,040,573 $ 15,297,679
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 764,983 1,113,774 1,490,934
(Gain)/Loss on fire - - (12,766,046)
Loss on disposal of fixed assets 70,441 - -
(Increase) decrease in accounts receivable, net (1,245,779) 61,265 182,940
Decrease in insurance receivable 7,242,488 - -
Decrease (increase) in inventories (2,843) 34,893 19,065
(Increase) decrease in due from Parent 2,461,144 (48,455) (2,633,811)
Increase in other assets 48,317 (2,965) (4,490)
Increase (decrease) in accounts payable and
accrued liabilities (515,844) (171,725) 114,101
Increase (decrease) in deferred revenue (2,285,013) - 2,285,013
Decrease in advance deposits (562,633) (1,497,810) (1,317,257)
-------------- ------------- -------------
Net cash provided by operating activities 6,758,562 2,529,550 2,668,128
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,102,115) (102,215) (278,200)
-------------- ------------- -------------
Net cash used in investing activities (12,102,115) (102,215) (278,200)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from (paid to) to Parent, net 4,976,223 (4,016,074) (3,985,279)
-------------- ------------- -------------
Net cash used in financing activities 4,976,223 (4,016,074) (3,985,279)
-------------- ------------- -------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (367,330) (1,588,739) (1,595,351)
CASH AND CASH EQUIVALENTS,
beginning of period 682,779 2,278,130 2,278,130
-------------- ------------- -------------
CASH AND CASH EQUIVALENTS,
end of period $ 315,449 $ 689,391 $ 682,779
============== ============= =============
The accompanying notes are an integral part of these statements.
F-18
VAIL MARRIOTT MOUNTAIN RESORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ORGANIZATION AND BUSINESS:
The Vail Marriott Mountain Resort (the "Hotel") is located at the base of
Vail Mountain, in Vail, Colorado. The Hotel was originally opened in 1972, and
was acquired by Host Marriott, L.P. ("Host") in 1994. The Hotel operated as a
wholly-owned property of Host until December of 2001, at which time it was
acquired by a wholly-owned subsidiary of Vail Resorts, Inc. ("Vail").
The Hotel maintains approximately 350 guest rooms, including a number of
condominium units and caters to both group and individual guests. The Hotel
maintains 14 meeting rooms, covering over 16,000 square feet of meeting space.
The Hotel provides guests with an on-site restaurant, room service, a cocktail
lounge, laundry facilities, a hair salon, concierge service, a full business
center, a full spa and health club.
Occupancy at the Hotel is seasonal with the winter ski season accounting
for a greater portion of the Hotel's operating results. The Hotel competes with
a number of properties located throughout the Vail Valley and Beaver Creek as
well as other parts of Colorado.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Use of Estimates
The accompanying financial statements were prepared in conformity with
accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Hotel considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts of cash equivalents, trade receivables and trade
payables approximate their fair value due to their short-term nature.
F-19
Inventories
Inventories consist primarily of food, beverages, merchandise, and
operating supplies and are stated at the lower of cost (generally first-in,
first-out) or market.
Property and Equipment
Property and equipment is stated at the lower of depreciated cost or net
realizable value. Net realizable value for financial reporting purposes is
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable. Impairment is
recognized when estimated expected future cash flows (undiscounted and without
interest charges) are less than the carrying amount of the Hotels long-lived
assets. The estimation of expected future net cash flows is inherently uncertain
and relies to a considerable extent on assumptions regarding current and future
economics and market conditions and the availability of capital. If, in future
periods, there are changes in the estimates or assumptions incorporated into the
impairment review analysis, the changes could result in an adjustment to the
carrying amount of the Hotel's long-lived assets over their estimated fair
value. To the extent that an impairment has occurred, the excess of the carrying
amount of the Hotel over its estimated fair value, less estimated selling costs,
would be charged to income. As of September 30, 2001 and December 31, 2000,
management of the Hotel believed there was no impairment of the carrying value
of the Hotel's long-lived assets.
Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the assets. The estimated lives are as
follows:
Building and improvements Shorter of 39 years or life
Furniture, fixtures, and equipment of asset 3-7 years
The cost of building and improvements includes the purchase price of the
Hotel, associated legal fees, and acquisition costs.
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments that extend the economic useful
life of assets are capitalized.
During November of 2000, the Hotel sustained damage from a fire. Property
and equipment with a net book value of approximately $7.5 million were written
off in connection with the fire. Total casualty proceeds received from the
insurance company amounted to approximately $20 million, of which approximately
$13 million was still due as of September 30, 2001 (unaudited). All remaining
casualty amounts due were collected in December of 2001 (unaudited). As
subsequent payment was assured, the Hotel recognized the net gain from the fire
during the year ended December 31, 2000. In connection with its business
interruption insurance coverage, the Hotel received an advance payment of
approximately $3 million from its insurance company in December of 2000. This
advance payment, less any amounts recognized as revenue from business
interruption proceeds, is reflected as deferred revenue in the accompanying
December 31, 2000 balance sheet. As of September 30, 2001 all business
interruption proceeds received had been recognized as revenues based on the
covered period. Revenue related to business interruption insurance is reflected
in Other Departments Revenue in the accompanying statements of operations.
F-20
Income Taxes
No provision for income taxes has been recorded in the financial statements
as the Hotel is a wholly-owned subsidiary of Host. Host was formed as a limited
partnership and therefore, partners are required to report their share of Host's
earnings in their respective income tax returns. Accordingly, no provision for
income taxes has been allocated to the Hotel.
Revenue Recognition
Revenue is recognized as earned. Ongoing credit evaluations are performed
and an allowance for doubtful accounts has been provided for the portion of
accounts receivable which is estimated to be uncollectible.
Advertising Costs
Advertising costs are expensed the first time the advertising takes place.
Earnings Per Share
The provisions of Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share", are not applicable to the Hotel. As such, the items
required for presentation under pursuant to SFAS No. 128 are not reflected in
the accompanying financial statements.
Distributions of Cash Flow
The Hotel remits all available cash flow to Host on a periodic basis.
