November 12, 1996
Form S-4/A
Amendment to Form S-4 filed August 8, 1996
The following are hereby filed electronically in
connection with the amendment of the S-4.
S-4A, 5.1, 5.2, 5.3, 8.1, 10.60, 10.61, 10.62, 10.63,
12.1, 23.1, 23.2 25.1, 99.1, 99.2, 99.3, 99.4
American Skiing Company
Sunday River Skiway Corporation
Sunday River Ltd.
Perfect Turn, Inc.
LBO Holding, Inc.
Sunday River Transportation, Inc.
Sugarbush Resort Holdings, Inc.
Sugarbush Leasing Company
Sugarbush Restaurants, Inc.
Cranmore, Inc.
Mountain Wastewater Treatment, Inc.
LBO Hotel Co.
S-K-I Limited
Killington Ltd.
Mount Snow Ltd.
Waterville Valley Ski Area, Ltd.
Sugarloaf Mountain Corporation
Killington Restaurants, Inc.
Dover Restaurants, Inc.
Resorts Technologies, Inc.
Resort Software Services, Inc.
Mountainside
Sugartech
Deerfield Operating Company
Pico Ski Area Management Company
By: /s/ Leslie B. Otten
President
<PAGE>
As filed with the Securities and Exchange
Commission on November 12, 1996
Registration No. 333-9763
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
AMENDMENT NO. 1 TO FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
________________
AMERICAN SKIING COMPANY
and Other Registrants
(See Table of Other Registrants Below)
(Exact name of each registrant as specified in its charter)
Maine 7900 01-0503382
(State of (Primary standard (I.R.S. employer
Incorporation) industrial classification identification
code number) number)
Sunday River Access Road
Bethel, Maine 04217
(207) 824-3000
(Address, including zip code, and telephone number,
including
area code, of registrant's principal executive offices)
THOMAS M. RICHARDSON
American Skiing Company
Sunday River Access Road
Bethel, Maine 04217
(207) 824-3000
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
Copy to:
CHRISTOPHER E. HOWARD, ESQ.
American Skiing Company
Sunday River Access Road
Bethel, Maine 04217
(207) 824-3000
________________
Approximate date of commencement of proposed sale to
the public: As soon as practicable after this Registration
Statement becomes effective.
If any of the securities being registered on this
Form are to be offered in connection with the formation of a
holding company and there is compliance with General
Instruction G, check the following box:
________________
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of each Class of Amount Maximum Maximum Amount of
Securities to be Registered to be Offering Aggregate Registration
Registered Price Offering Price Fee
Per (2)
Unit(1)
12% Series B Senior $120,000,000 97.165% $116,598,000 $40,206.21
Subordinated Notes due 2006
Guarantees of the 12% Series B
Senior Subordinated Notes due $120,000,000 None (2) None (2) None (2)
2006
133/4% Series B Subordinated $39,132,000 51.11% $20,000,365 $6,896.68
Discount Notes due 2007
Guarantees of the 133/4%
Series B Subordinated Discount $39,132,000 None (2) None (2) None (2)
Notes due 2007
Totals $136,598,365 $47,102.89
</TABLE>
(1) Estimated solely for the purpose of computing the
registration fee pursuant to Rule 457.
(2) Pursuant to Rule 457(n) under the Securities Act of
1933, no separate fee is payable for the Guarantees.
________________
The registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its
effective date until the registrants 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 of 1933, as amended,
or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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Name of Corporation Jurisdiction Primary IRS Employer Address,
of Standard Identification Including Zip
Incorporation Industrial Number Code and
Classificatio Telephone
n Number
Code Number Including Area
Code, of
Principal
Executive
Offices
Sunday River Skiway Maine 7900 01-0261489 Sunday River
Corporation Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sunday River Ltd. Maine 6599 01-0456264 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Perfect Turn, Inc. Maine 7900 01-0458495 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
LBO Holding, Inc. Maine 7900 01-0488967 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sunday River Maine 4000 01-0261489 Sunday River
Transportation, Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sugarbush Resort Vermont 7900 03-0344431 Sunday River
Holdings, Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sugarbush Leasing Vermont 7900 03-0344432 Sunday River
Company Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sugarbush Restaurants, Vermont 7900 03-0344820 Sunday River
Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Cranmore, Inc. Maine 7900 02-0481418 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Mountain Wastewater Vermont 4990 03-0313610 Sunday River
Treatment, Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
LBO Hotel Co. Maine 6550 01-0508236 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
S-K-I Limited Delaware 7900 03-0294233 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Killington Ltd. Vermont 7900 03-0195484 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Mount Snow Ltd. Vermont 7900 03-0265116 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Waterville Valley Ski New Hampshire 7900 02-0475701 Sunday River
Area, Ltd. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sugarloaf Mountain Maine 7900 01-0232195 Sunday River
Corporation Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Killington Vermont 7900 03-0218459 Sunday River
Restaurants, Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Dover Restaurants, Vermont 7900 03-0264550 Sunday River
Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Resort Technologies, Vermont 5008 99-0046530 Sunday River
Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Resort Software Vermont 5008 03-0320098 Sunday River
Services, Inc. Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Mountainside Maine 6500 01-0288053 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Sugartech Maine 7900 01-0390763 Sunday River
Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Deerfield Operating Vermont 7900 03-0332575 Sunday River
Company Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
Pico Ski Area Vermont 8930 03-0322667 Sunday River
Management Company Access Road
P.O. Box 450
Bethel, ME
04217
(207) 824-3000
</TABLE>
AMERICAN SKIING COMPANY
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K AND RULE 404(a)
SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN S-4
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Registration Statement Item and Heading Prospectus Captions
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus Forepart of the Registration
Statement; Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus Inside Front and Outside Back Cover
Pages of Prospectus; Available
Information
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information Summary; Risk Factors; Selected
Historical Financial Data; Pro Forma
Financial Data; Certain Federal Income
Tax Consequences of the Exchange
Offers
4. Terms of the Transaction Summary; The Exchange Offers;
Description of Senior Subordinated
Notes; Description of Subordinated
Notes; Description of the Company's
Capital Stock; Description of Other
Indebtedness; Certain Federal Income
Tax Considerations; Plan of
Distribution
5. Pro Forma Financial Information Pro Forma Financial Data
6. Material Contacts with Company Being Acquired Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to Not Applicable
be Underwriters
8. Interests of Named Experts and Counsel Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act Indemnification
Liabilities
10. Information With Respect to S-3 Registrants Not Applicable
11. Incorporation of Certain Information by Not Applicable
Reference
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants
13. Incorporation of Certain Information by Not Applicable
Reference
14. Information with Respect to Registrants Other
than S-2 or S-3 Registrants Summary; Recent Developments; Risk
Factors; Selected Historical Financial
Data; Pro Forma Financial Data;
Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Industry Overview;
Business; Experts
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or S-3 Not Applicable
Companies
17. Information with Respect to Companies Other
than S-2 or S-3 Companies Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in Management; The Exchange Offers
an Exchange Offer
</TABLE>
PROSPECTUS
November 12, 1996
AMERICAN SKIING COMPANY
Offer to Exchange its
12% Series B Senior Subordinated Notes due 2006
which have been registered under the Securities Act
(Guaranteed by substantially all of its subsidiaries)
for any and all of its
12% Series A Senior Subordinated Notes due 2006
(Guaranteed by substantially all of its subsidiaries)
Offer to Exchange its
133/4% Series B Subordinated Discount Notes due 2007
which have been registered under the Securities Act
(Guaranteed by substantially all of its subsidiaries)
for any and all of its
133/4% Series A Subordinated Discount Notes due 2007
(Guaranteed by substantially all of its subsidiaries)
Each Exchange Offer will expire at 5:00 p.m., New
York Time, on January 15, 1997, unless such Exchange Offer
is extended.
American Skiing Company, a Maine corporation (the
"Company" or "ASC"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (as
the same may be amended or supplemented from time to time,
the "Prospectus") and the accompanying Letter of Transmittal
relating to the Old Notes (as defined herein) (the "Notes
Letter of Transmittal", which together constitute the "Notes
Exchange Offer"), to exchange up to $120,000,000 aggregate
principal amount of its 12% Series B Senior Subordinated
Notes due 2006 (the "New Notes"), which will have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of
which this Prospectus is a part, for a like principal amount
of its outstanding 12% Series A Senior Subordinated Notes
due 2006 (the "Old Notes"), of which $120,000,000 aggregate
principal amount are outstanding. The terms of the New
Notes are identical in all material respects to the terms of
the Old Notes except that (i) the New Notes will have been
registered under the Securities Act and thus will not bear
restrictive legends restricting their transfer pursuant to
the Securities Act and will not be entitled to registration
rights and (ii) holders of New Notes will not be entitled to
liquidated damages for the Company's failure to register the
Old Notes or New Notes under the Registration Rights
Agreement (as defined herein). The New Notes will be issued
under the same Indenture (as defined herein) as the Old
Notes, and the New Notes and the Old Notes will constitute a
single series of debt securities under the Indenture. In
the event that the Notes Exchange Offer is consummated, any
Old Notes which remain outstanding after consummation of the
Notes Exchange Offer and the New Notes issued in the Notes
Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite
percentage in outstanding principal amount of Notes (as
defined herein) have taken certain actions or exercised
certain rights under the Indenture. The Old Notes and the
New Notes are sometimes referred to herein collectively as
the "Notes."
THIS PROSPECTUS AND THE RELATED LETTERS OF
TRANSMITTAL CONTAIN IMPORTANT INFORMATION. HOLDERS OF OLD
NOTES AND OLD SUBORDINATED NOTES (AS DEFINED HEREIN) ARE
URGED TO READ THIS PROSPECTUS AND THE RELATED LETTERS OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR OLD NOTES OR OLD SUBORDINATED NOTES PURSUANT TO THE
EXCHANGE OFFERS.
________________
See "Risk Factors", commencing on page 30 of this
Prospectus, for a discussion of certain factors which should
be considered in connection with the Exchange Offers and an
investment in the New Notes and the New Subordinated Notes
(as defined herein) offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
________________
Until February 13, 1997 (90 days after commencement
of the Exchange Offers), all dealers effecting transactions
in the New Notes and the New Subordinated Notes, whether or
not participating in the Exchange Offers, may be required to
deliver a Prospectus.
The Company also hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal relating to the Old
Subordinated Notes (as defined herein) (the "Subordinated
Notes Letter of Transmittal", which together constitute the
"Subordinated Notes Exchange Offer"), to exchange up to
$39,132,000 aggregate principal amount of its 133/4% Series
B Subordinated Discount Notes due 2007 (the "New
Subordinated Notes"), which will have been registered under
the Securities Act, pursuant to a Registration Statement of
which this Prospectus is a part, for a like principal amount
of its outstanding 133/4% Series A Subordinated Discount
Notes due 2007 (the "Old Subordinated Notes"), of which
$39,132,000 aggregate principal amount are outstanding. The
terms of the New Subordinated Notes are identical in all
material respects to the terms of the Old Subordinated Notes
except that (i) the New Subordinated Notes will have been
registered under the Securities Act and thus will not bear
restrictive legends restricting their transfer pursuant to
the Securities Act and will not be entitled to registration
rights and (ii) holders of New Subordinated Notes will not
be entitled to liquidated damages for the Company's failure
to register the Old Subordinated Notes or New Subordinated
Notes under the Subordinated Note Registration Rights
Agreement (as defined herein). The New Subordinated Notes
will be issued under the same Subordinated Note Indenture
(as defined herein) as the Old Subordinated Notes, and the
New Subordinated Notes and the Old Subordinated Notes will
constitute a single series of debt securities under the
Subordinated Note Indenture. In the event that the
Subordinated Notes Exchange Offer is consummated, any Old
Subordinated Notes which remain outstanding after
consummation of the Subordinated Notes Exchange Offer and
the New Subordinated Notes issued in the Subordinated Notes
Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite
percentage in outstanding principal amount of Subordinated
Notes (as defined herein) have taken certain actions or
exercised certain rights under the Subordinated Note
Indenture. The Old Subordinated Notes and the New
Subordinated Notes are sometimes referred to herein
collectively as the "Subordinated Notes." The Subordinated
Notes Exchange Offer and the Notes Exchange Offer are
sometimes referred to herein collectively as the "Exchange
Offers." The New Notes (including the Subsidiary Guarantees
(as defined)) and the New Subordinated Notes (including the
Subordinated Note Subsidiary Guarantees (as defined)) are
hereinafter collectively referred to as the "Securities."
The Company will accept for exchange any and all Old
Notes and any and all Old Subordinated Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City
time, on January 15, 1997, unless extended by the Company in
its sole discretion (the "Expiration Date"). Tenders of Old
Notes or Old Subordinated Notes may be withdrawn at any time
prior to the Expiration Date. The Exchange Offers are
subject to certain customary conditions. See "The Exchange
Offers - Terms of the Exchange Offers."
The New Notes and the New Subordinated Notes are
being offered for exchange in the Exchange Offers in order
to satisfy certain obligations of the Company under the
Registration Rights Agreement (the "Registration Rights
Agreement") and the Subordinated Note Registration Rights
Agreement ("the "Subordinated Note Registration Rights
Agreement"), each dated as of June 28, 1996 (collectively,
the "Registration Rights Agreements") among the Company, the
Guarantors (as defined) and the Initial Purchasers (as
defined herein) of the Old Notes and Bear, Stearns & Co.,
Inc. ("Bear Stearns"), as initial purchaser of the Old
Subordinated Notes, respectively. The Company is making the
Exchange Offers in reliance on the position of the staff of
the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in
other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that
the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect
to the Exchange Offers, as it has in such interpretive
letters to third parties. Based on these interpretations by
the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the
Company believes that New Notes and New Subordinated Notes
issued pursuant to the Exchange Offers in exchange for Old
Notes and Old Subordinated Notes may be offered for resale,
resold and otherwise transferred by a holder thereof
(holders of the Notes or Subordinated Notes are each
individually hereinafter referred to as a "Holder" and
collectively as the "Holders") (other than a Holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes and New
Subordinated Notes are acquired in the ordinary course of
such Holder's business and that such Holder is not
participating, and has no arrangement or understanding with
any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Notes or New
Subordinated Notes. However, any Holder of Old Notes or Old
Subordinated Notes who is an "affiliate" of the Company or
who intends to participate in the Exchange Offers for the
purpose of distributing New Notes or the New Subordinated
Notes, or any broker-dealer who purchased Old Notes or Old
Subordinated Notes from the Company to resell pursuant to
Rule 144A under the Securities Act ("Rule 144A") or any
other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the staff of
the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Old Notes or Old
Subordinated Notes in the Exchange Offers and (c) must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
sale or other transfer of such Old Notes or Old Subordinated
Notes unless such sale is made pursuant to an exemption from
such requirements. In addition, if any broker-dealer holds
Old Notes or Old Subordinated Notes acquired for its own
account as a result of market-making or other trading
activities and exchanges such Old Notes for New Notes or
exchanges such Old Subordinated Notes for New Subordinated
Notes, then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in connection
with any resales of such New Notes or New Subordinated
Notes. See "The Exchange Offers - Resales of New Notes and
New Subordinated Notes."
The New Notes will mature on July 15, 2006. Interest
on the Notes will accrue at the rate of 12% per annum and
will be payable semi-annually in arrears on January 15 and
July 15 of each year, commencing January 15, 1997.
The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on and after
July 15, 2001 at the redemption prices set forth herein,
plus accrued and unpaid interest to the applicable
redemption date. In addition, on or prior to July 15, 1999,
the Company may redeem up to 25% in aggregate principal
amount of the New Notes at a redemption price of 112% of the
principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of one
or more Equity Offerings (as defined); provided that at
least 75% in aggregate principal amount of the New Notes
originally issued under the Indenture remains outstanding
immediately after the occurrence of each such redemption.
Upon the occurrence of a Change of Control (as defined), the
Company will be required to make an offer to repurchase all
or any part of each Holder's Notes at an offer price in cash
equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon to the date of
repurchase. Depending upon the circumstances prevailing at
the time of such a Change of Control, there is a risk that
the Company may be unable to satisfy such obligations. See
"Description of Senior Subordinated Notes."
The New Notes will be general unsecured obligations
of the Company (with the sole exception of the security
provided under the Pledge and Disbursement Agreement (as
defined)), subordinated in right of payment to all existing
and future Senior Debt (as defined) of the Company,
including all borrowings of the Company under the Senior
Credit Facility (as defined). The New Notes will be jointly
and severally guaranteed (the "Subsidiary Guarantees") on an
unsecured, senior subordinated basis by certain of the
Company's subsidiaries and certain subsidiaries created
after the issuance of the New Notes (the "Guarantors"). The
Subsidiary Guarantees will be full and unconditional and
will be subordinated in right of payment to all Senior Debt
of the Guarantors. As of July 28, 1996, after giving pro
forma effect to the Company's acquisition of the 49%
minority interest in Sugarloaf not owned by it and the
divestitures of the Waterville Valley and Mt. Cranmore
resorts pursuant to a consent decree entered into between
the Company and the U.S. Department of Justice, the
aggregate amount of outstanding Senior Debt of the Company
would have been $53.8 million. The Indenture will permit the
Company and the Guarantors to incur additional Senior Debt,
subject to certain limitations. See "The Acquisition;
Antitrust Matters; Use of Proceeds," "Pro Forma
Capitalization" and "Description of Senior Subordinated
Notes."
The New Subordinated Notes will mature on January
15, 2007. Interest on the New Subordinated Notes will not
accrue prior to July 15, 2001. Thereafter, interest will
accrue at the rate of 13 3/4 % per annum and will be payable
semi-annually in arrears in cash on January 15 and July 15
of each year, commencing on January 15, 2002.
The New Subordinated Notes will be redeemable at the
option of the Company, in whole or in part, at any time on
and after July 15, 2001 at the redemption prices set forth
herein, plus accrued and unpaid interest to the applicable
redemption date. In addition, on or prior to July 15, 1999,
the Company may redeem the New Subordinated Notes, in whole
or in part, at a redemption price of 113.75% of the Accreted
Value (as defined) thereof, to the redemption date, with the
net proceeds of one or more Equity Offerings. Upon the
occurrence of a Change of Control, the Company will be
required to make an offer to purchase all or any part of
each Holder's New Subordinated Notes at an offer price in
cash equal to 101% of the Accreted Value thereof (if prior
to July 15, 2001), or 101% of the principal amount thereof
(if on or after July 15, 2001), to the date of repurchase.
Depending upon the circumstances prevailing at the time of
such a Change of Control, there is a risk that the Company
may be unable to satisfy such obligations. See "Description
of Subordinated Notes."
The New Subordinated Notes will be general unsecured
obligations of the Company, subordinated in right of payment
to all existing and future Subordinated Note Senior Debt (as
defined) of the Company, including all borrowings of the
Company under the Senior Credit Facility and all obligations
of the Company with respect to the New Notes and any Old
Notes remaining outstanding. The New Subordinated Notes will
be jointly and severally guaranteed (the "Subordinated Note
Subsidiary Guarantees") on an unsecured, subordinated basis
by the Guarantors. The Subordinated Note Subsidiary
Guarantees will be full and unconditional, and will be
subordinated in right of payment to all Subordinated Note
Senior Debt of the Guarantors.
Any Old Notes and Old Subordinated Notes not
tendered and accepted in the Exchange Offers will remain
outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto
under the Indenture and the Subordinated Note Indenture,
respectively (except for those rights which terminate upon
consummation of the Exchange Offers). Following
consummation of the Exchange Offers, the Holders of Old
Notes and Old Subordinated Notes will continue to be subject
to the existing restrictions upon transfer thereof and the
Company will have no further obligation to such Holders
(other than to certain Holders under certain limited
circumstances) to provide for registration under the
Securities Act of the Old Notes and Old Subordinated Notes
held by them. To the extent that Old Notes or Old
Subordinated Notes are tendered and accepted in the Exchange
Offers, a Holder's ability to sell untendered Old Notes or
Old Subordinated Notes, as the case may be, could be
adversely affected. See "Risk Factors - Consequences of
Failure to Exchange" and "The Exchange Offers - Certain
Consequences of a Failure to Exchange."
This Prospectus, together with the Notes Letter of
Transmittal or the Subordinated Notes Letter of Transmittal,
as appropriate, is being sent to all registered Holders of
Old Notes and Old Subordinated Notes as of November 25,
1996.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration
Statement (which term shall include any amendments thereto)
on Form S-4 under the Securities Act with respect to the
securities offered by this Prospectus. This Prospectus,
which constitutes a part of the Registration Statement, does
not contain all the information set forth in the
Registration Statement and the exhibits and schedules
thereto, to which reference is hereby made. Each statement
made in this Prospectus referring to a document filed as an
exhibit or schedule to the Registration Statement is not
necessarily complete and is qualified in its entirety by
reference to the exhibit or schedule for a complete
statement of its terms and conditions. In addition, upon
the effectiveness of the Registration Statement filed with
the Commission, the Company will be subject to the
informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith the Company will file periodic reports and other
information with the Commission relating to its business,
financial statements and other matters. Any interested
parties may inspect and/or copy the Registration Statement,
its schedules and exhibits, and the periodic reports and
other information filed in connection therewith, at the
public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional
offices located at Citicorp Center, 500 W. Madison Street,
Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of
such materials can be obtained at prescribed rates by
addressing written requests for such copies to the Public
Reference Section of the Commission at its principal office
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Such material may also be accessed
electronically by means of the Commission's home page on the
Internet at http://www.sec.gov., which contains reports,
proxy and information statements and other information
regarding registrants, including the Company, that file
electronically with the Commission. The obligations of the
Company under the Exchange Act to file periodic reports and
other information with the Commission may be suspended,
under certain circumstances, if the New Notes and the New
Subordinated Notes are each held of record by fewer than 300
holders at the beginning of any fiscal year and the New
Notes and the New Subordinated Notes are not listed on a
national securities exchange. The Company has agreed that,
whether or not it is required to do so by the rules and
regulations of the Commission, for so long as any of the
Notes or Subordinated Notes remain outstanding it will
furnish to the holders of the Notes and the Subordinated
Notes and file with the Commission (unless the Commission
will not accept such a filing) the financial information and
management's discussion and analysis of financial condition
and results of operations that would be included in all
annual, quarterly and current reports that the Company is or
would be required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act. In addition,
for so long as any of the Old Notes or Old Subordinated
Notes remain outstanding, the Company has agreed to make
available to any prospective purchaser of the Old Notes or
Old Subordinated Notes or beneficial owner of the Old Notes
or Old Subordinated Notes in connection with any sale
thereof the information required by Rule 144A(d)(4) under
the Securities Act.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION WITH RESPECT TO ANY
SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY OR AN
OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION
OF SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
SUMMARY
The following summary is qualified in its entirety
by, and should be read in conjunction with, the more
detailed information and financial data, including the
financial statements and notes thereto, appearing elsewhere
in this Prospectus. Unless the context otherwise requires,
when used historically, the terms the "Company" or "ASC"
refer to the combined businesses of the ski resorts and
related properties owned by Leslie B. Otten, which were
contributed to ASC simultaneously with the consummation of
the acquisition of S-K-I Ltd. (including the financing
thereof, the "Acquisition"), and when used in the present
tense or prospectively, also include the business of S-K-I
Ltd. acquired in the Acquisition. The Company will divest
the Waterville Valley and Mt. Cranmore resorts pursuant to a
consent decree (the "Consent") into which the Company has
entered with the United States Department of Justice
("DOJ"). See "The Company," "The Acquisition; Antitrust
Matters; Use of Proceeds" and "Pro Forma Financial Data."
Unless otherwise specified, all data contained herein
includes the Waterville Valley and Mt. Cranmore resorts.
Data or other statements pertaining to the Company's EBITDA
(as defined herein) may not be comparable to similarly
titled data of other companies. References herein to a
fiscal year refer to the fiscal year ended or ending on the
last Sunday in July of such year with respect to the
Company, and on July 31 of such year with respect to S-K-I
Ltd.
The Company
Giving effect to the Acquisition, ASC is one of the
largest mountain resort operators in North America, owning
and operating eight ski resorts in the northeastern United
States. ASC's properties now include Killington, Mt.
Snow/Haystack and Sugarbush ski resorts in Vermont;
Waterville Valley, Attitash/Bear Peak and Mt. Cranmore ski
resorts in New Hampshire; and Sunday River and Sugarloaf/USA
ski resorts in Maine. These resorts recorded over 3.3
million skier visits during the 1995/96 ski season,
representing approximately 24% of total skier visits in the
northeastern United States and approximately 6% of total
skier visits nationally. ASC's ski resort properties offer
approximately 4,000 acres of skiable terrain (of which
approximately 82% are covered by snowmaking capability), 777
trails and 121 lifts. For the fiscal year ended July 28,
1996, after giving pro forma effect to the Acquisition, ASC
generated approximately $187.6 million in total revenues,
$3.8 million in net loss and $34.6 million in EBITDA, in
each case including the Waterville Valley and Mt. Cranmore
resorts, which are to be divested. Excluding Waterville
Valley and Mt. Cranmore, ASC generated total revenues of
$172.0 million, $3.8 million in net loss and $32.6 million
in EBITDA over such period after giving pro forma effect to
the Acquisition.
The Company entered into the Consent with the DOJ in
order to resolve the concerns identified by the DOJ in
response to the Company's filing with the Federal Trade
Commission under the Hart-Scott-Rodino Act. The United
States filed a civil antitrust complaint through the DOJ
alleging that the Acquisition would violate Section 7 of the
Clayton Act due to a substantial increase in the
concentration of ownership of ski resorts to which eastern
New England residents (i.e., those in Maine, eastern
Massachusetts, Connecticut and Rhode Island) practicably can
go for weekend ski trips, and of those to which Maine
residents practicably can go for day ski trips. The DOJ
complaint alleged that the Acquisition threatened to raise
the price of, or reduce discounts for, weekend and day
skiing to consumers living in those areas in violation of
Section 7 of the Clayton Act. Simultaneously with the
filing of the complaint, the DOJ also filed the Consent as a
proposed settlement that would permit the Company to
complete the Acquisition, but will also require the
divestiture of the Waterville Valley and Mount Cranmore
resorts in order to preserve and enhance competition for
skiers in eastern New England.
On a combined basis, the Waterville Valley and Mt.
Cranmore resorts recorded approximately 382,000 skier visits
during the 1995-96 ski season (11.4% of total 1995-96 skier
visits for the Company, after giving pro forma effect to the
Acquisition) and, during the fiscal year ended July 28,
1996, generated approximately $15.6 million in total
revenues, $0.0 million in net loss and $2.0 million in
EBITDA (8.3%, (1.3)% and 5.8%, respectively, of the
Company's revenues, net loss and EBITDA for such period
after giving pro forma effect to the Acquisition). The net
assets to be divested of these two resorts, as of July 28,
1996, aggregate approximately $16.7 million, or 5.6% of
total assets of the Company as of such date, and they
represent on a combined basis approximately 445 acres of
skiable terrain, 90 trails and 19 lifts. See "The
Acquisition; Antitrust Matters; Use of Proceeds" and "Pro
Forma Financial Data." The Company has entered into a
Purchase and Sale Agreement for the sale of the Waterville
Valley and Mt. Cranmore resorts for a purchase price of
$17,500,000 with closing anticipated to occur on or before
November 27, 1996. See "Recent Developments."
The Company has experienced consistent growth since
its inception in 1980 when it acquired the Sunday River ski
resort. Skier visits at Sunday River have grown from less
than 50,000 in the 1980/81 ski season to approximately
589,000 in the 1995/96 ski season. The Company acquired
Attitash/Bear Peak in fiscal 1994, and Sugarbush and Mt.
Cranmore in fiscal 1995. Since their acquisition by the
Company, skier visits have increased by 24% at Attitash/Bear
Peak, 13% at Sugarbush and 32% at Mt. Cranmore. The Company
has successfully implemented its operating strategy at the
acquired resorts, and has realized significant increases in
earnings and EBITDA for each of these resorts following its
acquisition.
The operations of S-K-I Ltd. ("SKI"), which were
acquired by the Company in the Acquisition on June 28, 1996,
include Killington, a six mountain resort which is the
largest ski area in the Northeast; Mt. Snow/Haystack,
Waterville Valley and Sugarloaf/USA ski resorts, which
benefit from their proximity to New York (in the case of Mt.
Snow/Haystack) and Boston. These properties recorded a total
of over 2.0 million skier visits during the 1995/96 ski
season. Management of the Company believes that ASC will
realize growth in skier visits and profitability from (i)
the implementation of the Company's successful operating
strategy at the SKI resorts and the continued pursuit of
that strategy at the Company's recently acquired resorts;
(ii) operational synergies and economies of scale available
to the Company as a result of the Acquisition; and (iii)
coordinated marketing and promotion of each of the Company's
resorts in a single region. See "Business."
Management also believes that the Company is well
positioned to benefit from certain trends in the North
American ski industry, including the emergence of the "echo
boom" generation (the children of the "baby boom"
generation), continued consolidation, growing interest in
snowboarding, and demand among families for vacation
property ownership. As the cost of infrastructure to
maintain competitiveness in the ski industry has grown, the
number of U.S. ski areas has declined. There are currently
516 ski areas in operation in the nation as compared to over
700 in 1986, while skier visits have remained relatively
stable over the same period. Management believes that the
Company, as the largest mountain resort operator in North
America, will be well positioned to continue its growth both
internally and through acquisitions. Management also
believes that the ski industry is poised for growth through
increased participation in the sport, especially among the
echo boom generation who are reaching their teen years, the
prime entry age for skiing and snowboarding, over the next
decade. The Company and other emerging multiple resort
operators are expected to focus more of their marketing
efforts on attracting new participants to the sport.
Strategy
The Company intends to pursue a strategic plan that
mirrors the formula successfully employed at Sunday River
and its recently acquired resorts.
Invest in the Ski Experience. Management believes that the
most efficient way to increase resort visitation is to
provide the highest quality skiing available. The Company
intends to improve the infrastructure at each property,
emphasizing modernization and introducing at the SKI
properties the snowmaking and trail grooming practices
successfully developed at the Company's other ski areas. The
largest portion of the capital budget is targeted for
increasing lift capacity through the installation of high
capacity lifts, including those with high speed drives and
detachable chairs. The Company believes that modernizing
lifts appeals to skiers because it allows a resort to
transport larger numbers of skiers to the summit faster,
reducing time spent in lift lines and on lifts. By improving
snowmaking coverage, the Company will further reduce its
reliance on natural snowfall and increase skiers' confidence
that high quality conditions will be available
notwithstanding the weather. Trail grooming further enhances
the skiing experience by assuring a consistent surface under
changing weather conditions. Management believes that the
Company has developed a unique system for snowmaking and
grooming that produces a higher quality, longer lasting
trail surface than exists at most other ski areas.
Emphasize Marketing. The Company's marketing
program is designed to attract both day
skiers and vacationers. Approximately 35
million people live within the Company's day
skiing market, which includes Boston and New
York. With the acquisition of SKI, the
Company's marketing program will become more
focused on the population centers located in
Massachusetts, Connecticut, New York and New
Jersey. The Company's marketing program
promotes each resort's unique attributes and
highlights the improvements made through the
capital program (e.g., new lifts, increased
snowmaking). In an effort to attract both new
and existing skiers, the Company intends to
expand its "Perfect Turn" skier development
program, a proprietary ski instruction
methodology which guarantees that new skiers
will learn to ski in one day, and its "Edge
Card" frequent skier program, which rewards
frequent skiers with free lift tickets. With
multiple resorts extending from southern
Vermont to northern Maine, ASC believes that
its cross-marketing programs will become even
more effective in the future. In order to
develop future generations of visitors,
younger skiers are targeted through an
emphasis on the Company's innovative
snowboarding facilities. Snowboarding
represents one of the fastest growing
segments of the ski resort business. To draw
families to its resorts, the Company has
highlighted the availability of intermediate
skiing terrain, which appeals to families
wishing to ski together.
Control Multiple Revenue Sources. The
Company's revenues are derived from a diverse group
of operations. In addition to lift ticket sales,
which represented approximately 40% of total
revenues for the fiscal year ended July 28, 1996,
the Company generates revenues from equipment
rentals, ski lessons, restaurant and retail sales,
lodging services and real estate sales. Management
believes that controlling multiple profit centers at
its resorts enables the Company to maintain
consistent quality standards for all elements of the
guest experience while maximizing the revenues, net
income and EBITDA generated by the Company's fixed
asset base and marketing expenditures.
Pursue Cost Saving Opportunities. Management
believes that a significant element of the
success to date at Sunday River, as well as
at the recently acquired properties, is
management's focus on cost controls. The
Company expects to realize significant cost
savings as it integrates the SKI operations
with those of the Company through the
elimination of certain redundant positions in
the corporate staff and in the accounting,
marketing, and information systems areas and
reduces insurance expenses and costs
associated with shareholder services. The
Company expects to generate significant
additional operating efficiencies and cost
savings in such areas as purchasing and
marketing.
Selectively Develop Mountainside Real
Estate. Mountainside real estate development
permits the Company to generate increased
revenues and profitability through real
estate sales, while also increasing a
resort's bed base and amenities to attract
more vacationing skiers, which is the most
profitable customer segment. For the fiscal
years ended 1996, 1995 and 1994, the
percentage of total revenues attributable to
development of real estate was 13.5%, 14.5%
and 20.1%, respectively. Such development,
which is only pursued following significant
pre-construction marketing and sales, has
proven to be highly profitable for the
Company. At Sunday River, the Company has
developed and sold over 700 condominiums and,
most recently, developed a quartershare
condominium hotel known as the "Summit
Hotel." The Summit Hotel is a condominium in
which the Company retains ownership of the
restaurants, commercial space, conference
facilities and infrastructure facilities.
Quartershare interests (13 weeks evenly
divided over the year) in the hotel suites
are sold to individual owners as residential
condominiums. The Company operates the hotel
and provides optional management of the
quartershare units for individual owners. The
Summit Hotel concept will be the focus of the
Company's real estate development activities,
with additional hotels planned for selected
resort locations over the next several years.
The number and location of projects will be
based on market conditions at the time,
determined primarily by the results of
pre-construction marketing and sales
programs.
Expand Off-Season Activities. Each resort has developed
off-season activities in order to improve utilization of
facilities, retain quality employees and contribute to
coverage of fixed operating costs. Sugarloaf, Killington,
Mt. Snow and Sugarbush operate championship golf courses,
and all the resorts offer a variety of summer outdoor
recreational opportunities ranging from tennis and mountain
biking to off-site activities such as whitewater rafting,
canoeing, fishing and hiking in the surrounding mountains.
Each resort has also begun to sponsor cultural programs
during the summer that increase utilization of the existing
bed base and conference and convention facilities.
The Acquisition and the Divestiture
On February 13, 1996, the Company entered into an
agreement (the "Acquisition Agreement") to acquire SKI by
merger resulting in a total purchase price of approximately
$104.6 million plus assumed debt of $58.5 million as of June
28, 1996 (consisting of long-term debt of $20.1 million,
current portion of long-term debt of $3.0 million,
subordinated debentures of $10.9 million, and other current
and long-term liabilities of $24.5 million). The Acquisition
was consummated on June 28, 1996, whereupon S-K-I became a
wholly-owned subsidiary of the Company. For the year ended
July 28, 1996, the Company had total revenue of $73.4
million, net loss of $2.2 million, and EBITDA of $13.2
million, which include results of operations of SKI
subsequent to the Acquisition on June 28, 1996. For the
years ended July 31, 1995 and 1994, the Company had total
revenues of $54.7 million and $33.2 million, net income of
$5.1 million and $4.9 million, and EBITDA of $11.6 million
and $8.3 million, respectively. For the years ended July
31, 1995 and 1994, SKI had total revenues of $114.0 million
and $98.9 million, net income of $1.0 million and $4.6
million, and EBITDA of $19.9 million and $21.5 million,
respectively. Simultaneously with the closing of the
Acquisition, Leslie B. Otten contributed all of the
outstanding capital stock of the corporations comprising
Sunday River, Sugarbush, Attitash/Bear Peak and Mt. Cranmore
to the Company. The net proceeds from the offerings of the
Old Notes, the Old Subordinated Notes and the Common Stock
(as defined) (the "Offerings"), together with borrowings
under the Senior Credit Facility and available cash, were
used to finance the Acquisition, repay certain indebtedness
of the Company and SKI, fund the acquisition of the 49%
interest in Sugarloaf not owned by SKI, fund a pledge
account to secure the payment of the first two interest
payments on the Notes (subject, in the case of the first
such payment, to the subordination provisions of the Notes)
and pay certain expenses relating to the Acquisition. See
"The Acquisition; Antitrust Matters; Use of Proceeds."
In connection with the consummation of the
Acquisition, the Company and the Guarantors also entered
into the following transactions:
(1) A revolving credit facility in a principal
amount of up to $65.0 million pursuant to the
Senior Credit Facility. See "Description of
Other Indebtedness - The Senior Credit
Facility."
(2) Issuance of Old Notes in the aggregate
principal amount of $120.0 million. The Old
Notes were initially purchased by Bear
Stearns and SPP Hambro & Co., LLC (together
with Bear Stearns, the "Initial Purchasers").
(3) Issuance of units (the "Units") consisting of
Old Subordinated Notes in the aggregate
principal amount of $39,132,000 and 39,132
shares of common stock, par value $.01 per
share, of the Company (the "Common Stock" or
the "Unit Shares") for $20,000,365. The
Units were initially purchased by Bear
Stearns.
The principal executive offices of the Company are located
at Sunday River Access Road, Bethel, Maine 04217, and its
telephone number is (207) 824-3000.
<PAGE>
The Notes Exchange Offer
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<S> <C>
Registration Rights Agreement On June 28, 1996, the Old Notes were sold by
the Company to the Initial Purchasers, which
subsequently resold the Old Notes to qualified
institutional buyers and/or institutional
accredited investors. In connection with the
issuance of the Old Notes, the Company, the
Guarantors and the Initial Purchasers entered
into the Registration Rights Agreement which
grants the Holders of the Old Notes certain
exchange and registration rights. This Notes
Exchange Offer is intended to satisfy the
Company's obligations under the Registration
Rights Agreement. See "The Exchange Offers -
Purpose and Effect of the Exchange Offers."
The Notes Exchange Offer Up to $120,000,000 aggregate
principal amount of New Notes are
being offered in exchange for a
like aggregate principal amount of
Old Notes. Old Notes may be
tendered for exchange in whole or
in part in a principal amount of
$1,000 and integral multiples
thereof. The terms of the New
Notes and the Old Notes are
identical in all material
respects. The Company will issue
the New Notes to Holders on the
earliest practical date following
the Expiration Date. See "The
Exchange Offers - Terms of the
Exchange Offers."
The Company is making the Notes
Exchange Offer in reliance on the
position of the staff of the
Division of Corporation Finance of
the Commission as set forth in
certain interpretive letters
addressed to third parties in
other transactions. However, the
Company has not sought its own
interpretive letter and there can
be no assurance that the staff of
the Division of Corporation
Finance of the Commission would
make a similar determination with
respect to the Notes Exchange
Offer as it has in such
interpretive letters to third
parties. Based on interpretations
by the staff of the Division of
Corporation Finance, and subject
to the two immediately following
sentences, the Company believes
that New Notes issued pursuant to
the Notes Exchange Offer in
exchange for Old Notes may be
offered for resale, resold and
otherwise transferred by a Holder
thereof (other than a Holder who
is a broker-dealer) without
further compliance with the
registration and prospectus
delivery requirements of the
Securities Act, provided that such
New Notes are acquired in the
ordinary course of such Holder's
business and that such Holder is
not participating, and has no
arrangement or understanding with
any person to participate, in a
distribution (within the meaning
of the Securities Act) of such New
Notes. However, any Holder of Old
Notes who is an "affiliate" of the
Company or who intends to
participate in the Notes Exchange
Offer for the purpose of
distributing New Notes, or any
broker-dealer who purchased Old
Notes from the Company to resell
pursuant to Rule 144A or any other
available exemption under the
Securities Act, (a) will not be
able to rely on the
interpretations of the staff of
the Division of Corporation
Finance of the Commission set
forth in the above-mentioned
interpretive letters, (b) will not
be permitted or entitled to tender
such Old Notes in the Notes
Exchange Offer and (c) must comply
with the registration and
prospectus delivery requirements
of the Securities Act in
connection with any sale or other
transfer of such Old Notes unless
such sale is made pursuant to an
exemption from such requirements.
In addition, if any broker-dealer
holds Old Notes acquired for its
own account as a result of market-
making or other trading activities
and exchanges such Old Notes for
New Notes, then such broker-dealer
must deliver a prospectus meeting
the requirements of the Securities
Act in connection with any resales
of such New Notes. See "The
Exchange Offers - Resales of New
Notes and New Subordinated Notes."
Expiration Date 5:00 p.m., New York City time, on
January 15, 1997, unless the
Exchange Offers are extended by
the Company in its sole
discretion, in which case the term
"Expiration Date" means the latest
date and time to which the
Exchange Offers are extended. See
"The Exchange Offers - Terms of
the Exchange Offers - Expiration
Date; Extensions; Amendments."
Conditions to the Notes Exchange
Offer The Notes Exchange Offer is
subject to certain customary
conditions, which may be waived by
the Company. See "The Exchange
Offers - Terms of the Exchange
Offers - Certain Conditions to the
Exchange Offers."
Procedures for Tendering the Old For the Old Notes to be validly
Notes tendered pursuant to the Notes
Exchange Offer, (i) the Notes
Letter of Transmittal, or a
facsimile thereof, properly
completed, signed and dated in
accordance with the instructions
contained herein and therein, and
mailed or otherwise delivered,
together with any other required
documentation, or an Agent's
Message (as defined herein) in
connection with a book-entry
transfer of Old Notes must be
received by, the Exchange Agent at
the address set forth herein and
either (a) the Old Notes to be
tendered must be received by the
Exchange Agent at such address or
(b) such Old Notes must be
transferred pursuant to the
procedures for book-entry transfer
described herein and a
confirmation of such book-entry
transfer must be received by the
Exchange Agent, in each case prior
to the Expiration Date or (ii) the
guaranteed delivery procedures
described herein must be complied
with. Holders of Old Notes
registered in the name of a
broker, dealer, commercial bank,
trust company or other nominee are
urged to contact such person
promptly if they wish to tender
Old Notes pursuant to the Notes
Exchange Offer. See "The Exchange
Offers - Terms of the Exchange
Offers - Procedures for Tendering
Old Notes and Old Subordinated
Notes." Notes Letters of
Transmittal and certificates
representing Old Notes should not
be sent to the Company. Such
documents should only be sent to
the Exchange Agent. Questions
regarding how to tender and
requests for information should be
directed to the Exchange Agent.
See "The Exchange Offers - Terms
of the Exchange Offers - Exchange
Agent."
By executing the Notes Letter of
Transmittal, each Holder will
represent to the Company that,
among other things, (i) it is not
an "affiliate" of the Company,
(ii) any New Notes to be received
by it are being acquired in the
ordinary course of its business,
(iii) it has no arrangement or
understanding with any person to
participate in a distribution
(within the meaning of the
Securities Act) of such New Notes,
and (iv) if such Holder is not a
broker-dealer, such Holder is not
engaged in, and does not intend to
engage in, a distribution (within
the meaning of the Securities Act)
of such new Notes. Each broker-
dealer that receives New Notes for
its own account pursuant to the
Notes Exchange Offer must
acknowledge that it acquired the
Old Notes for its own account as
the result of market-making
activities or other trading
activities and must agree that it
will deliver a prospectus meeting
the requirements of the Securities
Act in connection with any resale
of such New Notes. See "The
Exchange Offers - Resales of New
Notes and New Subordinated Notes."
Guaranteed Delivery Procedures Holders of Old Notes who wish to
tender their Old Notes and whose
Old Notes are not immediately
available or who cannot deliver
their Old Notes, the Notes Letter
of Transmittal or any other
documents required by the Notes
Letter of Transmittal to the
Exchange Agent prior to the
Expiration Date or if the
procedure for book-entry transfer
cannot be completed before such
date, must tender their Old Notes
according to the guaranteed
delivery procedures set forth
under "The Exchange Offers - Terms
of the Exchange Offers -
Procedures for Tendering Old Notes
and Old Subordinated Notes -
Guaranteed Delivery."
Withdrawal Rights Tenders may be withdrawn at any
time prior to the Expiration Date
by delivering a written notice of
withdrawal to the Exchange Agent
in conformity with certain
procedures set forth under "The
Exchange Offers - Terms of the
Exchange Offers - Withdrawal
Rights."
Accrued Interest on the New Notes
and Old Notes Each New Note will bear interest
from its issuance date. Holders
of Old Notes that are accepted for
exchange will receive, in cash,
accrued interest thereon to, but
excluding, the issuance date of
the New Notes. Such interest will
be paid with the first interest
payment on the New Notes.
Interest on the Old Notes accepted
for exchange will cease to accrue
upon issuance of the New Notes.
Acceptance of the Old Notes and
Delivery of the New Notes The Company will accept for
exchange any and all Old Notes
which are properly tendered in the
Notes Exchange Offer prior to the
Expiration Date. The New Notes
issued pursuant to the Exchange
Offer will be delivered on the
earliest practicable date
following the Expiration Date.
Any Old Notes not accepted for
exchange for any reason will be
returned to the tendering Holder
thereof as promptly as practicable
after the expiration or
termination of the Notes Exchange
Offer. See "The Exchange Offers -
Terms of the Exchange Offers."
Resales of New Notes by
Participating Broker-Dealers Based on the position taken by the
staff of the Division of
Corporation Finance of the
Commission in certain interpretive
letters, the Company believes that
broker-dealers who acquired Old
Notes for their own accounts as a
result of market-making activities
or other trading activities
("Participating Broker-Dealers")
may fulfill their prospectus
delivery requirements with respect
to resales of New Notes received
upon exchange of such Old Notes
(other than Old Notes which
represent an unsold allotment from
the original sale of the Old
Notes), by delivering the
Prospectus prepared for the
Exchange Offers, so long as it
contains a description of the plan
of distribution with respect to
the resale of such New Notes. A
Participating Broker-Dealer who
intends to use the Prospectus in
connection with the resale of the
New Notes received in exchange for
Old Notes pursuant to the Notes
Exchange Offer must notify the
Company, or cause the Company to
be notified, on or prior to the
Expiration Date, that it is a
Participating Broker-Dealer. See
"The Exchange Offers - Resales of
New Notes and New Subordinated
Notes."