Recently Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations". SFAS No. 141 addresses financial accounting
and reporting for business combinations and supersedes APB Opinion No. 16,
"Business Combinations". The major provisions of SFAS No. 141 include (a) the
elimination of the pooling-of-interests method of accounting for business
combinations, (b) additional criteria for the recognition of intangible assets
independent of goodwill, and (c) disclosure of the primary reasons for a
business combination and the allocation of the purchase price paid to the assets
acquired and liabilities assumed by major balance sheet caption. The majority of
the provisions of APB Opinion No. 16 are retained by SFAS No. 141. The
provisions of SFAS No. 141 apply to all business combinations initiated after
June 30, 2001.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets". SFAS No. 142 addresses how intangible assets that are
acquired individually or with a group of other assets (but not those acquired in
business combinations) should be accounted for in financial statements upon
their acquisition, and also addresses how goodwill and other intangible assets
(including those acquired in business combinations) should be accounted for
after they have been initially recognized in the financial statements. The major
provisions of SFAS No. 142 and differences from APB Opinion No. 17 include (a)
no am-
F-21
ortization of goodwill and other certain intangible assets with indefinite
lives, (b) a more aggregate view of goodwill and accounting for goodwill based
on units of the combined entity, (c) a better defined "two-step" approach for
testing impairment of goodwill, (d) a better defined process for testing other
intangible assets for impairment, and (e) disclosure of additional information
related to goodwill and intangible assets. The "two-step" impairment approach to
testing goodwill is required to be performed at least annually with the first
step involving a screen for potential impairment and the second step measuring
the amount of impairment. The provisions of SFAS No. 142 are required to be
applied starting with fiscal years after December 15, 2001. The Hotel does not
anticipate the adoption of SFAS No. 142 to have any impact on its financial
position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", but retains the requirements of SFAS No.121 to (a)
recognize an impairment loss only if the carrying amount of a long-lived asset
is not recoverable from its undiscounted cash flows and (b) measure an
impairment loss as the difference between the carrying amount and fair value of
the asset. SFAS No. 144 removes goodwill from its scope as the impairment of
goodwill is addressed prospectively pursuant to SFAS No. 142. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those years. The Hotel does not
expect the adoption of SFAS No. 144 to have a material impact on its financial
position or results of operations.
3. MANAGEMENT AGREEMENT:
On October 20, 1994, the Hotel entered into an operating agreement with
Marriott Hotel Services, Inc. (the "Manager") for the management and operations
of the Hotel. The operating agreement has a term of approximately fifteen years,
which was to expire in December of 2009. Under the operating agreement, the
Hotel is required to pay the Manager a base fee equal to 3% of Gross Revenues,
as defined. The Hotel incurred a base fee of $575,130, $436,742 (unaudited) and
$483,168 (unaudited) during the year ended December 31, 2000 and the nine months
ended September 30, 2001 and 2000, respectively. The Hotel is also required to
pay an incentive fee equal to 40% of the available net cash flow, as defined,
provided that the incentive fee does not exceed 20% of operating profit with
respect to each fiscal period. The Hotel incurred incentive fees of $407,455,
$620,837 (unaudited) and $294,038 (unaudited) during the year ended December 31,
2000 and the nine months ended September 30, 2001 and 2000, respectively. During
the nine months ended September 31, 2001 (unaudited), the incentive fee was not
impacted by certain expenses incurred by the Hotel related to the fire.
4. FUTURE RENTAL RECEIPTS:
The Hotel entered into a lease agreement with a tenant to lease retail
space in the Hotel. The agreement has an initial term of three years expiring
September 30, 2002. Rental income is reflected in Other Departments Revenue in
the accompanying statements of operations. Future minimum base rentals, under
noncancelable leases, due to the Hotel as of December 31, 2000 are as follows:
F-22
2001 $ 66,756
2002 50,067
--------
$ 116,823
========
5. RELATED PARTY TRANSACTIONS:
The Hotel has entered into management agreements with the third party
owners of the 28 condominium units contained within the Hotel. The Hotel is
responsible for the management and maintenance of these units, including the
collection of rental income from guests' stays. The Hotel then remits to each
unit owner a pre-defined percentage (between 50% and 70%) of the rental income
received from guests. The rental receipts received by the Hotel, net of the
amounts remitted to condominium unit owners, are reflected as Room Revenues in
the accompanying statements of operations. During the year ended December 31,
2000 and the nine months ended September 30, 2001 and 2000, the Hotel remitted
$498,835, $421,503 (unaudited) and $418,305 (unaudited), to the condominium unit
owners, respectively.
The Hotel leases various apartments from an apartment complex located in
the Vail Valley. The Hotel then subleases these apartments to employees to
provide affordable housing. The Hotel pays the apartment complex approximately
$264,000 each year for the lease of the units and recoups approximately $150,000
from its employees on an annual basis. The amounts paid to the apartment complex
owner are reflected net of the rental amounts received from employees in the
accompanying statements of operations.
The Hotel participates in the Marriott Rewards program through which guests
may redeem awards for free rooms and other amenities at the Hotel. The Hotel is
reimbursed by Host for a pre-determined amount for each room occupied under this
program. During the year ended December 31, 2000 and the nine months ended
September 30, 2001 and 2000, the Hotel recognized $362,946, $285,285 (unaudited)
and $334,443 (unaudited) as room revenues under this program, respectively. The
revenue recognized is equal to the reimbursements received from Host.
During June of 2001 (unaudited), Host, on behalf of the Hotel, entered into
a technical services agreement with Marriott International Design and
Construction Services, Inc. ("MIDCS"), a related party, to provide project
management and other technical services related to the re-construction of the
section of the Hotel damaged in the November 2000 fire. Under this agreement,
MIDCS provides to Host a periodic estimate of costs and expenses to be incurred,
with compensation then agreed to by both parties. The agreement runs through the
completion of the construction project.