Certain Federal Income Tax
Considerations The Company believes that the
exchange pursuant to the Notes
Exchange Offer will not be a
taxable event for federal income
tax purposes. See "Certain
Federal Income Tax Consequences of
the Exchange Offers."
Trustee Exchange Agent United States Trust Company of New
York is serving as Trustee in
connection with the Notes and as
exchange agent (the "Exchange
Agent") in connection with the
Notes Exchange Offer.
</TABLE>
Terms of the Notes
The Notes Exchange Offer applies to $120,000,000
aggregate principal amount of Old Notes. The terms of the
New Notes are identical in all material respects to the
terms of the Old Notes except that (i) the New Notes will
have been registered under the Securities Act and thus will
not bear restrictive legends restricting their transfer
pursuant to the Securities Act and will not be entitled to
registration rights and (ii) Holders of New Notes will not
be entitled to liquidated damages for the Company's failure
to register the Old Notes or New Notes under the
Registration Rights Agreement. The New Notes will be issued
under the same Indenture as the Old Notes, and the New Notes
and the Old Notes will constitute a single series of debt
securities under the Indenture. See "Description of Senior
Subordinated Notes." The Old Notes and the New Notes are
hereinafter collectively referred to as the "Notes."
<TABLE>
<CAPTION>
<S> <C>
Maturity July 15, 2006.
Interest Rate and Payment Dates The Notes bear interest at the
rate of 12% per annum, payable
semi-annually in arrears on
January 15 and July 15 of each
year, commencing on January 15,
1997.
Subsidiary Guarantees The New Notes will be, and the
Old Notes remaining outstanding
after the Notes Exchange Offer
will continue to be, jointly and
severally guaranteed, fully and
unconditionally, on an unsecured,
senior subordinated basis by
certain of the Company's
subsidiaries and certain
subsidiaries created after the
issuance of the Notes.
Ranking The Notes are general unsecured
obligations of the Company (with
the sole exception of the
security provided under the
Pledge and Disbursement Agreement
(as defined)), subordinated in
right of payment to all existing
and future Senior Debt of the
Company, including all borrowings
of the Company under the Senior
Credit Facility. The Subsidiary
Guarantees will be subordinated
in right of payment to all Senior
Debt of the Guarantors. As of
July 28, 1996, after giving pro
forma effect to the acquisition
of the 49% interest in Sugarloaf
not acquired in the Acquisition
and the divestitures of
Waterville and Cranmore pursuant
to the Consent, the aggregate
amount of outstanding Senior Debt
of the Company would have been
$53.8 million. See "The
Acquisition; Antitrust Matters;
Use of Proceeds," "Recent
Developments," "Pro Forma
Capitalization" and "Description
of Senior Subordinated Notes."
As of July 28, 1996 approximately
$53.8 million of the Company's
indebtedness and other
obligations, including
indebtedness and obligations of
its subsidiaries, was secured by
collateral, and there was no
indebtedness or obligations
ranked pari passu with, or junior
to the Notes, except the
Subordinated Notes.
Optional Redemption The Notes are redeemable at the
option of the Company, in whole
or in part, at any time on and
after July 15, 2001 at the
redemption prices set forth
herein, plus accrued and unpaid
interest to the applicable
redemption date.
In addition, on or prior to July
15, 1999, the Company may redeem
up to 25% in aggregate principal
amount of the Notes at a
redemption price of 112% of the
principal amount thereof, plus
accrued and unpaid interest
thereon to the redemption date,
with the net proceeds of one or
more Equity Offerings; provided
that at least 75% in aggregate
principal amount of the Notes
remains outstanding immediately
after the occurrence of each such
redemption.
Change of Control Offer Upon the occurrence of a Change
of Control, the Company will be
required, within 30 days
following the date of the Change
of Control, to make an offer to
repurchase all or any part of
each Holder's Notes at an offer
price in cash equal to 101% of
the aggregate principal amount
thereof plus accrued and unpaid
interest thereon to the date of
purchase. Although, due to
circumstances prevailing at the
time of a Change of Control, the
Company may be unable to fulfill
such obligations, Mr. Otten, as
the controlling stockholder of
the Company, does not presently
intend to effect or permit the
occurrence of a Change of Control
(to the extent that such an event
is within his control) unless the
Company were able to fulfill such
obligations. See "Description of
Senior Subordinated Notes --
Repurchase at the Option of
Holders -- Change of Control."
The occurrence of a Change of
Control may, by virtue of the
fact that an offer to purchase
the Notes and the Subordinated
Notes must thereupon be made,
constitute a default under the
Senior Credit Facility. All debt
other than debt under the Senior
Credit Facility (totalling $175.8
million) is (with the exception
of the Notes and the Subordinated
Notes debt of the Restricted
Subsidiaries, rather than the
Company. The maturity of most of
such debt would accelerate upon a
Change of Control resulting from
bankruptcy, liquidation,
dissolution, or sale of
substantiallly all of the assets
of the Restricted Subsidiary
responsible for such debt. The
bankruptcy, liquidation or
dissolution of the Company would,
in most instances, also involve
the bankruptcy, liquidation or
dissolution of its Restricted
Subsidiaries and would likely,
therefore, result in acceleration
of such debt. Other Change of
Control events involving only the
Company would not, by themselves,
result in the acceleration of the
maturity of debt (other than the
Notes, the Subordinated Notes and
the Senior Credit Facility).
Certain Covenants The Indenture contains certain
covenants that, among other
things, limit the ability of the
Company and its Restricted
Subsidiaries (as defined) to
incur additional indebtedness,
pay dividends or make other
distributions, repurchase Equity
Interests (as defined) or
subordinated indebtedness, create
certain liens, enter into certain
transactions with affiliates,
sell assets or enter into certain
mergers and consolidations.
Use of Proceeds; Interest Payment
Pledge Account The net proceeds from the sale of
Old Notes, together with the net
proceeds from the sale of Units
and borrowings under the Senior
Credit Facility and available
cash, were used to finance the
Acquisition, repay certain
indebtedness of the Company and
SKI, fund the acquisition of the
49% interest in Sugarloaf not
owned by SKI and pay certain
expenses relating to the
Acquisition. See "The
Acquisition; Antitrust Matters;
Use of Proceeds" and "Pro Forma
Capitalization." In addition,
approximately $15 million of the
proceeds of the Offerings (the
"Pledged Funds") were deposited
into the Pledge Account (as
defined). The Pledged Funds were
invested in U.S. Treasury
obligations maturing immediately
prior to the January 15, 1997 and
July 15, 1997 interest payment
dates applicable to the Notes.
The Company will be permitted to
obtain release of the Pledged
Funds only for the payment of
interest on the Notes through
July 15, 1997 (subject, in the
case of interest payable on
January 15, 1997, to the
subordination provisions of the
Notes). See "Description of
Senior Subordinated Notes --
Interest Payment Pledge Account."
</TABLE>
The Subordinated Notes Exchange Offer
<TABLE>
<CAPTION>
<S> <C>
Subordinated Notes Registration
Rights Agreement On June 28, 1996, the Old
Subordinated Notes were sold by
the Company to Bear Stearns,
which subsequently resold the Old
Subordinated Notes to qualified
institutional buyers and/or
institutional accredited
investors. In connection with
the issuance of the Old
Subordinated Notes, the Company,
the Guarantors and Bear Stearns
entered into the Subordinated
Note Registration Rights
Agreement which grants the
Holders of the Old Subordinated
Notes certain exchange and
registration rights. This
Subordinated Notes Exchange Offer
is intended to satisfy the
Company's obligations under the
Subordinated Note Registration
Rights Agreement. See "The
Exchange Offers - Purpose and
Effect of the Exchange Offers."
The Subordinated Notes Exchange
Offer Up to $39,132,000 aggregate
principal amount of New
Subordinated Notes are being
offered in exchange for a like
aggregate principal amount of Old
Subordinated Notes. Old
Subordinated Notes may be
tendered for exchange in whole or
in part in a principal amount of
$1,000 and integral multiplies
thereof. The terms of the New
Subordinated Notes and the Old
Subordinated Notes are identical
in all material respects. The
Company will issue the New
Subordinated Notes to Holders on
the earliest practicable date
following the Expiration Date.
See "The Exchange Offers - Terms
of the Exchange Offers."
The Company is making the
Subordinated Notes Exchange Offer
in reliance on the position of
the staff of the Division of
Corporation Finance of the
Commission as set forth in
certain interpretive letters
addressed to third parties in
other transactions. However, the
Company has not sought its own
interpretive letter and there can
be no assurance that the staff of
the Division of Corporation
Finance of the Commission would
make a similar determination with
respect to the Subordinated Notes
Exchange Offer as it has in such
interpretive letters to third
parties. Based on
interpretations by the staff of
the Division of Corporation
Finance, and subject to the two
immediately following sentences,
the Company believes that New
Subordinated Notes issued
pursuant to the Subordinated
Notes Exchange Offer in exchange
for Old Subordinated Notes may be
offered for resale, resold and
otherwise transferred by a Holder
thereof (other than a Holder who
is a broker-dealer) without
further compliance with the
registration and prospectus
delivery requirements of the
Securities Act, provided that
such New Subordinated Notes are
acquired in the ordinary course
of such Holder's business and
that such Holder is not
participating, and has no
arrangement or understanding with
any person to participate, in a
distribution (within the meaning
of the Securities Act) of such
New Subordinated Notes. However,
any Holder of Old Subordinated
Notes who is an "affiliate" of
the Company or who intends to
participate in the Subordinated
Notes Exchange Offer for the
purpose of distributing New
Subordinated Notes, or any broker-
dealer who purchased Old
Subordinated Notes from the
Company to resell pursuant to
Rule 144A or any other available
exemption under the Securities
Act, (a) will not be able to rely
on the interpretations of the
staff of the Division of
Corporation Finance of the
Commission set forth in the above-
mentioned interpretive letters,
(b) will not be permitted or
entitled to tender such Old
Subordinated Notes in the
Subordinated Notes Exchange Offer
and (c) must comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection with
any sale or other transfer of
such Old Subordinated Notes
unless such sale is made pursuant
to an exemption from such
requirements. In addition, if
any broker-dealer holds Old
Subordinated Notes acquired for
its own account as a result of
market-making or other trading
activities and exchanges such Old
Subordinated Notes for New
Subordinated Notes, then such
broker-dealer must deliver a
prospectus meeting the
requirements of the Securities
Act in connection with any
resales of such New Subordinated
Notes. See "The Exchange Offers
- Resales of New Notes and New
Subordinated Notes."
Expiration Date 5:00 p.m., New York City time, on
January 15, 1997, unless the
Exchange Offers are extended by
the Company in its sole
discretion, in which case the
term "Expiration Date" means the
latest date and time to which the
Exchange Offers are extended.
See "The Exchange Offers - Terms
of the Exchange Offers -
Expiration Date; Extensions;
Amendments."
Conditions to the Subordinated
Notes Exchange Offer The Subordinated Notes Exchange
Offer is subject to certain
customary conditions, which may
be waived by the Company. See
"The Exchange Offers - Terms of
the Exchange Offers - Certain
Conditions to the Exchange
Offers."
Procedures for Tendering the Old
Subordinated Notes For Old Subordinated Notes to be
validly tendered pursuant to the
Subordinated Notes Exchange
Offer, (i) the Subordinated Notes
Letter of Transmittal, or a
facsimile thereof, properly
completed, signed and dated in
accordance with the instructions
contained herein and therein, and
mailed or otherwise delivered,
together with any other required
documentation, or an Agent's
Message (as defined herein) in
connection with a book-entry
transfer of Old Subordinated
Notes must be received by the
Exchange Agent, in each case
prior to the Expiration Date or
(ii) the guaranteed delivery
procedures described herein must
be complied with. Holders of Old
Subordinated Notes registered in
the name of a broker, dealer,
commercial bank, trust company or
other nominee are urged to
contact such person promptly if
they wish to tender Old
Subordinated Notes pursuant to
the Subordinated Notes Exchange
Offer. See "The Exchange Offers
- Terms of the Exchange Offers -
Procedures for Tendering Old
Notes and Old Subordinated
Notes." Subordinated Notes
Letters of Transmittal and
certificates representing Old
Subordinated Notes should not be
sent to the Company. Such
documents should only be sent to
the Exchange Agent. Questions
regarding how to tender and
requests for information should
be directed to the Exchange
Agent. See "The Exchange Offers
- Terms of the Exchange Offers -
Exchange Agent."
By executing the Subordinated
Notes Letter of Transmittal, each
Holder will represent to the
Company that, among other things,
(i) it is not an "affiliate" of
the Company, (ii) any New
Subordinated Notes to be received
by it are being acquired in the
ordinary course of its business,
(iii) it has no arrangement or
understanding with any person to
participate in a distribution
(within the meaning of the
Securities Act) of such New
Subordinated Notes, and (iv) if
such Holder is not a broker-
dealer, such Holder is not
engaged in, and does not intend
to engage in, a distribution
(within the meaning of the
Securities Act) of such New
Subordinated Notes. Each broker-
dealer that receives New
Subordinated Notes for its own
account pursuant to the
Subordinated Notes Exchange Offer
must acknowledge that it acquired
the Old Subordinated Notes for
its own account as the result of
market-making activities or other
trading activities and must agree
that it will deliver a prospectus
meeting the requirements of the
Securities Act in connection with
any resale of such New
Subordinated Notes. See "The
Exchange Offers - Resales of New
Notes and New Subordinated
Notes."
Guaranteed Delivery Procedures Holders of Old Subordinated Notes
who wish to tender their Old
Subordinated Notes and whose Old
Subordinated Notes are not
immediately available or who
cannot deliver their Old
Subordinated Notes, the
Subordinated Notes Letter of
Transmittal or any other
documents required by the
Subordinated Notes Letter of
Transmittal to the Exchange Agent
prior to the Expiration Date or
if the procedure for book-entry
transfer cannot be completed
before such date, must tender
their Old Notes according to the
guaranteed delivery procedures
set forth under "The Exchange
Offers - Terms of the Exchange
Offers - Procedures for Tendering
Old Notes and Old Subordinated
Notes - Guaranteed Delivery."
Withdrawal Rights Tenders may be withdrawn at any
time prior to the Expiration Date
by delivering a written notice of
withdrawal to the Exchange Agent
in conformity with certain
procedures set forth under "The
Exchange Offers - Terms of the
Exchange Offers - Withdrawal
Rights."
Accrued Interest on the New
Subordinated Notes and Old
Subordinated Notes Each New Subordinated Note will
bear interest from its issuance
date. Holders of Old
Subordinated Notes that are
accepted for exchange will
receive, in cash, accrued
interest thereon to, but
excluding, the issuance date of
the New Subordinated Notes. Such
interest will be paid with the
first interest payment on the New
Subordinated Notes. Interest on
the Old Subordinated Notes
accepted for exchange will cease
to accrue upon issuance of the
New Subordinated Notes.
Acceptance of the Old
Subordinated Notes and Delivery
of the New The Company will accept for
Subordinated Notes exchange any and all Old
Subordinated Notes which are
properly tendered in the
Subordinated Notes Exchange Offer
prior to the Expiration Date.
The New Subordinated Notes issued
pursuant to the Subordinated
Notes Exchange Offer will be
delivered on the earliest
practicable date following the
Expiration Date. Any Old
Subordinated Notes not accepted
for exchange for any reason will
be returned to the tendering
Holder thereof as promptly as
practicable after the expiration
or termination of the
Subordinated Notes Exchange
Offer. See "The Exchange Offers
- Terms of the Exchange Offers."
Resales of New Subordinated Notes
by Participating Broker-Dealers Based on the position taken by
the staff of the Division of
Corporation Finance of the
Commission in certain
interpretive letters, the Company
believes that broker-dealers who
acquired Old Subordinated Notes
for their own accounts as a
result of market-making
activities or other trading
activities ("Participating Broker-
Dealers") may fulfill their
prospectus delivery requirements
with respect to resales of New
Subordinated Notes received upon
exchange of such Old Subordinated
Notes (other than Old
Subordinated Notes which
represent an unsold allotment
from the original sale of the Old
Subordinated Notes), by
delivering the Prospectus
prepared for the Exchange Offers,
so long as it contains a
description of the plan of
distribution with respect to the
resale of such New Subordinated
Notes. A Participating Broker-
Dealer who intends to use the
Prospectus in connection with the
resale of the New Subordinated
Notes received in exchange for
Old Subordinated Notes pursuant
to the Subordinated Notes
Exchange Offer must notify the
Company, or cause the Company to
be notified, on or prior to the
Expiration Date, that it is a
Participating Broker-Dealer. See
"The Exchange Offers - Resales of
New Notes and New Subordinated
Notes.
Certain Federal Income Tax
Considerations The Company believes that the
exchange pursuant to the
Subordinated Notes Exchange Offer
will not be a taxable event for
federal income tax purposes. See
"Certain Federal Income Tax
Consequences of the Exchange
Offers."
Trustee; Exchange Agent United States Trust Company of
New York is serving as Trustee in
connection with the Subordinated
Notes and as exchange agent (the
"Exchange Agent") in connection
with the Subordinated Notes
Exchange Offer.
</TABLE>
Terms of the Subordinated Notes
The Subordinated Notes Exchange Offer applies to
$39,132,000 aggregate principal amount of Old Subordinated
Notes. The terms of the New Subordinated Notes are
identical in all material respects to the terms of the Old
Subordinated Notes except that (i) the New Subordinated
Notes will have been registered under the Securities Act and
thus will not bear restrictive legends restricting their
transfer pursuant to the Securities Act and will not be
entitled to registration rights and (ii) Holders of New
Subordinated Notes will not be entitled to liquidated
damages for the Company's failure to register the Old
Subordinated Notes or New Subordinated Notes under the
Subordinated Note Registration Rights Agreement. The New
Subordinated Notes will be issued under the same
Subordinated Note Indenture as the Old Subordinated Notes,
and the New Subordinated Notes and the Old Subordinated
Notes will constitute a single series of debt securities
under the Subordinated Note Indenture. See "Description of
Subordinated Notes." The Old Subordinated Notes and the New
Subordinated Notes are hereinafter collectively referred to
as the "Subordinated Notes."
<TABLE>
<CAPTION>
<S> <C>
Maturity January 15, 2007
Interest Rate and Payment Dates Interest on the Subordinated Notes
will not accrue prior to July 15,
2001. Thereafter, interest will
accrue at the rate of 13 3/4 % per
annum and will be payable
semi-annually in arrears in cash
on January 15 and July 15 of each
year, commencing on January 15,
2002.
Subsidiary Guarantees The New Subordinated Notes will
be, and the Old Subordinated Notes
remaining outstanding after the
Subordinated Notes Exchange Offer
will continue to be, jointly and
severally guaranteed, fully and
unconditionally, on an unsecured,
subordinated basis by certain of
the Company's subsidiaries (after
giving effect to the search
Contribution (as defined herein))
and certain subsidiaries created
after the issuance of the
Subordinated Notes.
Ranking The Subordinated Notes are general
unsecured obligations of the
Company, subordinated in right of
payment to all existing and future
Subordinated Note Senior Debt of
the Company, including all
borrowings of the Company under
the Senior Credit Facility and all
obligations of the Company with
respect to the Notes. The
Subordinated Note Subsidiary
Guarantees are subordinated in
right of payment to all
Subordinated Note Senior Debt of
the Guarantors, including the
Guarantors' guarantees of the
Notes. As of July 28, 1996, after
giving pro forma effect to the
acquisition of the 49% interest in
Sugarloaf not acquired in the
Acquisition and the divestitures
of Waterville and Cranmore
pursuant to the Consent, the
aggregate amount of outstanding
Subordinated Note Senior Debt of
the Company would have been $170.4
million. See "The Acquisition;
Antitrust Matters; Use of
Proceeds," "Recent Developments,"
"Pro Forma Capitalization" and
"Description of Subordinated
Notes." As of July 28, 1996
approximately $53.8 million of the
Company's indebtedness and other
obligations, including
indebtedness and obligations of
its subsidiaries, was secured by
collateral, and there was no
indebtedness and other obligations
ranked pari passu with the
Subordinated Notes except the
Notes.
Optional Redemption The Subordinated Notes are
redeemable at the option of the
Company, in whole or in part, at
any time on and after July 15,
2001 at the redemption prices set
forth herein, plus accrued and
unpaid interest to the applicable
redemption date.
In addition, on or prior to July
15, 1999, the Company may redeem
the Subordinated Notes, in whole
or in part, at a redemption price
of 113.75% of the Accreted Value
thereof, with the net proceeds of
one or more Equity Offerings.
Change of Control Offer Upon the occurrence of a Change of
Control, the Company will be
required to make an offer to
purchase all or any part of each
Holder's Subordinated Notes at an
offer price in cash equal to 101%
of the Accreted Value thereof (if
prior to July 15, 2001), or 101%
of the principal amount thereof,
plus accrued and unpaid interest
thereon (if on or after July 15,
2001), to the date of repurchase.
Although, due to circumstances
prevailing at the time of a Change
of Control, the Company may be
unable to fulfill such
obligations, Mr. Otten, as the
controlling stockholder of the
Company, does not presently intend
to effect or permit the occurrence
of a Change of Control (to the
extent such an event is within his
control) unless the Company were
able to fulfill such obligations.
See "Description of Subordinated
Notes -- Repurchase at the Option
of Holders -- Change of Control."
The occurrence of a Change of
Control may, by virtue of the fact
that an offer to purchase the
Subordinated Notes must thereupon
be made, constitute a default
under the Senior Credit Facility.
Apart from the debt evidenced by
the Notes, all debt other than
debt under the Senior Credit
Facility (totalling $175.8
million) is (with the exception of
the Notes and the Subordinated
Notes) debt of the Restricted
Subsidiaries, rather than the
Company. The maturity of most of
such debt would accelerate upon a
Change of Control resulting from
bankruptcy, liquidation,
dissolution, or sale of
substantially all of the assets of
the Restricted Subsidiary
responsible for such debt. The
bankruptcy, liquidation or
dissolution of the Company would,
in most instances, also involve
the bankruptcy, liquidation or
dissolution of its Restricted
Subsidiaries and would likely,
therefore, result in acceleration
of such debt. Other Change of
Control events involving only the
Company would not, by themselves,
result in the acceleration of the
maturity of debt (other than the
Notes, the Subordinated Notes and
the Senior Credit Facility).
Certain Covenants The Subordinated Note Indenture
contains certain covenants that,
among other things, limit the
ability of the Company and its
Restricted Subsidiaries to incur
additional indebtedness, pay
dividends or make other
distributions, repurchase Equity
Interests or subordinated
indebtedness, create certain
liens, enter into certain
transactions with affiliates, sell
assets or enter into certain
mergers and consolidations.
Use of Proceeds The net proceeds from the sale of
Subordinated Notes, together with
the net proceeds from the sale of
Notes and borrowings under the
Senior Credit Facility and
available cash, were used to
finance the Acquisition, repay
certain indebtedness of the
Company and SKI, fund the
acquisition of the 49% interest in
Sugarloaf not owned by SKI and pay
certain expenses relating to the
Acquisition. See "The Acquisition;
Antitrust Matters; Use of
Proceeds" and "Pro Forma
Capitalization."
</TABLE>
RISK FACTORS
See "Risk Factors" for a discussion of certain
factors that investors should consider before exchanging Old
Notes for New Notes or Old Subordinated Notes for New
Subordinated Notes in the Exchange Offers.
Summary Pro Forma Consolidated Financial Data
The following unaudited summary pro forma
consolidated financial data as of July 28, 1996 and for the
year ended July 28, 1996 (except Other Financial and
Operating Data) are derived from the historical financial
data of the Company included elsewhere in this Prospectus
and give pro forma effect to the Acquisition and the
Offerings (with respect to statement of income data only) as
if they had occurred on August 1, 1995 and the acquisition
of the 49% interest of Sugarloaf, not acquired in the
Acquisition, and the divestitures of the Waterville Valley
and Mt. Cranmore resorts, pursuant to the Consent, as if the
acquisition and divestitures had occurred on July 28, 1996
with respect to the balance sheet data, and as of August 1,
1995 with respect to the statement of income data. See "The
Acquisition; Antitrust Matters; Use of Proceeds," "Recent
Developments," and "Pro Forma Financial Data." The Pro Forma
Financial Data is not intended to be indicative of either
future results of operations or results that might have been
achieved had such Acquisition and the Offerings and the
acquisition of the 49% interest of Sugarloaf and the
divestitures of the Waterville Valley and Mt. Cranmore
resorts pursuant to the Consent actually occurred on the
dates specified. See "Pro Forma Financial Data." Management
believes that the following presentation will assist
potential investors in evaluating the ability of the Company
to meet debt service requirements. In the opinion of the
Company's management, all adjustments necessary to present
fairly such unaudited pro forma consolidated financial data
have been made based upon the terms and structure of the
Acquisition and the Offerings and the divestitures of the
Waterville Valley and Mt. Cranmore resorts pursuant to the
Consent. The unaudited summary pro forma consolidated
financial data should be read together with the Selected
Historical Financial Data and the financial statements and
notes thereto included elsewhere in this Prospectus. See
"The Acquisition; Antitrust Matters; Use of Proceeds,"
"Selected Historical Financial Data," "Pro Forma Financial
Data" and the financial statements and notes thereto
included elsewhere in this Prospectus.
Summary Pro Forma Consolidated Financial Data (Continued)
<TABLE>
<CAPTION>
(Unaudited)
Year Ended
July 28, 1996
(in thousands,
except per share
data, per skier
visit data and
ratios)
<S> <C> <C>
Pro Forma Consolidated
Statement of Operations Data:
Revenues:
Ski and lodging $161,733
Real estate 9,933
Total revenues 171,666
Operating Expenses:
Cost of operations including 78,678
wages, maintenance and
supplies
Cost of real estate sold 5,849
Real estate and payroll taxes 9,595
Utilities 11,781
Insurance 7,643
Selling, general and 24,388
administrative
Depreciation and amortization 16,857
Total operating expenses 154,799
Income from operations 16,875
Other income and expenses:
Interet income 330
Commitment fee 1,447
Interest expense 22,406
Loss before income tax benefit (6,648)
Income tax benefit (2,863)
Net loss $(3,785)
Net loss per share(1) $(3.87)
Other Financial and Operating
Data:
EBITDA(2) $32,615
EBITDA to interest expense 1.5x
EBITDA to cash interest 1.7x
expense(3)
Ratio of earnings to fixed --
charges(4)
Skier visits (5) 3,339
Average revenue per skier $48.44
visit
Pro Forma Consolidated Balance As of
Sheet Data: July 28, 1996
Property and equipment, net $227,470
Total assets 285,063
Total debt 204,236
Stockholders' equity 22,395
</TABLE>
_________________________________
(1) Pro forma net loss per share was computed giving
consideration to the 978,300 common shares of the
Company which were issued and outstanding on the
Closing Date.
(2) EBITDA represents earnings before interest expense,
income tax expense (benefit), depreciation and
amortization expense. 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 generally accepted
accounting principles or as a measure of the
Company's profitability or liquidity, and may not be
comparable to other similarly titled data of other
companies. The Company does not consider it
feasible to calculate cash flows from operating,
investing and financing activities on a pro forma
basis.
(3) Cash interest expense excludes interest on the
Subordinated Notes which would not have been payable
in cash during the periods presented.
(4) The ratio of combined earnings to combined fixed
charges represents the number of times combined
fixed charges were covered by combined 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 operating lease rental
expense deemed to be representative of the interest
factor. Pro forma earnings were insufficient to
cover pro forma fixed charges by $18.0 million for
the year ended July 28, 1996. However, such results
for the year ended July 28, 1996 included non-cash
charges such as depreciation and amortization of
$16.4 million and a loss on the sale of Bear
Mountain in October 1995 of $4.7 million.
(5) Each skier visit represents one skier visiting one
ski resort for one day, including skiers using
complimentary and season passes. Calculation of
skier visits requires an estimation of visits by
season pass holders. Although different ski resort
operators may use different methodologies for making
such estimations, management believes that any
resulting differences in total skier visits are
immaterial.
Summary Historical Financial Data
The Company
The following summary historical financial data of
the Company (except Other Financial and Operating Data) (i)
as of and for the fiscal years ended July 30, 1995 and July
28, 1996 have been derived from the financial statements of
the Company audited by Price Waterhouse LLP, independent
accountants, and (ii) as of and for each of the three fiscal
years ended July 31, 1994 have been derived from the
financial statements of the Company audited by Berry, Dunn,
McNeil & Parker, independent accountants. The following
information includes Mt. Cranmore, which the Company
acquired in June 1995 and will be divested. Additionally,
the following information includes the accounts of S-K-I in
the July 28, 1996 Balance Sheet Data and in the Statements
of Operations and of Cash Flows Data of S-K-I from June 28,
1996 through July 28, 1996 pursuant to the Acquisition.
Included in the S-K-I information is Waterville Valley,
which will be divested. See "The Acquisition; Antitrust
Matters; Use of Proceeds," "Recent Developments" and "Pro
Forma Financial Data." The following information should be
read in conjunction with the Unaudited "Pro Forma Financial
Data," "Selected Historical Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results
of Operations" and the financial statements of the Company
and notes thereto included elsewhere in this Prospectus.
Summary Historical Financial Data (Continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year
Ended
(1)
July July July July July 28,
26, 25, 30, 30, 1996
1992 1993 1994 1995
(in thousands, except per skier visit data and
ratios)
Statement of Operations
Data:
Revenues:
Skiing and lodging $20,312 $23,645 $26,544 $46,794 $63,489
Real estate sales 304 6,103 6,682 7,953 9,933
Total revenues 20,616 29,748 33,226 54,747 73,422
Operating expenses:
Cost of operations
including wages, 7,936 10,045 11,505 21,730 31,137
maintenance and supplies
Cost of real estate sold 101 3,245 3,179 3,994 5,844
Real estate and payroll 758 993 1,265 1,736 2,544
taxes
Utilities 2,046 2,097 1,854 4,132 5,819
Insurance 1,162 1,570 1,163 2,127 2,299
Selling, general and
administrative 3,010 4,718 5,940 9,394 11,289
Depreciation and 1,790 1,984 2,421 3,910 6,783
amortization
Total Operating Expenses 16,803 24,652 27,327 47,023 65,715
Income from operations 3,813 5,096 5,899 7,724 7,707
Commitment fee -- -- -- -- 1,447
Interest Expense 776 849 1,026 2,205 4,699
Income before provision for
income taxes and minority 3,037 4,247 4,873 5,519 1,561
interest in loss of
subsidiary
Provision for income taxes -- -- -- 400 3,906
Income (loss) before 3,037 4,247 4,873 5,119 (2,345)
minority interest
Minority interest in loss -- -- -- -- 108
of subsidiary
Income (loss) before
extraordinary gain from 3,037 4,247 4,873 5,119 (2,237)
insurance claim
Extraordinary gain from -- 1,592 -- -- --
insurance claim
Net income (loss) $3,037 $5,839 $4,873 $5,119 $(2,237)
Balance Sheet Data:
Property and equipment, $27,580 $30,363 $41,871 $62,213 $227,470
net
Total assets 32,256 40,550 51,784 72,434 298,732
Total long term debt,
excluding current 10,317 14,150 19,103 27,169 187,827
portion
Stockholders' equity 18,367 23,167 26,212 30,502 21,903
Statement of Cash Flows
Data:
Cash flows from operating $3,864 $2,667 $5,438 $ 12,5 $7,465
activities 93
Cash flows from investing (5,031) (4,432) (9,041) (13,84 (122,5
activities 3) 83)
Cash flows from financing 1,372 1,559 3,764 2,399 116,941
activities
Other Financial and
Operating Data:
Net (loss) per common share -- -- -- -- $(2.37)
(2)
EBITDA(3) $5,603 $7,080 $8,320 $11,634 $13,151
Capital expenditures 5,037 5,182 7,798 12,024 25,054
EBITDA to interest expense 7.2x 8.3x 8.1x 5.3x 2.8x
Ratio of earnings to fixed 4.0x 4.4x 4.2x 2.9x 1.2x
charges(4)
Skier visits(5) 497 515 515 1,048 1,284
Average revenue per skier $40.87 $45.91 $51.54 $44.65 $49.45
visit
</TABLE>
_____________________________
(1) The historical results of the Company reflect the
acquisition of the Attitash/Bear Peak ski resort in
July 1994, the lease of the Sugarbush ski resort
beginning in October 1994, the acquisition of
Sugarbush in May 1995, the acquisition of the Mt.
Cranmore ski resort in June 1995, and the
acquisition of S-K-I in June 1996.
(2) At July 28, 1996, the computation of net loss per
common share is based on the weighted average of
shares outstanding during the year (942,200). Prior
to June 28, 1996, all of the Company's outstanding
common stock was owned by the same individual, and
accordingly earnings per share has not been
presented for the four fiscal years prior to 1996.
(3) EBITDA represents earnings before interest expense,
income tax expense, depreciation and amortization
expense and extraordinary gain. 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 generally accepted
accounting principles or as a measure of the
Company's profitability or liquidity, and may not be
comparable to other similarly titled data of other
companies.
(4) 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 operating lease rental
expense deemed to be representative of the interest
factor.
(5) Each skier visit represents one skier visiting one
ski resort for one day, including skiers using
complimentary and season passes. Calculation of
skier visits requires an estimation of visits by
season pass holders. Although different ski resort
operators may use different methodologies for making
such estimations, management believes that any
resulting differences in total skier visits are
immaterial.
SKI
The following summary historical financial data of
SKI (except other financial and operating data) (i) as of
and for each of the five fiscal years ended July 31, 1995
have been derived from the financial statements of SKI
audited by Price Waterhouse LLP, independent accountants and
(ii) as of and for the nine months ended April 30, 1995 and
April 28, 1996 have been derived from unaudited interim
financial statements of SKI which, in the opinion of SKI
management, include all adjustments, consisting solely of
normal recurring adjustments, necessary for a fair
presentation of SKI's financial position and results of
operations. SKI's fourth fiscal quarter ordinarily reflects
a significant reduction in revenues as compared to the
second and third quarters, as well as a less significant
comparative expense reduction, ordinarily producing a loss
for such quarter and reduced full fiscal year levels of net
income and EBITDA as compared to the first nine months of
the year. The following information includes Waterville
Valley, which SKI acquired in October 1994 and will be
divested. See "The Acquisition; Antitrust Matters; Use of
Proceeds" and "Pro Forma Financial Data." The following
information should be read in conjunction with the Unaudited
"Pro Forma Financial Data," "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial
statements of SKI and related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year Ended July 31, (1) Nine Months Ended
<S> <C> <C> <C> <C> <C> <C> <C>
April April 28,
30,
1991 1992 1993 1994 1995 1995 1996
(in thousands, except per share data, per skier visit data and ratios)
Statement of
Income Data:
Revenues $83,007 $89,014 $96,708 $98,907 $113,960 $106,682 $106,752
Operating
expenses:
Cost of operations 34,480 36,956 39,903 42,560, 51,557, 45,310 47,885
including wages,
maintenance and
supplies
Other taxes 5,989 7,002 7,632 8,016 8,600 7,544 7,541
Utilities 5,580 6,172 6,655 6,045 8,071 7,624 7,465
Insurance 4,325 5,041 5,115 5,518 6,635 6,220 5,692
Selling, general 13,666 14,048 16,872 15,298 19,495 16,377 17,061
and administrative
expense
Depreciation and 10,290 10,822 10,942 11,440 14,056 13,843 10,146
amortization
Loss on sale of -- -- -- -- -- -- 4,737
Bear Mountain
74,330 80,041 87,119 88,877 108,414 96,918 100,527
Operating income 8,677 8,973 9,764 6,225
9,589 10,030 5,546
Interest expense 2,940 2,471 3,018 2,561
2,228 2,214 3,819
Income before 5,737 6,502 6,746 3,664
income taxes and 7,361 7,816 1,727
minority interest
Income taxes 2,324 2,776 2,725 1,429
2,952 3,170 997
Income before 3,413 3,726 4,021 2,235
minority interest 4,409 4,646 730
Minority interest -- -- (193) (527)
in loss (income) -- -- 299
of subsidiary
Net income $3,413 $3,726 $3,828 $1,708
$4,409 $4,646 $1,029
Balance Sheet
Data:
Property and $83,154 $81,963 $124,110 $93,728
equipment, net $82,288 $94,771 $121,775
Total assets 90,288 93,531 138,730 118,454
99,182 106,790 136,721
Total long term 27,315 26,677 46,677 31,222
debt, excluding 28,119 29,167 50,190
current portion
Stockholders' 45,972 49,190 60,337 58,563
equity 53,047 57,186 57,562
Statement of Cash
Flows Data:
Cash flows from $14,061 $15,903 $19,941 $19,089
operating $13,474 $17,464 $14,948
activities
Cash flows from (11,408) (9,287) (33,502) 12,115
investing (12,181) (23,108) (30,925)
activities
Cash flows from (2,754) (1,787) 12,183 (21,967)
financing 968 848 16,063
activities
Other Financial
and Operating
Data:
Net income per $.60 $.65 $.66 $.30
common and common $.77 $.81 $.18
equivalent
share(2)
EBITDA(3) $18,967 $20,531 23,607 $16,371(6)
$19,795 $21,470 $19,602
Capital 12,279 9,566 18,982 6,020
expenditures 12,307 22,683 19,480
Ratio of earnings 2.6x 3.0x 2.6x 1.9x
to fixed 3.5x 3.6x 1.3x
charges(4)
Skier visits(5) 1,679 1,783 2,104 2,055
1,863 1,854 2,113
Average revenue $49.44 $49.92 $50.70 $51.95
per skier visit $51.91 $53.35 $53.93
</TABLE>
____________________________
(1) The historical results of SKI reflect the acquisitions of the
Sugarloaf (51% interest) and Waterville Valley ski resorts in
August 1994 and October 1994, respectively, and the divestiture
of the majority of the ski resort and golf course assets of
Bear Mountain in October 1995.
(2) The computation of net income per common and common equivalent
share amounts are based on the weighted average of shares
outstanding during the year. Shares issuable upon the exercise
of stock option grants have not been included in the per share
computation because they would not have a material effect on
earnings per share. The weighted average shares outstanding at
the respective balance sheet dates used in the computation of
net income per common and common equivalent share were
5,783,480 in 1995; 5,764,663 in 1994; 5,728,908 in 1993;
5,723,318 in 1992; 5,720,394 in 1991; 5,782,745 year to date
April 30, 1995; and 5,788,592 year to date April 28, 1996.
(3) EBITDA represents earnings before interest expense, income tax
expense, depreciation and amortization expense. 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 generally accepted accounting principles or as a measure
of SKI's profitability or liquidity, and may not be comparable
to other similarly titled data of other companies.
(4) 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 operating lease rental expense
deemed to be representative of the interest factor.
(5) Each skier visit represents one skier visiting one ski resort
for one day, including skiers using complimentary and season
passes. Calculation of skier visits requires an estimation of
visits by season pass holders. Although different ski resort
operators may use different methodologies for making such
estimations, management believes that any resulting differences
in total skier visits are immaterial.
(6) Includes loss of $4,737 realized in connection with the sale of
Bear Mountain.
THE ACQUISITION; ANTITRUST MATTERS; USE OF PROCEEDS
The Acquisition. On February 13, 1996, LBO Resort
Enterprises (the predecessor of the Company), LBO
Acquisition Co. ("Newco"), its wholly owned subsidiary, and
SKI entered into the Acquisition Agreement pursuant to which
the Company agreed to acquire SKI through the merger of
Newco with and into SKI, subject to the satisfaction or
waiver of certain covenants and conditions. The Acquisition
was consummated on June 28, 1996. Concurrently with the
consummation of the Acquisition, Leslie B. Otten contributed
to the Company all of the outstanding stock of the
corporations comprising Sunday River, Sugarbush,
Attitash/Bear Peak and Mt. Cranmore (the "Contribution").
In the merger of Newco with and into SKI, each of
the issued and outstanding shares of common stock, par value
$.10 per share, of SKI ("SKI Common Stock"), excluding any
shares held in SKI's treasury or owned by the Company or any
of its affiliates, were converted into the right to receive
an amount in cash equal to $18.00 (the "Purchase Price Per
Share"). Pursuant to the Acquisition Agreement, all
outstanding stock options ("SKI Options") granted by SKI
prior to the date of the Acquisition Agreement automatically
became fully vested and the holders thereof became entitled
to receive the Purchase Price Per Share less the exercise
price of such SKI Option and any amount required by law to
be withheld for taxes. The total cash purchase price payable
in the Acquisition for the SKI Common Stock and the SKI
Options was approximately $104.1 million ($104.6 million
including certain transaction expenses). In connection with
the Acquisition, the Company assumed or refinanced $58.5
million of debt as of June 28, 1996 (consisting of long-term
debt of $20.1 million, current portion of long-term debt of
$3.0 million, subordinated debentures of $10.9 million, and
other current and long-term liabilities of $24.5 million).
In connection with the Acquisition, the Company
repaid certain indebtedness of the Company and SKI. The
repaid indebtedness includes (i) all outstanding
indebtedness under SKI's credit agreement with the First
National Bank of Boston (the "SKI Credit Agreement"); (ii)
all outstanding indebtedness under SKI's existing credit
agreement with Teachers' Insurance and Annuity Association
(the "TIAA Credit Agreement"); and (iii) all outstanding
indebtedness under the Company's existing credit agreement
with the First National Bank of Boston (the "ASC Credit
Agreement"). On August 30, 1996, the Company repaid all
outstanding indebtedness under Sugarloaf's existing credit
agreement with the First National Bank of Boston (the "SMC
Credit Agreement") and under Sugarloaf's existing term loan
indebtedness to the Town of Carrabassett Valley, Maine (the
"Town Debt"), contemporaneously with the consummation of the
acquisition of the 49% minority interest in Sugarloaf which
was not acquired by the Company in the Acquisition.
Prior to the Acquisition, Sunday River delivered to
Mr. Otten a demand note (the "Demand Note") in the principal
amount of $5.2 million for the amounts expected to become
payable by Mr. Otten in 1996 and 1997 as income taxes with
respect to Sunday River's pre-Acquisition income as a
Subchapter S Corporation. This note is unsecured and bears
interest at 5.4% per annum, the applicable federal rate in
effect at the time of issuance.
Antitrust Matters
Federal. The Company entered into the Consent with
the DOJ in order to resolve the concerns identified by the
DOJ in response to the Company's filing with the Federal
Trade Commission under the Hart-Scott-Rodino Act. The
United States filed a civil antitrust complaint through the
DOJ alleging that the Acquisition would violate Section 7 of
the Clayton Act due to substantial increase in the
concentration of ownership of ski resorts to which eastern
New England residents (i.e., those in Maine, eastern
Massachusetts, Connecticut and Rhode Island) practicably can
go for weekend ski trips, and of those to which Maine
residents practicably can go for day ski trips. The DOJ
complaint alleged that the Acquisition threatened to raise
the price of, or reduce discounts for, weekend and day
skiing to consumers living in those areas in violation of
Section 7 of the Clayton Act. Simultaneously with the
filing of the complaint, DOJ also filed the Consent as a
proposed settlement that would permit the Company to
complete the Acquisition, but would also require the
divestiture of the Waterville Valley and Mount Cranmore
resorts in order to preserve and enhance competition for
skiers in eastern New England.
The Company has resolved antitrust concerns of the
DOJ raised by the Acquisition by entering into a consent
decree. Specifically, the Company has agreed to divest the
assets constituting the Waterville Valley and Mt. Cranmore
resorts not later than December 1, 1996. The Consent (i)
requires the Company to use its best efforts to complete the
divestitures as expeditiously as possible, (ii) gives DOJ
the ability, in its sole discretion, to extend the time
period for completing the divestitures by an additional
ninety days, and (iii) requires the Company to consent to
the appointment of a trustee to accomplish the divestitures
at the best price then obtainable upon a reasonable effort
by the trustee in the event the divestitures have not been
completed within the allotted period. Until the divestitures
are accomplished, the consent decree requires the Company to
take all steps necessary to assure that the resorts will be
maintained and operated as on-going, economically viable
resorts, including maintaining their usual and ordinary
levels of marketing personnel and marketing activity, and
maintaining the resorts' assets in operable condition based
on normal maintenance, and prohibits the Company from taking
any action that would jeopardize the divestiture of the
resorts.
On August 30, 1996 the Company entered into a
Purchase and Sale Agreement with Booth Creek Ski Acquisition
Corp. providing for the sale of all of the assets
constituting the Waterville Valley and Mount Cranmore ski
resorts for a total purchase price of $17.5 million. The
sale of the resorts is scheduled to close on or before
November 27, 1996. See "Recent Developments."
In the event the sale to Booth Creek Ski Acquisition
Corp. does not occur, no assurance can be given (i) that DOJ
would extend the time limit for completion of the
divestitures if requested to do so or (ii) as to the price
or terms at which the divestitures will occur.
State. The Maine Attorney General raised concerns
that the Acquisition would result in increased concentration
of the Company's market share within the State of Maine and
could result in an elimination of discounts historically
available to Maine resident skiers. The Maine Attorney
General filed a Complaint under the State of Maine's
antitrust laws (10 M.R.S.A. Sections 1102-A & 1104),
together with a consent degree specifically addressing the
Maine Attorney General's concerns with maintaining
historical discounts available for Maine resident skiers.
The consent decree requires that: (i) the Company maintain
the same level of day lift ticket pricing discounts to Maine
skiers as was in place during the 1995-96 season at the
Sunday River and Sugarloaf resorts, which is expected to be
accomplished by determining the blended average yield for
both resorts on day tickets sold to Maine residents and to
out-of-state residents, and maintaining a ratio of Maine
resident day ticket yield to nonresident ticket yield at or
below the ratio determined for the 1995-96 season, (ii) the
gross amount of discounts on junior and teen season passes
sold to Maine residents will not be reduced below the 1995-
96 season level for a period of three years, (iii) the
Company establish procedures acceptable to the Maine
Attorney General adequate to track the ratios and gross
youth season pass discounts for each ski season and report
those results to the Maine Attorney General at the
conclusion of each fiscal year, and (iv) should the Company
fail to achieve the required ratios in any season, it will
take action necessary during the following season so that
the required ratio will have been achieved when the two
seasons are averaged. The Maine Attorney General has
retained the right to audit the Company's results and to
retain independent accountants or other experts in
connection therewith at the Company's cost. The consent
decree does not limit the Company's ability to establish
prices, pricing discounts, or pricing or discount programs
so long as the required ratios are satisfied. The consent
decree will be reviewed every three years to determine if
any modifications are necessary in light of then prevailing
market conditions. The pricing controls imposed under the
consent decree are consistent with the Company's current
operations, and management believes that such controls will
not have an adverse impact upon the Company's operations or
financial condition.
Use of Proceeds. The Company will not receive any
cash proceeds from the Exchange Offers. In consideration
for issuing the New Notes and the New Subordinated Notes in
exchange for Old Notes and Old Subordinated Notes,
respectively, as described in this Prospectus, the Company
will receive Old Notes and Old Subordinated Notes in like
principal amount. The Old Notes and Old Subordinated Notes
surrendered in exchange for the New Notes and the New
Subordinated Notes will be retired and canceled.
Accordingly, the issuance of the New Notes and the New
Subordinated Notes will not result in any change in the
indebtedness of the Company.
The Company applied the net proceeds of the
Offerings, together with borrowings under the Senior Credit
Facility and available cash, of $42.8 million and $10.9
million, respectively, to (i) fund the $104.6 million
payable pursuant to the Acquisition, (ii) repay existing
indebtedness (including accrued interest thereon) of the
Company and of SKI, of $40.5 million and $20.5 million
(which includes long-term debt, including the current
portion thereof, and related accrued interest, and
prepayment penalty associated with the TIAA Credit Agreement
($13.1 million), provide funding for the repayment of
existing indebtedness of Sugarloaf under the SMC Credit
Agreement ($3.4 million) and Town Debt ($4.0 million)),
respectively, (iii) and for the acquisition of the minority
interest in Sugarloaf not already owned by SKI (excluding
certain outstanding warrants to acquire Sugarloaf common
stock), at a price equal to $2.0 million in cash and
earnings-based contingent purchase price of up to an
additional $1 million, (iv) fund the Pledge Account with
approximately $14.4 million to secure the first two interest
payments on the Notes, and (v) pay fees and expenses
associated with the Acquisition, the Offerings and the
Senior Credit Facility in the amount of $8.3 million. See
"Pro Forma Capitalization." The following table reflects the
sources and uses of funds in connection with the Acquisition
at June 28, 1996:
(in millions)
Sources:
Senior Subordinated Notes $116.6
Units 20.0
Senior Credit Facility (1) 42.8
Cash (2) 10.9
Total $190.3
Uses:
SKI acquisition, $104.6
outstanding shares and
options
Acquisition of Sugarloaf 2.0
minority interest (cash
portion (3)
Pledge Account 14.4
Repayment of existing
indebtedness, including
accrued interest (4):
TIAA Credit Agreement 13.1
ASC Credit Agreement 40.5
SMC Credit Agreement 3.4
Town Debt 4.0
Transaction and financing 8.3
costs (5)
Total $190.3
________________________
(1) Under the Senior Credit Facility, a total of $65.0
million is available for borrowing by the Company,
subject to compliance with the terms thereof. See
"Description of Other Indebtedness -- The Senior
Credit Facility."
(2) Includes a $5.1 million deposit paid to SKI under the
Acquisition Agreement in February 1996 (including
accrued interest).
(3) Certain former stockholders of Sugarloaf hold
warrants to acquire approximately 15% of its
outstanding Common Stock, on a fully diluted basis,
at a price of $.66 per share, or an aggregate
exercise price of approximately $737,000, at any time
on or prior to June 30, 2002.
(4) The TIAA Credit Agreement matures in 2003 and bears
interest at 8.12% per annum. The ASC Credit Agreement
matures in 2002 and bears interest at a rate equal to
LIBOR plus 2.50% per annum, with a weighted average
interest rate of 7.3% at June 28, 1996. The SMC
Credit Agreement consists of two facilities, one of
which matures on June 30, 1996 and bears interest at
prime plus 2% per annum, and the other of which
matures in 1998 and bears interest at prime plus .5%
per annum. The Town Debt matures in 2013 and bears
interest at a rate of 7.96% per annum as of June 28,
1996.
(5) Represents the estimated fees and expenses related to
the Acquisition, the Offerings and the Senior Credit
Facility.
RECENT DEVELOPMENTS
Since July 28, 1996, the following transactions have
occurred. Management considers these transactions to be
material to the operation of the Company.
Divestiture of Waterville Valley and Mt. Cranmore Resorts
On August 30, 1996 the Company entered into a
Purchase and Sale Agreement with Booth Creek Ski Acquisition
Corp. providing for the sale of both the Waterville Valley
and Mt. Cranmore resorts, as required in the DOJ Consent.
The purchase price for the assets of those resorts is
$17,500,000. The purchase price will be paid $14,750,000 in
cash at closing and $2,750,000 in a subordinated promissory
note bearing interest at 12% per annum payable in
installments over 7.5 years. The closing of the purchase
and sale is anticipated to occur on or before November 27,
1996. The closing is not subject to a financing contingency
and an earnest money deposit with a value of $750,000 has
been made by the purchaser. On October 22, 1996 the DOJ
approved Booth Creek Ski Acquisition Corp. as a purchaser
satisfying the requirements of the Consent. The net
proceeds from the sale will be applied to reduce
indebtedness under Senior Credit Facility.
Acquisition of Sugarloaf Mountain Corporation 49% Minority
Interest
On August 29, 1996 the Company acquired the remaining
49% minority interest in the co mmon stock of Sugarloaf
Mountain Corporation that it had not previously acquired
through the Acquisition, thereby making it a wholly owned
subsidiary of the Company (subject to the interests of
warrant holders who collectively may purchase approximately
15% of the common stock of Sugarloaf for total consideration
of $737,000 at any time on or prior to June 30, 2002). The
49% interest was purchased for a cash purchase price of $2
million. The Company entered into a commitment with the
selling minority stockholders to pay up to an additional $1
million in purchase price based upon the Sugarloaf resort's
EBITDA over the period 1997 through 2002. The performance-
based purchase price will be calculated by multiplying
annual EBITDA by a factor of .11, with that product then
being multiplied by a factor of .49. Payments will be made
on November 30 of each of the years 1997 through 2002.
Grand Summit at Attitash/Bear Peak
In August, 1996 the Company, through its wholly-owned
subsidiary LBO Hotel Co., commenced construction of the
Grand Summit at Attitash/Bear Peak. The Grand Summit at
Attitash/Bear Peak is a quartershare condominium hotel and
conference center located at the Attitash/Bear Peak Resort
in Bartlett, New Hampshire. The first phase of the project
consists of 105 condominium units (143 rooms) each divided
into quartershare time intervals and a single commercial
condominium unit, which will be owned and operated by LBO
Hotel Co. The hotel features a 6,895 square foot grand
ballroom, 8,100 square feet of conference space, a 125 seat
restaurant, a 110 seat lounge and a 45 seat cafe, a three
level atrium lobby, a health club with heated outdoor pool
and associated retail, child care and entertainment
amenities. The facility may ultimately contain two
additional phases that are not currently under construction.
At total build out the project will consist of 219
condominium units (300 rooms). The total cost for this
facility is estimated at $13 million. LBO Hotel Co.
established a construction/term financing arrangement with
Key Bank of Maine on October 3, 1996 pursuant to which
construction financing for $8,500,000 of total cost is being
provided. The construction financing is guaranteed by the
Company on a limited basis with the Company's liability
under the guarantee limited to an aggregate amount of $4.5
million. The remainder of the construction cost is being
funded by the Company through its Senior Credit Facility.
As of the date of this Prospectus, the project has in excess
of $4 million of quartershare interests committed under
binding purchase and sale agreements. Eighty percent of the
net proceeds of the sale of quartershare interests are
applied to reduce the Key Bank of Maine construction/term
project indebtedness and 20% is available to LBO Hotel Co.
for its use.
Summer 1996 Capital Improvement Program
The Company undertook a capital improvement program
during the summer and fall of 1996 resulting in total
capital expenditures of approximately $18 million. The
capital improvement program consisted of $7.8 million of new
lifts, $3.2 million of expanded snowmaking capacity, $1.1
million of expanded trails, and $5.9 million in other
improvements to resort amenities. These capital
improvements were concentrated at the Mt. Snow and
Killington resorts. The capital improvement program was
funded through the Company's Senior Credit Facility and
capital leases.
Pico Mountain Ski Resort Acquisition
The Company entered into a Purchase and Sale
Agreement effective as of November 1, 1996 to purchase
substantially all of the assets of the Pico Mountain Ski
Resort located in Sherburne, Vermont. The purchase price is
comprised of two components: (1) $3,350,000 of cash payable
at closing and (2) $3,350,000 in contingent purchase price
payable upon the occurrence of certain future events. The
future events and the relevant portion of purchase price
payable upon achieving those events are as follows:
Future Events Purchase Price Component
Issuance of regulatory approvals $325,000
for connection of a sewer line
from the Killington Ski Resort
base area facilities to the
Alpine Pipeline, which provides a
direct connection to the City of
Rutland Wastewater Treatment
Facilities
Killington Ski Resort and Pico $325,000
Mountain Ski Resort generating,
on a consolidated basis, at least
1,135,000 skier visits in a
single season
Sale of quartershare interests in $1,000 per quartershare
any condominium hotel development unit sold for Pico
at Pico Mountain Ski Resort or Mountain Development and
Killington Ski Resort $500 per quartershare
sold for Killington
Resort development, up
to an aggregate maximum
of $700,000
Killington Ski Resort and Pico $2,000,000 payable in
Mountain Ski Resort generating, equal annual
on a consolidated basis (1) at installments of $200,000
least 4,000,000 skier visits on a each beginning March 1,
cumulative basis from the closing 2000 and ending March 1,
date through March 1, 2000 or (2) 2009
1,400,000 skier visits in a
single season
The Pico Mountain Ski Resort is currently owned and
operated by four separate companies. The company
responsible for the operation of the resort has filed a
voluntary petition under Chapter 7 of the United States
Bankruptcy Code. The Company is not purchasing any of the
assets of the operating company and is not assuming any
liabilities of the operating company. The Company is
purchasing substantially all of the assets of the remaining
three companies, the principal business of which is the
ownership of the real estate and improvements constituting
the Pico Mountain Resort, which has historically been leased
to the operating company.
Financing for the cash portion of purchase price
payable at closing is expected to be provided through the
Senior Credit Facility, but availability of that credit is
subject to both final approval by the lenders under the
Senior Credit Facility and the closing of the divestiture of
the Waterville Valley and Mt. Cranmore resorts.
The Pico Mountain Resort is located adjacent to the
Killington Ski Resort. Subject to receipt of necessary
governmental permits and approvals, the Company intends to
connect the two resorts by ski lifts and ski trails and
operate the Pico Mountain Ski Resort as part of the
Killington Ski Resort.
RISK FACTORS
In addition to the other matters described in this
Prospectus, the following factors should be carefully
considered by each Holder before accepting the Notes
Exchange Offer or the Subordinated Notes Exchange Offer,
although certain of the factors described below are equally
applicable to the Old Notes and the Old Subordinated Notes.
Leverage and Debt Service
The Company is highly leveraged. At July 28, 1996,
after giving pro forma effect to the acquisition of the 49%
interest in Sugarloaf which was not acquired in the
Acquisition and the divestitures of the Waterville Valley
and Mt. Cranmore resorts, the Company's total indebtedness
(including current maturities) and stockholders' equity
would have been $204.2 million and $22.4 million,
respectively, and the Company would have had an additional
$30.6 million available to be borrowed under the Senior
Credit Facility. The Company borrowed under the Senior
Credit Facility in order to fund operating losses incurred
in the fourth quarter of fiscal 1996 and the first quarter
of fiscal 1997 (see "-- Dependence on Weather Conditions;
Seasonality"); accordingly, borrowings under the Senior
Credit Facility increased from the date of consummation of
the Acquisition. As a result of the loss incurred on a pro
forma basis for the fiscal year ended July 28, 1996 and July
30, 1995, after giving pro forma effect to the Aquisition,
the acquisition of the 49% interest of Sugarloaf, and the
divestiture of the Waterville and Mt. Cranmore resorts,
earnings would have been insufficient to cover the indicated
fixed charges. Earnings would not have covered fixed
charges by $18.0 and $8.4 million for such years,
respectively. However, such results for the fiscal year 1996
include non-cash charges such as depreciation and
amortization of $16.4 million and a loss on the sale of Bear
Mountain in October 1995 of $4.7 million. For the fiscal
year 1995, non-cash charges include depreciation and
amortization of $18.8 million. The Company's ability to make
scheduled payments of the principal of, or interest on, or
to refinance its indebtedness (including the Notes and the
Subordinated Notes) depends on its future performance, which
to a certain extent is subject to economic, financial,
competitive and other factors beyond its control.
The Company believes that its cash flow from
operations following the Acquisition, together with
borrowings under the Senior Credit Facility, will be
adequate to meet its anticipated requirements for working
capital, capital expenditures, interest payments and
scheduled principal payments over the next several years.
See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources." There can be no assurance, however, that the
Company's business will continue to generate cash flow at or
above current levels. If the Company is unable to generate
sufficient cash flow from operations in the future to
service its debt and make necessary capital expenditures, or
if its future earnings are insufficient to make all required
principal payments out of internally generated funds, the
Company may be required to refinance all or a portion of its
existing debt, sell assets or obtain additional financing.
There can be no assurance that any such refinancing or asset
sales would be possible or that any additional financing
could be obtained on terms acceptable to the Company or at
all, particularly in view of the Company's high level of
debt following the Acquisition and the fact that
substantially all of its assets (and those of certain of its
Subsidiaries) will be pledged to secure the borrowings under
the Senior Credit Facility and other secured obligations.
See "Description of Other Indebtedness -- The Senior Credit
Facility."
The Company's high level of debt will have several
important effects on its future operations, including the
following: (a) the Company will have significant cash
requirements to service debt, reducing funds available for
operations, expansions and improvements and increasing the
Company's vulnerability to adverse general economic and
industry conditions; (b) the financial covenants and other
restrictions contained in the Senior Credit Facility, the
Indenture and other agreements relating to the Company's
indebtedness require the Company to meet certain financial
tests and restrict its ability to borrow additional funds
and to dispose of assets; and (c) because of the Company's
debt service requirements, funds available for working
capital, capital expenditures, acquisitions and general
corporate purposes may be limited. The Company's leveraged
position may increase its vulnerability to competitive
pressures and the cyclicality of the skiing and recreational
industries. In addition, although management believes that
capital expenditures above maintenance levels can be
deferred to address cash flow or other constraints, such
initiatives cannot be deferred for extended periods without
adverse effects on skier visits, revenues and profitability.
The Company's continued growth depends, in part, on its
ability to maintain and expand its facilities and to engage
in successful real estate development initiatives, and,
therefore, to the extent it is unable to do so with
internally generated cash, its inability to finance capital
expenditures through borrowed funds could have a material
adverse effect on the Company's future operations.
Restrictions Under Debt Agreements
The Indenture and the Subordinated Note Indenture
contain covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries to
incur additional indebtedness, sell assets, or enter into
certain mergers and consolidations. In addition, the Senior
Credit Facility contains restrictive covenants which,
generally, are more restrictive than those contained in the
Indenture and the Subordinated Note Indenture, and prohibits
the Company from prepaying its subordinated indebtedness
(including the Notes and the Subordinated Notes). The Senior
Credit Facility also requires the Company to maintain
specified consolidated financial ratios and satisfy certain
consolidated financial tests. The consolidated financial
ratios and tests consist of the following:
Ratio of Consolidated Total Debt to Consolidated
EBITDA. The Company must maintain a ratio of consolidated
total debt to consolidated EBITDA measured on a rolling four
quarter basis beginning at 7.25-to-1.00 commencing the first
fiscal quarter of 1997 and declining on a graduated basis to
3.50-to-1.00 for the fourth fiscal quarter of 2001.
Interim Fiscal Year 1997 Consolidated EBITDA. For
the fiscal quarter ending October, 1996, the Company shall
not incur negative consolidated EBITDA in excess of
$6,000,000. For the two fiscal-quarter-period ending
January, 1997, the Company must generate consolidated EBITDA
of not less than $9,400,000. For the three fiscal-quarter-
period ending April, 1997, the Company must generate
consolidated EBITDA of not less than $37,300,000.
Ratio of Consolidated Adjusted Cash Flow to
Consolidated Debt Service. The Company must maintain as of
the end of each fiscal quarter commencing with the fourth
fiscal quarter of the 1997 fiscal year for the four-quarter
period ending as of the last day of each fiscal quarter a
ratio of consolidated adjusted cash flow to consolidated
debt service of not less than the specified levels measured
as of the end of any fiscal quarter beginning at 1.20-to-
1.00 for the 1997 fiscal year and increasing on a graduated
basis to 2.00-to-1.00 for the 2001 fiscal year.
Minimum Consolidated Tangible Net Worth. The
Company must maintain minimum consolidated tangible net
worth (a) as of the last day of each fiscal year of not less
than the sum of (i) $25,000,000 plus (ii) 50% of cumulative
consolidated net income (without deduction for any losses)
for each fiscal year, commencing with the fiscal year ending
July 1997 plus (iii) all amounts received after June 28,
1997 from the issuance of equity interests and (b) at all
other times, of not less than $15,000,000 plus all amounts
received after June 28, 1997 from the issuance of equity
interests.
The Company's ability to meet the foregoing
financial ratios and financial tests can be affected by
events beyond its control, and there can be no assurance
that the Company will meet those ratios and tests. A breach
of any of the covenants under the Senior Credit Facility,
the Indenture or the Subordinated Note Indenture could
result in a default under the Senior Credit Facility, the
Indenture and/or the Subordinated Note Indenture. If an
event of default occurs under the Senior Credit Facility,
the lenders could elect to declare all amounts outstanding
thereunder, together with accrued interest, to be
immediately due and payable. If the Company is unable to
repay those amounts, the lenders could proceed against the
collateral granted to them to secure that indebtedness.
Substantially all the assets of the Company and certain of
its Subsidiaries have been pledged as security under the
Senior Credit Facility. See "Description of Senior
Subordinated Notes," "Description of Subordinated Notes" and
"Description of Other Indebtedness -- The Senior Credit
Facility."
Subordination of the Notes and the Subordinated Notes
The payment of principal of, premium and interest
on, and any other amounts owing in respect of, the Notes is
subordinated to the prior payment in full of all existing
and future Senior Debt of the Company, including
indebtedness under the Senior Credit Facility, and each
Subsidiary Guarantee is subordinated in right of payment to
Senior Debt of the Guarantors. The payment of principal of,
premium and interest on, and any other amounts owing in
respect of, the Subordinated Notes is subordinated to the
prior payment in full of all existing and future
Subordinated Note Senior Debt of the Company, including
indebtedness under the Senior Credit Facility and with
respect to the Notes, and each Subordinated Note Subsidiary
Guarantee is subordinated in right of payment to
Subordinated Note Senior Debt of the Guarantors. As of July
28, 1996, after giving pro forma effect to the acquisition
of the 49% interest in Sugarloaf and the divestitures of
Waterville and Mt. Cranmore pursuant to the Consent, the
aggregate outstanding amount of Senior Debt of the Company
would have been approximately $53.8 million and the
aggregate outstanding amount of Subordinated Note Senior
Debt of the Company would have been approximately $1170.4
million. In addition, the Company would have had $30.6
million available for borrowing under the Senior Credit
Facility. The Indenture and the Subordinated Note Indenture
limit, but do not prohibit, the incurrence by the Company
and the Guarantors of additional indebtedness which is
Senior Debt or Subordinated Note Senior Debt, as the case
may be. In the event of the bankruptcy, liquidation,
dissolution, reorganization or other winding up of the
Company, the assets of the Company will be available to pay
obligations on the Notes only after all Senior Debt has been
paid in full in cash, and the assets of the Company will be
available to pay obligations on the Subordinated Notes only
after all Subordinated Note Senior Debt has been paid in
full in cash, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes or
he Subordinated Notes. In addition, under certain
circumstances, the Company may not pay principal of, premium
or interest on, or any other amounts owing in respect of,
the Notes or the Subordinated Notes, or purchase, redeem or
otherwise retire the Notes or the Subordinated Notes, if a
payment default or a non-payment default exists with respect
to certain Senior Debt or Subordinated Note Senior Debt, as
the case may be, and, in the case of a non-payment default,
a payment blockage notice has been received by the Trustee
(as defined) or the Subordinated Note Trustee (as defined),
as the case may be. See "Description of Senior Subordinated
Notes -- Subordination" and "Description of Subordinated
Notes --Subordination."
Holding Company Structure; Effects of Asset Encumbrances
Virtually all of the Company's operating income will
be generated by its subsidiaries. As a result, the Company
is dependent on the earnings and cash flow of, and dividends
and distributions or advances from, its subsidiaries to
provide the funds necessary to meet its debt service
obligations, including the payment of principal of and
interest on the Notes and the Subordinated Notes. There can
be no assurance that such subsidiaries will generate
sufficient cash flow to dividend, distribute or advance
funds to the Company. Should the Company fail to satisfy any
payment obligation under the Notes or the Subordinated
Notes, the holders thereof would have a direct claim
therefor against the Guarantors pursuant to their Subsidiary
Guarantees or their Subordinated Note Subsidiary Guarantees,
as applicable. However, substantially all of the assets of
the Guarantors have been pledged to secure the obligations
of the Company and such subsidiaries under the Senior Credit
Facility and other secured obligations. The Indenture and
the Subordinated Note Indenture limit, but do not prohibit,
the ability of the Company and its Restricted Subsidiaries
to incur additional secured indebtedness. In the event of a
default under the Senior Credit Facility (or any other
secured indebtedness), the lenders thereunder would be
entitled to a claim on the assets securing such indebtedness
which is prior to any claim of the holders of the Notes
(except to the extent provided under the Pledge and
Disbursement Agreement) or the Subordinated Notes.
Accordingly, there may be insufficient assets remaining
after payment of prior secured claims (including claims of
lenders under the Senior Credit Facility) to pay amounts due
on the Notes or the Subordinated Notes. See "-- Leverage and
Debt Service" and "--Subordination of the Notes and the
Subordinated Notes."
Risks of Expansion
An element of the Company's business strategy is the
development of new skiable terrain and the development,
construction, operation and sale of interval ownership and
condominium real estate units, and other related facilities
at or near its ski resorts. See "Business -- Real Estate
Development." Such efforts will be dependent upon, among
other things, receipt of adequate financing on suitable
terms and obtaining and maintaining the requisite permits
and licenses. There can be no assurance as to whether, when
or on what terms such financing, permits and licenses may be
obtained. In addition, such efforts entail risks associated
with development and construction activities, including cost
overruns, shortages of materials or skilled labor, labor
disputes, unforeseen environmental or engineering problems,
work stoppages, and acts of God, any of which could delay
construction and result in a substantial increase in cost to
the Company. Because the real estate projects may be
developed subject, in whole or in part, to later sales of
units or other interests, the Company may face additional
risks associated with marketing such units or interests
after incurring substantial out-of-pocket costs or
indebtedness. See "Business -- Real Estate Development" and
"Business -- Environmental Matters." The Company may also
grow through acquisitions; however, there can be no
assurance that attractive acquisition candidates will be
identified, or that any such acquisitions will be completed
on terms acceptable to the Company, that necessary financing
will be available on suitable terms, if at all, or that such
acquisitions will be permitted under applicable antitrust
laws. See "-- Leverage and Debt Service."
Ability to Achieve Anticipated Cost Savings; Integration of
SKI
The Company faces risks associated with implementing
its post-Acquisition strategy and integrating the operations
of SKI into the operations of the Company. See "Business --
The Company -- Strategy." Management of the Company has
estimated that substantial cost savings can be achieved as a
result of integrating the operations of the Company and SKI.
See "Pro Forma Financial Data" and "Business -- The Company
- -- Strategy." The cost savings estimates have been prepared
solely by members of the management of the Company based on
information about SKI available to them, and have not been
independently reviewed. The estimates necessarily make
numerous assumptions as to future revenue levels and other
operating results, the availability of funds for capital
expenditures and general industry and business conditions
and other matters, many of which are beyond the control of
the Company. Investors are cautioned that the actual cost
savings realized by the Company may vary considerably from
the estimates contained herein and that undue reliance
should not be placed upon such estimates. There also can be
no assurance that unforeseen costs and expenses or other
factors will not offset the anticipated cost savings in
whole or in part.
Regional and National Economic Conditions
The skiing industry is cyclical in nature, and is
particularly vulnerable to shifts in regional and national
economic conditions. A significant portion of the Company's
customers reside in the New England states. The economy in
New England has been affected by substantial job losses in
the manufacturing sector and in the defense industry, and
has experienced other adverse economic trends. Although data
indicate a stabilization of the New England economy, there
can be no assurance that improvement will occur or that
stagnation or declines in skier visits or real
estate-related sales will not occur. Skiing is a
discretionary recreational activity entailing relatively
high costs of participation, and a worsening in the regional
economy, or deteriorating national economic conditions,
could adversely impact skier visits, and the Company's real
estate and other revenues. Accordingly, the Company's
financial condition, particularly in light of its highly
leveraged condition, could be adversely affected by such a
worsening in the regional or national economy. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Dependence on Weather Conditions; Seasonality
Although the Company's facilities include high
quality snowmaking equipment, its revenues and operating
expenses continue to be heavily influenced by weather
conditions. Adverse weather conditions lead to increased
power and other operating costs associated with snowmaking,
and can render snowmaking wholly or partially ineffective in
maintaining quality skiing conditions. Moreover, it has been
management's experience that, despite the presence of high
quality snow on the mountains, unfavorable weather
conditions in more highly populated areas can result in
decreased skier visits. Prolonged adverse weather
conditions, or the occurrence of such conditions during key
periods of the ski season, can dramatically and adversely
affect operating results. In addition, the Company's
revenues are highly seasonal in nature, with the vast
majority of its revenues historically being generated in the
second and third fiscal quarters, of which a significant
portion (as well as approximately 20% of annual skier days)
is produced in two key weeks -- the Christmas and
Presidents' Day vacation weeks. See "Management's Discussion
and Analysis of Financial Condition and Results of
Operations -- General." This high degree of seasonality of
revenues exacerbates the potential effect on operating
results of adverse weather and other developments of even
moderate or limited duration.
Competition
The skiing industry is highly competitive and is
characterized by high fixed operating expenses and heavy
dependence upon marginal revenues and maintenance or
improvement of skier visit levels. The Company's competitors
include other major ski resorts in the northeastern United
States, as well as in the western states, for its vacation
business, and other ski areas in Maine, New Hampshire,
Vermont, Massachusetts and upstate New York for weekend and
day-skier traffic. The Company also competes with other
non-ski-oriented major resorts. See "Business
- --Competition." The Company believes that competition for
skiers focuses on snow conditions, size, quality and variety
of terrain, extent and quality of other facilities, quality
of service, location and accessibility, and price. While the
Company regularly monitors the activities of its principal
competitors and modifies its marketing and operational
strategies and techniques as necessary, there can be no
assurance that its competitors will not be successful in
capturing a material portion of the Company's present or
potential customer base. Some of the Company's competitors
have greater financial resources than the Company and could
use these resources to take steps which could adversely
affect the Company's competitive position. Such competitors
may also be better positioned than the Company to withstand
downturns in the skiing industry, adverse weather
conditions, price and other forms of competition, and other
negative developments. In addition, many of the Company's
competitors in the western states have facilities offering
more and longer trails with a greater variety of terrain
and, as perceived by some, superior natural snow conditions.
See "Business -- Competition."
Risk Associated with Leased Property and Property Used
Pursuant to Permits
Portions of the land underlying certain of the
Company's ski resorts are leased by the Company or used
pursuant to permits or licenses from governmental and
private entities. If any such lease were to be terminated as
a result of a default by the lessee or holder thereunder, or
if any such permit or license were to be terminated as a
result of a default by the user thereunder or not renewed
upon expiration or otherwise revoked prior to expiration,
the Company would lose possession of the land subject
thereto and any improvements thereon, perhaps making it
impossible for the Company to operate the affected resort.
Certain leases under which the Company is the tenant provide
for renewal, but upon terms to be negotiated in the future.
Therefore, the obligations of the Company may increase upon
any such renewal. Special use permits granted by the United
States Forest Service (the "USFS") are subject to
termination if the federal government determines that the
land is needed for a "higher public purpose." Such permits
are granted subject to third party claims to the permitted
land, if any, and the USFS reserves the right to use and
permit others to use the permitted land so long as such use
does not materially interfere with the rights and privileges
authorized by the permits. Additionally, the USFS may impose
additional conditions on the Company in connection with the
Acquisition. For a description of such leases, permits and
licenses, see "Business -- Properties." In addition, future
expansion could subject the leases, permits or licenses to
additional review under the federal National Environmental
Policy Act ("NEPA") or other federal or state environmental
laws.
Environmental and Land Use Matters
The Company is subject to a wide variety of federal,
state, and local laws, regulations and policies relating to
land use and development and to the use, storage, discharge,
emission and disposal of hazardous materials. Failure to
comply with such laws could result in the imposition of
severe penalties or restrictions on operations including,
without limitation, revocation of government issued special
use permits, where applicable, that could adversely affect
present and future operations, including both skiing and
real estate development. The Company and SKI have recently
completed Phase I environmental assessments at the
properties owned or used by their respective subsidiaries.
The reports included suggestions relative to certain
conditions and areas of potential environmental concern. The
reports did not, however, identify any environmental
conditions or noncompliance, the remediation or correction
of which management believes would have a material adverse
impact on the business or financial condition, results of
operations and cash flows of the Company at any of its
resort areas. In addition, such laws, regulations and
policies could change in a manner that materially and
adversely affects the Company's ability to conduct its
business as at present or to implement desired expansions
and improvements to its facilities. See "Business --
Environmental Matters."
Adequacy of Water Supply
The Company's operations are heavily dependent upon
its continued ability, under applicable laws, regulations,
policies, permits, licenses, or contractual arrangements,
including leases, reservations in deeds, easements and
rights-of-way, to have access to adequate supplies of water
with which to make snow and service the other needs of its
facilities, including, in certain cases, the condominium
developments at the properties and otherwise to conduct its
operations. There can be no assurance that new applications
of existing laws, regulations and policies, or changes in
such laws, regulations and policies will not occur in a
manner that could have an adverse effect on the Company, or
that important permits, licenses or agreements will not be
canceled, non-renewed, or renewed on terms materially less
favorable to the Company. Additionally, the rights of the
Company to use various water sources on or about its
properties may be also subject to the rights of other
riparian users and the public generally. See "Business --
Environmental Matters" and "Business --Properties."
Antitrust
The Company has resolved antitrust concerns of the
DOJ raised by the Acquisition by entering into a consent
decree. Specifically, the Company has agreed to divest the
assets constituting the Waterville Valley and Mt. Cranmore
resorts not later than December 1, 1996. The Consent (i)
requires the Company to use its best efforts to complete the
divestitures as expeditiously as possible, (ii) gives the
DOJ the ability, in its sole discretion, to extend the time
period for completing the divestitures by an additional
ninety days, and (iii) requires the Company to consent to
the appointment of a trustee to accomplish the divestitures
at the best price then obtainable upon a reasonable effort
by the trustee in event the divestitures have not been
completed within the allotted period. If the transactions
contemplated by the agreement established with Booth Creek
Ski Acquisition Corp. to purchase these resorts (see "Recent
Developments") are not timely consummated, no assurance can
be given regarding the results of the sales, including the
price to be received or the terms and conditions of the
sales. No assurance can be given that the Company will
complete the divestitures within the allotted time period or
that the resorts will not be subject to sale by a trustee.
Control of the Company
Ninety-six percent (96%) of the Company's
outstanding common stock is held by Leslie B. Otten;
therefore, Mr. Otten has the ability unilaterally to control
the affairs of the Company, subject only to such limitations
as may be imposed under the Senior Credit Facility, the
Indenture, the Subordinated Note Indenture or other existing
or future contractual provisions.
Dependence on Key Personnel
The Company's success depends to a significant
extent upon the performance and continued service of Mr.
Otten, as well as several other key management and
operational personnel. The loss of the services of Mr. Otten
or of such other personnel could have a material adverse
effect on the business and operations of the Company.
Neither Mr. Otten nor any other executive officer is subject
to an employment agreement with the Company or any of its
subsidiaries. See "Management."
Change of Control
Upon a Change of Control, the Company will be
required to offer to repurchase (i) all of the outstanding
Notes at 101% of the principal amount thereof, plus accrued
interest to the date of repurchase, and (ii) all of the
Subordinated Notes at 101% of the Accreted Value or
principal amount, as applicable, thereof, plus accrued
interest to the date of repurchase. There can be no
assurance that the Company will have sufficient funds
available or will be permitted by its other debt agreements
to repurchase the Notes and the Subordinated Notes upon the
occurrence of a Change of Control. In addition, a Change of
Control may cause a default under the Senior Credit Facility
and other Senior Debt or Subordinated Note Senior Debt of
the Company, in which case the subordination provisions of
the Notes or the Subordinated Notes, as the case may be,
would require payment in full of all such Senior Debt or
Subordinated Note Senior Debt of the Company before
repurchase of the Notes or the Subordinated Notes, as the
case may be. See "Description of Senior Subordinated Notes
- -- Subordination," "Description of Senior Subordinated Notes
- -- Repurchase at the Option of Holders -- Change of
Control," "Description of Subordinated Notes
- --Subordination" and "Description of Subordinated Notes --
Repurchase at the Option of Holders -- Change of Control."
The inability to repay Senior Debt or Subordinated Note
Senior Debt of the Company, if accelerated, and to
repurchase all of the tendered Notes or Subordinated Notes,
would constitute an event of default under the Indenture or
the Subordinated Note Indenture, as the case may be.
Fraudulent Conveyance Risks
Various fraudulent conveyance laws have been enacted
for the protection of creditors and may be utilized by a
court to subordinate or avoid the Notes, any Subsidiary
Guarantee, the Subordinated Notes or any Subordinated Note
Subsidiary Guarantee in favor of other existing or future
creditors of the Company or a Guarantor.
If a court in a lawsuit on behalf of any unpaid
creditor of the Company or a representative of the Company's
creditors were to find that, at the time the Company issued
the Notes or the Subordinated Notes, the Company (x)
intended to hinder, delay or defraud any existing or future
creditor or contemplated insolvency with a design to prefer
one or more creditors to the exclusion in whole or in part
of others or (y) did not receive fair consideration or
reasonably equivalent value for issuing such Notes or such
Subordinated Notes, as applicable, and the Company (i) was
insolvent, (ii) was rendered insolvent by reason of such
distribution, (iii) was engaged or about to engage in a
business or transaction for which its remaining assets
constituted unreasonably small capital to carry on its
business, or (iv) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as
they matured, such court could void such Notes or such
Subordinated Notes, as applicable, and void such
transactions. Alternatively, in such event, claims of the
holders of such Notes or such Subordinated Notes, as
applicable, could be subordinated to claims of the other
creditors of the Company.
The Company's obligations under the Notes and the
Subordinated Notes have been guaranteed by the Guarantors.
To the extent that a court were to find that (x) a
Subsidiary Guarantee or Subordinated Note Subsidiary
Guarantee was incurred by a Guarantor with intent to hinder,
delay or defraud any present or future creditor or the
Guarantor contemplated insolvency with a design to prefer
one or more creditors to the exclusion in whole or in part
of others or (y) such Guarantor did not receive fair
consideration or reasonably equivalent value for issuing its
Subsidiary Guarantee or Subordinated Note Subsidiary
Guarantee and such Guarantor (i) was insolvent, (ii) was
rendered insolvent by reason of the issuance of such
Subsidiary Guarantee or Subordinated Note Subsidiary
Guarantee, (iii) was engaged or about to engage in a
business or transaction for which the remaining assets of
such Guarantor constituted unreasonably small capital to
carry on its business, or (iv) intended to incur, or
believed that it would incur, debts beyond its ability to
pay such debts as they matured, the court could void or
subordinate such Subsidiary Guarantee or Subordinated Note
Subsidiary Guarantee in favor of the Guarantor's creditors.
A legal challenge of a Subsidiary Guarantee or Subordinated
Note Subsidiary Guarantee on fraudulent conveyance grounds
may, among other things, focus on the benefits, if any,
realized by the Guarantor as a result of the issuance by the
Company of the applicable Notes or Subordinated Notes.
To the extent any Subsidiary Guarantees or
Subordinated Note Subsidiary Guarantees were avoided as a
fraudulent conveyance or held unenforceable for any other
reason, holders of the Notes or the Subordinated Notes, as
the case may be, would cease to have any claim in respect of
such Guarantor and would be creditors solely of the Company
and any Guarantor whose Subsidiary Guarantee or Subordinated
Note Subsidiary Guarantee was not avoided or held
unenforceable. In such event, the claims of the holders of
the applicable Notes or Subordinated Notes against the
issuer of an invalid Subsidiary Guarantee or Subordinated
Note Subsidiary Guarantee would be subject to the prior
payment of all liabilities and preferred stock claims of
such Guarantor. There can be no assurance that, after
providing for all prior claims and preferred stock
interests, if any, there would be sufficient assets to
satisfy the claims of the holders of the applicable Notes
relating to any voided portions of any of the Subsidiary
Guarantees or Subordinated Note Subsidiary Guarantees.
Based upon financial and other information currently
available to it, management of the Company believes that the
Notes, the Subsidiary Guarantees, the Subordinated Notes and
the Subordinated Note Subsidiary Guarantees have been
incurred for proper purposes and in good faith and that the
Company and each Guarantor (i) is solvent and will continue
to be solvent after issuing the Notes, the Subordinated
Notes, its Subsidiary Guarantee or its Subordinated Note
Subsidiary Guarantee, as the case may be, (ii) has
sufficient capital for carrying on its business after such
issuance, and (iii) will be able to pay its debts as they
mature. See "Management's Discussions and Analysis of
Financial Condition and Results of Operations -- Liquidity
and Capital Resources."
Tax Considerations
The Old Subordinated Notes were issued with
significant original issue discount, and the Old Notes were
issued with original issue discount, for federal income tax
purposes, and the New Notes and the New Subordinated Notes
will have similar original issue discount upon consummation
of the Exchange Offers. Although interest will not accrue on
the Subordinated Notes prior to July 15, 2001, and there
will be no periodic payments of cash interest on the
Subordinated Notes prior to January 15, 2002, original issue
discount (i.e., the difference between the stated redemption
price at maturity and the issue price of the Subordinated
Notes) will accrue from the issue date of the Subordinated
Notes. Original issue discount equal to such difference in
the case of the Notes will accrue from the issue date of the
Notes. Holders of the Subordinated Notes or the Notes will
be required to include such original issue discount in gross
income for federal income tax purposes over the term of such
obligations in advance of the receipt of the cash payments
to which the income is attributable. See "Certain Federal
Income Tax Consequences."
In addition, the Subordinated Notes constitute
"applicable high yield discount obligations" for federal
income tax purposes. As a result, the Company's deduction of
original issue discount on the Subordinated Notes will be
limited as follows: First, the "disqualified portion" of
original issue discount on the Subordinated Notes will not
be deductible by the Company. In general, the "disqualified
portion" of original issue discount on the Subordinated
Notes equals the percentage of such original issue discount
obtained by dividing (a) the excess of the yield to maturity
of the Subordinated Notes over the sum of the applicable
federal rate for the month in which the Subordinated Notes
are issued (6.92% for debt instruments issued in June 1996)
plus six percentage points by (b) the yield to maturity of
the Subordinated Notes. For purposes of the foregoing rules,
the yield to maturity of the Subordinated Notes will be
determined based on the "issue price" of the Subordinated
Notes as determined for federal income tax purposes, which
in general is the portion of the issue price of the Units
allocated to the Subordinated Notes. See "Certain Federal
Income Tax Consequences -- Original Issue Discount." Second,
the remainder of the original issue discount on the
Subordinated Notes will not be deductible by the Company
until paid.
If a bankruptcy case is commenced by or against the
Company under the U.S. Bankruptcy Code after the issuance of
the Subordinated Notes and the Notes, the claim of a holder
of Subordinated Notes or Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum
of (i) the initial offering price and (ii) that portion of
the original issue discount that is not deemed to constitute
"unmatured interest" for purposes of the U.S. Bankruptcy
Code. Any original issue discount that was not amortized as
of such bankruptcy filing would constitute "unmatured
interest."
See "Certain Federal Income Tax Considerations" for
a more detailed discussion of the federal income tax
consequences to the holders regarding the purchase,
ownership and disposition of the Subordinated Notes and the
Notes.
Absence of Public Market
The New Notes and the New Subordinated Notes are
being offered exclusively to holders of the Old Notes and
the Old Subordinated Notes, respectively. The Old Notes and
the Old Subordinated Notes were issued to a limited number
of institutional investors on June 28, 1996. There is no
existing trading market for the Notes or the Subordinated
Notes, and although the Company has been advised that Bear
Stearns currently intends to make a market in the Notes and
the Subordinated Notes, Bear Stearns is not obligated to do
so and may discontinue any such market making at any time
without notice. In addition, any market making activities
in the Old Notes and the Old Subordinated Notes may be
limited during the pendency of the Exchange Offers. There
can be no assurance that an active trading market for the
Notes or the Subordinated Notes will develop, or, if it
develops, that it will continue. The Company does not
intend to list the Notes or the Subordinated Notes on any
securities exchange or to seek approval for quotation of the
Notes or the Subordinated Notes through any automated
quotation system. Future trading prices for the Notes and
the Subordinated Notes will depend on many factors,
including, among others, the Company's operating results,
the market for similar securities and changes in prevailing
interest rates.
Consequences of Failure to Exchange
Holders of Old Notes or Old Subordinated Notes who
do not exchange for New Notes or New Subordinated Notes
pursuant to the Exchange Offers will continue to be subject
to the restrictions on transfer of such Old Notes or Old
Subordinated Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes or the Old
Subordinated Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements
of the Securities Act and applicable state securities laws.
In general, the Old Notes and the Old Subordinated 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. The Company does not
currently anticipate that it will register the Old Notes or
the Old Subordinated Notes under the Securities Act. New
Notes and New Subordinated Notes issued pursuant to the
Exchange Offers may be offered for resale, resold or
otherwise transferred by Holders thereof (other than any
such holder which is an "affiliate" of the Company or any
Guarantor 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 New Notes or New Subordinated Notes are
acquired in the ordinary course of such holders' business
and such holders have no arrangement with any person to
participate in the distribution of such notes. Each broker-
dealer that receives New Notes or New Subordinated Notes for
its own account pursuant to the Exchange Offers must
acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes or New Subordinated Notes.
The Letter of Transmittal states that, by so acknowledging
and delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the
meaning 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 New Notes or
New Subordinated Notes received in exchange for Old Notes or
Old Subordinated Notes where such Old Notes or Old
Subordinated Notes were acquired by such broker-dealer as a
result of market-making activities or other trading
activities. The Company has agreed that, for a period of
180 days after the effective date of this Prospectus, it
will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of
Distribution." However, to comply with the securities laws
of certain jurisdictions, if applicable, the New Notes and
New Subordinated Notes may not be offered or sold unless
they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or
qualification is available and is complied with. To the
extent that Old Notes or Old Subordinated Notes are tendered
and accepted in the Exchange Offers, the trading market for
untendered and tendered but unaccepted Old Notes and Old
Subordinated Notes will be adversely affected.
THE EXCHANGE OFFERS
Purpose and Effect of the Exchange Offers
On June 28, 1996 (the "Closing Date"), the Old Notes
were sold by the Company to the Initial Purchasers and the
Old Subordinated Notes were sold by the Company to Bear
Stearns. The Initial Purchasers and Bear Stearns
subsequently resold the Old Notes and the Old Subordinated
Notes, respectively, to qualified institutional buyers
and/or institutional accredited investors. In connection
with the issuance of the Old Notes and the Old Subordinated
Notes, the Company and the Guarantors entered into the
Registration Rights Agreements with the Initial Purchasers
and Bear Stearns, respectively. Pursuant to the
Registration Rights Agreements, the Company agreed (i) to
file with the Commission a registration statement under the
Securities Act with respect to the Exchange Offers no later
than 45 days following the Closing Date, (ii) to use its
best efforts to cause such registration statement to become
effective under the Securities Act at the earliest
practicable time, but in no event later than 150 days after
the Closing Date, and (iii) upon effectiveness of the
Registration Statement, to consummate the Exchange Offers
within 30 business days. Copies of the Registration Rights
Agreements have been filed as exhibits to the Registration
Statement of which this Prospectus is a part. The
Registration Statement is intended to satisfy the Company's
obligations under the Registration Rights Agreements.
As a result of the filing and the effectiveness of
the Registration Statement of which this Prospectus is a
part, payment of certain liquidated damages provided for in
the Registration Rights Agreements will not occur.
Following the consummation of the Exchange Offers, Holders
of Old Notes or Old Subordinated Notes will not, in general,
have any further registration rights and the Old Notes or
Old Subordinated Notes will continue to be subject to
certain restrictions on transfer except that certain Holders
may have certain registration rights in certain limited
circumstances. See "- Certain Consequences of a Failure to
Exchange." Accordingly, the liquidity of the market for the
Old Notes or Old Subordinated Notes could be adversely
affected.