6. COMMITMENTS AND CONTINGENCIES:
Operating Leases
The Hotel leases equipment and vehicles under operating leases with terms
ranging from one to five years. Future minimum lease payments under
noncancelable operating leases as of December 31, 2000 are as follows:
2001 $ 565,120
2002 402,531
F-23
2003 46,644
2004 33,019
2005 2,400
----------
$ 1,049,714
==========
The Hotel may be subject to certain litigation and claims in the ordinary
course of business, which are generally covered by insurance policies. In
management's opinion, litigation and claims will not have a material adverse
effect upon the financial position or results of operations of the Hotel.
7. SUBSEQUENT EVENT:
In December of 2001, the Hotel's assets and liabilities were sold to a
wholly-owned subsidiary of Vail for a sales price of approximately $50 million
in cash. In connection with the sale of the Hotel, Vail entered into a franchise
agreement with Marriott International, Inc. for the continued use of the
Marriott brand name and participation in group advertising, promotional and
sales programs. Under this agreement, Vail is required to pay Marriott
International, Inc. a monthly franchise fee equal to 6% of gross room sales and
3% of gross food and beverage sales in addition to a chain-wide fee equal to 1%
of gross room sales at the Hotel. The original term of the franchise agreement
is 20 years.
F-24
================================================================================
$160,000,000
VAIL RESORTS, INC.
Exchange Offer for $160,000,000 Aggregate Principal Amount of 8 3/4%
Senior Subordinated Notes due 2009
--------------
PROSPECTUS
--------------
, 2002
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on unauthorized information. This prospectus is not an offer to sell or buy
any securities in any jurisdiction where it is unlawful. The information in this
prospectus is current as of , 2002.
- --------------------------------------------------------------------------------
================================================================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") makes
provision for the indemnification of officers and directors of corporations in
terms sufficiently broad to indemnify the officers and directors of the
registrant under certain circumstances for liabilities (including reimbursement
of expenses incurred) arising under the Securities Act.
The Company's Restated Certificate of Incorporation (the "Certificate")
provides that to the fullest extent permitted by Delaware law or another
applicable law, a director of the Company shall not be liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Under current Delaware law, liability of a director may not be limited
(i) for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases and (iv)
for any transaction from which the director derives an improper personal
benefit. The effect of the provision of the Certificate is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in the situations
described in clauses (i) through (iv) above. This provision does not limit or
eliminate the rights of the Company or any stockholder to seek nonmonetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. In addition, the Company's Restated Bylaws (the
"Bylaws") provide that the Company shall indemnify its directors, officers and
employees to the fullest extent permitted by applicable law.
The Bylaws provide that the Company may indemnify any person who is or was
involved in any manner or is threatened to be made so involved in any
threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
any action, suit or proceeding by or in the right of the registrant to procure a
judgment in its town), by reason of the fact that he is or was or had agreed to
become a director, officer or employee of the registrant or is or was or had
agreed to become at the request of the board or an officer of the registrant a
director, officer or employee of another corporation, partnership, joint
venture, trust or other entity against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such Proceeding.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS INDEX.
(a) Exhibits:
Exhibit No. Description
3.1* Amended and Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware.
3.2* Amended and Restated By-Laws.
4.1** Purchase Agreement, dated as of November 16, 2001 among Vail Resorts,
Inc., the guarantors named on Schedule I thereto, and Deutsche Banc
Alex. Brown, Banc of America Securities LLC, Bear, Stearns & Co. Inc.,
CIBC World Markets and Fleet Securities, Inc.
4.2** Indenture, dated as of November 21, 2001 among Vail Resorts, Inc.,
the guarantors named therein and The Bank of New York, as trustee.
4.3** First Supplemental Indenture, dated as of January 15, 2002, to
Indenture dated as of November 21, 2001 among Vail Resorts, Inc., the
guarantors named therein and The Bank of New York, as trustee.
4.4** Form of Global Note (included in Exhibit 4.2).
4.5** Registration Rights Agreement, dated as of November 21, 2001 among
Vail Resorts, Inc., the guarantors signatory thereto and Deutsche Banc
Alex. Brown, Banc of America Securities LLC, Bear, Stearns & Co. Inc.,
CIBC World Markets and Fleet Securities, Inc.
5.1** Opinion of Cahill Gordon & Reindel as to the legality of the Exchange
Notes and the Guarantees of certain of the Guarantors.
5.2** Opinion of General Counsel to the Company as to the legality of the
Exchange Notes and the Guarantees of certain of the Guarantors.
12.1** Computation of Ratio of Earnings to Fixed Charges.
23.1*** Consents of Arthur Andersen LLP, independent public accountants.
23.2** Consent of Cahill Gordon & Reindel (included in Exhibit 5.1)
23.3** Consent of General Counsel to the Company (included in Exhibit 5.2)
24.1** Power of Attorney.
25.1** Statement regarding eligibility of Trustee on Form T-1.
II-2
99.1*** Form of Letter of Transmittal.
99.2*** Form of Notice of Guaranteed Delivery.
- --------------------------------------------------------------------------------
* Incorporated by reference to the Registration Statement on Form S-4 of
Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments
thereto
** Previously filed
*** Filed herewith
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake that:
(a) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) To deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
(d) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This undertaking includes information contained in documents filed
subsequent to the effective date of this registration statement through the
date of responding to the request.
(e) To supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein,
that was not the subject of and included in this registration statement
when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL RESORTS, INC.
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, Chief Executive February 20, 2002
- --------------------------------------- Officer and Director
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Chief Financial February 20, 2002
- --------------------------------------- Officer
James P. Donohue
Director
- ---------------------------------------
Antony P. Ressler
* Director February 20, 2002
- ---------------------------------------
Bruce H. Spector
* Director February 20, 2002
- ---------------------------------------
Craig M. Cogut
* Director February 20, 2002
- ---------------------------------------
Frank Biondi
Director
- ---------------------------------------
James S. Tisch
* Director February 20, 2002
- ---------------------------------------
John F. Sorte
S-1
* Director February 20, 2002
- ---------------------------------------
John J. Ryan III
* Director February 20, 2002
- ---------------------------------------
Joe R. Micheletto
Director
- ---------------------------------------
Leon D. Black
* Director February 20, 2002
- ---------------------------------------
Marc J. Rowan
* Director February 20, 2002
- ---------------------------------------
Robert A. Katz
* Director February 20, 2002
- ---------------------------------------
Stephen C. Hilbert
* Director February 20, 2002
- ---------------------------------------
Thomas H. Lee
* Director February 20, 2002
- ---------------------------------------
William L. Mack
* Director February 20, 2002
- ---------------------------------------
William Stiritz
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
BEAVER CREEK ASSOCIATES, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
BEAVER CREEK CONSULTANTS, INC.