Resales of New Notes and New Subordinated Notes
The Company is making the Exchange Offers in
reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in
other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that
the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect
to the Exchange Offers as it has in such interpretive
letters to third parties. Based on these interpretations by
the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the
Company believes that New Notes issued pursuant to the Notes
Exchange Offer in exchange for Old Notes and New
Subordinated Notes issued pursuant to the Subordinated Notes
Exchange Offer in exchange for Old Subordinated Notes may be
offered for resale, resold and otherwise transferred by a
Holder thereof (other than a Holder who is a broker-dealer)
without further compliance with the registration and
prospectus delivery requirements of the Securities Act,
provided that such New Notes and New Subordinated Notes are
acquired in the ordinary course of such Holder's business
and that such Holder is not participating, and has no
arrangement or understanding with any person to participate,
in a distribution (within the meaning of the Securities Act)
of such New Notes or New Subordinated Notes. However, any
Holder of Old Notes or Old Subordinated Notes who is an
"affiliate" of the Company or who intends to participate in
the Exchange Offers for the purpose of distributing New
Notes or the New Subordinated Notes, or any broker-dealer
who purchased Old Notes or Old Subordinated Notes from the
Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act (a) will not be
able to rely on the interpretations of the staff of the
Division of Corporation Finance of the Commission set forth
in the above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Notes or Old
Subordinated Notes in the Exchange Offers, and (c) must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
sale or other transfer of such Old Notes or Old Subordinated
Notes unless such sale is made pursuant to an exemption from
such requirements. In addition, as described below, if any
broker-dealer holds Old Notes or Old Subordinated Notes
acquired for its own account as a result of market-making or
other trading activities and exchanges such Old Notes for
New Notes or exchanges such Old Subordinated Notes for New
Subordinated Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Notes or New
Subordinated Notes.
Each Holder of Old Notes who wishes to exchange Old
Notes for New Notes in the Notes Exchange Offer and each
Holder of Old Subordinated Notes who wishes to exchange Old
Subordinated Notes for New Subordinated Notes in the
Subordinated Notes Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company,
(ii) any New Notes or New Subordinated Notes to be received
by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with
any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes or New
Subordinated Notes, and (iv) if such Holder is not a broker-
dealer, such Holder is not engaged in, and does not intend
to engage in, a distribution (within the meaning of the
Securities Act) of such New Notes or New Subordinated Notes.
Each broker-dealer that receives New Notes or New
Subordinated Notes for its own account pursuant to the
Exchange Offers must acknowledge that it acquired the Old
Notes or Old Subordinated Notes for its own account as the
result of market-making activities or other trading
activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection
with any resale of such New Notes or New Subordinated Notes.
The Notes Letter of Transmittal and the Subordinated Notes
Letter of Transmittal state that by so acknowledging 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. Based on the position taken by the
staff of the Division of Corporation Finance of the
Commission in the interpretive letters referred to above,
the Company believes that broker-dealers who acquired Old
Notes or Old Subordinated Notes for their own accounts as a
result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill
their prospectus delivery requirements with respect to New
Notes or New Subordinated Notes received upon exchange of
such Old Notes or Old Subordinated Notes, as the case may be
(other than Old Notes or Old Subordinated Notes which
represent an unsold allotment from the original sale of the
Old Notes or Old Subordinated Notes, as the case may be),
with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of
distribution with respect to the resale of such New Notes or
New Subordinated Notes. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Notes or
New Subordinated Notes received in exchange for Old Notes or
Old Subordinated Notes, as the case may be, where such Old
Notes or Old Subordinated Notes, as the case may be, were
acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the
Registration Rights Agreements, the Company has agreed that
this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Notes or New
Subordinated Notes for the lesser of (i) a period of 180
days from the date on which the Registration Statement of
which this Prospectus is a part is declared effective or
(ii) such period of time as such Participating Broker-Dealer
must comply with the prospectus delivery requirements of the
Act in order to resell such New Notes or New Subordinated
Notes (subject to extension under certain limited
circumstances below). See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive letters and must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
resale transaction.
In that regard, each Participating Broker-Dealer who
surrenders Old Notes or Old Subordinated Notes pursuant to
the Exchange Offers will be deemed to have agreed, by
execution of the Notes Letter of Transmittal or Subordinated
Notes Letter of Transmittal, as the case may be, that, upon
receipt of advice from the Company of the existence of any
fact or the happening of any event that makes any statement
of a material fact made in the Registration Statement, this
Prospectus, or any supplement or amendment thereto, untrue,
or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to
make the statements herein or therein not misleading or of
the occurrence of certain other events specified in the
Registration Rights Agreements, such Participating Broker-
Dealer will suspend the sale of New Notes or New
Subordinated Notes pursuant to this Prospectus until the
Company has amended or supplemented this Prospectus to
correct such untrue statement or make the statements herein
or therein not misleading and has furnished copies of the
amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has advised such Participating
Broker-Dealer in writing that the sale of the New Notes or
New Subordinated Notes may be resumed, as the case may be.
If the Company gives such notice to suspend the sale of New
Notes or New Subordinated Notes, or if the Company delays or
suspends the effectiveness of the Registration Statement of
which this Prospectus is a part, under certain circumstances
it shall extend the period referred to above during which
Participating Broker-Dealers are entitled to use this
Prospectus in connection with the resale of New Notes or New
Subordinated Notes by the number of days during the period
from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers
shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the New Notes or
New Subordinated Notes or to and including the date on which
the Company has given the advice that the sale of New Notes
or New Subordinated Notes may be resume, as the case may be.
A Participating Broker-Dealer who intends to use the
Prospectus in connection with the resale of the New Notes or
New Subordinated Notes pursuant to the Exchange Offers must
notify the Company, or cause the Company to be notified, on
or prior to the Expiration Date that it is a Participating
Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letters of Transmittal or
may be delivered to the Exchange Agent at the address set
forth in the sections of this Prospectus entitled "- Terms
of the Exchange Offers - Exchange Agent" and "Exchange
Agent."
Certain Consequences of a Failure to Exchange
The Old Notes or Old Subordinated Notes have not
been registered under the Securities Act or any state
securities law and therefore may not be offered, sold or
otherwise transferred except in compliance with the
registration requirements of the Securities Act and any
other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto,
and in each case in compliance with certain other conditions
and restrictions, including the Company's and the Trustee's
rights in certain cases to require the delivery of opinions
of counsel, certifications and other information prior to
any such transfer. Old Notes or Old Subordinated Notes
which remain outstanding after consummation of the Exchange
Offers will continue to bear a legend reflecting such
restrictions on transfer. In addition, upon consummation of
the Exchange Offers, Holders of the Old Notes or Old
Subordinated Notes which remain outstanding will not be
entitled to any rights to have such Old Notes or Old
Subordinated Notes registered under the Securities Act or to
any similar rights under the Registration Rights Agreements
(subject to certain limited exceptions, if applicable, which
would entitle certain holders in limited circumstances to
shelf registration rights with respect to the Old Notes or
Old Subordinated Notes). The Company currently does not
intend to register under the Securities Act any Old Notes or
Old Subordinated Notes which remain outstanding after
consummation of the Exchange Offers (subject to such limited
exceptions, if applicable).
To the extent that Old Notes or Old Subordinated
Notes are tendered and accepted in the Exchange Offers, a
Holder's ability to sell untendered Old Notes or untendered
Old Subordinated Notes could be adversely affected. In
addition, to the extent that Old Notes or Old Subordinated
Notes are tendered and accepted in connection with the
Exchange Offers, any trading market for Old Notes or Old
Subordinated Notes, as the case may be, which remain
outstanding after the Exchange Offers could be adversely
affected.
The New Notes and any Old Notes which remain
outstanding after consummation of the Notes Exchange Offer
will constitute a single series of debt securities under the
Indenture and, accordingly, will vote together as a single
class for purposes of determining whether holders of the
requisite percentage in outstanding principal amount thereof
have taken certain actions or exercised certain rights under
the Indenture. See "Description of Senior Subordinated
Notes."
The New Subordinated Notes and any Old Subordinated
Notes which remain outstanding after the consummation of the
Subordinated Notes Exchange Offer will constitute a single
series of debt securities under the Subordinated Note
Indenture and, accordingly, will vote together as a single
class for purposes of determining whether holders of the
requisite percentage in outstanding principal amount thereof
have taken certain actions or exercised certain rights under
the Subordinated Note Indenture. See "Description of
Subordinated Notes."
The Registration Rights Agreements provide for
liquidated damages in the event that certain events relating
to the registration of the New Notes or New Subordinated
Notes offered in the Exchange Offers does not occur within
specified time parameters. See "- Purpose and Effect of the
Exchange Offers." Following consummation of the Exchange
Offers, the Old Notes and the Old Subordinated Notes will
not be entitled to any liquidated damages thereon, except in
certain limited circumstances, if applicable. The New Notes
and the New Subordinated Notes will not be entitled to any
such liquidated damages thereon.
Terms of the Exchange Offers
General
The Company hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and
in the accompanying Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal, as applicable, to
exchange up to $120,000,000 aggregate principal amount of
New Notes for a like aggregate principal amount of Old Notes
and up to $39,132,000 aggregate principal amount of New
Subordinated Notes for a like aggregate principal amount of
Old Subordinated Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly
withdrawn in accordance with the procedures described below.
The Company will issue, promptly after the Expiration Date,
an aggregate principal amount of up to $120,000,000 of New
Notes in exchange for a like principal amount of outstanding
Old Notes tendered and accepted in connection with the Notes
Exchange offer and an aggregate principal amount of up to
$39,132,000 of New Subordinated Notes in exchange for a like
principal amount of outstanding Old Subordinated Notes
tendered and accepted in connection with the Subordinated
Notes Exchange Offer. Holders may tender their Old Notes
and Old Subordinated Notes in whole or in part in a
principal amount of $1,000 and integral multiples thereof.
The Exchange Offers are not conditioned upon any
minimum principal amount of Old Notes or Old Subordinated
Notes being tendered. As of the date of this Prospectus,
$120,000,000 aggregate principal amount of the Old Notes is
outstanding and $39,132,000 aggregate principal amount of
the Old Subordinated Notes is outstanding. Solely for
reasons of administration (and for no other purpose), the
Company has fixed the close of business on the date of this
Prospectus as the record date for the Exchange Offers for
purposes of determining the persons to whom this Prospectus
and the Notes Letter of Transmittal or the Subordinated
Notes Letter of Transmittal will be mailed initially. Only
a registered Holder of the Old Notes (or such Holder's legal
representative or attorney-in-fact) as reflected on the
records of the registrar for the Notes may participate in
the Notes Exchange Offer, and only a registered Holder of
the Old Subordinated Notes (or such Holder's legal
representative or attorney-in-fact) as reflected on the
records of the registrar for the Subordinated Notes may
participate in the Subordinated Notes Exchange Offer. There
will be no fixed record date for determining registered
Holders of the Old Notes or Old Subordinated Notes entitled
to participate in the Exchange Offers.
Holders of Old Notes or Old Subordinated Notes do
not have any appraisal or dissenters' rights in connection
with the Exchange Offers. Old Notes and Old Subordinated
Notes which are not tendered for exchange or are tendered
but not accepted in connection with the Exchange Offers will
remain outstanding and be entitled to the benefits of the
Indenture and the Subordinated Note Indenture, respectively,
but will not, in general, be entitled to any further
registration rights under the Registration Rights
Agreements.
If any tendered Old Notes or Old Subordinated Notes
are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes or
Old Subordinated Notes will be returned, without expense, to
the tendering Holder thereof promptly after the Expiration
Date.
Holders who tender Old Notes or Old Subordinated
Notes in connection with the Exchange Offers will not be
required to pay brokerage commissions or fees or, subject to
the instructions in the Notes Letter of Transmittal and the
Subordinated Notes Letter of Transmittal, transfer taxes
with respect to the exchange of Old Notes or Old
Subordinated Notes in connection with the Exchange Offers.
The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with
the Exchange Offers. See "- Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR
THE COMPANY MAKES ANY RECOMMENDATION TO HOLDERS OF OLD NOTES
OR OLD SUBORDINATED NOTES AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES OR OLD
SUBORDINATED NOTES PURSUANT TO THE EXCHANGE OFFERS. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF OLD NOTES OR OLD SUBORDINATED
NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER
PURSUANT TO THE NOTES EXCHANGE OFFERS AND, IF SO, THE
AGGREGATE AMOUNT OF OLD NOTES OR OLD SUBORDINATED NOTES TO
TENDER AFTER READING THIS PROSPECTUS AND THE NOTES LETTER OF
TRANSMITTAL OR THE SUBORDINATED NOTES LETTER OF TRANSMITTAL,
AS APPLICABLE, AND CONSULTING WITH THEIR ADVISERS, IF ANY,
BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York
City time, on January 15, 1997, unless the Exchange Offers
are extended by the Company (in which case the term
"Expiration Date" shall mean the latest date and time to
which the Exchange Offers are extended).
The Company expressly reserves the right in its sole
and absolute discretion, subject to applicable law, at any
time and from time to time, (i) to delay the acceptance of
the Old Notes or Old Subordinated Notes for exchange, (ii)
to terminate the Exchange Offers (whether or not any Old
Notes or Old Subordinated Notes have theretofore been
accepted for exchange) if the Company determines, in its
sole and absolute discretion, that any of the events or
conditions referred to under "- Certain Conditions of the
Exchange Offers" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the
Exchange Offers and retain all Old Notes or Old Subordinated
Notes tendered pursuant to the Exchange Offers, subject,
however, to the right of Holders of Old Notes or Old
Subordinated Notes to withdraw their tendered Old Notes or
Old Subordinated Notes as described under "- Withdrawal
Rights," and (iv) to waive any condition or otherwise amend
the terms of the Exchange Offers in any respect. If either
Exchange Offer is amended in a manner determined by the
Company to constitute a material change, or if the Company
waives a material condition of either Exchange Offer, the
Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the
registered Holders of the Old Notes or Old Subordinated
Notes, as applicable, and the Company will extend such
Exchange Offer to the extent required by Rule 14e-1 under
the Exchange Act.
Any such delay in acceptance, extension,
termination, or amendment will be followed promptly by oral
or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement
in the case of an extension will be made no later than 9:00
a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the
manner in which the Company may choose to make any public
announcement and subject to applicable law, the Company
shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
Acceptance for Exchange and Issuance of New Notes or
New Subordinated Notes
Upon the terms and subject to the conditions of the
Exchange Offers, the Company will exchange and will issue to
the Exchange Agent, New Notes for Old Notes, and New
Subordinated Notes for Old Subordinated Notes, in each case
validly tendered and not withdrawn (pursuant to the
withdrawal rights described under "- Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Notes in exchange for
Old Notes or of New Subordinated Notes in exchange for Old
Subordinated Notes, tendered and accepted for exchange
pursuant to the Exchange Offers will be made only after
timely receipt by the Exchange Agent of (i) Old Notes or Old
Subordinated Notes or a book-entry confirmation of a book-
entry transfer of Old Notes or Old Subordinated Notes into
the Exchange Agent's account at The Depository Trust Company
("DTC"), (ii) the Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal, as applicable (or
facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and (iii) any other
documents required by the Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal, as applicable.
The term "book-entry confirmation" means a timely
confirmation of a book-entry transfer of Old Notes or Old
Subordinated Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange
Offers, the Company will be deemed to have accepted for
exchange, and thereby exchanged, Old Notes or Old
Subordinated Notes validly tendered and not withdrawn as, if
and when the Company gives oral or written notice to the
Exchange Agent of the Company's acceptance of such Old Notes
or Old Subordinated Notes for exchange pursuant to the
Exchange Offers. The Exchange Agent will act as agent for
the Company for the purpose of receiving tenders of Old
Notes or Old Subordinated Notes, Notes Letters of
Transmittal, Subordinated Notes Letters of Transmittal and
related documents, and as agent for tendering Holders for
the purpose of receiving Old Notes or Old Subordinated
Notes, Notes Letters of Transmittal, Subordinated Notes
Letters of Transmittal and related documents, and
transmitting New Notes or New Subordinated Notes to validly
tendering Holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Notes or
Old Subordinated Notes tendered pursuant to the Exchange
Offers is delayed (whether before or after the Company's
acceptance for exchange of Old Notes or Old Subordinated
Notes) or the Company extends the Exchange Offers or is
unable to accept for exchange or exchange Old Notes or Old
Subordinated Notes tendered pursuant to the Exchange Offers,
then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of
the Company and subject to Rule 14e-1(c) under the Exchange
Act, retain tendered Old Notes or Old Subordinated Notes and
such Old Notes or Old Subordinated Notes, as the case may
be, may not be withdrawn except to the extent tendering
Holders are entitled to withdrawal rights as described under
"- Withdrawal Rights."
Pursuant to the Notes Letters of Transmittal and the
Subordinated Notes Letters of Transmittal, a Holder of Old
Notes or Old Subordinated Notes, respectively, will warrant
and agree that it has full power and authority to tender,
exchange, sell, assign, and transfer Old Notes or Old
Subordinated Notes, that the Company will acquire good,
marketable and unencumbered title to the tendered Old Notes
or Old Subordinated Notes, free and clear of all liens,
restrictions, charges, and encumbrances, and the Old Notes
or Old Subordinated Notes tendered for exchange are not
subject to any adverse claims or proxies. The Holder also
will warrant and agree that it will, upon request, execute
and deliver any additional documents deemed by the Company
or the Exchange Agent to be necessary or desirable to
complete the exchange, sale, assignment, and transfer of the
Old Notes or Old Subordinated Notes tendered pursuant to the
Exchange Offers.
Procedures for Tendering Old Notes or Old
Subordinated Notes
Valid Tender. Except as set forth below, in order
for Old Notes or Old Subordinated Notes to be validly
tendered pursuant to the Exchange Offers, (i) a properly
completed and duly executed Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal (or facsimile
thereof), as applicable, with any required signature
guarantees, or an Agent's Message (as defined herein) in
connection with a book-entry transfer of Old Notes or Old
Subordinated Notes, and any other required documents, must
be received by the Exchange Agent at one of its addresses
set forth under "- Exchange Agent," and either (a) tendered
Old Notes or Old Subordinated Notes must be received by the
Exchange Agent, or (b) such Old Notes or Old Subordinated
Notes must be tendered pursuant to the procedures for book-
entry transfer set forth below and a book-entry confirmation
must be received by the Exchange Agent, in each case on or
prior to the Expiration Date, or (ii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Notes or Old
Subordinated Notes are tendered, a tendering Holder should
fill in the amount of the Old Notes or Old Subordinated
Notes being tendered in the appropriate box on the Notes
Letter of Transmittal or Subordinated Notes Letter of
Transmittal. The entire amount of Old Notes or Old
Subordinated Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE NOTES
LETTER OF TRANSMITTAL OR SUBORDINATED NOTES LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, IS AT THE
OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO NOTES LETTER OF TRANSMITTAL OR
SUBORDINATED NOTES LETTER OF TRANSMITTAL SHOULD BE SENT TO
THE COMPANY.
Book-Entry Transfer. The Exchange Agent will
establish accounts with respect to the Old Notes and Old
Subordinated Notes at DTC for purposes of the Exchange
Offers promptly after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-
entry transfer facility system may make a book-entry
delivery of the Old Notes or Old Subordinated Notes by
causing DTC to transfer such Old Notes or Old Subordinated
Notes into the Exchange Agent's applicable account at DTC in
accordance with DTC's procedures for transfers. However,
although delivery of Old Notes or Old Subordinated Notes may
be effected through book-entry transfer into the Exchange
Agent's applicable account at DTC pursuant to the DTC's
Automated Tender Offer Program ("ATOP") procedures, the
Notes Letter of Transmittal or Subordinated Notes Letter of
Transmittal (or facsimile thereof), as applicable, properly
completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-
entry transfer, and any other required documents, must in
any case be delivered to and received by the Exchange Agent
at its address set forth under "- Exchange Agent" on or
prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH
DTC'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "Agent's Message" means a message,
transmitted by DTC to, and received by, the Exchange Agent
and forming a part of a book-entry confirmation, which
states that DTC has received an express acknowledgment from
the participant in DTC tendering the Old Notes or Old
Subordinated Notes which are the subject of such book-entry
confirmation, that such participation has received and
agrees to be bound by the terms of the Notes Letter of
Transmittal or Subordinated Notes Letter of Transmittal, as
applicable, and that the Company may enforce such agreement
against such participant.
Signature Guarantees. Certificates for Old Notes or
Old Subordinated Notes need not be endorsed and signature
guarantees on the Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal are unnecessary
unless (a) a certificate for the Old Notes or Old
Subordinated Notes, as applicable, is registered in a name
other than that of the person surrendering the certificate
or (b) such registered Holder completes the box entitled
"Special Issuance Instructions" or "Special Delivery
Instructions" in the Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal. In the case of
(a) or (b) above, such certificates for Old Notes or Old
Subordinated Notes must be duly endorsed or accompanied by a
properly executed bond power, with the endorsement or
signature on the bond power and on the Notes Letter of
Transmittal or Subordinated Notes Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-
15 under the Exchange Act, as an "eligible guarantor
institution," including (as such terms are defined therein):
(i) a bank, (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer,
(iii) a credit union, (iv) a national securities exchange,
registered securities association or clearing agency, or
(v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution.
Guaranteed Delivery. If a Holder desires to tender
Old Notes or Old Subordinated Notes pursuant to the Exchange
Offers and the certificates for Old Notes or Old
Subordinated Notes are not immediately available or time
will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures
for book-entry transfer cannot be completed on a timely
basis, such Old Notes or Old Subordinated Notes may
nevertheless be tendered, provided that all of the following
guaranteed delivery procedures are complied with:
(i) such tenders are made by or through
an Eligible Institution;
(ii) a properly completed and duly
executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Notes
Letter of Transmittal or Subordinated Notes Letter
of Transmittal, as applicable, is received by the
Exchange Agent, as provided below, on or prior to
the Expiration Date;
(iii) the certificates (or a book-entry
confirmation) representing all tendered Old Notes or
Old Subordinated Notes, in proper form for transfer,
together with a properly completed and duly executed
Notes Letter of Transmittal or Subordinated Notes
Letter of Transmittal (or facsimile thereof) as
applicable, with any required signature guarantees,
or an Agent's Message in connection with a book-
entry transfer of Old Notes or Old Subordinated
Notes, and any other documents required by the Notes
Letter of Transmittal or Subordinated Notes Letter
of Transmittal, as applicable, are received by the
Exchange Agent within three business days after the
date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered
by hand, or transmitted by facsimile or mail to the Exchange
Agent and must include a guarantee by an Eligible
Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the
delivery of New Notes in exchange for Old Notes, or of New
Subordinated Notes in exchange for Old Subordinated Notes,
tendered and accepted for exchange pursuant to the Exchange
Offers will in all cases be made only after timely receipt
by the Exchange Agent of Old Notes or Old Subordinated Notes
or of a book-entry confirmation with respect to such Old
Notes or Old Subordinated Notes and a properly completed and
duly executed Notes Letter of Transmittal or Subordinated
Notes Letter of Transmittal, as applicable. Accordingly,
the delivery of New Notes or New Subordinated Notes might
not be made to all tendering Holders at the same time, and
will depend upon when Old Notes or Old Subordinated Notes,
as applicable, book-entry confirmations with respect to Old
Notes or Old Subordinated Notes, as applicable, and other
required documents are received by the Exchange Agent.
The Company's acceptance for exchange of Old Notes
or Old Subordinated Notes tendered pursuant to any of the
procedures described above will constitute a binding
agreement between the tendering Holder and the Company upon
the terms and subject to the conditions of the Exchange
Offers.
Determination of Validity. All questions as to the
form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tendered Old
Notes or Old Subordinated Notes will be determined by the
Company, in its sole discretion, whose determination shall
be final and binding on all parties. The Company reserves
the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for,
may, in the view of counsel to the Company, be unlawful.
The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the
Exchange Offers as set forth under "-- Certain Conditions to
the Exchange Offers" or any condition or irregularity in any
tender of Old Notes or Old Subordinated Notes of any
particular Holder whether or not similar conditions or
irregularities are waived in the case of other Holders.
The Company's interpretation of the terms and
conditions of the Exchange Offers (including the Notes
Letter of Transmittal, the Subordinated Notes Letter of
Transmittal and the instructions thereto) will be final and
binding. No tender of Old Notes or Old Subordinated Notes
will be deemed to have been validly made until all
irregularities with respect to such tender have been cured
or waived. Neither the Company, any affiliates or assigns
of the Company, the Exchange Agent nor any other person
shall be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure
to give any such notification.
If any Notes Letter of Transmittal, Subordinated
Notes Letter of Transmittal, endorsement, bond power, power
of attorney, or any other document required by the Notes
Letter of Transmittal or Subordinated Notes Letter of
Transmittal is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and
unless waived by the Company, proper evidence satisfactory
to the Company, in its sole discretion, of such person's
authority to so act must be submitted.
A beneficial owner of Old Notes or Old Subordinated
Notes that are held by or registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee or custodian is urged to contact such entity
promptly if such beneficial Holder wishes to participate in
the applicable Exchange Offer.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old
Notes or Old Subordinated Notes may be withdrawn at any time
on or prior to the Expiration Date.
In order for a withdrawal to be effective a written,
telegraphic, telex or facsimile transmission of such notice
of withdrawal must be timely received by the Exchange Agent
at one of its addresses set forth under "- Exchange Agent"
on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered
the Old Notes or Old Subordinated Notes to be withdrawn, the
aggregate principal amount of the Old Notes or Old
Subordinated Notes to be withdrawn, and (if certificates for
such Old Notes or Old Subordinated Notes have been tendered)
the name of the registered Holder of the Old Notes or Old
Subordinated Notes as set forth on the Old Notes or Old
Subordinated Notes, if different from that of the person who
tendered such Old Notes or Old Subordinated Notes. If Old
Notes or Old Subordinated Notes have been delivered or
otherwise identified to the Exchange Agent, then prior to
the physical release of such Old Notes or Old Subordinated
Notes, the tendering Holder must submit the serial numbers
shown on the particular Old Notes or Old Subordinated Notes
to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Notes or Old Subordinated Notes
tendered for the account of an Eligible Institution. If Old
Notes or Old Subordinated Notes have been tendered pursuant
to the procedures for book-entry transfer set forth in "-
Procedures for Tendering Old Notes or Old Subordinated
Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the
withdrawal of Old Notes or Old Subordinated Notes, in which
case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Notes
or Old Subordinated Notes may not be rescinded. Old Notes
or Old Subordinated Notes properly withdrawn will not be
deemed validly tendered for purposes of the applicable
Exchange Offer, but may be retendered at any subsequent time
on or prior to the Expiration Date by following any of the
procedures described above under "- Procedures for Tendering
Old Notes or Old Subordinated Notes."
All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal
notices will be determined by the Company, in its sole
discretion, whose determination shall be final and binding
on all parties. Neither the Company, any affiliates or
assigns of the Company, the Exchange Agent nor any other
person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any
Old Notes or Old Subordinated Notes which have been tendered
but which are withdrawn will be returned to the Holder
thereof promptly after withdrawal.
Interest on the New Notes, Old Notes, New
Subordinated Notes, and Old Subordinated Notes.
Each New Note and each New Subordinated Note will
bear interest from its issuance date. Holders of Old Notes
or Old Subordinated Notes that are accepted for exchange
will receive, in cash, accrued interest thereon to, but
excluding, the issuance date of the New Notes or New
Subordinated Notes, as applicable. Such interest will be
paid with the first interest payment on the New Notes or New
Subordinated Notes, as applicable, Interest on the Old Notes
or Old Subordinated Notes accepted for exchange will cease
to accrue upon issuance of the New Notes or New Subordinated
Notes, as applicable.
Certain Conditions to the Exchange Offers
Notwithstanding any other provision of the Exchange
Offers or any extension of the Exchange Offers, the Company
will not be required to accept for exchange, or to exchange,
any Old Notes for any New Notes or any Old Subordinated
Notes for any New Subordinated Notes and, as described
below, may terminate the Exchange Offers (whether or not any
Old Notes or Old Subordinated Notes have theretofore been
accepted for exchange) or may waive any conditions to or
amend the Exchange Offers, if any of the following
conditions have occurred or exists or have not been
satisfied.
(a) either of the Exchange Offers or the
making of any exchange by a Holder violates any
applicable law or any applicable interpretation of
the staff of the Commission;
(b) any action or proceeding shall have
been instituted or threatened in any court or by or
before any governmental agency or body with respect
to either of the Exchange Offers which, in the
Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with
either of the Exchange Offers;
(c) any law, statute, rule, or regulation
shall have been adopted or enacted which, in the
Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with
either of the Exchange Offers;
(d) a banking moratorium shall have been
declared by United States federal or Maine or New
York state authorities which, in the Company's
judgment, would reasonably be expected to impair the
ability of the Company to proceed with either of the
Exchange Offers;
(e) trading on the New York Stock
Exchange or generally in the United States over-the-
counter market shall have been suspended by order of
the Commission or any other governmental authority
which, in the Company's judgment, would reasonably
be expected to impair the ability of the Company to
proceed with the Exchange Offers; or
(f) a stop order shall have been issued
by the Commission or any state securities authority
suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated
or, to the knowledge of the Company, threatened for
that purpose.
If the Company determines, in its reasonable
judgment, that any of the foregoing events or conditions has
occurred or exists or has not been satisfied, the Company
may, subject to applicable law, terminate the Exchange
Offers (whether or not any Old Notes or Old Subordinated
Notes have theretofore been accepted for exchange) or may
waive any such condition or otherwise amend the terms of the
Exchange Offers in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offers, the
Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the
registered Holders of the Old Notes or Old Subordinated
Notes and the Company will extend the Exchange Offers to the
extent required by Rule 14e-1 under the Exchange Act.
Exchange Agent
United States Trust Company of New York has been
appointed as Exchange Agent for the Exchange Offers.
Delivery of the Notes Letter of Transmittal, Subordinated
Notes Letter of Transmittal and any other required
documents, questions, requests for assistance, and requests
for additional copies of this Prospectus or of the Notes
Letter of Transmittal or Subordinated Notes Letter of
Transmittal should be directed to the Exchange Agent as
follows:
BY MAIL:
(insured or registered BY OVERNIGHT EXPRESS:
recommended)
United States Trust Company of United States Trust Company of
New York New York
P.O. Box 843 770 Broadway, 13th Floor
Peter Cooper Station New York, New York 10003
New York, New York 10276 Attention: Corporate Trust
Attention: Corporation Trust Services Window
BY HAND:
United States Trust Company of New York
111 Broadway/Lower Level
New York, New York 10005
Attention: Corporate Trust
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(800) 548-6565
FACSIMILE TRANSMISSION:
(for eligible institutions only)
(212) 420-6152
Delivery to other than one of the above addresses or
facsimile numbers will not constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent
reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage
houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes or Old Subordinated
Notes, and in handling or tendering for their customers.
Holders who tender their Old Notes or Old
Subordinated Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith. If, however,
New Notes or New Subordinated Notes are to be delivered to,
or are to be issued in the name of, any person other than
the registered Holder of the Old Notes or Old Subordinated
Notes tendered, or if a transfer tax is imposed for any
reason other than the exchange of Old Notes or Old
Subordinated Notes in connection with the Exchange Offers,
then 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 with the Notes Letter of Transmittal or
Subordinated Notes Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering
Holder.
The Company will not make any payment to brokers,
dealers or others soliciting acceptances of the Exchange
Offers.
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of
the Company as of July 28, 1996, on an actual historical
basis and as adjusted to give effect to the acquisition of
the remaining 49% interest in Sugarloaf and the divestitures
of the Waterville Valley and Mt. Cranmore resorts, pursuant
to the Consent. The following capitalization table should be
read in conjunction with the unaudited "Pro Forma Financial
Data" and "Selected Historical Financial Data" included
elsewhere in this Prospectus.
July 28, 1996
Consolidated
Actual Pro Forma
(in thousands)
Total Debt:
Senior Credit Facility (1) $40,301 $ 34,432
Other senior indebtedness 25,366 19,376
Senior Subordinated Notes 116,611 116,611
Subordinated Discount Notes 19,231 19,231
Other subordinated 14,586 14,586
indebtedness
Total debt 216,095 204,236
Stockholders' equity 21,903 $ 22,395
Total capitalization 237,998 $ 226,631
________________________
(1) Under the Senior Credit Facility, a total of $65.0
million is available for borrowing by the Company,
subject to compliance with the terms thereof. See
"Description of Other Indebtedness -- The Senior
Credit Facility" for a description of the terms of
the Senior Credit Facility.
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data
(the "Pro Forma Financial Data") is derived from the
historical financial statements of the Company and SKI, in
each case included elsewhere in this Prospectus, and have
been prepared on a pro forma basis giving effect to the
Acquisition and Offerings, the acquisition of the remaining
49% interest in Sugarloaf and the divestitures of the
Waterville Valley and Mt. Cranmore resorts, pursuant to the
Consent. The Pro Forma Financial Statements and accompanying
notes should be read in conjunction with the historical
financial statements and the notes thereto included
elsewhere in this Prospectus.
The unaudited pro forma statement of income data for
the year ended July 28, 1996 gives effect to the Acquisition
and Offerings, the acquisition of the remaining 49% interest
in Sugarloaf and the divestitures of the Waterville Valley
and Mt. Cranmore resorts, pursuant to the Consent, as if
they had occurred on August 1, 1995. The unaudited pro forma
balance sheet data as of July 28, 1996 give effect to the
acquisition of the remaining 49% interest in Sugarloaf and
the divestitures of the Waterville Valley and Mt. Cranmore
resorts, pursuant to the Consent, as if they had occurred on
such date. The Pro Forma Financial Data is not intended to
be indicative of either future results of operations or
results that might have been achieved had the Acquisition
and Offerings and the divestitures of the Waterville Valley
and Mt. Cranmore resorts, pursuant to the Consent, actually
occurred on the dates specified. In the opinion of the
Company's management, all adjustments necessary to present
fairly such unaudited pro forma consolidated financial data
have been made based upon the terms and structure of the
Acquisition and Offerings and the divestitures of the
Waterville Valley and Mt. Cranmore resorts, pursuant to the
Consent. See "The Acquisition; Antitrust Matters; Use of
Proceeds," "Recent Developments" and "Risk
Factors--Antitrust."
In addition to the cost reductions included in the pro forma
data, management expects to realize further annual cost
reductions following the Acquisition. These reductions will
result largely from decreases in discretionary costs yet to
be incurred and, therefore, have not been reflected in the
pro forma adjustments.
American Skiing Company
Unaudited Pro Forma Consolidated Balance Sheet Data
As of July 28, 1996
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pro Forma Consolidated
The Company Adjustments Pro Forma
Cash $3,185 $150 a, b $3,335
Restricted cash 902 902
Investments held in escrow 14,497 14,497
Accounts receivable (net) 2,458 2,458
Inventory 5,025 5,025
Prepaid expenses 3,371 3,371
Prepaid loan fees 1,056 1,056
Properties developed for sale 1,331 1,331
Deferred tax assets 588 588
Assets held for sale 14,921 (14,921) b --
Total current assets 47,334 (14,771) 32,563
Property and equipment (net) 227,470 227,470
Long-term investment 4,343 4,343
Prepaid loan fees 7,911 7,911
Other assets 2,934 2,858 a,b 5,792
Assets held for sale 1,756 (1,756) --
Goodwill 6,540 6,540
Note receivable, affiliate 444 ________ 444
Total assets $298,732 ($13,669) $285,063
Line of credit and current $22,893 ($8,444) a, b $14,449
portion of long-term debt
Accounts payable and accrued 13,406 (141) a 13,265
expenses
Accrued leasehold 1,660 1,660
Accrued interest on subordinated 1,491 1,491
notes and debentures 1,
Due to stockholder 175 175
Deposits and deferred revenue 3,541 3,541
Income taxes payable 671 331 b 1,002
Demand note, stockholder 5,200 5,200
Total current liabilities 49,037 (8,254) 40,783
Long-term debt, excluding current 41,035 (3,415) a 37,620
portion
Subordinated notes and debentures 146,792 146,792
Other long-term liabilities 6,778 6,778
Minority interest 2,492 (2,492) a --
Deferred income taxes 30,695 30,695
Total liabilities 276,829 (14,161) 262,668
Total stockholders' equity 21,903 492 b 22,395
Total liabilities and $298,732 ($13,669) $285,063
stockholders' equity
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma consolidated financial data.
American Skiing Company
Unaudited Pro Forma Consolidated Financial Data
Summary of ASC Pro Forma Adjustments -- Balance Sheet Data
<TABLE>
<CAPTION>
Balance Sheet Account Not Adjustment July 28, 1996
e
<S> <C> <C> <C>
(in thousands)
Cash a Purchase of 49% interest in ($2,600)
Sugarloaf
b Proceeds from sale of 14,750
Waterville & Cranmore
b Application of proceeds
from sale of Waterville & (12,000)
Cranmore against the Senior
Credit facility
150
Assets held for sale b Sale of Waterville & (16,677)
Cranmore
Other assets a Purchase of 49% interest in 108
Sugarloaf
b Note receivable from sale 2,750
of Waterville & Cranmore
2,858
Effect on total ($13,669)
assets
Line of credit and a Paydown of SMC Credit ($2,575)
current portion of Agreement and Town Debt
long -term debt
b Application of proceeds (12,000)
from sale of Waterville &
Cranmore against the Senior
Credit Facility
a Increase in Senior Credit
Facility to paydown SMC 6,131
Credit Agreement and Town
Debt
(8,444)
Accounts payable and a Retire accrued interest
accruals associated with SMC Credit (25)
Agreement
a Retire accrued interest (116)
associated with existing
Town Debt
(141)
Income taxes payable b Income taxes on gain from 331
Waterville & Cranmore sale
Long-term debt, a Paydown of Town Debt (3,415)
excluding current
portion
Minority interest a Purchase of 49% interest in (2,492)
Sugarloaf
Effect on total ($14,161)
liabilities
Stockholders' equity b Gain on sale of Waterville $492
and Cranmore
$0
</TABLE>
American Skiing Company
Unaudited Pro Forma Consolidated Statement of Income Data
For the Year Ended July 28, 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
SKI Bear Mountain Cranmore
The Company Acquisition Divestiture Divestiture
(k) (l) (b)
<S> <C> <C> <C> <C>
Revenues:
Skiing & lodging $63,489 $114,175 ($292) ($4,161)
Real estate sales 9,933 --
Total revenues 73,422 114,175 (292) (4,161)
Expenses:
Cost of operations
including wages,
maintenance and supplies 31,137 57,088 (509) (1,725)
Cost of real estate sold 5,844 -- -- --
Real estate and payroll 2,544 8,082 (247) (176)
taxes
Utilities 5,819 7,547 (82) (565)
Insurance 2,299 6,336 (205) (168)
Selling, general and
administrative 11,289 22,164 (404) (888)
Loss on sale of Bear -- 4,737 -- --
Mountain
Depreciation and 6,783 9,665 (34) (225)
amortization
Total expenses 65,715 115,619 (1,481) (3,747)
Income (loss) from 7,707 (1,444) 1,189 (414)
operations
Other income and
expenses:
Interest income -- -- -- --
Commitment fee 1,447 -- -- --
Interest expense 4,699 4,593 -- (163)
Income (loss) before
income taxes and minority
interest in loss of 1,561 (6,037) 1,189 (251)
subsidiary
Income tax expense 3,906 (2,354) 475 (101)
(benefit)
Minority interest in loss
of subsidiary (108) (65) -- --
Net income (loss) ($2,237) ($3,618) $714 ($150)
Net (loss) per share (o) ($2.37) -- -- --
Pro Forma
Waterville ASC Other Consolidated
Divestiture Adjustments Adjustments(n) Pro forma
(b)
Revenues:
Skiing & lodging ($11,478) -- -- $161,733
Real estate sales -- -- -- 9,933
Total revenues (11,478) -- -- 171,666
Expenses:
Cost of operations
including wages,
maintenance and (5,648) ($1,670)c $5 78,678
supplies
Cost of real estate sold -- -- 5 5,849
Real estate and payroll (608) -- -- 9,595
taxes
Utilities (938) -- -- 11,781
Insurance (395) (230) c 6 7,643
Selling, general and
administrative (2,569) (5,204) m -- 24,388
Loss on sale of Bear -- -- (4,721) --
Mountain
Depreciation and (1,127) 1,795 d,e -- 16,857
amortization
Total expenses (11,285) 5,309 (5,023) 154,791
Income (loss) from (193) (5,309) (4,721) 16,875
operations
Other income and
expenses:
Interest income -- 330 b -- 330
Commitment fee -- -- -- 1,447
Interest expense (396) 13,975 f,g,h (302) 22,406
Income (loss) before
income taxes and minority
interest in loss of 203 (8,336) 5,023 (6,648)
subsidiary
Income tax expense 4 (6,802) i, j 2,009 (2,863)
(benefit)
Minority interest in loss
of -- 173 a -- --
subsidiary
Net income (loss) $199 $1,707 $3,014 ($3,785)
Net (loss) per share (o) -- -- -- ($3.87)
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial data.
American Skiing Company
Unaudited Pro Forma Consolidated Financial Data
Summary of ASC Pro Forma Adjustments -- Statement of Income Data
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Ended
Income Statement Item Note Adjustment July 28,
1996
(in
thousands)
Interest income b Interest income from note $330
receivable
Cost of operations c Staff reductions and elimination of
redundant shareholder services
(1,670)
Insurance c Termination of a keyman life (230)
insurance policy
Selling, general and m Finder's fee (1,665)
administrative
m Employee stock options (1,404)
m SKI TIAA Credit Agreement (635)
prepayment penalty
m Other non-recurring charges (1,500)
(5,204)
Depreciation and d Depreciation on property and 670
amortization equipment
e Amortization of goodwill 150
d Amortization of deferred financing 975
costs
1,795
Interest expense f Interest on Mr. Otten Demand Note 257
g Senior and Junior Subordinated 16,118
Notes
h Other interest adjustments (2,400)
13,975
Income taxes j Tax effect of pro forma adjustments (3,254)
i Tax effect of S corporation income 2,004
i Reverse historical income tax
expense recorded upon conversion of
S corporations to C corporations (5,552)
(6,802)
Minority interest a Sugarloaf minority interest 173
Effect on net loss $(1,707)
</TABLE>
(a) ASC acquired the remaining 49% interest in Sugarloaf
on August 30, 1996 for a $2 million cash payment and
a $600,000 prepayment penalty for previously issued
debt. In connection with the acquisition of the
minority interest, ASC paid the outstanding balances
of the SMC Credit Agreement and the Town Debt with
proceeds from the Senior Credit Facility.
(b) ASC signed a purchase and sale agreement with Booth
Creek Ski Acquisition Corp. to sell the Waterville
Valley and Mt. Cranmore resorts for $17.5 million.
The deal is expected to close in November, 1996.
The terms of the agreement provide that the Company
will receive $14,750,000 in cash and $2,750,000 in a
promissory note with an interest rate of 12% per
annum due in seven and one-half years. Under the
Senior Credit Facility Agreement, a portion (which
is expected to be $12 million) of the proceeds from
the sale will be used to pay down the Senior Credit
Facility; the reduction of interest expense from
this paydown is reflected in the unaudited pro forma
statement of income data.
(c) Management has specifically identified certain costs
which have been eliminated in connection with the
Acquisition. These costs are primarily related to
the salaries and fringe benefits of the SKI
corporate staff positions which have been eliminated
as a result of the Acquisition, and amount to
approximately $1.57 million. In addition, the costs
associated with SKI's shareholder reporting and
relations, exchange listing, and corporate
governance, which amounted to approximately
$100,000, have been eliminated. The Company also
realized insurance savings through the termination
of a SKI executive's key man life insurance policy
of $230,000.
(d) The Acquisition of SKI by ASC resulted in the assets
of SKI being written up to reflect the purchase
price of the transaction. The purchase price of SKI
was calculated as the sum of (i) the cash paid to
the SKI shareholders, (ii) the fair value of any
liabilities of SKI assumed, and (iii) the
transaction costs incurred by ASC. Under the
purchase accounting method, the acquisition cost is
allocated to the assets and liabilities acquired
based on their relative fair values. The excess of
the purchase price over the relative fair values of
the assets acquired was allocated to goodwill. Pro
forma adjustments have been made to reflect the
depreciation of these assets over their estimated
useful lives and to amortize goodwill over forty
years.
The following table summarizes the purchase price
allocation at the time of acquisition:
<TABLE>
<CAPTION>
<S> <C>
Shares of SKI outstanding at June 28, 5,736,882
1996*
Purchase Price $ 18
103,264,000
SKI shares previously acquired 828,000
Cost of acquisition 528,000
Total Purchase Price $ 104,620,000
Purchase price allocation:
Historical cost basis of acquired net $ 58,378,000
assets
Identified value of property, plant and
equipment in excess of historical 67,508,000
cost basis
Goodwill 6,554,000
Deferred income taxes (27,820,000)
$ 104,620,000
</TABLE>
The deferred tax liability of $(27,820,000) was
recorded as the tax effect at the effective rate of
the difference between the book basis of the net
assets acquired of $104 million and the tax basis of
net assets acquired of $33 million.
* Total shares of SKI outstanding at June 28, 1996,
net of 54,000 shares owned by the Company prior to
the Acquisition.
The deferred tax liability of $(27,820,000) was
recorded as the tax effect at the effective rate of
the difference between the book basis of the net
assets acquired of $104 million and the tax basis of
net assets acquired of $33 million.
(e) ASC incurred professional fees and various direct
costs in connection with the issuance of Notes,
Subordinated Notes and the establishment of the
Senior Credit Facility which have been capitalized
and will be amortized over their lives ranging from
five to ten years. The accompanying pro forma
income statement data includes adjustments
reflecting the amortization associated with these
costs.