By: /s/ James P. Donohue
------------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
BEAVER CREEK FOOD SERVICES, INC.
By: /s/ James P. Donohue
-----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
John Garnsey
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
BRECKENRIDGE RESORT PROPERTIES, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
* Director February 20, 2002
- ---------------------------------------
Eric Thompson
* Director February 20, 2002
- ---------------------------------------
Alex Iskenderian
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
COMPLETE TELECOMMUNICATIONS, INC.
By: /s/ James P. Donohue
-----------------------------------------------
Name: James P. Donohue
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Chairman of the Board, Vice President and February 20, 2002
- --------------------------------------- Director
James P. Donohue
* President and Director February 20, 2002
- ---------------------------------------
R. Keith Gwinn
* Vice President and Director February 20, 2002
- ---------------------------------------
Nanci N. Northway
* Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
Director
- ---------------------------------------
John Uhley
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
GHTV, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Chief Financial Officer and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
GILLETT BROADCASTING, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Chief Financial Officer and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
GRAND TETON LODGE COMPANY
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
JACKSON HOLE GOLF & TENNIS CLUB, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
JHL&S LLC
By: /s/ James P. Donohue
-------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Manager February 20, 2002
- ---------------------------------------
Adam M. Aron
* Manager February 20, 2002
- ---------------------------------------
Clayton James
Manager
- ---------------------------------------
Joseph Byron
Manager
- ---------------------------------------
Jerry Johnson
Manager and Chief Executive Officer for SEC February 20, 2002
* purposes
- ---------------------------------------
Andrew P. Daly
Chief Financial Officer and Chief Accounting February 20, 2002
/s/ James P. Donohue Officer for SEC purposes
- ---------------------------------------
James P. Donohue
Senior Vice President for SEC purposes February 20, 2002
*
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
KEYSTONE CONFERENCE SERVICES, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
John W. Rutter
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
KEYSTONE DEVELOPMENT SALES, INC.
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
James P. Thompson
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
John W. Rutter
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
KEYSTONE FOOD and BEVERAGE COMPANY
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
John W. Rutter
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
John W. Rutter
* Director February 20, 2002
- ---------------------------------------
James P. Thompson
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
LARKSPUR RESTAURANT & BAR, LLC
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Manager February 20, 2002
- ---------------------------------------
William Jensen
* Manager February 20, 2002
- ---------------------------------------
Marla Steele
* Manager February 20, 2002
- ---------------------------------------
Federick Smith
Manager and President
- ---------------------------------------
Thomas Salamunovich
Manager
- ---------------------------------------
Kevin Deighan
Manager
- ---------------------------------------
Dave Ferguson
* Manager February 20, 2002
- ---------------------------------------
Chris Jarnot
* Chief Executive Officer for SEC Purposes February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Chief Financial Officer and Chief Accounting February 20, 2002
- --------------------------------------- Officer for SEC Purposes
James P. Donohue
S-17
* Senior Vice President for SEC Purposes February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
LODGE PROPERTIES, INC.
By: /s/ James P. Donohue
------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
LODGE REALTY, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
Vice President and Director
- ---------------------------------------
Victor Charles Viola
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* By: /s/ James P. Donohue
James P. Donohue February 20, 2002
Attorney-in-Fact
S-20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
By: /s/ James P. Donohue
----------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President, and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VA RANCHO MIRAGE RESORT, L.P.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* General Partner February 20, 2002
- ---------------------------------------
VA Rancho Mirage I, Inc.
By its Authorized Officer
Martha Dugan Rehm
* Limited Partner February 20, 2002
- ---------------------------------------
VA Rancho Mirage II, Inc.
By its Authorized Officer
Martha Dugan Rehm
* Chairman and President February 20, 2002
- ---------------------------------------
Adam M. Aron
* Director and Senior Vice President February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Director , Senior Vice President and February 20, 2002
- --------------------------------------- Assistant Treasurer
James P. Donohue
* Director and Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS CASA MADRONA, LLC
By: ROCKRESORTS INTERNATIONAL, LLC
By: /s/ James P. Donohue
------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Manager February 20, 2002
- ---------------------------------------
Rockresorts International, LLC
By: James P. Donohue
Senior Vice President
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS CHEECA, LLC
By: ROCKRESORTS INTERNATIONAL, LLC
By: /s/ James P. Donohue
------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Manager February 20, 2002
- ---------------------------------------
Rockresorts International, LLC
By: James P. Donohue
Senior Vice President
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS EQUINOX, INC.
By: /s/ James P. Donohue
------------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
* Director February 20, 2002
- ---------------------------------------
Janice McGill
* Director February 20, 2002
- ---------------------------------------
John Alexopolous
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS INTERNATIONAL, LLC
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Class "A" Manager February 20, 2002
- ---------------------------------------
Adam M. Aron, Chairman
* Class "A" Manager February 20, 2002
- ---------------------------------------
Andrew P. Daly
* Class "A" Manager February 20, 2002
- ---------------------------------------
Robert Katz
/s/ James P. Donohue Class "A" Manager and Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Class "A" Manager, Chief Executive Officer February 20, 2002
- --------------------------------------- and President
Edward Mace
Class "B" Manager
- ---------------------------------------
David B. Deniger
Class "B" Manager
- ---------------------------------------
Clark W. Hanraltie
Class "B" Manager
- ---------------------------------------
Robert S. Riggs
S-26
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS LAPOSADA, LLC
By: /s/ James P. Donohue
-----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Manager February 20, 2002
- ---------------------------------------
Rockresorts International, LLC
By: James P. Donohue
Senior Vice President
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha D.Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS LLC
By: ROCKRESORTS INTERNATIONAL, LLC
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Manager February 20, 2002
- ---------------------------------------
Rockresorts International, LLC
By: James P. Donohue
Senior Vice President
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
ROCKRESORTS ROSARIO, LLC
By: ROCKRESORTS INTERNATIONAL, LLC
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James P. Donohue Manager February 20, 2002
- ---------------------------------------
Rockresorts International, LLC
By: James P. Donohue
Senior Vice President
* President and Chief Executive Officer February 20, 2002
- ---------------------------------------
Edward E. Mace
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
TETON HOSPITALITY SERVICES, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew Daly
/s/ James P. Donohue Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL/ARROWHEAD, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL ASSOCIATES CONSULTANTS, INC.
By: /s/ James P. Donohue
-----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and February 20, 2002
- ---------------------------------------- Director
Andrew P. Daly
* Director February 20, 2002
- ----------------------------------------
Adam M. Aron
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ----------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ----------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-33
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL ASSOCIATES HOLDINGS, LTD.
By: /s/ James P. Donohue
-----------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL ASSOCIATES MANAGEMENT COMPANY
By: /s/ James P. Donohue
----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL ASSOCIATES REAL ESTATE, INC.
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL/BATTLE MOUNTAIN, INC.
By: /s/ James P. Donohue
----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Vice President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
By: /s/ James P. Donohue
---------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* Vice President and Director February 20, 2002
- ---------------------------------------
James P. Thompson
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
THE VAIL CORPORATION
By: /s/ James P. Donohue
-----------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President, Chief Executive Officer and February 20, 2002
- --------------------------------------- Director
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL FOOD SERVICES, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, President and Director February 20, 2002
- ---------------------------------------
William Jensen
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL HOLDINGS, INC.
By: /s/ James P. Donohue
----------------------------------------------
Name: James P. Donohue
Title: Chief Financial Officer and
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board, Chief Executive February 20, 2002
- --------------------------------------- Officer and Director
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President, Chief Financial February 20, 2002
- --------------------------------------- Officer and Director
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL RESORTS DEVELOPMENT COMPANY
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* Chief Executive Officer, President and February 20, 2002
- --------------------------------------- Director
James P. Thompson
/s/ James P. Donohue Senior Vice President February 20, 2002
- ---------------------------------------
James P. Donohue
* Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
* Director February 20, 2002
- ---------------------------------------
Marc J. Rowan
* Director February 20, 2002
- ---------------------------------------
Robert A. Katz
Director
- ---------------------------------------
James S. Mandel
* Senior Vice President February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL RR, INC.
By: /s/ James P. Donohue
-----------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board President and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-43
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL SUMMIT RESORTS, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAIL TRADEMARKS, INC.
By: /s/ James P. Donohue
--------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VAMHC, INC.
By: /s/ James P. Donohue
--------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and Director February 20, 2002
- ---------------------------------------
Adam M. Aron
* President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Director February 20, 2002
- ---------------------------------------
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VA RANCHO MIRAGE I, INC.
By: /s/ James P. Donohue
-------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman and President February 20, 2002
- ---------------------------------------
Adam M. Aron
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Assistant February 20, 2002
- --------------------------------------- Treasurer and Director
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
VA RANCHO MIRAGE II, INC.
By: /s/ James P. Donohue
-----------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman and President February 20, 2002
- ---------------------------------------
Adam M. Aron
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Andrew P. Daly
/s/ James P. Donohue Senior Vice President and Assistant February 20, 2002
- --------------------------------------- Treasurer and Director
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 20th day of February, 2002.
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
By: /s/ James P. Donohue
----------------------------------------------
Name: James P. Donohue
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* President and Director February 20, 2002
- ---------------------------------------
Roger McCarthy
/s/ James P. Donohue Senior Vice President, Director and February 20, 2002
- --------------------------------------- Assistant Secretary
James P. Donohue
* Senior Vice President and Director February 20, 2002
- ---------------------------------------
Martha Dugan Rehm
* By: /s/ James P. Donohue February 20, 2002
--------------------------
James P. Donohue
Attorney-in-Fact
S-49
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
included in this Registration Statement on Form S-4 and to the incorporation by
reference in this Registration Statement on Form S-4 of our report dated
September 7, 2001 included in Vail Resorts, Inc.'s Form 10-K for the year ended
July 31, 2001 and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Denver, Colorado,
February 19, 2002.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
related to Olympus Rancho Mirage, L.P., included in this Registration Statement
on Form S-4 and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 19, 2002.
LETTER OF TRANSMITTAL
Vail Resorts, Inc.
OFFER TO EXCHANGE ITS 8 3/4% SENIOR SUBORDINATED NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS ISSUED AND OUTSTANDING 8 3/4% SENIOR
SUBORDINATED NOTES DUE 2009
PURSUANT TO THE PROSPECTUS, DATED , 2002
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2002,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Bank of New York, as Exchange Agent
By Registered or Certified Mail: By Overnight Courier and by Hand By Hand Delivery to 4:30 p.m.:
Delivery after
4:30 p.m. on Expiration Date:
The Bank of New York The Bank of New York The Bank of New York
c/o United States Trust Company of c/o United States Trust Company of The Bank of New York
New York New York c/o United States Trust Company
P.O. Box 84 30 Broad Street, 14th Floor of New York
Bowling Green Station New York, NY 10004-2304 30 Broad Street, B-Level
New York, NY 10274-0084 New York, NY 10004-2304
By Facsimile:
(646) 458-8111
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions other than as set forth above, will not constitute
a valid delivery. The undersigned acknowledges that he or she has received and
reviewed the Prospectus, dated , 2002 (the "Prospectus"), of Vail Resorts, Inc.,
a company organized under the laws of Delaware, and this Letter of Transmittal,
which together constitute the Company's offer (the "Exchange Offer") to exchange
up to $160,000,000 aggregate principal amount of the Company's 8 3/4% Senior
Subordinated Notes Due 2009 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for a like
principal amount of the Company's issued and outstanding 8 3/4% Senior
Subordinated Notes Due 2009 (the "Outstanding Notes"), which have not been so
registered.