(f) The $5.2 million Demand Note was issued by the S
Corporations, bearing interest at 5.4%, which
represents the applicable federal rate in effect at
June 19, 1996, the time of issuance.
(g) Gives effect to the issuance of the Notes and the
Subordinated Notes, at their respective issue
prices, as well as related interest expense. Both
the Notes and the Subordinated Notes were issued
with original issue discount, therefore the
effective interest rates exceed the stated interest
rates. Pro forma interest expense with respect to
the Notes for an 11 months period was $13,465,000
which was calculated using the effective interest
method with an effective interest rate of
approximately 12.50%. Pro forma interest expense
with respect to the Subordinated Notes for the 11
month period was $2,653,000 which was calculated
using the effective interest method with an
effective interest rate of approximately 14.02%.
Pro forma interest expense includes interest expense
with respect to the Subordinated Notes of
$3,096,000. Interest expense relating to the
Subordinated Notes would not have been payable in
cash during this period.
(h) Gives effect to the Senior Credit Facility which was
used to retire previously outstanding indebtedness.
The seasonal Line of Credit and the Revolving Note
were retired with the initial proceeds of the Senior
Credit Facility. Certain obligations of Sugarloaf
(see note a above) and SKI's TIAA Credit Agreement
were also refinanced. A portion ($12 million) of
the proceeds from the sale of the Waterville and Mt.
Cranmore resorts is expected to be used to pay off
the Senior Credit Facility.
A 1/8th% fluctuation in interest rates would have an
approximate $42,864 annual impact on interest
expense and an approximate $25,633 impact on net
income.
As explained in the "Description of Senior
Subordinated Notes," an investment was made on the
Closing Date in the segregated Pledge Account to
secure the payment of the first year's interest on
the Notes. Due to the nature of these borrowings,
the accompanying pro forma financial data does not
include either interest income on the Pledge Account
or interest expense on this incremental
indebtedness.
(i) Certain of the Company's operations were within
corporations (the "S Corporations") for which Mr.
Otten was personally liable for income taxes. The
Company made distributions to Mr. Otten to pay the
income taxes associated with these operations
through the date of the Acquisition. The S
Corporations have been converted to C Corporations
pursuant to the Internal Revenue Code. As a result
of this conversion, certain tax attributes of the S
Corporations attributable directly to Mr. Otten have
been transferred to the respective C Corporations.
A $5,552,000 pro forma adjustment reflects the
reversal of the historical income tax expense
recorded upon conversion of the S corporations to C
corporations on June 28, 1996.
(j) All adjustments to the unaudited Pro Forma
Consolidated Statement of Income Data have been tax-
effected using the expected statutory rate. As
discussed in "Certain Federal Income Tax
Considerations," a portion of the interest on the
Subordinated Notes is expected to be permanently
disqualified for purposes of income tax deductions.
It is expected that approximately 90% of the total
interest will eventually be deductible, but none
until actually paid. Consideration of the
permanently disqualified portion has been given in
the accompanying pro forma data. In addition, an
adjustment has been made to tax-effect the earnings
of the S-Corporations (see note (i) above).
(k) Reflects the results of operations of SKI Ltd. prior
to its acquisition by the Company on June 28, 1996.
(l) Reflects the results of operations of Bear Mountain
(a majority of the assets of which were sold by SKI
in October 1995).
(m) Reflects the elimination of SKI's nonrecurring
charges which include a $1.6 million finder's fee, a
$1.4 million stock option payment, $635,000 SKI TIAA
Credit Agreement prepayment penalty, and $1.5
million of nonrecurring contingent liabilities.
(n) Other pro forma adjustments give effect to the SKI
divestiture of Bear Mountain discussed in note (l).
The most significant adjustment relates to the
realized loss on the sale of Bear Mountain by SKI.
The effect of the proceeds of the sale were
considered in the pro forma interest adjustments.
All of the adjustments were tax effected at the
applicable statutory rate.
(o) Pro forma net (loss) per share was computed giving
consideration to the 978,300 common shares of the
Company outstanding at July 28, 1996.
SELECTED HISTORICAL FINANCIAL DATA
The Company
The following selected historical financial data of
the Company (except Other Financial and Operating Data) (i)
as of and for the fiscal years ended July 30, 1995 and July
28, 1996 have been derived from the financial statements of
the Company audited by Price Waterhouse LLP, independent
accountants, and (ii) as of and for each of the three fiscal
years ended July 31, 1994 have been derived from the
financial statements of the Company audited by Berry, Dunn,
McNeil & Parker, independent accountants. The following
information includes Mt. Cranmore, which the Company
acquired in June 1995 and must divest pursuant to the
Consent. Additionally, the following information includes S-
K-I subsequent to June 28, 1996. Included in S-K-I is
Waterville Valley, which will be divested. See "The
Acquisition; Antitrust Matters; Use of Proceeds," "Recent
Developments" and "Pro Forma Financial Data." The following
information should be read in conjunction with the Unaudited
"Pro Forma Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and the financial statements of the Company and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year Ended (1)
<S> <C> <C> <C> <C> <C>
July 26, July 25, July 31, July 30, July 28,
1992 1993 1994 1995 1996
Statement of
Income Data
Revenues:
Skiing and $20,312 $23,645 $26,544 $46,794 $63,489
lodging
Real estate 304 6,103 6,682 ` 7,953 9,933
sales
Total 20,616 29,748 33,226 54,747 73,422
revenues
Operating
expenses:
Cost of
operations
including 7,936 10,045 11,505 21,730 31,137
wages,
maintenance
and
supplies
Cost of 101 3,245 3,179 3,994 5,844
real estate
sold
Real estate 758 993 1,265 1,736 2,544
and payroll
taxes
Utilities 2,046 2,097 1,854 4,132 5,819
Insurance 1,162 1,570 1,163 2,127 2,299
Selling,
general and 3,010 4,718 5,940 9,394 11,289
administrati
ve
Depreciation
and 1,790 1,984 2,421 3,910 6,783
amortizat
ion
Total 16,803 24,652 27,327 47,023 65,715
expenses
Income from 3,813 5,096 5,899 7,724 7,707
Operations
Other
expenses:
Commitment -- -- -- -- 1,447
fee
Interest 776 849 1,026 2,205 4,699
expense
Income
before
provision 3,037 4,247 4,873 5,519 1,561
for income
taxes and
minority
interest in
less of
subsidiary
Provision -- -- -- 400 3,906
for income
taxes
Income -- -- -- -- (2,345)
before
minority
interest
Minority
interest in -- -- -- -- 108
loss of
subsidiary
Income
(loss)
before 3,037 4,247 4,873 5,119 (2,237)
extraordinar
y gain from
insurance
claim
Extraordinar
y gain from -- 1,592 -- -- --
insurance
claim
Net income $3,037 $5,839 $4,873 $5,119 ($2,237)
(loss)
July 26, July 25, July 31, July 30, July 28,
1992 1993 1994 1995 1996
Balance
Sheet Data:
Property $27,580 $30,363 $41,871 $62,213 $227,470
and
equipment,
net
Total 32,256 40,550 51,784 72,434 298,732
assets
Total long
term debt, 10,317 14,150 19,103 27,169 187,827
excluding
current
portion
18,367 23,167 26,212 30,502 21,903
Stockholder'
s equity
Statement of
Cash Flows
Data:
Cash flows
from $3,864 $2,667 $5,438 $12,593 7,465
operating activities
Cash flows
from (5,031) (4,432) (9,041) (13,843) (122,583
investing )
activities
Cash flows
from 1,372 1,559 3,764 2,399 116,941
financing
activities
Other
Financial
and
Operating
Data:
EBITDA(2) $5,603 $7,080 $8,320 $11,634 $13,151
Capital 5,037 5,182 7,798 12,024 25,054
expenditures
EBITDA to 7.2x 8.3x 8.1x 5.3x 2.8x
interest
expense
Ratio of
earnings to 4.0x 4.4x 4.2x 2.9x 1.2x
fixed
charges(3)
Skier 497 515 515 1,048 1,284
visits(4)
Average
revenue per $40.87 $45.91 $51.54 $44.65 $49.45
skier visit
</TABLE>
(1) The historical results of the Company reflect the
acquisition of the Attitash/Bear Peak ski resort in
July 1994, the lease of the Sugarbush ski resort
beginning in October 1994 and the acquisition of
Sugarbush in May 1995, the acquisition of the Mt.
Cranmore ski resort in June 1995, and the acqusition
of S-K-I in June 1996.
(2) EBITDA represents earnings before interest expense,
income tax expense, depreciation and amortization
expense and extraordinary gain. 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 generally accepted
accounting principles or as a measure of the
Company's profitability or liquidity, and may not be
comparable to other similarly titled data of other
companies. The Company does not consider it
feasible to calculate cash flows from operating,
investing and financing activities on a pro forma
basis.
(3) 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 operating lease rental
expense deemed to be representative of the interest
factor.
(4) Each skier visit represents one skier visiting one
ski resort for one day, including skiers using
complimentary and season passes. Calculation of
skier visits requires an estimation of visits by
season pass holders. Although different ski resort
operators may use different methodologies for making
such estimations, management believes that any
resulting differences in total skier visits are
immaterial.
SKI
The following selected historical financial data of
SKI (except Other Financial and Operating Data) (i) as of
and for each of the five fiscal years ended July 31, 1995
have been derived from the financial statements of SKI
audited by Price Waterhouse LLP, independent accountants and
(ii) as of and for the nine months ended April 30, 1995 and
April 28, 1996 have been derived from unaudited interim
financial statements of SKI which, in the opinion of SKI
management, include all adjustments, consisting solely of
normal recurring adjustments, necessary for a fair
presentation of SKI's financial position and results of
operations. SKI's fourth fiscal quarter ordinarily reflects
a significant reduction in revenues as compared to the
second and third quarters, as well as a less significant
comparative expense reduction, ordinarily producing a loss
for such quarter and reduced full fiscal year levels of net
income and EBITDA as compared to the first nine months of
the year. The following information includes Waterville
Valley, which SKI acquired in October 1994 and the Company
must sell pursuant to the Consent. See "The Acquisition;
Antitrust Matters; Use of Proceeds" and "Pro Forma Financial
Data." The following information should be read in
conjunction with the Unaudited "Pro Forma Financial Data,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of
SKI and related notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended July 31,(1) April April
30 28
<S> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1995 1996
(in thousands, except per share data, per
skier visit data and ratios)
Statement of Income
Data:
Revenues $83,007 $89,014 $96,708 $98,907 $113,960 $106,682 $106,75
2
Operating expenses:
Cost of operations
including wages,
maintenance and 34,480 36,956 39,903 42,560 51,557 45,310 47,885
supplies
Other taxes 5,989 7,002 7,632 8,016 8,600 7,544 7,541
Utilities 5,580 6,172 6,655 6,045 8,071 7,624 7,465
Insurance 4,325 5,041 5,115 5,518 6,635 6,220 5,692
Selling, general and
administrative 13,666 14,048 16,872 15,298 19,495 16,377 17,061
expense
Depreciation and 10,290 10,822 10,942 11,440 14,056 13,843 10,146
amortization
Loss on sale of Bear -- -- -- -- -- -- 4,737
Mountain
74,330 80,041 87,119 88,877 108,414 96,918 100,527
Operating income 8,677 8,973 9,589 10,030 5,546 9,764 6,225
Interest expense 2,940 2,471 2,228 2,214 3,819 3,018 2,561
Income before income
taxes and minority 5,737 6,502 7,361 7,816 1,727 6,746 3,664
interest
Income taxes 2,324 2,776 2,952 3,170 997 2,725 1,429
Income before 3,413 3,726 4,409 4,646 730 4,021 2,235
minority interest
Minority interest in
income (loss) of -- -- -- -- 299 (193) (527)
subsidiary
Net income $3,413 $3,726 $4,409 $4,646 $1,029 $3,828 $1,708
Balance Sheet Data:
Property and $83,154 $81,963 $82,288 $94,771 $121,775 $124,110 $93,728
equipment, net
Total assets 90,288 93,531 99,182 106,790 136,721 138,730 118,454
Total long term
debt, excluding 27,315 26,677 28,119 29,167 50,190 46,677 31,222
current portion
Stockholders' equity 45,972 49,190 53,047 57,186 57,562 60,337 58,563
Statement of Cash
Flows Data:
Cash flows from $14,061 $15,903 $13,474 $17,464 $14,948 $19,941 $19,089
operating
activities
Cash flows from
investing activities (11,408) (9,287) (12,181 (23,108) (30,925) (33,502) 12,115
)
Cash flows from
financing activities (2,754) (1,787) 968 848 16,063 12,183 (21,967
)
Other Financial and
Operating Data:
Net income per common
and common equivalent $.60 $.65 $.77 $.81 $.18 $.66 $.30
share(2)
EBITDA(3) $18,967 $19,795 $20,531 $21,470 $19,602 $23,607 $16,371(6)
Capital expenditures 12,279 9,566 12,307 22,683 19,480 18,982 6,020
Ratio of earnings to
fixed charges (4) 2.6x 3.0x 3.5x 3.6x 1.3x 2.6x 1.9x
Skier visits (5) 1,679 1,783 1,863 1,854 2,113 2,104 2,055
Average revenue per $49.44 $49.92 $51.91 $53.35 $53.93 $50.70 $51.95
skier visit
</TABLE>
(1) The historical results of SKI reflect the
acquisitions of the Sugarloaf and Waterville Valley
ski resorts in August 1994 and October 1994,
respectively, and the divestiture of the majority of
the ski resort and golf course assets of Bear
Mountain in October 1995.
(2) The computation of net income per common and common
equivalent share amounts are based on the weighted
average of shares outstanding during the year.
Shares issuable upon the exercise of stock option
grants have not been included in the per share
computation because they would not have a material
effect on earnings per share. The weighted average
shares outstanding at the respective balance sheet
dates used in the computation of net income per
common and common equivalent share were 5,783,480 in
1995; 5,764,663 in 1994; 5,728,908 in 1993;
5,723,318 in 1992; 5,720,394 in 1991; 5,782,745 year
to date April 30, 1995; and 5,788,592 year to date
April 28, 1996.
(3) EBITDA represents earnings before interest expense,
income tax expense, depreciation and amortization
expense. 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 generally accepted accounting
principles or as a measure of SKI's profitability or
liquidity, and may not be comparable to other
similarly titled data of other companies.
(4) 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 operating lease rental
expense deemed to be representative of the interest
factor.
(5) Each skier visit represents one skier visiting one
ski resort for one day, including skiers using
complimentary and season passes. Calculation of
skier visits requires an estimation of visits by
season pass holders. Although different ski resort
operators may use different methodologies for making
such estimations, management believes that any
resulting differences in total skier visits are
immaterial.
(6) Includes loss of $4,737 realized in connection with
the sale of Bear Mountain.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The discussion and analysis below relates to (i) the
historical financial statements and results of operations of
the Company, (ii) the historical financial statements and
results of operations of SKI, and (iii) the liquidity and
capital resources of the Company after giving effect to the
consummation of the Acquisition. The following discussion
should be read in conjunction with the financial statements
and the notes thereto contained elsewhere in this
Prospectus.
The Company has, over the past several years,
undertaken the implementation of a strategy to differentiate
its resorts from its competition by enhancing the quality
and scope of on-mountain facilities and services, including
improved lifts, trail design, snowmaking, grooming and base
facilities, and to market these facilities and services
aggressively, while maintaining ownership of all revenue
sources connected with the resorts, including retail sales,
food and beverage concessions, lodging and real estate
development. This strategy has been coupled, in the last two
years, with growth through acquisitions, reflected in the
acquisitions of Attitash/Bear Peak resort in July 1994,
Sugarbush resort in May 1995 and Mt. Cranmore resort in June
1995 and subsequent capital expenditures at those three
resorts. See "Business -- The Company." These efforts have
resulted in growth both in revenues and profitability. See
"Selected Historical Financial Data -- The Company."
Over the past five years, SKI has experienced
relatively stable revenues from its core historical
operations (Killington and Mt. Snow), and has augmented its
revenues through the acquisitions in 1994 of Waterville
Valley and Haystack resorts and a majority interest in
Sugarloaf. Management believes it can more aggressively
manage the SKI properties, including implementing the
capital expansions and improvements that management believes
are essential to revenue and profit growth. See "Business --
SKI Limited" and "Business -- The Company -- Strategy."
Based on the historical success of the Company's strategic
plan, management believes that the application of that
strategy to SKI, and the continuation of the strategy with
its existing resorts, will result in improvement in revenues
and profitability on a combined basis.
Management believes that approximately $1.9 million
of annual cost savings are achievable following the
Acquisition, resulting from management consolidations,
elimination of shareholder service costs and a key man life
insurance policy. See "Pro Forma Financial Data." Further
savings may be attainable, in management's opinion, from
centralized purchasing of other key inputs, including
electricity, fuel, food and retail inventory, and from
consolidation of marketing functions and the combined
entity's enhanced buying power and desirability as a
strategic marketing partner. See "Business -- The Company
- --Strategy" and "Business -- Marketing." However, such
estimates and expectations are inherently uncertain and are
based on numerous assumptions which may not materialize, and
there can be no assurance that such improvements in
operating results and cost savings will in fact be realized.
See "Risk Factors -- Ability to Achieve Anticipated Cost
Savings; Integration of SKI."
Historically, both the Company and SKI have
generated the vast majority of their revenues in the second
and third quarters of their respective fiscal years, of
which a significant portion is produced in two key weeks --
the Christmas and Presidents' Day vacation weeks (during
which approximately 20% of annual skier visits are
generated). The fourth fiscal quarter ordinarily reflects a
significant reduction in revenues as compared to the second
and third quarters, as well as a less significant
comparative expense reduction, ordinarily producing a loss
for such quarter and reduced levels of net income and EBITDA
for the full fiscal year as compared to the first nine month
period. During the fourth and first fiscal quarters, the
Company and SKI experience substantial reductions in utility
expense, due to the absence of snowmaking and lift
operation, while making significant expenditures for
off-season maintenance, expansion and capital improvement
activities in preparation for the ensuing ski season.
Both the Company and SKI have consummated several
significant acquisitions and SKI recently concluded the sale
of one of its resorts. See "Selected Historical Financial
Data," "Business -- Existing Operations" and "Business --
SKI Limited." In several instances, the operating results of
the two entities reflect the impact of these transactions,
and are therefore less meaningfully comparable to operating
results for the prior or subsequent periods. In addition,
operating results for the Company reflect no income tax
expense for Sunday River as a consequence of its status as a
Subchapter S corporation. Such expense will be incurred and
reflected in future periods due to the conversion of Sunday
River to a Subchapter C corporation in connection with the
Acquisition. See "The Acquisition; Antitrust Matters; Use of
Proceeds" and Notes to Financial Statements of the Company.
Results of Operations of the Company
The following table sets forth, for the periods
indicated, certain operating data of the Company as a
percentage of revenues.
Year Ended
July 31, July 30, July 28,
1994 1995 1996
Revenues
Ski and 79.9 % 85.5 % 86.5 %
lodging
Real estate 20.1 14.5 13.5
Totalrevenues 100.0 100.0 100.0
...
Expenses
Cost of
operations 34.6 39.7 42.3
including
wages,
maintenance
and supplies
Cost of 9.6 7.3 7.9
real estate
sold
Real estate 3.8 3.2 3.5
and payroll
taxes
Utilities 5.5 7.5 7.9
Insurance 3.5 3.9 3.1
Selling, 17.9 17.2 15.4
general, and
administrativ
e
7.3 7.1 9.4
Depreciation
and
amortization
Total other 82.2* 85.9 89.5
expenses
Income from 17.8 14.1 10.5
operations
Commitment 0.0 0.0 1.9
fee
Interest 3.1 4.0 6.4
expense
Income
before
provision for 14.7 10.1 2.2
income
taxes and
minority
interest
in loss of
subsidiary
Provision 0.0 0.7 5.3
for income
taxes
Income before -- -- (3.1)
minority
interest
Minority -- -- .1
interest in
loss of
subsidiary
Net income 14.7 % 9.4 % (3.0) %
(loss)
Fiscal 1996 compared to Fiscal 1995.
Ski and lodging revenues increased by $16.7 million,
or 35.7%, in the fiscal year ended July 28, 1996 ("Fiscal
1996") compared to the fiscal year ended July 30, 1995
("Fiscal 1995"). This increase was due to (i) $4.0 million
attributable to the acquisition of Mt. Cranmore in June
1995, (ii) an increase of approximately 19,000 skier visits,
or approximately 10%, at Attitash/Bear Peak, (iii) an
increase of approximately 42,000 skier visits, or
approximately 13%, at Sugarbush, (iv) an increase in lift
ticket prices, resulting in an increase in revenues per
skier visit from $41.89 in Fiscal 1995 to $44.61 in the
Fiscal 1996, (vi) an approximate 10% increase in season pass
revenues, primarily due to the addition of a multi-resort
season pass and (vii) $2.8 million attributable to the
inclusion of SKI for the final month of Fiscal 1996.
Real estate revenues increased by $2.0 million, or
24.9%, in Fiscal 1996 compared to Fiscal 1995. This increase
was due to increased sales of quartershare units at the
Summit Hotel at Sunday River and the sale of 16 additional
townhouse units at Sunday River in Fiscal 1996 compared to
Fiscal 1995, as well as higher average sales prices.
Cost of operations increased by $9.4 million, or
43.3%, in Fiscal 1996 compared to Fiscal 1995. This increase
was due to (i) $1.5 million attributable to the acquisition
of Mt. Cranmore, (ii) incremental costs resulting from the
increased skier visits, (iii) operating costs resulting
from the increased snowmaking and lift capacity and skiable
terrain that resulted from the $22.2 million of capital
expenditures during Fiscal 1996 and (iv) $2.1 million
attributable to the inclusion of SKI for the final month of
Fiscal 1996.
Cost of real estate sold increased by $1.9 million,
or 46.3%, in Fiscal 1996 compared to Fiscal 1995 due to the
increased real estate sales volume.
Real estate and payroll taxes increased by $0.8
million, or 46.5%, in Fiscal 1996 compared to Fiscal 1995
primarily due to real estate and personal property taxes
relating to the acquisition of Mt. Cranmore and Sugarbush
and $388,000 attributable to the inclusion of SKI for the
final month of Fiscal 1996.
Utility expense increased by $1.7 million, or 40.8%,
in Fiscal 1996 compared to Fiscal 1995 as a result of the
acquisition of Mt. Cranmore and increased snowmaking
capacity at the Company's resorts, including a 300% increase
in snowmaking capacity at Sugarbush and $279,000
attributable to the inclusion of SKI for the final month of
Fiscal 1996.
Insurance expense decreased by $_0.2 million, or
8.1%, in Fiscal 1996 compared to Fiscal 1995 due to the
consolidation of the Company's resorts under a single
insurance policy, including $96,000 attributable to the
inclusion of SKI for the final month of Fiscal 1996.
Selling, general and administrative expense increased
by $1.9 million, or 20.2%, in Fiscal 1996 compared to Fiscal
1995 due to (i) approximately $0.7 million attributable to
the acquisition of Mt. Cranmore, (ii) an extensive marketing
campaign following the significant improvements made at
Sugarbush, (iii) expenses resulting from the acquisition of
Mt. Cranmore and Sugarbush and (iv) $912,000 attributable to
the inclusion of SKI for the final month of Fiscal 1996.
Interest expense increased by $2.5 million, or
113.1%, in Fiscal 1996 compared to Fiscal 1995 due to (i)
increased borrowings to support the Company's capital
program, (ii) the acquisitions of Mt. Cranmore and Sugarbush
and (iii) $206,000 attributable to the inclusion of SKI for
the final month of Fiscal 1996.
Depreciation and amortization increased by $2.9
million, or 73.5%, due to depreciation resulting from (i)
the $24 million capital program completed prior to the
1995/96 ski season, (ii) the acquisitions of Mt. Cranmore
and Sugarbush and (iii) $881,000 attributable to the
inclusion of SKI for the final month of Fiscal 1996.
Income tax expense increased $3.5 million in Fiscal
1996 compared to Fiscal 1995. The majority of the increase
in the Company's income before provision for income taxes
was attributable to the conversion of the former S
corporations to C corporations, offset by an $805,000
benefit due to inclusion of SKI for the final month of
Fiscal 1996.
Fiscal 1995 compared to fiscal 1994.
Ski and lodging revenues increased by $20.3 million,
or 76%, in fiscal 1995 compared to fiscal 1994 primarily due
to the acquisitions of Attitash/Bear Peak and Sugarbush. An
increase in skier visits at Sunday River of approximately
20,000, or 4%, as well as an increase in realized revenue
per skier visit, also contributed to this increase.
Real estate revenues increased by $1.3 million, or
19%, in fiscal 1995 compared to fiscal 1994 due to the
construction and sale of townhouse units at Sunday River and
continued sales of quartershare units at the Summit Hotel at
Sunday River.
Cost of operations increased by $10.2 million, or
89%, in fiscal 1995 compared to fiscal 1994 due to the
acquisitions of Attitash/Bear Peak and Sugarbush.
Cost of real estate sold increased by $0.8 million,
or 26%, in fiscal 1995 compared to fiscal 1994 due to the
increased real estate sales volume.
Real estate and payroll taxes increased by $0.5
million, or 37%, in fiscal 1995 compared to fiscal 1994
primarily due to the acquisitions of Attitash/Bear Peak and
Sugarbush.
Utility expense increased by $2.3 million, or 123%,
in fiscal 1995 compared to fiscal 1994 primarily due to the
acquisitions of Attitash/Bear Peak and Sugarbush.
Insurance expense increased by $1.0 million, or 83%,
due to the acquisitions of Attitash/Bear Peak and Sugarbush.
Selling, general and administrative expense increased
by $3.5 million, or 58%, in fiscal 1995 compared to fiscal
1994 due to the acquisitions of Attitash/Bear Peak and
Sugarbush.
Interest expense increased by $1.2 million, or 115%
in fiscal 1995 compared to fiscal 1994 due to increased
borrowing to finance the acquisitions of Attitash/Bear Peak
and Sugarbush and the Company's capital program, as well as
higher average interest rates.
Depreciation and amortization increased by $1.5
million, or 62%, due to depreciation resulting from the
acquisitions of Attitash/Bear Peak and Sugarbush and the
Company's capital program.
Provision for income taxes increased by $0.4 million
in fiscal 1995 compared to fiscal 1994 due to income taxes
due at Sugarbush.
Accounts payable and accrued expenses increased
$2,153,000 from July 31, 1994 to July 30, 1995 primarily due
to accounts payable and accrued liabilities of approximately
$2 million assumed in the acquisition of Sugarbush in May
1995.
At July 30, 1995, other liabilities included
$1,350,000 related to the purchase of Mt. Cranmore which was
not paid as of July 30, 1995.
Fiscal 1994 compared to fiscal 1993.
Ski and lodging revenues increased by $2.9 million,
or 12% in fiscal 1994 compared to fiscal 1993, primarily due
to lodging revenues attributable to the opening of the South
Wing at the Summit Hotel at Sunday River during fiscal 1994,
as well as a 5% increase in average lift ticket prices.
Real estate revenues increased $0.6 million, or 9%,
in fiscal 1994 compared to fiscal 1993 due to increased
sales and sale prices of quartershare units at the Summit
Hotel at Sunday River.
Cost of operations increased by $1.5 million, or 15%
in fiscal 1994 compared to fiscal 1993 due to the expansion
of lodging management operations at the Summit Hotel in
connection with the opening of the South Wing and the
commencement of operations of Sunday River's Silver Bullet
Express train service, as well as increased costs of retail
and food and concession inventory.
Real estate and payroll taxes increased by $0.3
million, or 27%, in fiscal 1994 compared to fiscal 1993 due
to real estate taxes attributable to unsold quartershare
units at the Summit Hotel and tax expense attributable to
the opening of the South Wing at the Summit Hotel and the
commencement of train service at Sunday River.
Utility expense decreased by $0.2 million, or 12%, in
fiscal 1994 compared to fiscal 1993 due to a new power
contract with Central Maine Power as a result of a new, more
efficient compressor facility.
Insurance expense decreased by $0.4 million, or 26%,
in fiscal 1994 compared to fiscal 1993, due to the
conversion of the Company's workers' compensation insurance
to a self-insured program.
Selling, general and administrative expense increased
by $1.2 million, or 26%, in fiscal 1994 compared to fiscal
1993 due primarily to an 18% increase in marketing expenses
to try to offset the unseasonably warm weather, as well as
additional management expenses in connection with
investigating potential acquisitions.
Interest expense increased by $0.2 million, or 21%,
in fiscal 1994 compared to fiscal 1993 due primarily to
increased average interest rates.
Depreciation and amortization expense increased by
$0.4 million, or 22%, due to improvements made as part of
the Company's capital program.
In fiscal 1993, the Company recorded an extraordinary
gain of $1.6 million as a result of insurance proceeds
following a fire at Sunday River's compressor building.
Results of Operations of SKI
The following table sets forth, for the periods indicated,
certain operating data of SKI as a percentage of revenues.
<TABLE>
<CAPTION>
Year Ended July 31, Nine Months Ended
April 30,
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1995 1996
Revenue 100.0 % 100.0 % 100.0 % 100.0 % 100.0%
Expenses
Cost of operations
including wages, 41.3 43.0 45.3 42.5 44.9
maintenance and
supplies
Other taxes 7.9 8.1 7.5 7.1 7.1
Utilities 6.9 6.1 7.1 7.1 7.0
Insurance 5.3 5.6 5.8 5.8 5.3
Selling, general and
administrative 17.4 15.5 17.1 15.4 16.0
expenses
Depreciation and 11.3 11.6 12.3 13.0 9.5
amortization
Loss on sale of Bear 0.0 0.0 0.0 0.0 4.4
Mountain
90.1 89.9 95.1 90.9 94.2
Operating income 9.9 10.1 4.9 9.1 5.8
Interest expense 2.3 2.2 3.4 2.8 2.4
Income before income
taxes and minority 7.6 7.9 1.5 6.3 3.4
interest
Income taxes 3.0 3.2 0.9 2.5 1.3
Income before minority 4.6 4.7 0.6 3.8 2.1
interest
Minority interest 0.0 0.0 0.3 (0.2) (0.5)
Net income 4.6 % 4.7 % 0.9 % 3.6 % 1.6 %
</TABLE>
The following comparative discussions with respect
to SKI have been taken from periodic reports filed by SKI
with the Securities and Exchange Commission.
Nine Months Ended April 28, 1996 Compared with Nine Months
Ended April 30, 1995
Revenues of $106,752,000 for fiscal 1996
approximated the comparable fiscal 1995 revenues. After
considering the reduction from the sale of Bear Mountain,
revenue increased 13% reflecting an overall increase in
skier visits, resulting in improved revenues from most
operational areas including tickets, restaurants and bars,
retail, rental, repair and ski school at all of SKI's ski
areas.
Cost of operations increased to $47,885,000 in
fiscal 1996, from $45,310,000 in the comparable fiscal 1995
period. After considering the reduction resulting from the
sale of Bear Mountain, cost of operations increased 17% in
support of increased revenues. Additionally, in fiscal 1996,
the Company entered into operating leases for its fleet of
snow-grooming vehicles which resulted in incremental lease
expense. In turn, SKI's depreciation expense was reduced as
a result of having disposed of a majority of its former
fleet of owned vehicles in July 1995.
Other taxes of $7,541,000 were approximately equal
to the comparable fiscal 1995 period. After considering the
reduction resulting from the sale of Bear Mountain, other
taxes increased 10% primarily due to increases in sales and
meals and rooms tax resulting from higher revenues.
Selling, general and administrative expenses
increased to $17,061,000 in fiscal 1996 from $16,377,000 in
fiscal 1995. After considering the reduction resulting from
the sale of Bear Mountain, selling, general and
administrative expense increased 17% primarily due to the
higher costs of the "Peaks of Excitement" marketing program
which was introduced in fiscal 1996. Additionally, SKI
incurred certain expenditures for financial advisory and
legal services relating to the impending acquisition by ASC.
Interest decreased 15% due to reduction of debt
levels principally relating to the sale of Bear Mountain
assets.
Depreciation and amortization expense decreased to
$10,146,000 in fiscal 1996, from $13,843,000 in fiscal 1995.
The reduction is principally attributable to the sale of
Bear Mountain assets.
Year Ended July 31, 1995 Compared to Year Ended July 31,
1994
Revenues on a consolidated basis increased 15% to
$113,960,000 in fiscal 1995 over fiscal 1994. Real estate
sales revenue for 1995 was $8,000 compared to zero in 1994.
The additions of Waterville Valley Ski Area and Sugarloaf
Mountain Corporation were the primary cause of increased
revenues on a consolidated basis.
Cost of operations increased 21% over 1994 due to
increased operational costs related to the acquisitions of
Waterville Valley and Sugarloaf ski areas.
Other taxes increased 7% in 1995 due to the
acquisitions of Waterville Valley and Sugarloaf ski areas.
Utilities expense increased 34% in 1995 primarily
due to the acquisitions of Waterville Valley and Sugarloaf
ski areas. Both Killington and Mount Snow had slight
increases over 1994 while Bear Mountain enjoyed a 23%
decrease due to their abundance of early season natural
snow.
Insurance expense increased 20% in 1995 primarily
due to the acquisitions of Waterville Valley and Sugarloaf
ski areas. Both Killington and Mount Snow had decreases in
their insurance expense while Bear Mountain had an increase
of 28%.
Selling, general and administrative expense
increased 27% in 1995 primarily due to the acquisitions of
Waterville Valley and Sugarloaf ski areas. Killington and
Mount Snow had slight decreases while Bear Mountain
increased by 28%.
Interest expense increased by 72% in 1995 due
primarily to the acquisition of Waterville Valley and
Sugarloaf ski areas as well as the construction of the
Killington Skyeship.
Depreciation expense increased by 23% due primarily
to the acquisitions of Waterville Valley and Sugarloaf ski
areas. Killington and Mount Snow had slight increases in
depreciation while Bear Mountain had a slight decrease.
There was a significant increase in SKI's tax rate
percentage in fiscal 1995 for two reasons. First, since SKI
owns 51% of Sugarloaf, it does not file a consolidated tax
return which includes Sugarloaf. SKI will reflect the tax
benefit of Sugarloaf's loss only at such time as Sugarloaf
actually earns a profit. Second, life insurance premiums are
not deductible for tax purposes; and although the amounts of
the premiums are relatively small, their effect on tax rates
increases in a low profit year. Despite the high tax rate
for book purposes, all of the taxes were deferred taxes and,
therefore, did not affect cash flow.
Net income decreased 78% in 1995 primarily due to
poor market response both in the northeast as well as
California.
Year Ended July 31, 1994 Compared to Year Ended July 31,
1993
Revenues on a consolidated basis increased 2% to
$98,907,000 in 1994 over 1993. There were no real estate
sales revenues for 1994, which compared to $1,858,000 in
1993. Stronger all around operational revenue allowed for
the increased revenues offsetting the 1993 real estate sale
in the face of virtually equal skier day totals in 1994 and
1993. The average lift ticket price increased 6%.
Cost of operations increased 7% over 1993 due to
increased operational costs related to the increase in
revenues.
Other taxes increased 5% in 1994 due primarily to
increases in payroll taxes and sales taxes incurred on
increased revenues.
Utilities expense decreased 9% due primarily to the
abundant snowfalls allowing a reduction in snowmaking
requirements.
Insurance expense increased 8% over 1993,
principally due to the favorable impact from the close-out
of certain general liability years in 1993.
Selling, general and administrative expense
decreased 9% in 1994 due primarily to a bonus declared in
1993.
Net income increased 5% to $4,646,000 from
$4,409,000 in 1993 due to increased revenues and improved
expense control. The margin on net revenue increased to
4.70% in 1994 from 4.56% in 1993.
Liquidity and Capital Resources
The Company's primary liquidity needs are to fund
capital expenditures, service indebtedness and support
seasonal working capital requirements. The Company's primary
sources of liquidity will be cash flow from operations and
borrowings under the Senior Credit Facility (under which
approximately $42.8 million was drawn in connection with the
Acquisition and $24.7 million remains available for future
borrowing, subject to compliance by the Company with the
provisions thereof, at July 28, 1996, as well as additional
borrowings as permitted under the Senior Credit Facility,
the Indenture and the Subordinated Note Indenture. See "Risk
Factors -- Leverage and Debt Service," "Risk Factors
- --Restrictions Under Debt Agreements," "Description of
Senior Subordinated Notes," "Description of Subordinated
Notes" and "Description of Other Indebtedness -- The Senior
Credit Facility." The Company intends to use borrowings
under the Senior Credit Facility to meet seasonal
fluctuations in working capital requirements, primarily
related to off-season operations and maintenance activities
in the Company's first and fourth fiscal quarters, to fund
capital expenditures for lifts, trail work, grooming
equipment and other on-mountain equipment and facilities and
to build retail and other inventories prior to the start of
the skiing season.
The Company's capital expenditures for the years
ended July 30, 1995 and July 28, 1996 were $12.0 million and
$25.0 million, respectively. SKI's capital expenditures for
the year ended July 31, 1995 were $19.5 million. See
"Business -- The Company -- Strategy." Management plans to
fund these capital expenditures from available cash, vendor
financing to the extent permitted under the Senior Credit
Facility, the Indenture and the Subordinated Note Indenture,
and borrowings under the Senior Credit Facility. Capital
expenditures during the second and third quarters of fiscal
1997 are expected to be insignificant because most capital
improvements are completed prior to the commencement of the
ski season.
Management expects capital expenditures to total
approximately $50 million over the next three years,
approximately 70% of which is targeted to be spent upgrading
SKI properties. However, this budget will be reviewed
annually and revised upward or downward to reflect the
previous winter's operating results and available liquidity.
Management believes that the minimum maintenance capital
expenditure requirement for the Company will be
approximately $6 million per year excluding the Mt. Cranmore
and Waterville Valley resorts, which the Company has agreed
to divest.
Management also plans to complete its Grand Summit
at Attitash/Bear Peak hotel development and undertake
quartershare hotel development and construction activities
in fiscal 1997 and 1998 at one or more of Sugarbush, Sunday
River, Killington and Mt. Snow (see "Business -- Real Estate
Development"). Each project is contingent upon satisfying
pre-sale objectives required under the Indenture, receipt of
necessary permits and approvals and establishing appropriate
financing. If all four projects move forward the total cost
is estimated at approximately $59 million. It is expected,
however, that these activities will be conducted through the
Real Estate Subsidiary with limited guarantees of associated
indebtedness being provided by the Company, to the extent
permitted by the Senior Credit Facility, the Indenture and
the Subordinated Note Indenture. Liquidity will also be
affected by the debt service requirements associated with
such borrowings, as well as any required equity investments
by the Company in such entities.
Management believes that there is a considerable
degree of flexibility in the timing (and, to a lesser
degree, the scope) of its capital expenditure program, and
even greater flexibility as to its real estate development
objectives. While the 1996-97 capital expenditure program
described above is regarded by management as important, both
as to timing and scope, discretionary capital spending above
maintenance levels can be deferred, in some instances for
substantial periods of time, in order to address cash flow
or other constraints. With respect to the Company's proposed
real estate development program, management believes that
such efforts will enhance ski revenues and will contribute
independently to earnings, as has been the case historically
at Sunday River. Nonetheless, existing lodging facilities in
the vicinity of each resort are believed to be adequate to
support current skier volumes, and a deferral or curtailment
of these development efforts is not regarded by management
as likely to adversely affect skier visits and ski revenues
or profitability. Pursuant to the Consent, the Company has
agreed to divest itself of the Mt. Cranmore and Waterville
Valley resorts. The Company's negative cash flow associated
with these resorts during the off-season is estimated by
management to be $100,000 per month. A portion of the
$14,750,000 cash proceeds received at closing from the sale
of these resorts ($12 million) is expected be applied to
reduce the amount outstanding under the Senior Credit
Facility. Management believes that reduction will result in
freeing up availability under the Senior Credit Facility,
although there are no commitments to that effect. See "The
Acquisition; Antitrust Matters; Use of Proceeds", "Recent
Developments," "Risk Factors--Antitrust" and Note (b) to
"Pro Forma Consolidated Financial Data."
The Company's liquidity also will be affected by the
substantial indebtedness it incurred in connection with the
financing of the Acquisition, including the indebtedness
evidenced by the Notes and the Senior Credit Facility. Such
indebtedness will significantly increase the Company's cash
requirements for debt service and will impose various
restrictions on additional indebtedness, capital
expenditures, creation of liens, sales of assets, permitted
investments and mergers or other business reorganizations.
See "Description of Senior Subordinated Notes," "Description
of Subordinated Notes" and "Description of Other
Indebtedness -- The Senior Credit Facility." In addition,
upon the occurrence of a Change of Control, the Company may
be required to repurchase the Notes and the Subordinated
Notes at 101% of the principal amount thereof, plus accrued
and unpaid interest. The occurrence of a change of control
may also constitute a default under the Senior Credit
Facility. See "Risk Factors -- Leverage and Debt Service,"
"Risk Factors -- Restrictions Under Debt Agreements,"
"Description of Senior Subordinated Notes -- Repurchase at
the Option of Holders -- Change of Control" "Description of
Senior Subordinated Notes -- Certain Covenants,"
"Description of Subordinated Notes -- Repurchase at the
Option of Holders -- Change of Control," "Description of
Subordinated Notes - Certain Covenants" and "Description of
Other Indebtedness -- The Senior Credit Facility."
As a result of the loss incurred on a pro forma
basis for the fiscal year ended July 28, 1996 and July 30,
1995, after giving pro forma effect to the Aquisition, the
acquisition of the 49% interest of Sugarloaf, and the
divestiture of the Waterville and Mt. Cranmore resorts,
earnings would have been insufficient to cover the indicated
fixed charges. Earnings would not have covered fixed
charges by $18.0 and $8.4 million for such years,
respectively. However, such results for the fiscal year
include non-cash charges such as depreciation and
amortization of $16.4 million and a loss on the sale of Bear
Mountain in October 1995 of $4.7 million. For the fiscal
year 1995, non-cash charges include depreciation and
amortization of $18.8 million.
Management believes that the Company's cash flow
from operations, combined with borrowings available under
the Senior Credit Facility and additional borrowings to the
extent permitted under the Senior Credit Facility, the
Indenture and the Subordinated Note Indenture, will be
sufficient to enable the Company to meet all of its cash
operating requirements for the foreseeable future.
The business of the Company is highly seasonal, with
the vast majority of its annual revenues historically being
generated in the second and third fiscal quarters, of which
a significant portion being produced in two key weeks -- the
Christmas and Presidents' Day vacation weeks, during which
approximately 20% of annual skier visits are realized.
Operating losses can be expected in the first and fourth
fiscal quarters, and results of operations in the first
quarter of the year typically will not be sufficient to
cover fixed charges. See "Risk Factors -- Dependence on
Weather Conditions; Seasonality."
INDUSTRY OVERVIEW
The U.S. ski market is a fragmented industry,
with 516 ski areas in operation during the 1995-96
season. Over the past 15 years, participation in the
sport of skiing has remained relatively stable,
averaging approximately 50 million skier visits
nationally. No single ski area accounted for more than
approximately 3% of 1994-95 skier visits. The market is
characterized by both regional and national competition.
NATIONAL SKI AREAS ASSOCIATION
REGIONS AND SKIER VISITS
(In thousands)
<TABLE>
<CAPTION>
SNortheast Southeast Midwest Rocky Mtn Pacific Total
e West
a
s
o
n
<<c> <C> <C> <C> <C> <C>
s
>
112,252 4,425 6,535 17,687 9,936 50,835
9
9
1
/
9
2
113,217 4,660 6,978 18,602 10,575 54,032
9
9
2
/
9
3
113,718 5,808 7,364 17,503 10,244 54,637
9
9
3
/
9
4
111,265 4,746 6,907 18,412 11,346 52,676
9
9
4
/
9
5
113,825 5,693 7,284 18,147 9,034 53,983
9
9
5
/
9
6
</TABLE>
Northeast: CT, MA, ME, NH, NY, VT, RI
Midwest: IA, IL, IN, MI, MN, MO, ND, NE, OH, SD, WI
Pacific West: AK, AZ, CA, NV, OR, WA
Southeast: AL, GA, KY, MD, NC, NJ, PA, TN, VA, WV
Rocky Mountain: CO, ID, MT, NM, UT, WY
Source: 1994/95 and 1995/96 KOTTKE NATIONAL END OF SEASON
SURVEY, Seventeenth Edition, August 1996, published by the
National Ski Areas Association and RRC Associates
The ski industry is presently experiencing a period
of consolidation and attrition, which is reflected in a
significant decline in the total number of areas over the
last ten years. Management believes that the driving forces
behind both consolidation and attrition are the need to gain
access to capital to maintain state-of-the-art facilities
and the need to retain professional management, and the
inability of numerous resorts to keep pace with the
competition with respect to one or both of these market
forces. The trend among leading resorts is toward investing
in improving technology and infrastructure so as to deliver
a more consistent, high quality product.
The NSAA defines the Northeast ski resort market as
encompassing the New England states and New York, although
the Company believes its market extends as far as the
Mid-Atlantic states and southeastern Canada. The Northeast
market has averaged approximately 12 million annual skier
visits over the last fifteen years. Within the Northeast
region, skiers can choose from among over 50 major resorts.
The region's major resorts are concentrated in the
mountainous areas of New England and eastern New York, with
the bulk of skiers coming from the population centers
located in eastern Massachusetts, southern New Hampshire,
Connecticut, eastern New York, New Jersey and the
Philadelphia area. Data collected at Sunday River indicate
that approximately 43% of its weekend skiers reside in
Massachusetts. Similar data collected at Killington and Mt.
Snow indicate that approximately 23% and 35% of their
weekend skiers, respectively, reside in New York, with high
concentrations from Massachusetts, Connecticut, New Jersey
and Vermont.