For each Outstanding Note accepted for exchange, the registered holder of
such Outstanding Note (collectively with all other registered holders of
Outstanding Notes, the "Holders") will receive an Exchange Note having a
principal amount equal to that of the surrendered Outstanding Note. Registered
holders of Exchange Notes on the relevant record date for the first interest
payment date following the consummation of the Exchange Offer will receive
interest accruing from the most recent date to which interest has been paid or,
if no interest has been paid, from November 21, 2001. Outstanding Notes accepted
for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offer. Accordingly, Holders whose Outstanding Notes
are accepted for exchange will not receive any payment in respect of accrued
interest on such Outstanding Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
This Letter of Transmittal is to be completed by a Holder of Outstanding
Notes if either certificates for such Outstanding Notes are available to be
forwarded herewith or tendered by book-entry transfer to the account maintained
by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Notes" section of the Prospectus.
Holders of Outstanding Notes whose certificates are not immediately available,
or who are unable to deliver their certificates or confirmation of the
book-entry tender of their Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter of Transmittal to the Exchange Agent on or
prior to the Expiration Date, must tender their Outstanding Notes according to
the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Outstanding Notes indicated below. Subject to, and effective upon, the
acceptance for exchange of the Outstanding Notes tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Outstanding Notes as are
being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Outstanding
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Company. The undersigned hereby further represents that any Exchange Notes
acquired in exchange for Outstanding Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the undersigned, that neither the
Holder of such Outstanding Notes nor any such other person has an arrangement or
understanding with any person to participate in a distribution of such Exchange
Notes and that neither the Holder of such Outstanding Notes nor any such other
person is an "affiliate" (as defined in Rule 405 under the Securities Act) of
the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Outstanding Notes may be offered for resale, resold and
otherwise transferred by a Holder thereof (other than a Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such Holder's business and such Holder has no arrangement
with any person to participate in a distribution of such Exchange Notes.
However, the SEC has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and has no arrangement or understanding to
participate in a distribution of Exchange Notes. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in, or has any arrangement or
understanding with any person to participate in, a distribution of the Exchange
Notes to be acquired pursuant to the Exchange Offer, such Holder could not rely
on the applicable interpretations of the staff of the SEC and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for Outstanding
Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes. However, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" herein, please issue the Exchange Notes (and, if applicable,
substitute certificates representing Outstanding Notes for any Outstanding Notes
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Outstanding Notes, please credit the account indicated below
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" herein, please
send the Exchange Notes (and, if applicable, substitute certificates
representing Outstanding Notes for any Outstanding Notes not exchanged) to the
undersigned at the address shown in the box herein entitled "Description of
Outstanding Notes Delivered."
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW ENTITLED "DESCRIPTION OF
OUTSTANDING NOTES DELIVERED" AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED OUTSTANDING NOTES AS SET FORTH IN SUCH BOX.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Outstanding Notes should be listed on a separate signed
schedule affixed hereto.
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES DELIVERED
- -------------------------------------------------------------------------------------------------------------------
Name(s) and Address of Registered Holder(s) Aggregate Principal Amount
(Please fill-in, if blank) Certificate Number(s)* Principal Amount Tendered**
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Totals:
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Outstanding Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Outstanding Notes represented by the listed
certificates. See Instruction 2. Outstanding Notes tendered hereby must be
in denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution______________________________________________
Account Number_______________________Transaction Code Number_______________
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name of Registered Holder
-----------------------------------------------
Window Ticket Number (if any)
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------
Name of Institution Which Guaranteed Delivery
---------------------------
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number Transaction Code Number
---------------------- ---------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO. (UNLESS
OTHERWISE SPECIFIED, 10 ADDITIONAL COPIES WILL BE FURNISHED.)
Name
--------------------------------------------------------------------
Address
-----------------------------------------------------------------
- -------------------------------------------------------- -----------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for To be completed ONLY if certificates for
Outstanding Notes not exchanged and/or Exchange Notes Outstanding Notes not exchanged and/or Exchange
are to be issued in the name of someone other than the Notes are to be sent to someone other than the
person or persons whose signature(s) appear(s) on this person or persons whose signature(s) appear(s) on
Letter of Transmittal below or if Outstanding Notes this Letter of Transmittal below or to such person
delivered by book-entry transfer which are not or persons at an address other than shown in the
accepted for exchange are to be returned by credit to box entitled "Description of Outstanding Notes
an account maintained at the Book-Entry Transfer Delivered" on this Letter of Transmittal above.
Facility other than the account indicated above.
Issue Exchange Notes and/or Outstanding Notes to: Mail Exchange Notes and/or Outstanding Notes to:
Name: Name:
------------------------------------------------ -------------------------------------------
(Please Type or Print) (Please Type or Print)
Address: Address:
--------------------------------------------- ---------------------------------------------
--------------------------------------------- ---------------------------------------------
(Zip Code) (Zip Code)
/ / Credit unexchanged Outstanding Notes delivered
by book-entry transfer to the Book-Entry Transfer
Facility account set forth below.
- ------------------------------------------------------
(Book-Entry Transfer Facility Account)
- -------------------------------------------------------- -----------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
HEREOF (TOGETHER WITH THE CERTIFICATES FOR OUTSTANDING NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX ABOVE
PLEASE SIGN HERE
(All Tendering Holders Must Complete This Letter of Transmittal
And The Accompanying Substitute Form W-9)
Dated: , 2002
-------------------------------------------------
X_______________________________________________________________________________
X_______________________________________________________________________________
(Signature(s)
Area Code and Telephone Number:_________________________________________________
If a holder is tendering any Outstanding Notes, this letter must be signed by
the Holder(s) as the name(s) appear(s) on the certificate(s) for the Outstanding
Notes or by any person(s) authorized to become Holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.
Name:___________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Telephone:______________________________________________________________________
SIGNATURE GUARANTEE (If required by Instruction 3)
Signature(s) Guarantees by an Eligible Institution:_____________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name and Firm)
Dated: _________________________, 2002
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE THE 8
3/4% SENIOR SUBORDINATED NOTES DUE 2009 OF VAIL RESORTS, INC., WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF THE
ISSUED AND OUTSTANDING 8 3/4% SENIOR SUBORDINATED NOTES DUE 2009 OF VAIL
RESORTS, INC.