The Northeast ski market consists of essentially two
segments: day skiing and vacationers. The day skiing market
is comprised of skiers who live within a four hour driving
radius of a particular resort. Day skiers may stay for one
to two days in a single trip. Approximately 35 million
people live within the Company's day skiing market, which
includes the New York and Boston metropolitan areas. The
vacation market is a national market for destination
resorts. While the Northeast does not draw significant
numbers of vacationing skiers from the Western regions of
the country, it competes with the Rocky Mountain and Pacific
Northwest areas for Eastern vacationing skiers. Over the
last several years, the Company has begun to compete in
certain international markets, with the U.K. market
historically producing the highest levels of international
skier visits.
Management believes that certain demographic trends
and trends in the U.S. ski industry will be favorable for
the Company's business outlook. The "echo boom" generation
is of prime age for introduction to skiing and snowboarding.
The trend toward consolidation is expected to permit larger,
multiple resort companies to concentrate more of their
marketing efforts on attracting new participants to the
sport. Improved snowmaking technology and grooming
techniques assure visitors better quality and more
consistent conditions. High speed chair lifts also increase
the quality of the experience by permitting more skiing
during a resort visit. As an active family sport, skiing
benefits from the social trends toward family vacationing
and health consciousness. Finally, management believes its
success with the first Summit Hotel program is directly
related to the desire for affordable vacation property
ownership among a growing population of skiers.
BUSINESS
The Company
General. Management estimates indicate ASC is one of
the largest mountain resort operators in North America,
owning and operating eight ski resorts in the northeastern
United States, including seven of the largest resorts
measured by annual skier visits, elevation, vertical drop
and skiable terrain. ASC's properties include Killington,
Mt. Snow/Haystack and Sugarbush ski resorts in Vermont;
Waterville Valley, Attitash/Bear Peak and Mt. Cranmore ski
resorts in New Hampshire; and Sunday River and Sugarloaf/USA
ski resorts in Maine. These resorts recorded over 3.3
million skier visits during the 1995/96 ski season,
representing approximately 24% of total skier visits in the
northeastern United States and approximately 6% of skier
visits nationally. ASC's ski resort properties offer
approximately 4,000 acres of skiable terrain (of which
approximately 82% are covered by snowmaking capability), 777
trails and 121 lifts. ASC generated approximately $187.6
million in revenues and approximately $3.8 million and $34.6
million in net loss and EBITDA, respectively, for the fiscal
year ended July 28, 1996, on a pro forma basis reflecting
the Acquisition and including the Waterville Valley and Mt.
Cranmore resorts, which are to be divested. Excluding
Waterville Valley and Mt. Cranmore, such total revenue were
$172.0 million, and ASC generated $3.8 million in net loss
and $32.6 million in EBITDA over such period after giving
pro forma effect to the Acquisition. (Data concerning the
Company's EBITDA may not be comparable to similarly titled
data of other companies.)
The Consent requires divestiture of the Waterville
Valley and Mt. Cranmore resorts not later than December 1,
1996, subject to a 90 day extension at the discretion of
DOJ. On a combined basis, these two resorts recorded
approximately 382,000 skier visits during the 1995-96 ski
season (11.4% of total 1995-96 skier visits for the Company,
after giving pro forma effect to the Acquisition) and,
during the fiscal year ended July 28, 1996, generated
approximately $15.6 million in total revenues, $0.0 million
in net loss and $2.0 million in EBITDA (8.3%, (1.3)% and
5.8%, respectively, of the Company's revenues, net loss and
EBITDA for such period after giving pro forma effect to the
Acquisition). The net assets to be divested of these two
resorts, as of July 28, 1996, aggregate approximately $16.7
million, or 5.6% of total assets of the Company, as of such
date, after giving pro forma effect to the Acquisition, and
they represent on a combined basis approximately 445 acres
of skiable terrain, 90 trails and 19 lifts. See "The
Acquisition; Antitrust Matters; Use of Proceeds" and "Pro
Forma Financial Data." On August 30, 1996 the Company
entered into a Purchase and Sale Agreement with Booth Creek
Ski Acquisition Corp. providing for the sale of all of the
assets constituting the Waterville Valley and Mt. Cranmore
ski resorts for a total purchase price of $17.5 million.
The sale of the resorts is scheduled to close on or before
November 27, 1996. See "Recent Developments."
The Company has experienced consistent growth since
its inception in 1980 when it acquired the Sunday River ski
resort. Skier visits at Sunday River have increased from
under 50,000 in the 1980/81 ski season to approximately
589,000 for the 1995/96 ski season. The Company acquired
Attitash/Bear Peak in fiscal 1994, and Sugarbush and Mt.
Cranmore in fiscal 1995. Since their acquisition by the
Company, skier visits have increased by 24% at Attitash/Bear
Peak, 13% at Sugarbush and 32% at Mt. Cranmore. Management
believes that ASC will realize growth in skier visits and
profitability from (i) implementation at the SKI resorts of
the Company's successful operating strategy and the
continued pursuit of that strategy at the Company's recently
acquired resorts, (ii) operational synergies and economies
of scale available to the Company as a result of the
Acquisition, and (iii) coordinated marketing and promotion
of eight resorts spanning a single region.
Management also believes that the Company is well
positioned to benefit from certain trends in the North
American ski industry, including the emergence of the echo
boom generation, continued consolidation, growing interest
in snowboarding, and demand among families for vacation
property ownership. As the cost of infrastructure to
maintain competitiveness in the ski industry has grown, the
number of U.S. ski areas has declined. There are currently
516 ski areas in operation in the nation as compared to over
700 in 1986, while skier visits have remained relatively
stable over the same period. Management believes that the
Company, as the largest ski resort operator in the U.S., is
well positioned to continue its growth both internally and
through acquisitions. Management also believes that the ski
industry is poised for growth through increased
participation in the sport, especially among the echo boom
generation who will be reaching their teen years, the prime
entry age for skiing, over the next decade. The Company and
other emerging multiple resort operators are expected to
focus more of their marketing efforts on attracting new
participants to the sport.
Resort Properties. The Company's multiple properties
extend from southern Vermont to central Maine, enabling the
Company to market its wide variety of skiing terrain and
resort characteristics to residents of the northeastern
U.S., including the New York and Boston metropolitan
population centers. Management believes that the number and
diversity of its resorts and their accessibility to these
customer bases will increase the effectiveness of its
marketing program and the likelihood of bringing new
visitors to its resorts. Management intends to capitalize on
this anticipated phenomenon by aggressively cross-marketing
and inducing visitors, including those seeking varied resort
experiences, to travel to its other resorts. See "--
Marketing." The following table summarizes certain key
statistics of each of the Company's properties.
American Skiing Company
Resort Overview
<TABLE>
<CAPTION>
Resort Skiable Vertical Trails Lifts
Terrain Drop
(Acres)
<S> <C> <C> <C> <C>
Killington Sherburne, 918 3,150 165 1 Gondola
Vermont 2 Detachable
15 Fixed Grip
2 Surface
Sunday River Newry, Maine 640 2,300 120 3 Detachable
12 Fixed Grip
1 Surface
Mount Snow/ Haystack 751 1,700 130 1 Detachable
Dover, Vermont 20 Fixed Grip
3 Surface
Sugarloaf Carrabassett 515 2,820 116 1 Gondola
Valley, Maine 1 Detachable
11 Fixed Grip
1 Surface
Sugarbush Warren, Vermont 413 2,600 111 4 Detachable
4 Surface
10 Fixed Grip
Attitash/ Bear Peak 214 1,750 45 1 Detachable
Bartlett, New Hampshire 7 Fixed Grip
2 Surface
Subtotal-- Retained 3,451 -- 687 2 Gondola
resorts 12 Detachable
75 Fixed Grip
13 Surface
Waterville Valley 255 2,020 54 1 Detachable
Waterville Valley, New 8 Fixed Grip
Hampshire 4 Surface
Mt. Cranmore North 190 1,167 36 1 Detachable
Conway, New Hampshire 4 Fixed Grip
1 Surface
Subtotal - Resorts to be 445 -- 90 2 Detachable
divested 12 Fixed Grip
5 Surface
Total 3,896 -- 777 2 Gondola
14 Detachable
87 Fixed Grip
18 Surface
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Snowmaking Coverage Groomers Lodges 1994-95 1995-96
Skier Skier
Visits Visits
(000s) (000s)
60% 29 7 826 905
92% 11 4 535 589
84% 13 6 461 553
92% 11 1 312 349
74% 9 5 331 373
100% 5 2 182 201
80% 78 25 2,647 2,970
96% 6 3 207 257
100% 3 2 95 125
98% 9 5 302 382
82% 87 30 2,949 3,352
</TABLE>
The following table summarizes the Company's
existing lodging capabilities. With the exception of the
Snow Cap Inn and Ski Dorm at Sunday River, the Sugarbush
Inn at Sugarbush, the Villager Hotel at Killington and the
Snowlake Lodge at Mt. Snow, all other lodging reflected in
the following table is not owned by the Company, but is
managed by the Company under contract with the owners of
the facilities.
Lodging Information
1995-96 Fiscal Year
<TABLE>
<CAPTION>
Total Gross
Company-Owned Rooms(2) Average Net Occupancy
Lodging Location Daily Rate Average Percentage
Daily
Rate (1)
<S> <C> <C> <C> <C> <C>
Snow Cap Inn (3) Sunday River 67 $79.85 $79.85 73.06 %
Ski Dorm (3) Sunday River 205 (4) 22.29 22.29 22.90
Sugarbush Inn Sugarbush 46 83.33 83.33 47.43
Villager Killington 80 68.81 68.81 53.77
Snowlake Lodge Mt. Snow 80 50.13 50.13 61.27
Managed Lodging
Condominiums Sunday River 400 106.84 39.99 28.66
Condominiums Sugarbush 200 100.05 45.02 27.74
Condominiums Killington 510 142.63 64.18 34.10
Condominiums Mt. Snow 139 113.66 51.14 38.73
Condominiums Sugarloaf 290 148.30 57.54 26.98
Summit Hotel Sunday River 230 65.56 30.05 53.38
Sugarloaf Inn Sugarloaf 42 71.70 35.85 48.34
</TABLE>
Explanatory Notes
(1) Net Average Daily Rate means the portion of lodging
revenue that is received by the resort under its
management contract after deduction of the owner's
portion of revenue, maintenance funds and related
fees.
(2) The number of condominiums under management varies
throughout the year; therefore, the numbers of total
rooms shown are estimates.
(3) Ski Dorm and Snow Cap Inn are open 158 days per year
from November 15 to April 20.
(4) Ski Dorm figures are based on total beds because a
"room" measurement does not apply to this style
lodging.
The Company has no plans to renovate any existing
lodging facilities.
Strategy. The Company intends to pursue a strategic
plan that mirrors the formula successfully employed at
Sunday River and its recently acquired resorts.
Invest in Ski Experience. Management believes that
the most efficient way to increase resort visitation is to
provide the highest quality skiing available. The Company
intends to continuously improve the infrastructure at each
resort, emphasizing modernization and introducing at the SKI
resorts the snowmaking and grooming successfully implemented
at the Company's other ski areas. Management expects to
invest approximately $50 million in improvements in lifts,
snowmaking, grooming and trail design over the next three
years, of which approximately 70% is designated for the SKI
resorts.
Up to half of the Company's three year capital
improvement budget is for investment in lifts, with a
substantial portion of that amount to be used to replace
outmoded equipment at Killington and Mt. Snow. Investment in
lifts achieves two goals. First, it provides increased
carrying capacity, which is critical to attracting and
retaining skiers by reducing or eliminating lift lines and
reducing time spent on lifts. Second, lifts are the most
visible form of improvement to the skiing public and are one
of the Company's centerpieces in promoting new experiences
at its resorts.
Approximately 25% of the three year capital budget
will be invested in snowmaking improvements during fiscal
1997 through 1999, targeting over 90% coverage at all of the
Company's resorts. Expanded snowmaking reduces the Company's
reliance on natural snowfall and increases skiers'
confidence that high quality conditions will be available
notwithstanding weather conditions. The expansion in water
capacity and the improvements in snowmaking equipment at
each of the Company's recently acquired resorts are
indicative of its strategic commitment to delivering the
highest quality skiing experience. Further expansion will be
subject to the Company's ability under applicable laws,
regulations, policies or contractual arrangements to have
access to adequate supplies of water. See
"Business--Environmental Matters." Since their acquisition
by the Company, the Company has increased snowmaking
capacity (measured in gallons per minute) by approximately
300% at Sugarbush, 100% at Attitash/Bear Peak, and 20% at
Mt. Cranmore. As with the planned lift improvements,
approximately 70% of the anticipated snowmaking investment
will be dedicated to upgrading the SKI resorts.
Grooming is also an essential element in producing a
quality skiing surface. Management intends to upgrade
surface quality principally through implementation of its
unique grooming system at all its resorts. This slow grind
process, in which grooming equipment works at half the
normal speed and tilling the snow at twice the normal
depths, improves the consistency of the snow. This grooming
technique takes longer and is, therefore, more expensive;
however, the Company believes the cost is justified by
increased skier satisfaction.
Management also plans to modernize the trail
configuration at the SKI resorts by eliminating cross over
trails and ensuring a higher quality skiing experience. This
is particularly true at the older Killington and Mt. Snow
resorts where trail design is more outdated. Approximately
$2 million in trail improvements are included in the three
year capital program. The Company has also identified
several opportunities to expand certain of the trail systems
at different resorts. Development of additional skiable
terrain will be conditioned upon market demand, availability
of funds and permitting. See "Business -- Existing
Operations" and "Business -- SKI Limited" for a discussion
of expansion possibilities.
The final portion of the on-mountain capital program
is an anticipated $6.5 million investment in new and
improved base facilities. These improvements will focus on
providing additional space for skier development, children's
programs and other family oriented activities and services.
Emphasize Marketing. The Company's marketing program
is designed to attract both day skiers and vacationers.
Approximately 35 million people live within the Company's
day skiing markets, which include the Boston and New York
metropolitan areas. With the acquisition of SKI, the
Company's marketing program will become even more focused on
the population centers located in Massachusetts,
Connecticut, New York and New Jersey. The Company employs a
two-tiered marketing program in which each resort develops a
resort-specific marketing plan, and assists in the
development of an integrated corporate marketing program.
The individual marketing program for each resort focuses on
the unique characteristics of that area and the demographics
of its skier base. The corporate marketing program focuses
on establishing a corporate identity and expanding the
Company's market, both by building the image of New England
skiing and by seeking to attract new participants to the
sport. Corporate marketing includes specific programs, such
as the successful "Perfect Turn" proprietary skier
instructional and development program. Increased loyalty
among day and overnight skiers is promoted through multi-
resort affinity programs like the "Edge Card," which
provides free lift tickets to frequent skiers.
The Company plans to expand upon its existing
marketing efforts by focusing on three distinct age groups
in order to develop new skiers. The first targeted segment
is the emerging echo boom generation, the children of the
baby boom generation who are reaching the age at which
recreational preferences begin to form. The Company will
employ a high-energy multimedia approach tailored to this
age group, emphasizing the fun and excitement of skiing and
snowboarding. The second demographic segment to be pursued
through marketing is the maturing baby boom generation,
which is beginning to generate higher levels of disposable
income. The third segment is the "X" generation. Management
believes this age group (15-32) will respond favorably to
the high energy levels of skiing and snowboarding.
The Acquisition provides the Company with expanded
marketing opportunities and efficiencies. With resorts
reaching from southern Vermont to northern Maine, the
Company believes that it is able to reach a wider
population, due to its resorts' proximity to Northeastern
population centers, and to cross-market its other resorts to
visitors at each resort, capitalizing on skiers' interest in
experiencing a diversity of skiing terrain and resort
accommodations. See "Business -- Marketing."
Control Multiple Revenue Sources. The Company
controls multiple revenue sources at each resort,
diversifying its income base and maximizing return from each
property. For the fiscal year ended July 28, 1996, lift
ticket revenues constituted approximately 46% of the
Company's total ski and lodging revenues while lodging
constituted approximately 19% of total ski and lodging
revenues, with the balance produced by retail, food and
beverage and other operations. The Company operates its own
chain of resort retail ski shops under the name "Crisports,"
which provide ski rentals and repairs, and a complete line
of ski equipment, clothing and accessories. Retail
operations accounted for approximately 8% of ski and lodging
revenues for the fiscal year ended July 28, 1996. Management
expects to expand marketing of Company-specific private
label clothing and accessories lines and increasingly
controlling the production of its private label products,
thus reducing its cost of goods sold. During that period,
other important revenue sources included food and beverage,
which accounted for approximately 11% of ski and lodging
revenues; skier development, which accounted for
approximately 5% of ski and lodging revenues; and summer
activities, which contributed approximately 5% of such
revenues. The remaining 6% is attributable to other
revenues. Management continuously seeks to maximize
contribution by reducing the costs associated with each
source and identifying and exploiting opportunities to grow
these enterprises.
Pursue Cost Savings Opportunities. Management has
identified approximately $1.9 million of net annual cost
savings it believes are achievable following the Acquisition
(see "Pro Forma Financial Data"), resulting from staff
reductions, elimination of a key man life insurance policy,
and elimination of shareholder service costs and related
expenses. Several areas have been identified by the Company
as providing the opportunity for additional cost savings
including centralized purchasing of electricity, fuel, and
food and retail inventory, and the combined entity's
enhanced buying power and desirability as a strategic
marketing partner.
The anticipated savings are based on estimates and
assumptions made by the Company that are inherently
uncertain, though considered reasonable by the Company, and
are subject to significant business, economic and
competitive uncertainties and contingencies, all of which
are difficult to predict and many of which are beyond the
control of management. There can be no assurance that such
savings will be achieved. See "Risk Factors -- Ability to
Achieve Anticipated Cost Savings; Integration of SKI."
Selectively Develop Mountainside Real Estate. In
addition to more conventional slopeside condominium
projects, the Company has developed a prototype year-round
destination slopeside hotel. The hotel is a condominium in
which the Company retains ownership of the core hotel
properties consisting of restaurants, commercial space,
conference facilities and infrastructure facilities.
Quartershare interests (13 weeks evenly divided over the
year) in the hotel suites are sold to individual owners as
residential condominiums. The Company operates the hotel and
provides optional management of the quartershare units for
individual owners. The first of these hotels, called the
"Summit Hotel," was successfully developed in two phases at
Sunday River in 1992 and 1993. The project is fully sold,
and has generated substantial profits for the Company.
The Summit Hotel concept is expected to be the
prototype for the Company's future real estate development
activities, with additional hotels planned for selected
resort locations over the next several years. The number,
timing, and location of projects will be driven by demand,
as determined through an extensive pre-construction
marketing and sales program. Current plans provide for the
development of one hotel at each resort, except Sugarloaf,
during fiscal years 1997 through 2000. Initial cost is
expected to be in the range of $12 to $15 million per hotel.
In addition, subject to demand, management believes that an
additional wing could be added to each hotel approximately
two years after the initial construction at a cost of
approximately $5-$6 million per hotel. See "Recent
Developments" for discussion of recent hotel development.
Expand Off-Season Activities. Each resort has
developed off-season activities in order to improve
utilization of facilities, retain quality employees and
contribute to coverage of fixed operating costs. Sugarloaf,
Killington, Mt. Snow and Sugarbush operate championship golf
courses, with the Sugarloaf course, designed by Robert Trent
Jones, recently being rated one of the top 25 courses in the
country by Golf Digest magazine and Golf magazine. All the
resorts offer a variety of other summer outdoor recreational
opportunities ranging from tennis and mountain biking to
off-site activities such as whitewater rafting, canoeing,
fishing and hiking in the surrounding mountains. Each resort
has also begun to sponsor cultural programs during the
summer. All of these facilities and activities are intended
to draw off-season visitors to the resorts' conference and
convention facilities.
Existing Operations
The formation of the businesses comprising the
Company began when Leslie B. Otten, ASC's chairman and chief
executive officer, acquired Sunday River in fiscal 1981.
During the 1980/81 ski season, Sunday River generated fewer
than 50,000 annual skier visits. In contrast, the Company
generated approximately 589,000 skier visits at Sunday River
in the 1995/96 season, ranking second in New England only to
Killington. Sunday River has achieved steady increases in
skier visits by making significant expansions and
improvements to trails, lifts, snowmaking, grooming and base
lodge facilities and through aggressive marketing. Sunday
River has enhanced profits through strict cost controls, and
by maintaining control over multiple revenue sources at the
resort. In order to provide a bed base to support the higher
levels of skier visits and to generate additional cash flow
to fund capital improvements, in the mid-1980s Sunday River
began a program of limited condominium development. In 1992
and 1993, the Company constructed the Summit Hotel, its
prototype quartershare hotel at the base of the mountain.
The Company recognized an opportunity to replicate
Sunday River's success at other ski resorts, and in 1994 and
1995 acquired the Attitash/Bear Peak, Mt. Cranmore and
Sugarbush resorts. Implementing the strategy successfully
developed at Sunday River, the Company has invested, since
the respective date of acquisition by the Company,
approximately $27.9 million in capital expenditures at these
properties.
The capital improvements at those resorts are
reflected in the following table:
<TABLE>
<S> <C> <C> <C> <C> <C>
Resort New New Lifts New New Trails New Base
Snowmaking Grooming Facilities
Machines
Attitash/Bear 80 million 1 high 2 5 trails Bear Peak Base
Peak gallon speed w/40 acres Lodge
snowmaking detachable
pond quad
Sugarbush 63 million 7 lifts, 6 1 Addition to Gate
gallon including House Base
snowmaking 4 high Lodge;
pond; new speed Renovation to
550-gun detachable Valley House
snowmaking quads Base Lodge
system
Mt. Cranmore New stream 1 high -- 4 New ski shop;
intake & speed Improved summit
variable detachable restaurant
pumping quad 1
capacity improved
lift
</TABLE>
Supported by aggressive marketing programs and
better overall market conditions for the 1995/96 season,
skier visits grew from pre-acquisition levels.
<TABLE>
<CAPTION>
Skier Visits
<S> <C> <C> <C> <C>
% Increase
Resort Pre-Acquis First Year Second Since
ition Year Acquisitio
n
Attitash/Bear Peak 162,602 182,449 201,458 24%
Mt. Cranmore 95,000 125,143 N.A. 32%
Sugarbush* 330,922 373,200 N.A. 13%
</TABLE>
________________________*Managed by the Company beginning
November, 1994 and acquired May, 1995.
Sunday River. Extending over eight interconnected
mountain peaks, Sunday River's facilities consist of 640
acres of skiable terrain and 120 trails. The resort has a
3,100 foot summit and a 2,300 foot vertical drop. Its eight
mountains are serviced by 16 lifts, including three
high-speed detachable quad lifts, five fixed grip quad
lifts, seven triple or double lifts and one surface lift.
The mountains are serviced by four base lodges, including
one located at the top of North Peak. The resort's
on-mountain bed base consists of more than 700 condominium
units, the Summit Hotel's 230 quartershare units, and two
other hotels providing housing for 5,400 skiers on slope.
The off-mountain bed base in greater Bethel, Maine totals
1,500 beds. The resort's transportation network includes the
Silver Bullet Express ski train, which provides rail service
between Portland, Maine, and Bethel, Maine. The resort
operates five ski shops, four full-service restaurants, four
cafeteria-style restaurants, and four bars. The Company also
owns and operates a 67 unit hotel, and manages the Summit
Hotel as well as 704 condominium units.
Sunday River has focused on producing high quality
skiing conditions through emphasizing the quality and
coverage of its snowmaking system, its unique grooming
techniques, attention to trail design and lift capacity.
Sunday River has one of the most modern lift systems in the
Northeast, featuring 16 chairlifts with the most quads of
any Eastern ski area. Sunday River is widely recognized for
its dedication to producing new and different terrain on a
regular basis, thus offering skiers a new and different
experience each season.
Management believes that Sunday River has
significant growth potential. Over 300 acres of land at the
base of the new Jordan Bowl area are earmarked for
development of base facilities and a second Summit Hotel.
There are approximately 10,000 acres of undeveloped land,
either owned by the Company or under option, suitable for
development as skiable terrain. The resort's capital
improvement program provides for up to approximately $10
million in improvements to on-mountain facilities over
fiscal years 1997 through 2001.
Sugarbush Resort. Extending over six mountain peaks,
Sugarbush's facilities consist of 413 acres of skiable
terrain and 111 trails. The resort has a 4,135 foot summit
and a 2,600 foot vertical drop. Its six mountains are
serviced by 18 lifts, including four high-speed detachable
quad lifts, two fixed grip quad lifts, seven triple or
double lifts and three surface lifts. The mountains are
serviced by five base lodges and two summit lodges. The
resort's bed base consists of approximately 1,900 beds
on-mountain and another 2,200 beds within the greater
Warren, Vermont area. The resort operates three ski shops,
four full-service restaurants, four cafeteria-style
restaurants, and four bars. The Company also owns and
operates the 46 unit Sugarbush Inn, manages approximately
200 condominium units and owns and operates a championship
golf course as well as a sports center and a conference
center.
Sugarbush features the three highest mountain peaks
of any single resort in the East (Mount Ellen at 4,135 feet,
Lincoln Peak at 3,975 feet and Nancy Hanks at 3,812 feet).
Its terrain is extremely diverse, featuring steep expert
slopes, both narrow and wide, numerous long intermediate
cruising trails, significant novice terrain as well as
separate teaching and learning areas. The resort offers
picturesque base facilities at both its north and south
peaks. Following its acquisition by the Company in 1994, the
Company invested $16 million in a major capital improvement
program that included four high speed quad chairlifts, a
300% increase in snowmaking capacity and base area
improvements.
Management believes Sugarbush also has substantial
growth potential. The Company has identified approximately
250 to 300 acres of its terrain for development as
additional intermediate terrain. Future demands will require
additional pipeline connections, which are included in the
over $8 million in planned capital improvements to the
resort's on-mountain facilities over fiscal years 1997
through 2001.
Attitash/Bear Peak. Covering two mountain peaks,
Attitash/Bear Peak facilities consist of 214 acres of
skiable terrain and 45 trails. The resort has a 2,350 foot
summit and a 1,750 foot vertical drop. Its two mountains are
serviced by ten lifts, including one high-speed detachable
quad lift, one fixed grip quad lift, four triple or double
lifts and two surface lifts. The mountains are serviced by
two base lodges. The resort has limited on-mountain bed
base; however, it maintains 3,200 beds in its reservation
system and draws from the 16,000 bed Mt. Washington Valley
area. The resort operates two ski shops, two full-service
restaurants, three cafeteria-style restaurants, and two
bars.
Attitash has been fully developed for some time.
Bear Peak is a new area still under development by the
Company. The most recent improvements include a new full
scale base lodge and high speed quad. The resort is widely
recognized as a family-oriented resort presenting a relaxed
atmosphere and manageable size believed to be attractive to
many families vacationing in the Mt. Washington Valley. Due
to its location in the Mt. Washington Valley tourist area,
it has developed a significant number of year-round
activities including an alpine water slide, horseback riding
and features several top level equestrian events.
Management expects to continue to develop terrain at
its new Bear Peak area. A Summit Hotel is under construction
at the resort and scheduled for substantial completion by
February 15, 1997. The resort's capital improvement program
will provide for over $7 million in improvements to
on-mountain facilities over fiscal years 1997 through 2001.
Mt. Cranmore. Mt. Cranmore's facilities consist of
190 acres of skiable terrain, with 36 trails. The resort has
a 1,714 foot summit and a 1,167 foot vertical drop. It is
serviced by six lifts, including one high-speed detachable
quad lift, four triple or double lifts and one surface lift.
The mountain is serviced by two base lodges and a gourmet
restaurant at the summit. The resort has no on-mountain bed
base but is located near the center of Mt. Washington
Valley's 16,000 bed base. The resort operates one ski shop,
one rental shop, two full-service restaurants, two
cafeteria-style restaurants, and one bar. The Company also
manages 30 condominium units.
Mt. Cranmore is one of the oldest continuously
operated ski areas in the United States. Located within
walking distance of the North Conway shopping district, the
mountain offers a unique combination of quality skiing and
immediate access to one of New England's largest retail and
restaurant centers. Although Mt. Cranmore is the Company's
smallest mountain, its location and amenities make it a
unique and very attractive skiing alternative.
The Company owns 800 acres and holds deeded rights
to develop approximately 700 additional acres, at its sole
discretion that are appropriately zoned for development as
skiable terrain.
The Company has entered into the Consent with the
DOJ, which requires the sale of Mt. Cranmore. The Company
has entered into an agreement for the sale of Mt. Cranmore
with closing scheduled on or before November 27, 1996. See
"The Acquisition; Antitrust Matters; Use of Proceeds" and
"Recent Developments."
SKI Limited
SKI's operations consist of the Killington, Mt.
Snow/Haystack, Waterville Valley and Sugarloaf ski resorts.
SKI acquired Mt. Snow in 1977 and Haystack, Waterville
Valley and its initial 51% interest in Sugarloaf in 1994,
and the balance of the outstanding Sugarloaf stock in
August, 1996. SKI's resorts comprise 2,439 acres of skiable
terrain (of which approximately 77.6% are covered by
snowmaking equipment), 465 trails, and 70 lifts, of which
seven are high-speed detachable quads or gondolas. The
Company believes that since the late 1980s, SKI's resorts
have been characterized by a lack of significant capital
investment, resulting in stagnant or declining skier visits,
revenues, net income and EBITDA. Nonetheless, the resorts
remain some of the finest in the Northeast, and the lack of
capital investment over the last half decade presents a
unique opportunity for the Company to maximize the value and
earnings potential of those resorts through strategic
capital investment and rigorous management techniques
instituted at the Company's other recently acquired
facilities.
Killington Resort. Killington is a six-mountain
resort, with a 4,241 foot summit and a 3,150 foot vertical
drop. Killington's ski terrain is comprised of 918 acres
with 165 trails and 20 lifts consisting of one gondola,
seven quad lifts, ten triple or double lifts and two surface
lifts. The resort's base facilities include seven
full-service base lodges, including one located at the top
of Killington Peak. Killington also owns and operates eight
retail shops, six rental and repair shops, a travel and
reservation agency, an 87-room motor lodge in Killington
Village and a low-voltage television station. There is
lodging capacity of 3,300 beds at the base of the mountains
and approximately 12,000 beds in the greater Sherburne area.
Killington is a year-round resort, offering complete golf
amenities including an 18-hole golf course, a golf school, a
pro shop and a driving range, as well as a tennis school.
Killington is the largest ski resort in the
Northeast. Its size and diversity of skiing terrain make it
attractive to all segments of the market. The Killington
access road is a highly developed retail, lodging and
restaurant center known for its retail shopping, fine dining
and night life. Surveys indicate that Killington is the most
widely recognized of the Company's resorts.
Management believes Killington's facilities can be
enhanced through updating its snowmaking trail and lift
systems and developing the real estate potential at its base
area. The Company plans major on-mountain capital
improvements over fiscal years 1997 through 2001. Management
believes the Killington base area presents superior
potential for development of a Summit Hotel. The Company has
reached an agreement in principle with the State of Vermont
to trade Company-owned land at higher elevations for base
area land owned by the State. The agreement is subject to
legislative approval and no assurances can be given
regarding that approval. As a result of the land trade, the
Company will own substantial undeveloped real estate at the
Killington base, which the Company may develop, subject to
receipt of necessary permits and obtaining necessary
financing commitments. The two tracks of land are of
approximately equivalent value in their existing undeveloped
condition. The land trade has the added value of resolving
a longstanding dispute with the Vermont Agency of Natural
Resources and certain environmental groups regarding
possible development of the land at higher elevations. The
Company has agreed that the land it is trading will not be
developed in exchange for a commitment from the State of
Vermont that the land in the base area does not constitute
necessary black bear habitat. Historically the black bear
habitat issue has impeded development of that real estate.
That barrier to development will be eliminated if the
exchange is consummated. Although water supplies are
adequate for current operations, management is negotiating
to acquire the additional water supplies needed to
accommodate the Company's snowmaking expansion plan. No
assurances can be given regarding the results of those
negotiations.
Mount Snow/Haystack Resort. Mount Snow/Haystack
resort covers two mountain peaks and has a 3,580 foot summit
and a 1,700 foot vertical drop. The facilities consist of
130 trails and 751 acres of skiable terrain, serviced by 24
lifts. On-mountain facilities include six full-service base
lodges, several retail shops, six rental and repair shops, a
pro shop, a country club and a nightclub. Mount Snow also
headquarters the Company-owned "Original Golf School," and
operates an 18-hole golf course, golf schools in Vermont,
Ocean City, Maryland and Crystal River, Florida, a mountain
bike school, a 92-room hotel, and a low-voltage television
station. Its bed base consists of 890 on-mountain beds and
7,821 beds in the greater Dover area.
Mount Snow is the southernmost of the Company's
resorts. Located in the Brattleboro, Vermont area, it is a
convenient day drive from both New York City and Boston. A
large percentage of Mount Snow's skier base derives from
Massachusetts, Connecticut and New York. The resort consists
of two separate mountains, separated by approximately six
miles, which have been combined under single management.
Together, the two mountains are serviced by one of the
Northeast's most extensive lift systems.
Management believes Mt. Snow's development potential
includes reconfiguration of lifts and trails to increase the
mountains' carrying capacity and interconnecting the Mt.
Snow and Haystack areas. Additional property rights and
permitting will be required in order to establish that
connection, and no assurance can be given that this
objective can be achieved. A petition is pending before the
Vermont Water Resources Board to reclassify a section of a
stream running between the Haystack area and the Mt. Snow
area. This reclassification has the potential to restrict or
prevent construction activities to connect the two areas. No
assurance can be given regarding the outcome of this
proceeding. The current capital program provides for
substantial expenditures to improve outdated facilities and
reconfigure and expand portions of the lift system over the
next five years. The Mt. Snow base area has been identified
by management as a potential site for construction of a
Summit Hotel project. Management considers water supplies to
be adequate to meet existing needs. Optimal snowmaking and
future development will require additional water sources.
The Company has identified potential additional sources of
water believed to be adequate for Mt. Snow's anticipated
needs; however, there can be no assurance that the requisite
permits can be obtained.
Sugarloaf Resort. Sugarloaf is a single mountain
with 1,400 acres of terrain, 14 lifts and 116 trails
covering 515 acres. There are approximately 895 acres of
off-trail skiing terrain. The mountain has a 4,237 foot
summit and a 2,820 foot vertical drop. Sugarloaf operates a
year-round conference center and nordic ski facility. It
leases, on a long term basis from the Town of Carrabassett
Valley, an 18-hole golf course designed by Robert Trent
Jones, Jr., which is ranked by Golf Digest and Golf magazine
as one of the top 25 courses in the United States. The
Original Golf School, which was developed at Mount Snow, was
expanded during fiscal year 1995 to include Sugarloaf.
Sugarloaf's slopeside ski village consists of its base
lodge, two hotels, banquet facilities for 800 people,
retail, rental and repair shops, a sports and fitness club,
900 condominium units, rental homes, shops, restaurants and
an extensive recreational path network.
Sugarloaf is located in Carrabassett Valley, Maine.
Its remote location has driven its development as a
self-contained destination resort. The resort offers one of
the largest ski-in/ski-out base villages in the Northeast,
containing numerous restaurants, retail shops and an
abundance of lodging. Aside from its base development,
Sugarloaf is widely recognized for its challenging terrain,
including its snowfields, which represent the only
lift-serviced above treeline skiing in the Northeast.
Sugarloaf is a destination resort for many Maine skiers.
Although it draws from areas as distant as New York, New
Jersey and Pennsylvania, a significant segment of its skiers
are Maine-based.
Waterville Valley. Waterville Valley's facilities
consist of two mountain peaks with 255 acres of terrain,
including a separate 31 acre snowboard mountain, a 4,004
foot summit and 2,020 foot vertical drop, 54 trails and 13
lifts. Waterville operates a planned ski community with
three lodges, a retail shop, a rental shop, and a repair
shop. The resort has a year-round Base Camp Adventure Center
offering mountain bikers, cross country skiers and hikers
access to 60 miles of trails in the White Mountain National
Forest. Other resort amenities include an ice skating arena,
golf course, tennis center, sports and fitness center, and
horseback riding. Waterville Valley's Conference Center has
17,000 square feet of meeting space and provides meeting and
banquet facilities for up to 1,000.
Waterville Valley has long been recognized as one of
the largest ski resorts in New Hampshire. Its location
immediately adjacent to Interstate 93 (a major north-south
thoroughfare for skiers) makes it one of the most accessible
of the Company's resorts. The area is adjacent to a
picturesque New England village which contains most of the
area's dining, shopping and entertainment. The village
square and resort are serviced by a shuttle, and offer an
integrated vacation experience characterized by both
challenging skiing at one of New Hampshire's largest resorts
and an immediately available off-mountain New England
village offering some of the finest amenities in the area.
Management believes the resort's proximity to the
Boston market is a major underdeveloped asset, and that the
resort has the potential to develop a larger day skiing base
from that market through improved on-mountain facilities and
aggressively marketing in the Boston metropolitan area.
The Company has entered into the Consent with the
DOJ, which requires the sale of Waterville Valley. The
Company has entered into an agreement for the sale of
Waterville Valley with closing scheduled on or before
November 27, 1996. See "The Acquisition; Antitrust Matters;
Use of Proceeds" and "Recent Developments."
Marketing
Staff. The Company maintains a full-time marketing
staff of 117 persons. Each resort has its own marketing
director who reports to the Company's vice president of
marketing. The staff at each mountain is responsible for
development of a resort-specific marketing plan, as well as
participating in combining all of the resorts' marketing
programs into an overall marketing program designed to
develop a corporate branded identity. Management regularly
sponsors marketing seminars and planning sessions designed
to maximize the staff's professionalism and effectiveness.
Strategy. The Company has established a dedicated
group within its corporate marketing department, whose
objective is to increase participation in the sport by
promoting the fun and excitement of skiing and snowboarding.
The group is developing an innovative ad campaign targeted
to potential skiers and snowboarders in three broad customer
profiles. The first two demographics are the emerging echo
boom generation, and the "X" generation. Over the next five
to ten years, management believes these generations of over
114 million younger Americans are going to be of the prime
age for making what often become life-long recreational
choices. The Company's marketing initiative is a high energy
music and video ad campaign that is coupled with national
and regional strategic advertising alliances intended to
introduce skiing and snowboarding specifically to these
generations by creating an image for skiing and snowboarding
that is up-to-date and consistent with the generational
mood, style and attitude. The third demographic is an older
group (beginning in the early 30s) that is just beginning to
earn sufficient disposable income that enables more
expensive recreational pursuits. A similar marketing
campaign focusing on the fun and excitement of skiing has
been developed for this market segment, as well, using
images most closely aligned with its demographic profile.
The Company's resorts are located within manageable
drive times from major Eastern metropolitan areas. The
Company plans to highlight its close proximity to these
population centers through its marketing program.
The individual resort marketing programs are divided
between those for the properties that attract a broader
spectrum of skiers and snowboarders and those that appeal to
more focused groups. The larger resorts market to all
visitor segments, whether defined by skiing ability,
affluence, marital status or family size, with each resort
marketing its unique attributes. Killington is recognized
for its size and diversity; Sunday River emphasizes its snow
conditions, lift capacity and consistently new terrain;
Mount Snow will promote its proximity to metropolitan New
York and Boston; Sugarloaf is known as a destination resort
with superior lodging, a relaxed rural Maine image and big
mountain skiing; and Sugarbush promotes its classic,
challenging terrain combined with its substantial new
investment in lifts and snowmaking. Attitash/Bear Peak has
distinct market appeal; located in the heart of the Mt.
Washington Valley, Attitash/Bear Peak draws from its 16,000
bed lodging base and provides a family orientation,
leveraging proximity to the North Conway retail and
restaurant district, a prime location for families with
non-skiers.
Programs. The Company is subject to impulse consumer
decisions to visit other resorts and ski areas. The Company
has designed and implemented a series of initiatives to
create a loyal customer base and increase the number of
seasonal visits. Chief among these has been:
Aggressive marketing of the corporate message.
Customer affinity programs.
School, group and business affiliations.
Innovative skier development and services program.
Strategic marketing alliances.
Data based marketing programs.
Aggressive marketing of the corporate message. The
Company consistently focuses marketing messages on snow
quality, terrain, on-mountain facilities and excitement.
Beginning with midsummer mailings and continuing through
seasonal TV and radio advertisements, this message enables
the resorts to build a branded image relationship with
consumers. An example of the Company's branded image is the
"skycam," a unique marketing program that places real-time
aerial views of resorts on selected television stations in
the market to graphically depict quality skiing conditions
to potential skiers in the target population centers where
weather conditions may not be suggestive of skiing.
Customer affinity programs. The Company is a leader
in the development of "frequent skier" programs. These
programs allow skiers to earn points through the purchase of
lift tickets which can be exchanged for free lift tickets.
The Company will introduce an enhanced affinity program that
allows skiers to earn points at all Company resorts. The
Company has developed a number of season pass programs
allowing individuals, families, seniors and students to
purchase passes that provide unlimited access during
designated time periods.
School, group and business affiliations. The Company
will maintain a full time staff at each resort dedicated to
developing special school, group and business affiliations.
The school programs bring thousands of students to the
resorts during five week-long programs in January and early
February. These programs have proved to be an effective way
of building name recognition and brand loyalty among the
school-age populations. Surveys suggest that many of these
students return to the resort with their families. Ski
groups have emerged as the fastest and most profitable way
of increasing midweek business. The group sales department
provides year-round support to group leaders through the
Unites States and Canada. Through an extensive Spring and
Fall touring program, the resorts recruit new groups and
potential group leaders. The group sales office provides
technical support to potential group leaders and helps them
develop and support their groups. The Company is developing
the European group market by forming contacts with the major
group vendors in England. Business affiliations are
developed and maintained through corporate tickets programs,
whereby participating businesses are given an opportunity to
provide their employees with incentive-based pricing.
Innovative skier development and services
programs. Management believes that the Company has been a
leader in the development of skier development and services.
The Guaranteed Learn to Ski program was one of the first
skier development programs to guarantee that a customer
would learn to ski in one day. The success of this program
led to the development of "Perfect Turn," which management
believes is the first combined skier development and
marketing program in the industry. Perfect Turn ski
professionals receive specialized training in coaching,
communication and skiing. The program uses ski pros to build
relationships between improved skiing technique, special
resort programs and fun. Perfect Turn is currently licensed
to five resorts in the United States and Canada. Management
believes that it is the only skier educational program in
the industry to be licensed to other resorts. In the
1995/1996 season, the program began to develop special hard
goods marketing programs designed to allow customers to test
ride skis and snowboards with professionals, purchase their
equipment from a professional and receive ongoing product
and technical support through Perfect Turn. This program
will be expanded to all of the Company's resorts.
Strategic marketing alliances. Management expects to
establish advertising sponsorships with several key
sponsors, whereby a sponsor in a given product category is
designated as the official provider of that product category
for the Company's resorts. The Company has been approached
by numerous high quality sponsors, and has entered into
shared promotional advertising with Jeep/Eagle and Coca
Cola, among others. Industries under active consideration
for such sponsorships include automobile, sport utility
vehicle, soft drink, juice drink, credit card, financial
services, fuel dealers, communications, hair care, fast
food, cereal manufacturers and film companies.
Data based marketing programs. The Company maintains
a well-developed data base of frequent skiers and lodging
consumers. The Company has expanded its management systems
for the specific purpose of developing new consumer
profiles. Through the use of this technology, management
believes that the marketing departments have been able to
substantially increase the effectiveness of the Company's
marketing programs. The Company has seen immediate cost
savings and increased profits through the use of targeted
"smart mailings," which are designed to provide the right
consumer with the right vacation package offer at the right
time.
Real Estate Development
Strategy. The Company views selective real estate
development as a natural outgrowth of the on-mountain
development of its resorts. Management believes that there
is tremendous opportunity for synergy between real estate
development and the ski experience. Development of real
estate provides a three-fold benefit to the ski resorts.
First, successful real estate development generates profits
that have been historically reinvested in resort
infrastructure. Second, signature properties like the Summit
Hotel at Sunday River create an image for the resort that
both attracts skiers to the area and provides a valuable
marketing opportunity. Finally, real estate development
enhances the bed base at the mountain, thereby contributing
directly to maintaining, and increasing, skier days.
The Company has traditionally taken a conservative
approach toward real estate development and expects to
continue this conservative philosophy. Throughout the 1980s
and early 1990s, management required substantial levels of
pre-construction sales before commencing construction of any
of its projects, whether traditional condominiums or its
Summit Hotel interval ownership project at Sunday River,
providing a test of the market's appetite for the proposed
product, while reducing risk to the Company and facilitating
development financing.
History. The Company's real estate development
efforts to date have focused on Sunday River, and have
consisted of the construction of condominiums and the Summit
Hotel. A 105-unit quartershare hotel project is currently
under construction at Attitash. See "Recent Developments."
Development at the Company's other recently acquired resorts
is now in the planning and permitting stages.
Between 1992 and 1993, Sunday River successfully
developed the Summit Hotel, a prototype year-round
destination slopeside hotel. The hotel is a condominium
consisting of six types of space: real estate, commercial,
conference facilities, owners' amenities, infrastructure
facilities and common space. Sunday River retains ownership
of the core commercial and restaurant space, conference
facilities and infrastructure facilities. The real estate
space consists of the individual hotel condominiums, which
are sold in quartershare interests. A quartershare interest
is an interval ownership concept providing an owner with the
right to use the unit for 13 weeks evenly divided over the
year. There are six basic room designs that combine to
create over 21 different condominium possibilities. The
units can be configured to the desires of each purchaser.
Quartershare owners participate in the Resort
Condominium International ("RCI") exchange program, through
which owners can exchange their right to use a Summit
quartershare for interval stays at RCI properties located at
resorts around the world. Sunday River operates the hotel
and provides optional management of the quartershare units
for individual owners through a management agreement with
Sunday River under which its ski and lodging operations
receive up to 45% of the rental revenues.