1. Delivery Of This Letter And Outstanding Notes; Guaranteed Delivery
Procedures.
This Letter of Transmittal is to be completed by Holders of Outstanding
Notes either if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry transfer set forth
in "The Exchange Offer--Procedures for Tendering Outstanding Notes" section of
the Prospectus. Certificates for all physically tendered Outstanding Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile hereof) and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Outstanding Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Outstanding Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Outstanding Notes pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution, (ii) on or prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of Outstanding Notes
and the amount of Outstanding Notes tendered, stating that the tender is being
made thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Outstanding Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by this Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Outstanding Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and any other documents required by
this Letter of Transmittal, are deposited by the Eligible Institution within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter of Transmittal, the Outstanding Notes
and all other required documents is at the election and risk of the tendering
Holders, but delivery will be deemed made only upon actual receipt or
confirmation by the Exchange Agent. If Outstanding Notes are sent by mail, it is
suggested that the mailing be registered mail, properly insured, with return
receipt requested, and made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not Applicable to Holders Who Tender By Book-Entry
Transfer).
If less than all of the Outstanding Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Outstanding Notes to be tendered in the box above
entitled "Description of Outstanding Notes -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Outstanding Notes
will be sent to such tendering Holder, unless otherwise provided in the
appropriate box of this Letter of Transmittal, promptly after the Expiration
Date. See Instruction 4. All of the Outstanding Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
-2-
3. Signatures On This Letter, Bond Powers and Endorsements, Guarantee Of
Signatures.
If this Letter of Transmittal is signed by the Holder of the Outstanding
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Outstanding Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this Letter of Transmittal is signed by the Holder or Holders of the
Outstanding Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If however, the Exchange
Notes are to be issued, or any untendered Outstanding Notes are to be reissued,
to a person other than the Holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificates(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the Holder
or Holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the Holder or Holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OUTSTANDING NOTES OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FINANCIAL
INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE
HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK
EXCHANGES MEDALLION PROGRAM (EACH, AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OUTSTANDING NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF OUTSTANDING NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OUTSTANDING NOTES)
WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR
"SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. Special Issuance and Delivery Instructions.
Tendering Holders of Outstanding Notes should indicate in the applicable
box the name and address to which Exchange Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Outstanding Notes not exchanged
are to be issued or sent, if different from the name or address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification or social security number of the person named must
also be indicated. Holders tendering Outstanding Notes by book-entry transfer
may request that Outstanding Notes not exchanged be credited to such account
maintained at the Book-Entry Transfer Facility as such Holder may designate
hereon. If no such instructions are given, such Outstanding Notes not exchanged
will be returned to the name and address of the person signing this Letter of
Transmittal.
-3-
5. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Outstanding Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Outstanding Notes not exchanged are to
be delivered to, or are to be registered or issued in the name of, any person
other than the Holder of the Outstanding Notes tendered hereby, or if tendered
Outstanding Notes are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer of Outstanding Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed to such tendering Holder and the Exchange Agent will retain possession of
an amount of Exchange Notes with a face amount equal to the amount of such
transfer taxes due by such tendering Holder pending receipt by the Exchange
Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes specified in this
Letter of Transmittal.
6. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Outstanding Notes, by execution of this
Letter of Transmittal, shall waive any right to receive notice of the acceptance
of their Outstanding Notes for exchange.
Although the Company intends to notify Holders of defects or irregularities
with respect to tenders of Outstanding Notes, neither the Company, the Exchange
Agent nor any other person shall incur any liability for failure to give any
such notice.
8. Mutilated, Lost, Stolen or Destroyed Outstanding Notes.
Any Holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. Withdrawal of Tenders.
Tenders of Outstanding Notes may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date. For a withdrawal to be
effective, a written notice of withdrawal must be received by the Exchange Agent
at one of the addresses set forth above. Any such notice of withdrawal must
specify the name of the person having tendered the Outstanding Notes to be
withdrawn, identify the Outstanding Notes to be withdrawn (including the
principal amount of such Outstanding Notes), and (where certificates for
Outstanding Notes have been transmitted) specify the name in which such
Outstanding Notes are registered, if different from that of the withdrawing
Holder. If certificates for Outstanding Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the release of such certificates
the withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution in which case such guarantee will not be required. If Outstanding
Notes have been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Outstanding Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination will be final and binding on all parties. Any Outstanding Notes so
withdrawn will be deemed not to have been
-4-
validly tendered for exchange for purposes of the Exchange Offer. Any
Outstanding Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the Holder thereof without cost to
such Holder (or, in the case of Outstanding Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described above, such Outstanding
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility for the Outstanding Notes) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Outstanding Notes may be retendered by following one of the procedures set forth
in "The Exchange Offer--Procedures for Tendering Outstanding Notes" section of
the Prospectus at any time on or prior to the Expiration Date.
10. Requests For Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus, this Letter of Transmittal and other
related documents may be directed to the Exchange Agent at the address indicated
above.
-5-
IMPORTANT TAX INFORMATION
Under current United States federal income tax law, a Holder of Exchange
Notes is required to provide the Company (as payor) with such Holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 or otherwise
establish a basis for exemption from backup withholding to prevent backup
withholding on any Exchange Notes delivered pursuant to the Exchange Offer and
any payments received in respect of the Exchange Notes. If a Holder of Exchange
Notes is an individual, the TIN is such holder's social security number. If the
Company is not provided with the correct taxpayer identification number, a
Holder of Exchange Notes may be subject to a $50 penalty imposed by the Internal
Revenue Service. Accordingly, each prospective Holder of Exchange Notes to be
issued pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain Holders of Exchange Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective Holders of Exchange
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Company,
through the Exchange Agent, a properly completed Internal Revenue Service Form
W-8 BEN or Form W-8 ECI (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the Holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Company is required to withhold 30% of
any payment made to the Holder of Exchange Notes or other payee. Backup
withholding is not an additional United States federal income tax. Rather, the
United States federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Exchange Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the Exchange Notes,
each prospective Holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions should provide the Company, through the Exchange Agent,
with either: (i) such prospective Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such prospective Holder is awaiting a TIN) and that (A) such prospective
Holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified such prospective
Holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective Holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the Exchange Notes. If the Exchange Notes will be held in more
than one name or are not held in the name of the actual owner, consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance regarding which number to report.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE IMPORTANT TAX INFORMATION)
PAYOR'S NAME: THE BANK OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT OR INDICATE THAT TIN: _______________________________
YOU APPLIED FOR A TIN AND CERTIFY Social Security Number or
BY SIGNING AND DATING BELOW. Employer Identification Number
TIN Applied for / /
------------------------------------- -------------------------------------
Substitute PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued
Department of the Treasury to me);
Internal Revenue Service (2) I am not subject to backup withholding either because: (a) I am
exempt from backup withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I am subject to
Payor's Request for Taxpayer backup withholding as a result of a failure to report all interest
Identification Number ("TIN") or dividends, or (c) the IRS has notified me that I am no longer
and Certification subject to backup withholding; and
(3) any other information provided on this form is true and correct.