There are eight conference facilities of varying
sizes ranging from relatively small 500-square foot function
rooms to a 5,900 square foot ballroom. Owner amenities
consist of membership in the Gold Crown Club, which provides
a range of exclusive goods and services to quartershare
owners, as well as private owner lounges, a full-size
swimming pool, tennis courts and private locker rooms and
changing facilities.
Marketing. Management uses a unique marketing
program in which the hotel is sold in five phases. Each
phase relates to a specific level of hotel development and
targets a specific level of sales. Inventory of units is
controlled and released on an incremental basis over the
first four phases. The sales effort targets middle income
buyers, with quartershare interests historically being
offered at prices ranging from $25,000 to $45,000. Annual
common area maintenance charges are approximately $1,500 per
quartershare. Management believes that the presence of large
numbers of potential buyers at the resort within targeted
income categories has allowed the quartershare development
to sell with relatively low marketing costs. Management
believes that this marketing program can be successfully
implemented in connection with real estate development
activities at the Company's other resorts.
Future Development. The Company is considering
developing hotels at its other resorts using the Summit
Hotel prototype, based upon its assessment of the market
demand. Initial cost is expected to be in the range of $12
to $15 million per hotel. In addition, management believes
that an additional wing could be added to each hotel,
subject to market demand, approximately two years after the
initial construction at a cost of approximately $5-$6
million per hotel.
The Company has commenced construction of a hotel at
the Attitash/Bear Peak resort. See "Recent Developments."
Summit Hotels are in various stages of planning at several
other resorts. At Sugarbush, the project is in the
pre-construction marketing and sales stage while permits and
all land rights are being finalized. Local approvals have
been secured for the new Jordan Bowl Hotel at Sunday River,
with final state approvals expected by management during
early 1997. Locations for Summit Hotel projects have been
identified at Killington and Mt. Snow resorts. Each of those
locations is on property currently owned by the resort, and
the permit process for hotel facilities and at each resort
is underway. The Company will evaluate whether and when to
begin each project based upon market demand. Management
believes that the lack of recent real estate development at
Killington, Mt. Snow and Sugarbush makes those locations
particularly attractive markets for Summit Hotel-type
projects.
Management intends to limit development risk by
implementing pre-construction sales programs at each
location prior to commencement of construction. The
financing for each project is expected to be arranged only
after pre-construction sales targets are achieved.
Other than with respect to Attitash/Bear Peak, the
Company has no agreements, arrangements or understandings
with respect to financing the development of any of the real
estate projects discussed herein. Any future development
would be subject to, among other things, the Company's
ability to obtain the necessary financing and all necessary
permits and approvals. No assurance can be given that the
Company will develop successfully any additional properties
or, if completed, any such properties will be successful.
Sunday River is also engaged in the construction of
a limited number of townhouse condominium projects. During
1996-1998, the Company's objective is to sell eight
condominiums each year at Sunday River. Each condominium is
planned to be offered for approximately $225,000.
Mountain Operations
Mountain operations consist of four basic
components--snowmaking, grooming, lift operation and base
operations. Each of these segments of mountain operations is
described in summary fashion below.
Snowmaking. Management believes that the Company
operates some of the world's largest snowmaking facilities.
The Company intends to introduce to each of its resorts the
snowmaking process refined at its Sunday River resort over
the past 20 years. The Company has designed, engineered and
produces its own snowmaking guns, which it believes adds
substantially to the quality of snow made at Sunday River.
Through its engineering department, the Company has
developed a snowmaking system that combines hardware
developed by the Company with a computer control system that
monitors weather conditions throughout the resort's eight
mountains and automatically programs the pressure and water
volume necessary in order to produce consistent, high
quality snow. Management believes the snow produced at
Sunday River is consistently dry and looks and skis like
lightly packed natural snow and is qualitatively different
from snow produced at other resorts.
Grooming. In addition to producing high quality
snow, the Company emphasizes careful grooming in order to
maintain a high quality skiing surface. The Company's modern
fleet of groomers located at each of its facilities employ a
unique "slow tilling" grooming technique in which grooming
equipment operates at one-half the normal speed, increasing
the depth to which the snow is groomed and thereby
replicating the feel of natural snowfall and extending the
useful life of the manufactured snow.
Lift Operation. Each of the Company's resorts
employs qualified, well-trained engineers and lift operators
to maintain the Company's extensive, modern lift systems.
Under the direction of the Company's Senior Vice President
of Mountain Operations, the Company's substantial investment
in lifts is continually protected by on-ongoing maintenance
programs and careful operation.
Base Operations. Under the control of the Director
of Base Operations, all of the Company's retail, food and
beverage, rental and skier development area operations are
administered on a coordinated basis. The Company's
philosophy is to provide consistently high-quality service
to its customers, while enabling each resort to exercise its
own creativity in developing and administering base
facilities in a fashion that best suits its needs and its
customers' desires. Its business objectives with respect to
these facilities are to retain full control over them, to
impose rigorous cost controls and to creatively and
aggressively seek to enhance revenues.
Competition
The Company faces strong competition from ski areas
operating in the Northeast (which consists of Maine, New
Hampshire, Vermont, Massachusetts, Connecticut and New York)
competing for day and vacationing skiers, destination ski
resorts competing on a national basis for vacationing skier
visits, and non-ski related leisure and recreation
destination resorts.
On a regional basis, the Company's major markets are
the major population centers in the Northeast, particularly
eastern Massachusetts, northern Connecticut, New York and
northern New Jersey. For example, skier origin data
collected at Sunday River indicates that approximately 43%
of its weekend skiers reside in Massachusetts. Similar data
collected at Killington and Mt. Snow indicate that
approximately 23% and 35% of their weekend skiers,
respectively, reside in New York, with high concentrations
from Massachusetts, Connecticut, New Jersey and Vermont, as
well.
In order to cover the high fixed costs of operation
associated with the ski industry, the Company must maintain
its regional skier base. The Company's ability to price
product is directly impacted by the variety of acceptable
alternatives presented to skiers in the Northeast region.
The most significant competitors are resorts that have
established a niche market or loyal clientele, such as
mountains recognized as family-friendly resorts. Also, many
resorts have made significant capital improvements, keeping
them on the edge of the sport's technology and positioning
them as keen competitors. Many of the Company's competitors
have exhibited both the desire and ability to make
on-mountain capital improvements and to develop real estate,
thus sustaining competitive pressure in the region. Although
many smaller areas offer fewer amenities and less diversity
of terrain, often they are competitively priced and draw
from nearby population centers, which form a part of the
Company's market as well.
On a national basis, the Company's resorts compete
with well-capitalized, professionally managed resorts
offering a variety of amenities. The Company, as well as
other nationally-recognized resorts, will be competing on a
broader scale for recreational and leisure dollars. These
resorts offer a variety of activities and amenities
including luxury accommodations, gourmet restaurants,
extensive retail shops, spas, skating rinks and a variety of
non-skiing activities. For example, many Western resorts are
making major investments in non-alpine activities such as
snowmobile trails, horseback riding, skating and retail and
performing arts centers. Although Eastern skiing draws few
skiers from Western regions, the Company competes with
Western resorts to attract and retain Mid-Western,
Mid-Atlantic and Northeast skiers. The Company also competes
with large, well-capitalized Canadian resorts for the over
seven million annual Eastern Canadian skier visits.
Employees and Labor Relations
The Company employs approximately 7,000 employees at
peak season and approximately 2,000 persons full time. None
of the Company's employees are covered by any collective
bargaining agreements. The Company believes it has good
relations with its employees.
Environmental Matters
The Company's resorts are subject to a wide variety
of federal, state and local laws and regulations relating to
land use, water resources, sewage disposal, and the use,
storage, discharge, emission and disposal of wastes, and
other environmental matters. While management believes that
the Company's resorts are presently in material compliance
with all land use and environmental laws, failure to comply
with such laws could result in the imposition of severe
penalties or restrictions on operations by government
agencies or courts that could adversely affect operations.
The Company has recently completed Phase I environmental
assessments at all eight resort properties which were
undertaken voluntarily by the Company prior to consummating
the Acquisition. The reports identified areas of potential
environmental concern, including the need to upgrade
existing underground storage tanks at several facilities and
to remediate potential petroleum releases. The reports did
not identify any environmental conditions or non-compliance
at any of the resorts, the remediation or correction of
which management believes would have a material adverse
impact on the business or financial condition of the Company
or results of operations or cash flows. No additional phases
have been scheduled. The Killington resort has been
identified by the U.S. Environmental Protection Agency
("EPA") as a potentially responsible party at two sites
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund").
Killington has entered into a settlement agreement with EPA
at one of the sites, the Solvents Recovery Service of New
England Superfund site in Southington, Connecticut.
Killington recently rejected an offer to enter into a de
minimis settlement with EPA for the other site, the PSC
Resources Superfund site in Palmer, Massachusetts. The
Company believes that its liability for these sites,
individually and in the aggregate, will not have a material
adverse effect on the business or financial condition of the
Company or its results of operations or cash flows.
The Company believes it has all permits, licenses
and approvals from governmental authorities material to the
operation of the resorts as currently configured. The
Company has not received any notice of material
non-compliance with permits, licenses or approvals necessary
for the operation of its properties.
The capital programs at the resorts will require
permits and approvals from certain federal, state and local
authorities. The Company's operations are heavily dependent
upon its continued ability, under applicable laws,
regulations, policies, permits, licenses or contractual
arrangements, to have access to adequate supplies of water
with which to make snow and service the other needs of its
facilities, and otherwise to conduct its operations. There
can be no assurance that new applications of existing laws,
regulations and policies, or changes in such laws,
regulations and policies will not occur in a manner that
could have such an effect, or that important permits,
licenses or agreements will not be canceled, non-renewed, or
renewed on terms materially less favorable to the Company.
Major expansions of any one or more resorts could require
the filing of an environmental impact statement with the
U.S. Forest Service under NEPA if it is determined that the
expansion has a significant impact upon the environment.
Although the Company has consistently been successful in
implementing its capital expansion plans, no assurance can
be given that necessary permits and approvals will be
obtained. A petition is pending before the Vermont Water
Resources Board to reclassify a section of a stream running
between the Haystack area and the Mt. Snow area. This
reclassification has the potential to restrict or prevent
construction activities to connect the two areas. No
assurance can be given regarding the outcome of this
proceeding.
Legal Proceedings
The Company currently and from time to time is
involved in litigation arising in the ordinary course of its
business. The Company does not believe that it is involved
in any litigation that will, individually or in the
aggregate, have a material adverse effect on its financial
condition or results of operations or cash flows.
Each of the resort operating companies have pending
and are regularly subject to suit with respect to personal
injury claims related principally to skiing activities at
each resort. Each of the operating companies maintains
liability insurance that the Company considers adequate to
insure claims related to usual and customary risks
associated with the operation of a ski resort. SKI operates
a captive insurance company authorized under the laws of the
State of Vermont which provides liability and workers'
compensation coverage for the SKI resorts located in
Vermont. The Company has received confirmation from an
internationally recognized actuarial firm that the insurance
company's reserves are adequate to cover losses and loss
adjustment expenses associated with all claims made through
July 28, 1996.
Properties
The Company's operations are wholly dependent upon
its ownership or control over the real estate constituting
each resort. The following summarizes non-owned real estate
critical to operations at each resort. Management believes
each of the following leases, permits or agreements is in
full force and effect and that the Company is entitled to
the benefit of such agreements.
Sunday River leases 1,500 acres, which constitute a
substantial portion of its current skiable terrain, under a
50 year lease terminating on October 14, 2030. The lease
renews automatically thereafter on a year-to-year basis
unless terminated by either the lessor or lessee.
The Sugarbush Resort has a license to use 1,915
acres of United States Forest Service land pursuant to a
special use permit dated May 17, 1995. The permit has a 40
year term expiring April 30, 2035.
Mt. Snow leases 1,315 acres which constitute a
substantial portion of its skiable terrain. Of this total,
approximately 900 acres is occupied by Mt. Snow pursuant to
a special use permit granted by the United States Forest
Service dated November 29, 1989. The permit has a 40 year
term expiring December 31, 2029.
Mt. Snow also leases 252 acres which constitute a
portion of its skiable terrain from the Town of Wilmington,
Vermont. The lease expires November 15, 2030. There are no
renewal options. In addition, Mt. Snow leases approximately
200 acres from Sargent Inc. pursuant to a lease expiring
March 31, 2025. The lease can be renewed for an additional
30 year term. Mt. Snow also has the option to purchase the
leased property and a right of first refusal in the event
Sargent Inc. receives a bona fide offer for the leased
property.
Attitash/Bear Peak uses 279 acres of its skiable
terrain pursuant to a special use permit from the United
States Forest Service dated July 19, 1994. The permit has a
40 year term expiring June 19, 2034. In addition,
Attitash/Bear Peak leases its parking facilities under a
lease expiring December 31, 2003. Attitash/Bear Peak has the
option to purchase this leased property at any time during
the lease term. The lease contains no renewal provisions.
Killington leases 2,500 acres from the State of
Vermont. A substantial portion of that property constitutes
skiable terrain. The lease is for an initial 10 year term
commencing in 1960 and contains nine 10-year renewal
options. Killington exercised the renewal option in 1970,
1980 and 1990. Assuming continued exercise of Killington's
renewal options, the lease will ultimately expire in the
year 2060. The lease is subject to a buy-out option retained
by the State of Vermont. At the conclusion of each 10 year
term (or extended term), the state has the option to buy out
the lease for an amount equal to Killington's adjusted
capital outlay plus 10% of the gross receipts from the
operation for the preceding three years. "Adjusted Capital
Outlay" means total capital expenditures made by the tenant
from 1956 to the date of exercise of the option, depreciated
at 1% per annum, except that certain non-operable assets
depreciate at 2% per annum. This buy-out option will next
become exercisable in the year 2000. If exercised today, the
exercise price would be approximately $72 million. Although
the Company has not had direct confirmation from Vermont
state officials, it has no reason to believe that the State
intends to exercise the option in 2000.
The Sugarloaf resort leases the Sugarloaf Golf
Course from the Town of Carrabassett Valley, Maine pursuant
to a lease dated June 3, 1987. The lease term expires
December, 2003. Sugarloaf has an option to renew the lease
for an additional 20 year term. In addition, Sugarloaf has
an option to purchase the leased property at any time on or
prior to June 3, 1997 at a purchase price equal to
approximately $1.4 million, plus accrued and unpaid interest
at the rate of 8% per year from 1984 (the commencement of
Sugarloaf's original lease), plus the capital construction
costs of any club house constructed on the premises, less
all lease payments made to the Town, for a total estimated
price of $2.7 million. Management has made no determination
regarding exercising the option or extending the lease.
Waterville Valley uses approximately 790 acres,
which constitute a major portion of its skiable terrain,
pursuant to a Special Use Permit granted by the United
States Forest Service. The special use permit expires
October 31, 2034.
94
MANAGEMENT
The following table sets forth information with
respect to the current director and executive officers
of the Company.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Leslie B. Otten 47 Sole Director, President
and Chief Executive
Officer
Burton R. Mills 42 Senior Vice President
(Mountain Operations)
Thomas M. Richardson 42 Chief Financial Officer,
Treasurer and Senior Vice
President (Finance)
Christopher E. Howard 39 Chief Administrative
Officer, General Counsel
and Senior Vice President
(Administration)
G. Christopher Brink 42 Senior Vice President
(Marketing and Sales)
Allen Wilson 43 President (Sugarbush)
Philip T. Gravink 60 President (Attitash/Mt.
Cranmore)
Jolan F. Ippolito 49 Vice President of
Corporate Affairs (Sunday
River)
Leslie B. Otten, Director, President and Chief
Executive Officer. Mr. Otten joined Sherburne
Corporation, then the parent company of Sunday River,
Killington and Mount Snow, in 1970. Mr. Otten joined
Sunday River in 1972 as Assistant General Manager and
became General Manager of Sunday River in 1974. In 1980,
Mr. Otten purchased Sherburne's 90% interest in Sunday
River and acquired the remaining 10% interest from the
minority shareholders in 1989. He has been the sole
director, President and Chief Executive Officer of the
Company (or its predecessor) since 1980. Mr. Otten owns
96% of the outstanding stock of the Company. Mr. Otten
is a director of the Portland Museum of Art, a director
of the Maine Chamber and Alliance, a director of Maine
Handicap Skiing, a trustee of Gould Academy and a
director of Project Opportunity.
Burton R. Mills, Senior Vice President of
Mountain Operations. Mr. Mills has spent his entire 22
year career with the Company (or its predecessor),
serving in his present capacities since 1993. Prior
thereto, he served as Vice President of Mountain
Operations.
Thomas M. Richardson, Chief Financial Officer,
Treasurer, Senior Vice President (Finance). Mr.
Richardson joined the Company in the spring of 1993, and
has served in his present capacity since then. Prior to
joining the Company, from 1992 to 1993, he worked at
Loon Mountain Recreation Corporation as treasurer and
director of food, beverage and tickets. Prior thereto,
Mr. Richardson worked at SKI from 1983 to 1992 as an
internal auditor, accounting manager and division
controller.
Christopher E. Howard, Chief Administrative
Officer, General Counsel and Senior Vice President
(Administration). Mr. Howard joined the Company in
October, 1996 after serving as its principal outside
legal counsel. From 1982 to October, 1996, Mr. Howard
practiced with Pierce Atwood, a Portland, Maine law
firm, where he was a partner since 1988.
G. Christopher Brink, Senior Vice President
(Marketing and Sales). Mr. Brink has been with the
Company in his present capacity since 1993. Prior to
joining the Company, Mr. Brink served as Vice President
for group sales and conference sales and Vice President
of Marketing at Stratton Corp., Stratton, Vermont.
Allen Wilson, President (Sugarbush). Mr. Wilson
has served as President (Sugarbush) since 1994. Prior to
assuming that position, he served in various capacities
for SKI, including Vice President and Controller of
Killington (1992-94) and as Chief Financial Officer of
Bear Mountain, Ltd. (1988-92).
Philip T. Gravink, President (Attitash/Mt.
Cranmore). Mr. Gravink joined the company at the time
Attitash was acquired in July of 1994, continuing in the
same position he had held for the Mount Attitash Lift
Corporation. Prior to joining Mount Attitash Lift
Corporation in 1992, he served as Interim Director of
skiing for the State of New Hampshire, overseeing the
Cannon and Mount Sunapee ski resorts. Prior to that he
was President and Chief Executive Officer of Loon
Mountain Recreation Corporation for 14 years.
Jolan F. Ippolito, Vice President of Corporate
Affairs of Sunday River. Ms. Ippolito joined Sunday
River in January of 1982, serving in her current
position since 1993. Ms. Ippolito held various positions
at the resort prior thereto.
Executive Compensation
The following table sets forth the annual
compensation for the fiscal year ended July 28, 1996 of
the Company's President and Chief Executive Officer and
its other executive officers who received salary and
bonuses in excess of $100,000 for the fiscal year ended
July 28, 1996 from the Company. None of the Company's
officers is subject to an employment agreement with the
Company.
1996 SUMMARY COMPENSATION TABLE
</TABLE>
<TABLE>
<CAPTION>
Annual Compensation
Name And Principal Position Salary Bonus
<S> <C> <C>
Leslie B. Otten,
President and Chief Executive Officer $104,000 $6,000
Thomas M. Richardson,
Chief Financial Officer and Senior $112,000 $7,000
Vice President (Finance)
Burton R. Mills,
Senior Vice President (Mountain $155,000 $9,000
Operations)
G. Christopher Brink,
Senior Vice President (Marketing and $127,000 $7,000
Sales)
Allen Wilson,
President (Killington) $138,000 --
Blaise Carrig
President (Sugarbush) $116,000 --
Philip T. Gravink,
President (Attitash/Mt. Cranmore) $110,000 --
</TABLE> The Company expects to increase Mr.
Otten's compensation to a salary of up to $350,000 and
an annual performance-based bonus.
The Company intends to develop and implement,
during fiscal 1997, an incentive-based compensation plan
for selected executive officers and key employees
providing both EBITDA-based annual bonuses and
equity-based longer term incentives.
Report on Executive Compensation
The Company does not have a compensation
committee. Historically, all decisions with respect to
the compensation of the Company's executive officers
have been made by Mr. Otten, in his capacity as the sole
stockholder, sole director and chief executive officer
of each of the entities comprising the Company.
Decisions with respect to executive compensation have
been made on the basis of available information with
respect to the compensation of individuals having
comparable responsibilities at other major skiing and
resort businesses, the recent performance and financial
condition of the Company and the performance of the
individual executive officers. Mr. Otten's compensation
as described above has not, historically, been
determined on the basis of such criteria, principally
due to the fact that, as the Company's sole stockholder,
he was entitled to receive, and has received, dividends
in respect of his holdings of Common Stock based on the
year-to-year profitability of the Company that more
directly reflect its performance and financial
condition. In the future, however, due to restrictions
on the payment of dividends by the Company, contained in
the Indenture, the Subordinated Note Indenture and the
Senior Credit Facility, it is anticipated that Mr.
Otten's compensation will be determined in a manner
similar to that described above with respect to the
Company's other executive officers.
<PAGE>
Leslie B. Otten
Common Stock Ownership
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of of Beneficial Owner of Beneficial Percent of Class
Class Ownership
<S> <C> <C> <C>
Common Stock Leslie B. Otten 939,168 shares direct 96.0%
c/o American Skiing ownership
Company
Sunday River Access
Road
Bethel, Maine
04217
</TABLE>
Certain Transactions with Management
In June, 1996, Sunday River issued to Mr. Otten
a demand note bearing interest at the rate of 5.4% per
annum obligating Sunday River to pay to Mr. Otten a
total of $5.2 million, which amount equals the total
amounts expected to become payable during 1996 and 1997
by Mr. Otten as income taxes with respect to Sunday
River's pre-Acquisition income as a Subchapter S
corporation.
Christine Otten, Mr. Otten's spouse, is employed
by the Company as its director of retail buying, and is
principally responsible for its retail sales activities.
During the fiscal years 1994, 1995 and 1996, Ms. Otten
received total compensation of $54,575, $53,584 and
$54,577, respectively.
Western Maine Leasing Co., a corporation wholly
owned by Mr. Otten, presently leases items of heavy
equipment to Sunday River under short-term leases on
terms believed by management to be comparable to those
that could be obtained by Sunday River from unaffiliated
lessors of such equipment. In fiscal 1994, 1995 and
1996, payments under such leases totaled $43,000,
$34,000 and $36,000, respectively.
The Company provides lodging management services
for Ski Dorm, Inc., a corporation owned by Mr. Otten and
his mother which owns a ski dorm located near the Sunday
River resort, on terms believed by management to be not
less favorable to the Company than those that would be
offered by the Company to unaffiliated entities or that
have been obtained from or offered by unaffiliated
entities. In fiscal 1994, 1995 and 1996 payments by Ski
Dorm, Inc. to Sunday River totaled $93,000, $83,000 and
$0, respectively.
DESCRIPTION OF SENIOR SUBORDINATED NOTES
General
The Old Notes were issued and the New Notes are
to be issued pursuant to the Indenture between the
Company and U.S. Trust Company of New York, as trustee
(the "Trustee"). 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 and the forms of the certificates
evidencing the Old Notes and the New Notes, including
the definitions therein of certain terms used below,
which documents have been filed as exhibits to the
Registration Statement and are incorporated herein by
reference. The definitions of certain terms used in the
following summary are set forth below under "-- Certain
Definitions."
All of the Company's Subsidiaries are Restricted
Subsidiaries, other than LBO Development Company, Ski
Insurance Company, Mountain Water Company and Killington
West Ltd., each of which is an Unrestricted Subsidiary.
Under certain circumstances, the Company will be able to
designate additional 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 Old Notes and the New Notes will constitute
a single series of debt securities under the Indenture.
If the Notes Exchange Offer is consummated, holders of
the Old Notes who do not exchange their Old Notes for
New Notes will vote together with the holders of the New
Notes for all relevant purposes under the Indenture. In
that regard, the Indenture requires that certain actions
by holders thereunder (including acceleration following
an Event of Default) must be taken, and certain rights
must be exercised, by specified minimum percentages of
the aggregate principal amount of the outstanding Notes.
In determining whether holders of the requisite
percentage in principal amount have given any notice,
consent or waiver or taken any other action permitted
under the Indenture, any Old Notes which remain
outstanding after the Notes Exchange Offer will be
aggregated with the New Notes and the holders of the Old
Notes and New Notes will vote together as a single class
for all such purposes. Accordingly, all references
herein to specified percentages in aggregate principal
amount of the outstanding Notes shall be deemed to mean,
at any time after the Notes Exchange Offer is
consummated, such percentage in aggregate principal
amount of the Old Notes and New Notes then outstanding.
The terms of the New Note are identical in all
material respects to the terms of the Old Notes except
that (i) the New Notes will have been registered under
the Securities Act and thus will not bear restrictive
legends restricting their transfer pursuant to the
Securities Act and will not be entitled to registration
rights and (ii) Holders of New Notes will not be
entitled to liquidated damages for the Company's failure
to register the Old Notes or New Notes under the
Registration Rights Agreement, Holders of Old Notes
should review the information set forth under "The
Exchange Offers - Certain Consequences of a Failure to
Exchange."
The New Notes and the Old Notes are sometimes
referred to as, collectively, the "Notes" and,
individually, a "Note."
Principal, Maturity and Interest
The Notes will be limited in aggregate principal
amount to $120.0 million and will mature on July 15,
2006. Interest on the Notes will accrue at the rate of
12% per annum and will be payable semi-annually in
arrears on January 15 and July 15 of each year,
commencing on January 15, 1997, to Holders of record on
the immediately preceding January 1 and July 1. 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, 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 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 Old Notes were, and the
New Notes are to be issued in denominations of $1,000
and integral multiples thereof.
Subordination
The payment of principal of, premium, interest
and Liquidated Damages, if any, on, and all other
Obligations with respect to the Notes (other than the
making of the interest payment payable on July 15, 1997
from the Pledge Account) will be subordinated in right
of payment, as set forth in the Indenture, to the prior
payment in full in cash of all Senior Debt of the
Company, whether outstanding on the date of the
Indenture or thereafter incurred.
Upon any distribution of cash, securities or
other property to creditors of the Company in a
liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors
or any marshaling of the Company's assets and
liabilities, the holders of Senior Debt of the Company
will be entitled to receive payment in full in cash of
all Obligations 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 will be
entitled to receive any payment with respect to the
Notes (except for the interest payment payable on July
15, 1997 from the Pledge Account), and until all
Obligations with respect to Senior Debt of the Company
are paid in full in cash, any distribution to which the
Holders of Notes would be entitled shall be made to the
holders of such Senior Debt (except that Holders of
Notes may receive the interest payment payable on July
15, 1997 from the Pledge Account, securities that are
subordinated at least to the same extent as the Notes to
Senior Debt and any securities issued in exchange for
Senior Debt and payments made from the trust described
under "-- Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon
or in respect of the Notes (except such interest payment
such subordinated securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance") if
(i) a default in the payment of the principal of or
premium or interest on Senior Debt of the Company occurs
and is continuing 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 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 Senior Agent. 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
and (b) in case of a nonpayment default, the earlier of
the date on which such nonpayment default is cured or
waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless
the maturity of such Senior Debt has been accelerated.
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.
The Indenture further requires that the Company
promptly notify holders of Senior Debt of the Company 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. As of July 28, 1996, after giving pro forma effect
to the acquisition of the 49% interest in Sugarloaf and
the divestitures of Waterville Valley and Cranmore,
pursuant to the Consent, the amount of outstanding
Senior Debt of the Company would have been approximately
$53.8 million. The Indenture limits 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."
Interest Payment Pledge Account
The Indenture provides that the Company's
obligations under the Notes to pay interest on January
15, 1997 and July 15, 1997 will be secured by funds held
by the Collateral Agent under the Pledge and
Disbursement Agreement, subject, in the case of the
interest payment payable on January 15, 1997, to the
subordination provisions of the Notes. See
"--Subordination." Approximately $15 million, an amount
sufficient to pay interest on the Notes through July 15,
1997, has been deposited in the Pledge Account, and has
been invested in U.S. Treasury obligations maturing
immediately prior to January 15, 1997 and July 15, 1997,
pending disbursement. Following the July 15, 1997
interest payment on the Notes, any amounts remaining in
the Pledge Account will be released to the Company and
will thereafter remain subject to the applicable
provisions of the Indenture.
Subject to the foregoing, the Pledge and
Disbursement Agreement provides for the grant by the
Company to the Collateral Agent of a first priority
security interest in the Pledge Account for the benefit
of the Holders of the Notes to secure the payment of
interest due with respect to the Notes on or prior to
July 15, 1997. In addition to the subordination
provisions applicable to the interest payment payable on
January 15, 1997, the ability of Holders of Notes to
realize upon any such funds or securities may be subject
to certain bankruptcy law limitations in the event of a
bankruptcy of the Company. Under the terms of the
Indenture, the proceeds of the Pledge Account will be
applied, first, to amounts owing to the Trustee in
respect of fees and expenses of the Trustee and, second,
to the Obligations under the Notes and the Indenture,
subject to the subordination provisions described above.
Subsidiary Guarantees
The Company's payment Obligations under the
Notes have been jointly and severally guaranteed (the
"Subsidiary Guarantees") by the Guarantors. The
Obligations of each Guarantor under its Subsidiary
Guarantee are subordinated in right of payment to all
Senior Debt of such Guarantor pursuant to subordination
provisions substantially similar to those described
above under "-- Subordination."
The Indenture provides that no Guarantor may
consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person) another
corporation, Person or entity, whether or not affiliated
with such Guarantor, unless (i) subject to the
provisions of the following paragraph, the Person formed
by or surviving any such consolidation or merger (if
other than such Guarantor) assumes all of 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; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists;
(iii) such Guarantor, or any Person formed by or
surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect
to such transaction) equal to or greater than the
Consolidated Net Worth of such Guarantor immediately
preceding the transaction; and (iv) the Company would be
permitted by virtue of the Company's pro forma Fixed
Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the covenant described
below under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock"; provided, however,
that this provision shall not prohibit any merger or
consolidation among the Company or one or more wholly
owned Guarantors.
The Indenture provides that, in the event of a
sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all of the capital
stock of any Guarantor, such Guarantor (in the event of
a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of
all of the assets of such Guarantor) will be released
and relieved of any Obligations under its Subsidiary
Guarantee; provided that the Net Proceeds of such sale
or other disposition are applied in accordance with the
applicable provisions of the Indenture. See "--
Repurchase at Option of Holders -- Asset Sales." In
addition, the Indenture provides that, in the event the
Board of Directors designates a Guarantor to be an
Unrestricted Subsidiary, then such Guarantor will be
released and relieved of any Obligations under its
Subsidiary Guarantee; provided that such designation is
conducted in accordance with the applicable provisions
of the Indenture.
Optional Redemption
The Notes are not redeemable at the Company's
option prior to July 15, 2001. Thereafter, the Notes
will be subject to redemption 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 interest and Liquidated
Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period
beginning on July 15 of the years indicated below:
Year Percenta
ge
2001
106.250%
2002 104.688
2003 103.125
2004 101.563
2005 and thereafter 100.000
Notwithstanding the foregoing, on or prior to
July 15, 1999, the Company may redeem up to 25% in
aggregate principal amount of the Notes at a redemption
price of 112% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if
any, thereon to the redemption date, with the net
proceeds of one or more Equity Offerings; provided that
at least 75% in aggregate principal amount of the Notes
originally issued under the Indenture remains
outstanding immediately after the occurrence of each
such redemption; and provided, further, that notice of
each such redemption shall have been given within 30
days after the date of the closing of such Equity
Offering.
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. On and after the
redemption date, interest ceases to accrue on Notes or
portions of them 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.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, the
Company will be required to make an offer (a "Change of
Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each 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 repurchase (the "Change of Control
Payment"). Within 30 days following any Change of
Control, the Company will mail a notice to each Holder
describing the transaction that constitutes the Change
of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described
in such notice; provided that, prior to complying with
the provisions of this covenant, but in any event within
90 days following a Change of Control, the Company will
either repay all outstanding Senior Debt or obtain the
requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the
repurchase of Notes required by this covenant. 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 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.
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.
The occurrence of a Change of Control could
result in a default under the Senior Credit Facility or
other Senior Debt of the Company. In addition, the
Senior Credit Facility or other Senior Debt could
restrict the Company's ability to repurchase Notes upon
a Change of Control. 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 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 make a Change of Control Offer
or to repurchase Notes tendered in a Change of Control
Offer would constitute an Event of Default under the
Indenture, which could, in turn, constitute a default
under the Senior Credit Facility or other Senior Debt.
In such circumstances, the subordination provisions in
the Indenture would likely restrict payments to the
Holders of Notes. See "-- Subordination." Finally, the
Company's ability to repurchase Notes upon a Change of
Control may be limited by the Company's then existing
financial resources.
The Company will not be required to make a
Change of Control Offer upon a Change of Control if a
third party makes the 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
under such Change of Control Offer.
Asset Sales
The Indenture provides that the Company will
not, and will not permit any of its Restricted
Subsidiaries to, engage in 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 resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) 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 cash; provided
that (x) 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 any Restricted
Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the
Notes) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from
further liability and (b) any notes or other obligations
received by the Company or such Restricted Subsidiary
from such transferee that are immediately converted by
the Company or such Restricted Subsidiary into cash (to
the extent of the cash received) shall be deemed to be
cash for purposes of this provision and (y) Asset Sales
pursuant to the DOJ Divestiture shall not be subject to
the 75% minimum cash requirement specified in clause
(ii) of this paragraph, but such Asset Sales shall
otherwise continue to be subject to this covenant and
any cash proceeds resulting from the subsequent
disposition of such non-cash consideration shall be
subject to the provisions of this covenant.
Within 360 days after the receipt of any Net
Proceeds from an Asset Sale, the Company or such
Restricted Subsidiary may apply such Net Proceeds (a) to
permanently reduce Senior Debt of the Company or such
Restricted Subsidiary (and to correspondingly reduce
commitments with respect thereto) or (b) to the making
of capital expenditures or the acquisition of long-term
assets in the same line of business as the Company or
any Restricted Subsidiary was engaged immediately prior
to such Asset Sale. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce
Senior Debt or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales in excess of $1.0 million in
any fiscal year 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 $10.0
million, the Company will be required to make an offer
to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may
be purchased out of 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
amount of Notes 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 (subject to the restrictions of the Indenture).
If the aggregate principal amount of Notes surrendered
by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall
be reset at zero.
Certain Covenants
Restricted Payments
The Indenture provides that the Company will
not, and will not permit any of its Restricted
Subsidiaries to, 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 holder of the
Company's Equity Interests in its capacity as such,
other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company
or dividends or distributions payable to the Company or
any Wholly Owned Restricted Subsidiary of the Company
that is a Guarantor; (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the
Company or any Subsidiary or other Affiliate of the
Company, other than any such Equity Interests owned by
the Company or any Wholly Owned Restricted Subsidiary of
the Company that is a Guarantor; (iii) make any
principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value, prior to a
scheduled mandatory sinking fund payment date or final
maturity date, any Indebtedness that is subordinated to
the Notes; 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;
(b) the Company would be permitted by
virtue of the Company's pro forma Fixed Charge
Coverage Ratio, immediately after giving effect
to such Restricted Payment, to incur at least
$1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in
the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
(c) such Restricted Payment, together
with the aggregate of all other Restricted
Payments made by the Company and its Restricted
Subsidiaries on or after the date of the
Indenture, is less than the sum of (i) $5.0
million, plus (ii) 50% of the Consolidated Net
Income of the Company for the period (taken as
one accounting period) from July 29, 1996 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 (iii) 100% of the aggregate net
cash proceeds received by the Company as capital
contributions or from the issue or sale since
the date of the Indenture of Equity Interests of
the Company or of debt securities of the Company
that have been converted into such Equity
Interests (other than Equity Interests (or
convertible debt securities) sold to a
Subsidiary of the Company and other than
Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus
(iv) to the extent that any Restricted
Investment is sold for cash or otherwise
liquidated or repaid for cash, 100% of the net
cash proceeds thereof (less the cost of
disposition) (but only to the extent not
included in subclause (ii) of this clause (c));
plus (v) to the extent that any Unrestricted
Subsidiary is designated to be a Restricted
Subsidiary, the fair market value (as determined
in good faith by the Board of Directors) of the
Company's Investment in such Subsidiary at the
time of such designation (but only to the extent
not included in subclause (ii) of this clause
(c)); provided, however, that in the case of (1)
the declaration or payment of any dividend or
the making of any other payment or distribution
on account of the Company's Common Stock or to
any direct or indirect holder of the Company's
Common Stock in its capacity as such or (2) the
purchase, redemption or other acquisition or
retirement for value of any Common Stock of the
Company, (A) the Company may not include the
$5.0 million set forth in subclause (i) of this
clause (c) and may only include 25% of its
Consolidated Net Income for purposes of
subclause (ii) of this clause (c) in calculating
the amount available pursuant to this clause (c)
for the making of any such Restricted Payment
if, after giving effect to such Restricted
Payment, the Company's Leverage Ratio would
exceed 70% and (B) Consolidated Net Income for
purposes of this clause (c) shall exclude the
first $5.0 million of Consolidated Net Income of
the Company reported from July 29, 1996.
The foregoing provisions will not prohibit (i)
the payment of any dividend or other distribution 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 or other acquisition
of any Equity Interests of the Company in exchange for,
or out of the proceeds of, the substantially concurrent
sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c) of the preceding
paragraph; (iii) the defeasance, redemption or
repurchase of subordinated Indebtedness with the net
cash proceeds from an incurrence of Permitted
Refinancing Debt or the substantially concurrent sale
(other than to a Subsidiary of the Company) of Equity
Interests of the Company (other than Disqualified
Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be
excluded from clause (c) of the preceding paragraph;
(iv) Investments in Real Estate Subsidiaries in an
amount not to exceed $10.0 million plus, to the extent
that any such Investment is sold for cash or otherwise
liquidated or repaid for cash, the net cash proceeds
thereof (less the cost of disposition); provided that
the amount of any such net cash proceeds shall be
excluded from clause (c) of the preceding paragraph; (v)
the acquisition of Equity Interests in Sugarloaf
Mountain Corporation within six months after the
consummation of the Acquisition; (vi) contributions of
real estate not used in or essential to ski operations
to Real Estate Subsidiaries for Permitted Real Estate
Projects; (vii) conveyance of real estate not used in or
essential to ski operations to Unrestricted Subsidiaries
with an aggregate book value not in excess of $2.0
million; (viii) Guarantees of Indebtedness of Real
Estate Subsidiaries to the extent that such Guarantees
are permitted to be incurred by the covenant described
under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock;" (ix) payments of principal
of and interest on the Demand Note; (x) Investments
received by the Company and its Restricted Subsidiaries
as non-cash consideration from Asset Sales to the extent
permitted by the covenant described under the caption
"-- Repurchase at the Option of Holders -- Asset Sales";
and (xi) the repurchase of Subordinated Notes pursuant
to a Subordinated Note Change of Control Offer (as
defined).
The Board of Directors 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 by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and
will reduce the amount available for Restricted Payments
under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value
(as determined in good faith by the Board of Directors)
of such Investments at the time of such designation.
Such designation will only be permitted if such
Restricted Payment would be permitted at such time and
if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other
than cash) shall be the fair market value (evidenced by
a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) on the
date of the Restricted Payment of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. Not
later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based
upon the Company's latest available financial
statements.
Notwithstanding the foregoing, the Company and
its Restricted Subsidiaries may not (i) transfer any
property or assets that are a material part of the ski
operations of the Company and its Restricted
Subsidiaries to an Unrestricted Subsidiary or (ii)
designate as an Unrestricted Subsidiary any Restricted
Subsidiary of the Company that holds any property or
assets that are a material part of the ski operations of
the Company and its Restricted Subsidiaries.
Incurrence of Indebtedness and Issuance of
Preferred Stock
The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including
Acquired Debt), and will not permit any of its
Restricted Subsidiaries to issue any preferred stock;
provided, however, that, so long as no Default or Event
of Default has occurred and is continuing, the Company
and its Restricted Subsidiaries that are Guarantors may
incur Indebtedness (including Acquired Debt), and its
Restricted Subsidiaries that are Guarantors may issue
preferred stock, if the Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal
quarters for which internal quarterly financial
statements are available immediately preceding the date
on which such additional Indebtedness is incurred or
such additional preferred stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been
incurred or the additional preferred stock had been
issued at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company and its
Restricted Subsidiaries of Indebtedness pursuant
to the Bank Credit Agreements in an amount not
to exceed the greater of (a) $65.0 million and
(b) 1.5 times the Company's Consolidated Cash
Flow for the most recently ended four full
fiscal quarters for which internal quarterly
financial statements are available immediately
preceding the date on which such Indebtedness is
incurred, less, in either case, the aggregate
amount of all permanent reductions thereto
pursuant to the covenant described under "--
Repurchase at the Option of Holders -- Asset
Sales";
(ii) the incurrence by the Company and
its Restricted Subsidiaries of Existing
Indebtedness;
(iii) the incurrence by the Company and
the Guarantors of Indebtedness represented by
the Notes, the Subsidiary Guarantees, the
Indenture, the Subordinated Notes, the
Subordinated Note Subsidiary Guarantees and the
Subordinated Note Indenture;
(iv) the incurrence of intercompany
Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries
(other than Real Estate Subsidiaries); provided
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 Wholly Owned Restricted
Subsidiary of the Company, or any sale or other
transfer of any such Indebtedness to a Person
that is neither the Company nor a Wholly Owned
Restricted Subsidiary of the Company, shall be
deemed to constitute an incurrence of such
Indebtedness by the Company or such Restricted
Subsidiary, as the case may be;
(v) the incurrence by the Company or any
of its Restricted Subsidiaries of purchase money
Indebtedness to finance the purchase of property
or assets to be used in the ski operations of
the Company and its Restricted Subsidiaries or a
related business in an aggregate amount at any
one time outstanding not to exceed the lesser of
(a) the purchase price of such property or
assets and (b) $15.0 million;
(vi) the incurrence by the Company and
its Restricted Subsidiaries of Guarantees of
Indebtedness of Real Estate Subsidiaries in an
amount not to exceed $15.0 million at any one
time outstanding in connection with Permitted
Real Estate Projects, provided that the total
purchase price for the hotel, condominium,
interval ownership or other units comprising the
development to be constructed, in whole or in
part, with the proceeds of the Indebtedness so
guaranteed, that have been contracted for sale
(evidenced by executed purchase agreements and
security deposits from credit-approved
purchasers), equals at least 35% of the
estimated total cost of construction (as
determined in good faith by the Board of
Directors) of the Permitted Real Estate Projects
(except for the development of the Summit Hotel
at the Attitash resort, for which such total
purchase price must equal at least 25% of the
estimated total cost of construction (as
determined in good faith by the Board of
Directors));
(vii) the incurrence by the Company or
any of its Restricted Subsidiaries of Permitted
Refinancing Debt in exchange for, or the net
proceeds of which are used to extend, refinance,
renew, replace, defease or refund Indebtedness
that was permitted by the Indenture to be
incurred;
(viii) the incurrence by Real Estate
Subsidiaries of Non-Recourse Real Estate Debt,
provided that if any such Indebtedness ceases to
be Non-Recourse Real Estate Debt of a Real
Estate Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company that is not
a Real Estate Subsidiary;
(ix) the incurrence by the Company's
Unrestricted Subsidiaries of Non-Recourse Debt,
provided that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company; and
(x) the incurrence by the Company and its
Restricted Subsidiaries of additional
Indebtedness in an amount not to exceed $25.0
million at any one time outstanding, provided
that such Indebtedness is expressly subordinated
in right of payment to the Notes at least to the
same extent as the Notes are subordinated in
right of payment to Senior Debt of the Company.
Liens
The Indenture provides that the Company will
not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset now
owned or hereafter 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 the Company will
not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective
any 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 on its Capital Stock or with
respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted
Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of
its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason
of: (a) Existing Indebtedness as in effect on the date
of the Indenture; (b) applicable law; (c) any instrument
governing Indebtedness or Capital Stock 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 was
incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or
assets of the Person, so acquired; (d) by reason of
customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent
with past practices; (e) 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; (f) any
instrument governing Non-Recourse Real Estate
Indebtedness of a Real Estate Subsidiary, which
encumbrance or restriction is not applicable to any
Person or the properties or assets of any Person other
than such Real Estate Subsidiary or the property or
assets of such Real Estate Subsidiary; (g Senior Debt of
the Company and Indebtedness of Guarantors, provided
that such Indebtedness was permitted to be incurred
pursuant to the Indenture; and (h) Permitted Liens.
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 entity), 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 corporation,
Person or entity, unless (i) the Company is the
surviving entity or the entity 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 corporation organized or existing
under the laws of the United States, any state thereof
or the District of Columbia; (ii) the entity or Person
formed by or surviving any such consolidation or merger
(if other than the Company) or the entity or 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 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 Wholly Owned
Restricted Subsidiary of the Company, the Company or the
entity or 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
Fixed Charge 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."
Transactions with Affiliates
The Indenture provides the Company will not, and
will not permit any of its Restricted Subsidiaries to,
directly or indirectly, 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
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 the Company or the relevant
Restricted Subsidiary than those that would have been
obtained in a comparable transaction 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
consideration in excess of $0.5 million, a resolution of
the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b)
with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as
to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of
national standing; provided that (1) any employment
agreement or arrangement in existence on the date of the
Indenture or entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the
Company or such Restricted Subsidiary, (2) transactions
between or among the Company and its Restricted
Subsidiaries and (3) Restricted Payments and Permitted
Investments that are permitted by the provisions of the
Indenture described above under the caption
"--Restricted Payments," in each case, shall not be
deemed Affiliate Transactions.
Independent Board of Directors
The Indenture provides that at least one member
of the Board of Directors of the Company shall be a
disinterested director. The Indenture further provides
that the Company shall use its best efforts to have a
disinterested member of the Board of Directors by July
31, 1996.