Signature: Date:
-------------------------- ---------------------------
- -------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding.
NOTE: FAILURE BY A PROSPECTIVE HOLDER OF NEW NOTES TO BE ISSUED PURSUANT TO
THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF THE NEW NOTES DELIVERED
TO YOU PURSUANT TO THE EXCHANGE OFFER AND ANY PAYMENTS RECEIVED BY YOU
IN RESPECT OF THE NEW NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 1 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 30% of all reportable payments made to me thereafter
will be withheld until I provide a number.
- ----------------------------------------- -------------------------------------
Signature Date
- --------------------------------------------------------------------------------
FORM OF
NOTICE OF GUARANTEED DELIVERY
VAIL RESORTS, INC.
OFFER TO EXCHANGE ITS 8 3/4% SENIOR SUBORDINATED NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS ISSUED AND OUTSTANDING
8 3/4% SENIOR SUBORDINATED NOTES DUE 2009
PURSUANT TO THE PROSPECTUS, DATED , 2002
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2002,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
As set forth in the Prospectus dated , 2002 (the "Prospectus") under the
caption "The Exchange Offer -- Guaranteed Delivery Procedures" and the
accompanying Letter of Transmittal (the "Letter of Transmittal") and Instruction
1 thereto, this form, or one substantially equivalent hereto, must be used to
accept the Exchange Offer if certificates representing the 8 3/4% Senior
Subordinated Notes due 2009 (the "Outstanding Notes") of Vail Resorts, Inc., a
Delaware corporation (the "Company"), are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit a Holder's certificates or other required documents to reach the
Exchange Agent on or prior to the Expiration Date. Such form may be delivered by
hand or transmitted by telegram, telex, facsimile transmission or mail to the
Exchange Agent and must include a guarantee by an Eligible Institution unless
such form is submitted on behalf of an Eligible Institution. Capitalized terms
used and not defined herein have the respective meanings ascribed to them in the
Prospectus.
The Exchange Agent is
THE BANK OF NEW YORK
By Registered or Certified Mail: By Overnight and by Hand Delivery By Hand Delivery to 4:30 p.m.
after 4:30 p.m. on Expiration Date:
THE BANK OF NEW YORK THE BANK OF NEW YORK THE BANK OF NEW YORK
The Bank of New York The Bank of New York The Bank of New York
c/o United States Trust Company of c/o United States Trust Company of c/o United States Trust Company of
New York New York New York
P.O. Box 84 30 Broad Street, 14th Floor 30 Broad Street, B-Level
Bowling Green Station New York, NY 10004-2304 New York, NY 10004-2304
New York, NY 10274-0084
By Facsimile:
(646) 458-8111
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an address or transmission via
facsimile number other than the ones above will not
constitute a valid delivery.
-2-
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies & Gentlemen:
Upon the terms and subject to the conditions set forth in the Prospectus
and the accompanying Letter of Transmittal, receipt of which is hereby
acknowledged, the undersigned hereby tenders to Vail Resorts, Inc., a Delaware
corporation (the "Company"), $__________ principal amount of Outstanding Notes,
pursuant to the guaranteed delivery procedures set forth in the Prospectus and
accompanying Letter of Transmittal.
Certificate Numbers of Outstanding Notes Principal Amount Tendered
(if available)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If Outstanding Notes will be tendered by book-entry transfer to the
Depositary Trust Company, provide account number.
Account No.
------------------------------------------
The undersigned authorizes the Exchange Agent to deliver this Notice of
Guaranteed Delivery to the Company and the Bank Of New York, as Trustee with
respect to the Outstanding Notes tendered pursuant to the Exchange Offer.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
SIGN HERE
- --------------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
- --------------------------------------------------------------------------------
Name(s) of Registered Holder(s)
(Please Type or Print)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Zip Code
- --------------------------------------------------------------------------------
Area code and Telephone Number
Dated: , 2002
--------------------------------------------------------------------------
GUARANTEE
(Not to be Used for Signature Guarantees)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office in the United States, hereby (a) represents
that the above-named person(s) has a net long position in the Outstanding Notes
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, (b) represents that such tender of Outstanding Notes
complies with Rule 14e-4 and (c) guarantees delivery to the Exchange Agent of
certificates representing the Outstanding Notes tendered hereby, in proper form
for transfer, or confirmation of book-entry transfer of such Outstanding Notes
into the Exchange Agent's account at a Book-Entry Transfer Facility (as defined
in the Prospectus), in each case together with a properly completed and duly
executed Letter of Transmittal with any required signature guarantees and any
other documents required by the Letter of Transmittal, within three New York
Stock Exchange trading days after the date hereof.
- ------------------------------------------- --------------------------------
Name of Firm Title
- ------------------------------------------- --------------------------------
Authorized Signature Name (Please Type or Print)
Dated:
- ------------------------------------------- -------------------, 2002
Address
- -------------------------------------------
Area Code and Telephone Number
NOTE: DO NOT SEND CERTIFICATES REPRESENTING OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR OUTSTANDING NOTES MUST BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