Limitation on Other Senior Subordinated Debt
The Indenture provides that neither the Company
nor any Guarantor will incur, create, issue, assume,
guarantee or otherwise become liable for any
Indebtedness that, in accordance with the terms of the
instrument pursuant to which it was created, is
subordinate or junior in right of payment to any Senior
Debt of the Company or such Guarantor, as the case may
be, and senior in any respect in right of payment to the
Notes or such Guarantor's Subsidiary Guarantee.
Additional Subsidiary Guarantees
The Indenture provides that if the Company or
any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of the
Indenture, then such newly acquired or created
Subsidiary shall execute a Subsidiary Guarantee and
deliver an opinion of counsel in accordance with the
terms of the Indenture; provided, that this covenant
shall not apply to any Subsidiary that has been properly
designated as an Unrestricted Subsidiary in accordance
with the Indenture for so long as it continues to
constitute an Unrestricted Subsidiary.
Payments for Consent
The Indenture provides that the Company will
not, and will not permit any of its Restricted
Subsidiaries to, 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, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that
describes the financial condition and results of
operations of the Company and its Restricted
Subsidiaries 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 has agreed that, for so long as any Notes remain
outstanding, it 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 Securities 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 the
Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment
when due of the principal of or premium or Liquidated
Damages, if any, on the Notes (whether or not prohibited
by the subordination provisions of the Indenture); (iii)
failure by the Company to comply with the provisions
described under the captions "-- Change of Control," "--
Asset Sales," "-- Restricted Payments" or "-- Incurrence
of Indebtedness and Issuance of Preferred Stock"; (iv)
failure by the Company for 30 days after notice to
comply with any of its other agreements in the Indenture
or the Notes; (v) a continuing 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 Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of
the Indenture, which default (a) is caused by a failure
to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness (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 $5.0 million or more; (vi)
failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in
excess of $5.0 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; and (vii) certain events of
bankruptcy or insolvency with respect to the Company or
any of its Restricted 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 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, any Significant
Subsidiary of the Company or any group of Restricted
Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary of 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 or interest) if it
determines that withholding notice is in their interest.
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 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. If an Event of Default occurs prior to July 15,
2001 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of
the Notes prior to such date, then the premium specified
in the Indenture shall also become 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 the
principal of or premium, interest or Liquidated Damages
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
and Shareholders
No director, officer, employee, incorporator or
shareholder of the Company, as such, shall have any
liability for any Obligations of the Company under the
Notes or 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, 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.
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, without
reinvestment, in the opinion of a nationally recognized
firm of independent public accountants, to pay the
principal of and premium, 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 date of the Indenture, 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) or insofar as
Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the
91st day after the date of 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 funds will not be subject to the
effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors'
rights generally; (vii) the Company shall have delivered
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 shall have delivered 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.
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 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 redemption of
the Notes (other than provisions relating to the
covenants described above under the caption
"--Repurchase at the Option of Holders"), (iii) reduce
the rate of or change the time for payment of interest
or Liquidated Damages on any Note, (iv) waive a Default
or Event of Default in the payment of principal of or
premium, interest or Liquidated Damages 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) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of
Holders of Notes to receive payments of principal of or
premium, interest or Liquidated Damages on the Notes,
(vii) waive a redemption payment with respect to any
Note (other than a payment required by one of the
covenants described above under the caption "--
Repurchase at the Option of Holders") or (viii) make any
change in the foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article
10 of the Indenture (which relate to subordination)
requires the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding
if such amendment would adversely affect the rights of
Holders of the Notes.
Notwithstanding the foregoing, without the
consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture or 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 obligations to Holders of
Notes in the case of a merger or consolidation, 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, or to comply with requirements of the
Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture
Act.
Concerning the Trustee
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,
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 it against any
loss, liability or expense.
Book-Entry, Delivery and Form
Except as set forth in the next paragraph, the
Notes were initially issued in the form of one Global
Note (the "Global Note"). The Global Note was deposited
on the date of the closing of the sale of the Old Notes
(the "Closing Date") with, or on behalf of, The
Depository Trust Company (the "Depositary") and
registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the
"Global Note Holder").
Notes that are issued as described below under
"-- Certificated Securities" will be issued in the form
of registered definitive certificates (the "Certificated
Securities"). Upon the transfer of Certificated
Securities, such Certificated Securities may, unless the
Global Note has previously been exchanged for
Certificated Securities, be exchanged for an interest in
the Global Note representing the principal amount of
Notes being transferred.
The Depositary is a limited-purpose trust
company that was created to hold securities for its
participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and
to facilitate the clearance and settlement of
transactions in such securities between Participants
through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include
securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to
the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or
the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who
are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the
Depositary's Participants or the Depositary's Indirect
Participants.
The Company expects that pursuant to procedures
established by the Depositary ownership of the Notes
evidenced by the Global Note will be shown on, and the
transfer of ownership thereof will be effected only
through, records maintained by the Depositary (with
respect to the interests of the Depositary's
Participants), the Depositary's Participants and the
Depositary's Indirect Participants. Prospective
purchasers are advised that the laws of some states
require that certain persons take physical delivery in
definitive form of securities that they own.
Consequently, the ability to transfer Notes evidenced by
the Global Note will be limited to such extent.
So long as the Global Note Holder is the
registered owner of any Notes, the Global Note Holder
will be considered the sole Holder under the Indenture
of any Notes evidenced by the Global Note. Beneficial
owners of Notes evidenced by the Global Note will not be
considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to
the Trustee thereunder. Neither the Company nor the
Trustee will have any responsibility or liability for
any aspect of the records of the Depositary or for
maintaining, supervising or reviewing any records of the
Depositary relating to the Notes.
Payments in respect of the principal of and
premium, interest and Liquidated Damages, if any, on any
Notes registered in the name of the Global Note Holder
on the applicable record date will be payable by the
Trustee to or at the direction of the Global Note Holder
in its capacity as the registered Holder under the
Indenture. Under the terms of the Indenture, the Company
and the Trustee may treat the persons in whose names
Notes, including the Global Note, are registered as the
owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the
Trustee has or will have any responsibility or liability
for the payment of such amounts to beneficial owners of
Notes. The Company believes, however, that it is
currently the policy of the Depositary to immediately
credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their
respective holdings of beneficial interests in the
relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants
and the Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the
responsibility of the Depositary's Participants or the
Depositary's Indirect Participants.
Certificated Securities
Subject to certain conditions, any person having
a beneficial interest in the Global Note may, upon
request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated
Securities. Upon any such issuance, the Trustee is
required to register such Certificated Securities in the
name of, and cause the same to be delivered to, such
person or persons (or the nominee of any thereof). All
such certificated Notes would be subject to the legend
requirements described herein under "Notice to
Investors." In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer
willing or able to act as a depositary and the Company
is unable to locate a qualified successor within 90 days
or (ii) the Company, at its option, notifies the Trustee
in writing that it elects to cause the issuance of Notes
in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note
Holder of its Global Note, Notes in such form will be
issued to each person that the Global Note Holder and
the Depositary identify as being the beneficial owner of
the related Notes.
Neither the Company nor the Trustee will be
liable for any delay by the Global Note Holder or the
Depositary in identifying the beneficial owners of Notes
and the Company and the Trustee may conclusively rely
on, and will be protected in relying on, instructions
from the Global Note Holder or the Depositary for all
purposes.
Same-Day Settlement and Payment
The Indenture requires that payments in respect
of the Notes represented by the Global Note (including
principal, premium, interest and Liquidated Damages, if
any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note
Holder. With respect to Certificated Securities, the
Company will make all payments of principal, premium,
interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts
specified by the Holders thereof or, if no such account
is specified, by mailing a check to each such Holder's
registered address. The Notes represented by the Global
Note are expected to be eligible to trade in the
Depositary's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to
be settled in immediately available funds. The Company
expect that secondary trading in the Certificated
Securities will also be settled in immediately available
funds.
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 of any other Person
existing at the time such other Person is merged with or
into or became a Restricted Subsidiary of such specified
Person, including, without limitation, Indebtedness
incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a
Restricted 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; provided that beneficial
ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease,
conveyance or other disposition of any rights, property
or assets (including, without limitation, by way of a
sale and leaseback), other than sales of inventory,
sales of obsolete or unused equipment and sales by Real
Estate Subsidiaries of hotel, condominium, interval
ownership or other units, in each case, in the ordinary
course of business consistent with past practices
(provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of
the Company and its Restricted Subsidiaries taken as a
whole will be governed by the provisions of the
Indenture described above under the caption "-- Change
of Control" and/or the provisions described above under
the caption "-- Merger, Consolidation or Sale of Assets"
and not by the provisions of the Asset Sale covenant),
and (ii) the issue or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, 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 $1.0 million or (b) for net proceeds in excess of
$1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted
Subsidiary, (iii) issuances of Equity Interests by
Sugarloaf pursuant to warrants outstanding on the date
of the Indenture, and (iv) a Restricted Payment that is
permitted by the covenant described above under the
caption "-- Restricted Payments" will not be deemed to
be Asset Sales.
"Bank Credit Agreements" means (i) the Senior
Credit Facility, (ii) any other credit, loan,
reimbursement or other similar agreement among the
Company, any Subsidiary and any bank, insurance company,
finance company or other institutional lender, (iii)
each instrument pursuant to which Obligations under any
of the agreements described in clause (i) or (ii) above
are amended, deferred, extended, renewed, replaced,
refunded or refinanced, in whole or in part, and (iv)
each instrument now or hereafter evidencing, governing,
guarantying or securing any Indebtedness under any
agreements described in clause (i), (ii) or (iii) above,
in each case, as modified, amended, restated or
supplemented from time to time.
"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, partnership 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 (i) United States
dollars, (ii) securities issued or directly and fully
guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities
of not more than one year from the date of acquisition,
(iii) certificates of deposit and eurodollar time
deposits with maturities of one year or less from the
date of acquisition, bankers' acceptances with
maturities not exceeding one year and overnight bank
deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and
a Keefe Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than
seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into
with any financial institution meeting the
qualifications specified in clause (iii) above and (v)
commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within one
year after the date of acquisition.
"Change of Control" means the occurrence of any
of the following: (i) the sale, lease, transfer,
conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets
of the Company and its Restricted Subsidiaries, taken as
a whole, to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than the
Permitted Holders, (ii) the adoption of a plan relating
to the liquidation or dissolution of the Company, (iii)
the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of
which is that the Permitted Holders cease to be the
"beneficial owners" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act) of an
aggregate of at least 51% of the common stock of the
Company and at least 51% of the voting power of the
Capital Stock of the Company, (iv) the consummation of
any transaction (including, without limitation, any
merger or consolidation) the result of which is that any
"person" (as such term is used in Section 13(d)(3) of
the Exchange Act), other than the Permitted Holders,
becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly, of more than 35% of the common
stock of the Company or more than 35% of the voting
power of the Capital Stock of the Company and (v) the
first day on which more than one-third of the members of
the board of directors of the Company are not Continuing
Directors.
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 a
developing body of 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.
"Collateral Agent" means U.S. Trust Company of
New York, as Collateral Agent for the benefit of Holders
of Notes under the Pledge and Disbursement Agreement, or
any successor thereto appointed pursuant to such
Agreement.
"Consolidated Cash Flow" 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 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 of such Person and
its Restricted Subsidiaries for such period, whether
paid or accrued and whether or not capitalized
(including, without limitation, amortization of 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) 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) of such Person and its
Restricted Subsidiaries for such period, in each case,
on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, the provision
for taxes on the income or profits of, and the
depreciation and amortization of, a Restricted
Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in same proportion) that
the Net Income of such Restricted Subsidiary was
included in calculating the Consolidated Net Income of
such Person and only if a corresponding amount would be
permitted at the date of determination to be dividended
to the Company by such Restricted Subsidiary without
prior governmental approval (that has not been
obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules
and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"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 Real Estate Subsidiaries or of any
Person that is not a Restricted Subsidiary 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 to the referent
Person or a Wholly Owned Restricted Subsidiary thereof
(other than a Real Estate Subsidiary), (ii) the Net
Income of any Restricted Subsidiary that is not a
Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such Net
Income is not at the date of determination permitted
without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such 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 sum of (i) the
consolidated equity of the common equity holders of such
Person and its consolidated Restricted Subsidiaries as
of such date plus (ii) the respective amounts reported
on such Person's balance sheet as of such date with
respect to any series of preferred equity (other than
Disqualified Stock) that by its terms is not entitled to
the payment of dividends or other distributions unless
such dividends or other distributions may be declared
and paid only out of net earnings in respect of the year
of such declaration and payment, but only to the extent
of any cash received by such Person upon issuance of
such preferred equity, less (a) all write-ups (other
than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going
concern business made within 12 months after the
acquisition of such business) subsequent to the date of
the Indenture in the book value of any asset owned by
such Person or a consolidated Restricted Subsidiary of
such Person, (b) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not
Restricted Subsidiaries (except, in each case, Permitted
Investments), and (c) all unamortized debt discount and
expense and unamortized deferred charges as of such
date, all of the foregoing determined 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 the board of
directors on the date of the Indenture or (ii) was
nominated for election to the board of directors with
the approval of at least two-thirds of the Continuing
Directors who were members of the board of directors at
the time of such nomination or election.
"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.
"Demand Note" means the promissory note of
Sunday River Skiway Corporation payable to Leslie B.
Otten in the original principal amount of $5.2 million,
as in effect on the date of the Indenture.
"Designated Senior Debt" of any Person means
such Person's Obligations under the Bank Credit
Agreements and any other Senior Debt of such Person
permitted to be incurred by such Person under the terms
of the Indenture the principal amount of which is $25.0
million or more and that has been designated by the
board of directors of such Person as "Designated Senior
Debt" by notice to the Trustee from both such Person and
the Senior Agent.
"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), 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.
"DOJ Divestiture" means the divestiture of the
Waterville Valley and Mount Cranmore resorts, whether
effected by way of sale, lease, conveyance or other
disposition of any rights, property or assets, or by way
of a sale of the Capital Stock of Waterville Valley Ski
Area, Ltd. or Cranmore, Inc., or a merger, consolidation
or other reorganization, effected in compliance with the
United States Department of Justice consent decree
applicable 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 a public or private sale
of common stock of the Company that results in net
proceeds of at least $25.0 million to the Company.
"Existing Indebtedness" means Indebtedness of
the Company and its Restricted Subsidiaries in existence
on the date of the Indenture, until such amounts are
repaid.
"Fixed Charges" means, with respect to any
Person for any period, the sum 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 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) and
(ii) the consolidated interest expense of such Person
and its Restricted Subsidiaries that was capitalized
during such period and (iii) any interest expense on
Indebtedness of another Person to the extent that such
Indebtedness 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)
and (iv) the product of (a) all cash dividend payments
or other distributions (and non-cash dividend payments
in the case of a Person that is a Restricted Subsidiary)
on any series of preferred equity of such Person, times
(b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current
combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect
to any Person for any period, the ratio of the
Consolidated Cash Flow of such Person for such period to
the Fixed Charges of such Person for such period. In the
event that the Company or any of its Restricted
Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or
issues preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then
the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, 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)
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, 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 Cash Flow 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, and (ii) the
Consolidated Cash Flow attributable to Real Estate
Subsidiaries, Unrestricted Subsidiaries, 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 Fixed
Charges attributable to Real Estate Subsidiaries,
Unrestricted Subsidiaries, discontinued operations (as
determined in accordance with GAAP) and operations or
businesses disposed of prior o the Calculation Date
shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not
be obligations of the referent Person or any of its
Restricted Subsidiaries (other than Real Estate
Subsidiaries) following the Calculation Date and, in the
case of Real Estate Subsidiaries, only to the extent
that the obligations giving rise to such Fixed Charges
consist of Non-Recourse Real Estate Debt.
"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 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.
"Guarantors" means each of (i) Sunday River
Skiway Corporation, Sunday River Ltd., Perfect Turn
Inc., LBO Holding, Inc., Sunday River Transportation,
Inc., Sugarbush Resort Holdings, Inc., Sugarbush Leasing
Company, Sugarbush Restaurants, Inc., Cranmore, Inc.,
S-K-I Limited, Killington Ltd., Mount Snow Ltd.,
Waterville Valley Ski Area, Ltd., Sugarloaf Mountain
Corporation, Killington Restaurants, Inc., Dover
Restaurants, Inc., Resort Technologies, Inc., Pico Ski
Area Management Company, Mountain Wastewater Treatment,
Inc., Deerfield Operating Company and Resort Software
Services, Inc. and (ii) any other subsidiary that
executes a Subsidiary Guarantee in accordance with the
provisions of the Indenture, and their respective
successors and assigns.
"Hedging Obligations" means, with respect to any
Person, the obligations of such Person under (i)
interest and currency rate swap agreements, interest
rate cap agreements and interest rate collar agreements
and (ii) other agreements or arrangements designed to
protect such Person against fluctuations in interest or
currency exchange 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 banker's
acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of
any property 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
secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person),
(iii) Disqualified Stock of such Person, (iv) preferred
stock of any Restricted Subsidiary of such Person (other
than Preferred Stock held by such Person or any of its
Wholly Owned Restricted Subsidiaries) and (v) to the
extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person.
"Investments" means, with respect to any Person,
all investments by such Person in other Persons 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; provided
that an acquisition of assets, Equity Interests or other
securities by the Company or any of its Restricted
Subsidiaries for consideration consisting of common
equity securities of the Company shall not be deemed to
be an Investment.
"Leverage Ratio" means, as of any date of
determination, the ratio of (i) the total indebtedness
of the Company as shown on the Company's most recent
balance sheet, as adjusted to give effect to any
repayment or incurrence of indebtedness subsequent to
the balance sheet date through such date of
determination, to (ii) the sum of (a) the total
indebtedness of the Company, calculated pursuant to
clause (i), plus (b) total stockholders' equity of the
Company as shown on the Company's most recent balance
sheet, as adjusted to give effect to any capital
contributions or issuances of Equity Interests of the
Company, any dividends or other distributions with
respect to any Equity Interests of the Company, or any
repurchase or redemption of Equity Interests of the
Company, subsequent to the balance sheet date through
such date of determination.
"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, any option or other agreement to sell or give a
security interest in and any filing of or agreement to
give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Income" means, with respect to any Person
for any period, the net income (loss) of such Person for
such period, determined in accordance with GAAP and
before any reduction in respect of preferred stock
dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on
such gain (but not 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 Restricted Subsidiaries or
the extinguishment of any Indebtedness of such Person or
any of its Restricted Subsidiaries and (ii) any
extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash 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), net of the direct costs relating to
such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales
commissions), any relocation expenses incurred as a
result thereof, any taxes paid or payable by the Company
or any of its Restricted Subsidiaries as a result
thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements)
and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance
with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to
which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or
indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender, (ii) no default with respect to
which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to
its stated maturity and (iii) as to which the lenders
have been notified in writing that they will not have
any recourse to the stock or assets of the Company or
any of its Restricted Subsidiaries.
"Non-Recourse Real Estate Debt" means
Indebtedness (i) as to which neither the Company nor any
of its Restricted Subsidiaries, other than Real Estate
Subsidiaries, (a) provides credit support of any kind
(including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or
indirectly liable (as a guarantor or otherwise) or (c)
constitutes the lender, (ii) no default with respect to
which (including any rights that the holders thereof may
have to take enforcement action against a Real Estate
Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries, other
than Real Estate Subsidiaries, to declare a default on
such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity
and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the
stock or assets of the Company or any of its Restricted
Subsidiaries, other than Real Estate Subsidiaries,
except, in each case, to the extent permitted by the
covenant described under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock."
"Obligations" means, with respect to any
instrument or agreement, any and all principal, interest
(including post petition interest), penalties, premiums,
fees (including without limitation, to the extent
provided for in such instrument or agreement, fees and
expenses of counsel), indemnifications, reimbursements,
damages and other charges, obligations and liabilities
existing from time to time under such instrument or
agreement, whether direct or indirect, joint or several,
actual, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured,
arising by contract, operation of law or otherwise,
including any obligations or liabilities to repay,
redeem, repurchase, retire, acquire or defease any
Indebtedness under such instrument or agreement, or any
obligation to establish a sinking fund for any such
purpose.
"Permitted Holders" means Leslie B. Otten (or,
in the event of his incompetence or death, his estate
and his and his estate's heirs, executor, administrator,
committee or other representative (collectively,
"Heirs")) and any Person in which Leslie B. Otten and
his Heirs, directly or indirectly, have an 80%
controlling interest.
"Permitted Investments" means (i) any Investment
in the Company or in a Wholly Owned Restricted
Subsidiary of the Company that is a Guarantor; (ii) any
Investment in Cash Equivalents; (iii) any Investment by
the Company or any of its Restricted Subsidiaries in a
Person if, as a result of such Investment, (a) such
Person becomes a Wholly Owned Restricted Subsidiary of
the Company and 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 Wholly Owned
Restricted Subsidiary of the Company that is a
Guarantor; (iv) any Restricted 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;" and
(v) Guarantees of Indebtedness permitted to be made
pursuant to clause (vi) of the covenant described above
under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock."
"Permitted Liens" means (i) Liens securing
Senior Debt of the Company and its Restricted
Subsidiaries; (ii) Liens securing Indebtedness that is
pari passu in right of payment with the Notes, provided
that the Notes are equally and ratably secured, (iii)
Liens in favor of the Company or any of its Restricted
Subsidiaries; (iv) Liens on property of a Person
existing at the time such Person is merged into or
consolidated with the Company or any of its Restricted
Subsidiaries, provided that such Liens were in existence
prior to the contemplation of such merger or
consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with the
Company or any such Restricted Subsidiary; (v) Liens on
property existing at the time of acquisition thereof by
the Company or any of its Restricted Subsidiaries,
provided that such Liens were in existence prior to the
contemplation of such acquisition; (vi) Liens to secure
the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of
business; (vii) Liens to secure Indebtedness permitted
by clause (v) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with
such Indebtedness; (viii) Liens existing on the date of
the Indenture; (ix) 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 therefor; (x) Liens
incurred in the ordinary course of business of the
Company or any of its Restricted Subsidiaries with
respect to obligations that do not exceed $2.0 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 any such
Restricted Subsidiary; (xi) Liens on assets of Real
Estate Subsidiaries securing Non-Recourse Real Estate
Debt; and (xii) Liens on the Pledge Account in favor of
the Collateral Agent.
"Permitted Real Estate Project" means a project
relating to one or more of the purposes for which Real
Estate Subsidiaries may be formed.
"Permitted Refinancing Debt" 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 of the Company or
any such Restricted Subsidiary; provided that: (i) the
principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable)
of 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 no earlier 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, such Permitted Refinancing
Indebtedness has a final maturity date no earlier than
the final maturity date of, and is subordinated in right
of payment to, the Notes 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 only by the Company
or the Restricted Subsidiary that is the obligor on the
Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Pledge Account" means the Pledge Account held
by the Collateral Agent for the benefit of Holders of
Notes for the initial deposit of U.S. Treasury
obligations maturing immediately prior to the January
15, 1997 and the July 15, 1997 interest payment dates
under the Notes acquired with approximately $15 million
of borrowings under the Senior Credit Facility and net
proceeds from the Note Offering which have been pledged
by the Company to secure such interest payments under
the Pledge and Disbursement Agreement.
"Pledge and Disbursement Agreement" means the
Pledge and Disbursement Agreement, dated as of the date
of the Indenture, by and between the Collateral Agent
and the Company, governing the establishment and
maintenance of, and disbursement from, the Pledge
Account.
"Real Estate Subsidiary" means a Restricted
Subsidiary of the Company that was formed for the
purpose of developing, constructing and marketing hotel,
condominium, interval ownership and other residential
real estate projects, together with commercial and other
space functionally related or complementary thereto, and
that is designated by the Board of Directors as a Real
Estate Subsidiary.
"Restricted Investment" means an Investment
other than a Permitted Investment.
"Restricted Subsidiary" of a Person means any
Subsidiary of such Person that is not an Unrestricted
Subsidiary.
"Senior Agent" means (i) until all Indebtedness
under the Bank Credit Agreements is paid in full, the
agent (or the institution performing similar functions)
under the Bank Credit Agreement under which the greatest
aggregate principal amount of Indebtedness is
outstanding and (ii) if all Indebtedness under the Bank
Credit Agreements has been paid in full, the Person (or
representative thereof) holding the greatest amount of
Senior Debt.
"Senior Debt" of any Person means and includes
all principal of, premium and interest on and other
Obligations with respect to (i) the Bank Credit
Agreements and (ii) any other Indebtedness of such
Person (other than as otherwise provided in this
definition), whether outstanding on the date of issuance
of the Notes or thereafter incurred; provided, however,
that Senior Debt shall not include (a) any Indebtedness
which by the terms of the instrument creating or
evidencing the same is subordinated or junior in right
of payment to any other Senior Debt in any respect or
(b) that portion of any Indebtedness incurred in
violation of the Indenture. Notwithstanding the
foregoing, Senior Debt shall not include (1)
Indebtedness evidenced by the Notes, (2) Indebtedness
which when incurred and without respect to any election
under Section 1111(b) of the United States Bankruptcy
Code is without recourse to such Person, (3) any
liability for foreign, federal, state, local or other
taxes owed or owing by such Person, (4) Indebtedness of
such Person to the extent such liability constitutes
Indebtedness to a Subsidiary or any other Affiliate of
such Person or any of such Affiliate's subsidiaries, (5)
Indebtedness for the purchase of goods or materials in
the ordinary course of business except purchase-money
Indebtedness secured by a security interest in or Lien
upon the goods or materials purchased or (6)
Indebtedness owed by such Person for compensation to
employees or for services.
"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 Act, as such Regulation is
in effect on the date hereof.
"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 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 such 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 of one or more Subsidiaries of such
Person (or any combination thereof).
"Unrestricted Subsidiary" means any Subsidiary
(i) 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 (i) has no
Indebtedness other than Non-Recourse Debt, (ii) is not
party to any agreement, contract, arrangement or
understanding with the Company or any of its Restricted
Subsidiaries unless the terms of any such agreement,
contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from
Persons who are not Affiliates of the Company, (iii) is
a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional
Equity Interests or (b) to maintain or preserve such
Person's financial condition or to cause such Person to
achieve any specified levels of operating results
(except, in the case of Ski Insurance Company, for the
indirect obligation to maintain adequate reserves and
capital as required by the State of Vermont), (iv) has
not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries and (v)
has at least one disinterested member of its board of
directors. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the Board
Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted
by the covenant described above under the caption
"Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall
be deemed to be incurred by a Restricted Subsidiary of
the Company as of such date (and, if such Indebtedness
is not permitted to be incurred as of such date under
the covenant described under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock," the
Company shall be in default of such covenant). The Board
of Directors 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 covenant
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; and, provided, further, that such
Subsidiary shall execute a Subsidiary Guarantee and
deliver an opinion of counsel in accordance with the
terms of the Indenture.
"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.
"Wholly Owned Restricted Subsidiary" of any
Person means a Restricted Subsidiary of such Person all
of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person and
the Wholly Owned Restricted Subsidiaries of such Person.
DESCRIPTION OF SUBORDINATED NOTES
General
The Old Subordinated Notes were issued and the
New Subordinated Notes are to be issued pursuant to the
Subordinated Note Indenture between the Company and U.S.
Trust Company of New York, as trustee (the "Subordinated
Note Trustee"). The terms of the Subordinated Notes
include those stated in the Subordinated Note Indenture
and those made part of the Subordinated Note Indenture
by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The Subordinated Notes are
subject to all such terms, and holders of Subordinated
Notes are referred to the Subordinated Note Indenture
and the Trust Indenture Act for a statement thereof. The
following summary of the material provisions of the
Subordinated Note Indenture does not purport to be
complete and is qualified in its entirety by reference
to the Subordinated Note Indenture and the forms of the
certificates evidencing the Old Subordinated Notes and
the New Subordinated Notes, including the definitions
therein of certain terms used below, which documents
have been filed as exhibits to the Registration
Statement and are incorporated herein by reference. The
definitions of certain terms used in the following
summary are set forth below under "-- Certain
Definitions."
All of the Company's Subsidiaries are Restricted
Subsidiaries, other than LBO Development Company, Ski
Insurance Company and Killington West Ltd., each of
which is an Unrestricted Subsidiary. Under certain
circumstances, the Company will be able to designate
additional current or future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries
will not be subject to many of the restrictive covenants
set forth in the Subordinated Note Indenture.
The Old Subordinated Notes and the New
Subordinated Notes will constitute a single series of
debt securities under the Subordinated Note Indenture.
If the Subordinated Notes Exchange Offer is consummated,
holders of the Old Subordinated Notes who do not
exchange their Old Subordinated Notes for New
Subordinated Notes will vote together with the holders
of the New Subordinated Notes for all relevant purposes
under the Subordinated Note Indenture. In that regard,
the Subordinated Note Indenture requires that certain
actions by holders thereunder (including acceleration
following an Event of Default) must be taken, and
certain rights must be exercised, by specified minimum
percentages of the aggregate principal amount of the
outstanding Subordinated Notes. In determining whether
holders of the requisite percentage in principal amount
have given any notice, consent or waiver or taken any
other action permitted under the Indenture, any Old
Subordinated Notes which remain outstanding after the
Subordinated Notes Exchange Offer will be aggregated
with the New Subordinated Notes and the holders of Old
Subordinated Notes and New Subordinated Notes will vote
together as single class for all such purposes.
Accordingly, all references herein to specified
percentages in aggregate principal amount of the
outstanding Subordinated Notes shall be deemed to mean,
at any time after the Subordinated Notes Exchange Offer
is consummated, such percentage in aggregate principal
amount of the Old Subordinated Notes and New
Subordinated Notes then outstanding.
The terms of the New Subordinated Notes are
identical in all material respects to the terms of the
Old Subordinated Notes except that (i) the New
Subordinated Notes will have been registered under the
Securities Act and thus will not bear restrictive
legends restricting their transfer pursuant to the
Securities Act and will not be entitled to registration
rights and (ii) Holders of New Subordinated Notes will
not be entitled to liquidated damages for the Company's
failure to register the Old Subordinated Notes or New
Subordinated Notes under the Subordinated Notes
Registration Rights Agreement. Holders of Old
Subordinated Notes should review the information set
forth under "The Exchange Offers - Certain Consequences
of a Failure to Exchange."
The New Subordinated Notes and the Old
Subordinated Notes are sometimes referred to as,
collectively, the "Subordinated Notes" and,
individually, a "Subordinated Note."
Principal, Maturity and Interest
The Subordinated Notes were issued in a
principal amount sufficient to generate approximately
$20.0 million of gross proceeds to the Company and will
mature on January 15, 2007. Interest on the Subordinated
Notes will not accrue prior to July 15, 2001.
Thereafter, interest will accrue at the rate of 13 3/4 %
per annum and will be payable semi-annually in arrears
in cash on January 15 and July 15 of each year,
commencing on January 15, 2002, to holders of record on
the immediately preceding January 1 and July 1. 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 July 15, 2001. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day
months. Principal of and premium, interest and
Liquidated Damages, if any, on the Subordinated 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
Subordinated Notes at their respective addresses set
forth in the register of Holders of Subordinated Notes;
provided that all payments with respect to Subordinated
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 Subordinated
Note Trustee maintained for such purpose. The Old
Subordinated Notes were, and the New Subordinated Notes
are to be, issued in denominations of $1,000 principal
amount and integral multiples thereof.
Subordination
The payment of principal of, premium, interest
and Liquidated Damages, if any, on, and all other
Obligations with respect to the Subordinated Notes will
be subordinated in right of payment, as set forth in the
Subordinated Note Indenture, to the prior payment in
full in cash of all Subordinated Note Senior Debt of the
Company (including, without limitation, the Company's
obligations with respect to the Senior Credit Facility
and the Notes), whether outstanding on the date of the
Subordinated Note Indenture or thereafter incurred.
Upon any distribution of cash, securities or
other property to creditors of the Company in a
liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors
or any marshaling of the Company's assets and
liabilities, the holders of Subordinated Note Senior
Debt of the Company will be entitled to receive payment
in full in cash of all Obligations due in respect of
such Subordinated Note Senior Debt (including interest
after the commencement of any such proceeding at the
rate specified in the applicable Subordinated Note
Senior Debt) before the Holders of Subordinated Notes
will be entitled to receive any payment with respect to
the Subordinated Notes, and until all Obligations with
respect to Subordinated Note Senior Debt of the Company
are paid in full in cash, any distribution to which the
Holders of Subordinated Notes would be entitled shall be
made to the holders of such Subordinated Note Senior
Debt (except that Holders of Subordinated Notes may
receive securities that are subordinated at least to the
same extent as the Subordinated Notes to Subordinated
Note Senior Debt and any securities issued in exchange
for Subordinated Note Senior Debt and payments made from
the trust described under "-- Legal Defeasance and
Covenant Defeasance").
The Company also may not make any payment upon
or in respect of the Subordinated Notes (except in such
subordinated securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance") if
(i) a default in the payment of the principal of or
premium or interest on Subordinated Note Senior Debt of
the Company occurs and is continuing or (ii) any other
default occurs and is continuing with respect to
Designated Subordinated Note Senior Debt of the Company
that permits holders of the Designated Subordinated Note
Senior Debt as to which such default relates to
accelerate its maturity and the Subordinated Note
Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Subordinated Note Senior
Agent. Payments on the Subordinated 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 and
(b) in case of a nonpayment default, the earlier of the
date on which such nonpayment default is cured or waived
or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity
of such Subordinated Note Senior Debt has been
accelerated. 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 Subordinated Note Trustee shall
be, or be made, the basis for a subsequent Payment
Blockage Notice.
The Subordinated Note Indenture further requires
that the Company promptly notify holders of Subordinated
Note Senior Debt of the Company if payment of the
Subordinated 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 Subordinated Notes may recover
less ratably than creditors of the Company who are
holders of Subordinated Note Senior Debt. As of April
28, 1996, after giving pro forma effect to the
Acquisition, the amount of outstanding Subordinated Note
Senior Debt of the Company would have been approximately
$167.6 million. The Subordinated Note Indenture limits
the amount of additional Indebtedness, including
Subordinated Note Senior Debt, that the Company and its
Restricted Subsidiaries can incur. See "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock."
Subsidiary Guarantees
The Company's payment Obligations under the
Subordinated Notes have been jointly and severally
guaranteed (the "Subordinated Note Subsidiary
Guarantees") by the Guarantors. The Obligations of each
Guarantor under its Subordinated Note Subsidiary
Guarantee are subordinated in right of payment to all
Subordinated Note Senior Debt of such Guarantor pursuant
to subordination provisions substantially similar to
those described above under "--Subordination."
The Subordinated Note Indenture provides that no
Guarantor may consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person)
another corporation, Person or entity, whether or not
affiliated with such Guarantor, unless (i) subject to
the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all of the
Obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably
satisfactory to the Subordinated Note Trustee, under the
Subordinated Notes and the Subordinated Note Indenture;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default exists;
(iii) such Guarantor, or any Person formed by or
surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect
to such transaction) equal to or greater than the
Consolidated Net Worth of such Guarantor immediately
preceding the transaction; and (iv) the Company would be
permitted by virtue of the Company's pro forma Fixed
Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the covenant described
below under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock"; provided, however,
that this provision shall not prohibit any merger or
consolidation among the Company or one or more wholly
owned Guarantors.
The Subordinated Note Indenture provides that,
in the event of a sale or other disposition of all of
the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any
Guarantor, such Guarantor (in the event of a sale or
other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of
all of the assets of such Guarantor) will be released
and relieved of any Obligations under its Subordinated
Note Subsidiary Guarantee; provided that the Net
Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the
Subordinated Note Indenture. See "-- Repurchase at
Option of Holders -- Asset Sales." In addition, the
Subordinated Note Indenture provides that, in the event
the Board of Directors designates a Guarantor to be an
Unrestricted Subsidiary, then such Guarantor will be
released and relieved of any Obligations under its
Subordinated Note Subsidiary Guarantee; provided that
such designation is conducted in accordance with the
applicable provisions of the Indenture.
Optional Redemption
The Subordinated Notes are not redeemable at the
Company's option prior to July 15, 2001. Thereafter, the
Subordinated Notes will be subject to redemption 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
interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the
twelve-month period beginning on July 15 of the years
indicated below:
Year Percentage
2001 106.875%
2002 105.156
2003 103.438
2004 101.719
2005 and thereafter 100.000
Notwithstanding the foregoing, on or prior to
July 15, 1999, the Company may redeem the Subordinated
Notes, in whole or in part, at a redemption price of
113.75% of the Accreted Value thereof, plus accrued and
unpaid Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more
Equity Offerings; provided that notice of each such
redemption shall have been given within 30 days after
the date of the closing of such Equity Offering.
Selection and Notice
If less than all of the Subordinated Notes are
to be redeemed at any time, selection of Subordinated
Notes for redemption will be made by the Subordinated
Note Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which
the Subordinated Notes are listed, or, if the
Subordinated Notes are not so listed, on a pro rata
basis, by lot or by such method as the Subordinated Note
Trustee shall deem fair and appropriate; provided that
no Subordinated Notes of $1,000 principal amount 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 Subordinated Notes to be redeemed at its registered
address. If any Subordinated Note is to be redeemed in
part only, the notice of redemption that relates to such
Subordinated Note shall state the portion of the
principal amount thereof to be redeemed. A new
Subordinated 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
Subordinated Note. On and after the redemption date,
interest ceases to accrue on Subordinated Notes or
portions of them 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 Subordinated Notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, the
Company will be required to make an offer (a
"Subordinated Note Change of Control Offer") to
repurchase all or any part (equal to $1,000 principal
amount or an integral multiple thereof) of each Holder's
Subordinated Notes at an offer price in cash equal to
101% of the Accreted Value thereof, plus accrued and
unpaid Liquidated Damages, if any, thereon (if prior to
July 15, 2001), or 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon (if on or after July
15, 2001), to the date of repurchase (the "Change of
Control Payment"). Within 30 days following any Change
of Control, the Company will mail a notice to each
Holder describing the transaction that constitutes the
Change of Control and offering to repurchase
Subordinated Notes pursuant to the procedures required
by the Subordinated Note Indenture and described in such
notice; provided that, prior to complying with the
provisions of this covenant, but in any event within 90
days following a Change of Control, the Company will
either repay all outstanding Subordinated Note Senior
Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Subordinated Note
Senior Debt to permit the repurchase of Subordinated
Notes required by this covenant. 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
Subordinated 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 Subordinated Notes or portions thereof
properly tendered pursuant to the Subordinated Note
Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment
in respect of all Subordinated Notes or portions thereof
so tendered and (iii) deliver or cause to be delivered
to the Subordinated Note Trustee the Subordinated Notes
so accepted together with an Officers' Certificate
stating the aggregate principal amount of Subordinated
Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each
Holder of Subordinated Notes so tendered the Change of
Control Payment for such Subordinated Notes, and the
Subordinated Note Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each
Holder a new Subordinated Note equal in principal amount
to any unpurchased portion of the Subordinated Notes
surrendered, if any; provided that each such new
Subordinated Note will be in a principal amount of
$1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Subordinated Note
Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Except as described above with respect to a
Change of Control, the Subordinated Note Indenture does
not contain provisions that permit the Holders of the
Subordinated Notes to require that the Company
repurchase or redeem the Subordinated Notes in the event
of a takeover, recapitalization or similar transaction.
The occurrence of a Change of Control could
result in a default under the Senior Credit Facility or
other Subordinated Note Senior Debt of the Company. In
addition, the Senior Credit Facility or other
Subordinated Note Senior Debt could restrict the
Company's ability to repurchase Subordinated Notes upon
a Change of Control. In the event a Change of Control
occurs at a time when the Company is prohibited from
repurchasing Subordinated Notes, the Company could seek
the consent of its lenders to the repurchase of
Subordinated Notes or could attempt to refinance 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
Subordinated Notes. In such case, the Company's failure
to make a Subordinated Note Change of Control Offer or
to repurchase Subordinated Notes tendered in a
Subordinated Note Change of Control Offer would
constitute an Event of Default under the Subordinated
Note Indenture, which could, in turn, constitute a
default under the Senior Credit Facility or other
Subordinated Note Senior Debt. In such circumstances,
the subordination provisions in the Subordinated Note
Indenture would likely restrict payments to the Holders
of Subordinated Notes. See "--Subordination." Finally,
upon a Change of Control, the Company will be obligated
to offer to repurchase the Notes, and the Company's
ability to repurchase Subordinated Notes upon a Change
of Control may be limited by the Company's then existing
financial resources.
The Company will not be required to make a
Subordinated Note Change of Control Offer upon a Change
of Control if a third party makes the Subordinated Note
Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth
in the Subordinated Note Indenture applicable to a
Subordinated Note Change of Control Offer made by the
Company and purchases all Subordinated Notes validly
tendered and not withdrawn under such Subordinated Note
Change of Control Offer.
Asset Sales
The Subordinated Note Indenture provides that
the Company will not, and will not permit any of its
Restricted Subsidiaries to, engage in 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 resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the
Subordinated Note Trustee) 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 cash; provided that (x) 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 any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their
terms subordinated to the Subordinated Notes) that are
assumed by the transferee of any such assets pursuant to
a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and
(b) any notes or other obligations received by the
Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company
or such Restricted Subsidiary into cash (to the extent
of the cash received) shall be deemed to be cash for
purposes of this provision and (y) Asset Sales pursuant
to the DOJ Divestiture shall not be subject to the 75%
minimum cash requirement specified in clause (ii) of
this paragraph, but such Asset Sales shall otherwise
continue to be subject to this covenant and any cash
proceeds resulting from the subsequent disposition of
such non-cash consideration shall be subject to the
provisions of this covenant.
Within 360 days after the receipt of any Net
Proceeds from an Asset Sale, the Company or such
Restricted Subsidiary may apply such Net Proceeds (a) to
permanently reduce Subordinated Note Senior Debt of the
Company or such Restricted Subsidiary (and to
correspondingly reduce commitments with respect thereto)
or (b) to the making of capital expenditures or the
acquisition of long-term assets in the same line of
business as the Company or any Restricted Subsidiary was
engaged immediately prior to such Asset Sale. Pending
the final application of any such Net Proceeds, the
Company may temporarily reduce Subordinated Note Senior
Debt or otherwise invest such Net Proceeds in any manner
that is not prohibited by the Subordinated Note
Indenture. Any Net Proceeds from Asset Sales in excess
of $1.0 million in any fiscal year that are not applied
or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Subordinated
Note Excess Proceeds." When the aggregate amount of
Subordinated Excess Proceeds exceeds $10.0 million, the
Company will be required to make an offer to all Holders
of Subordinated Notes (a "Subordinated Note Asset Sale
Offer") to purchase the maximum principal amount of
Subordinated Notes that may be purchased out of the
Subordinated Note Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the Accreted Value
thereof, plus accrued and unpaid Liquidated Damages, if
any, thereon (if prior to July 15, 2001), or 100% of the
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon (if on
or after July 15, 2001), to the date of purchase, in
accordance with the procedures set forth in the
Subordinated Note Indenture. To the extent that the
aggregate amount of Subordinated Notes tendered pursuant
to a Subordinated Note Asset Sale Offer is less than the
Subordinated Note Excess Proceeds, the Company may use
any remaining Subordinated Note Excess Proceeds for
general corporate purposes (subject to the restrictions
of the Subordinated Note Indenture). If the aggregate
principal amount of Subordinated Notes surrendered by
Holders thereof exceeds the amount of Subordinated Note
Excess Proceeds, the Subordinated Note Trustee shall
select the Subordinated Notes to be purchased on a pro
rata basis. Upon completion of such offer to purchase,
the amount of Subordinated Note Excess Proceeds shall be
reset at zero.
Certain Covenants
Restricted Payments
The Subordinated Note Indenture provides that
the Company will not, and will not permit any of its
Restricted Subsidiaries to, 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 holder of the
Company's Equity Interests in its capacity as such,
other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company
or dividends or distributions payable to the Company or
any Wholly Owned Restricted Subsidiary of the Company
that is a Guarantor; (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the
Company or any Subsidiary or other Affiliate of the
Company, other than any such Equity Interests owned by
the Company or any Wholly Owned Restricted Subsidiary of
the Company that is a Guarantor; (iii) make any
principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value, prior to a
scheduled mandatory sinking fund payment date or final
maturity date, any Indebtedness that is subordinated to
the Subordinated Notes; 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;
(b) the Company would be permitted by
virtue of the Company's pro forma Fixed Charge
Coverage Ratio, immediately after giving effect
to such Restricted Payment, to incur at least
$1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in
the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
(c) such Restricted Payment, together
with the aggregate of all other Restricted
Payments made by the Company and its Restricted
Subsidiaries on or after the date of the
Subordinated Note Indenture, is less than the
sum of (i) $5.0 million, plus (ii) 50% of the
Consolidated Net Income of the Company for the
period (taken as one accounting period) from
July 29, 1996 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 (iii)
100% of the aggregate net cash proceeds received
by the Company as capital contributions or from
the issue or sale since the date of the
Subordinated Note Indenture of Equity Interests
of the Company or of debt securities of the
Company that have been converted into such
Equity Interests (other than Equity Interests
(or convertible debt securities) sold to a
Subsidiary of the Company and other than
Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus
(iv) to the extent that any Restricted
Investment is sold for cash or otherwise
liquidated or repaid for cash, 100% of the net
cash proceeds thereof (less the cost of
disposition) (but only to the extent not
included in subclause (ii) of this clause (c));
plus (v) to the extent that any Unrestricted
Subsidiary is designated to be a Restricted
Subsidiary, the fair market value (as determined
in good faith by the Board of Directors) of the
Company's Investment in such Subsidiary at the
time of such designation (but only to the extent
not included in subclause (ii) of this clause
(c)); provided, however, that in the case of (1)
the declaration or payment of any dividend or
the making of any other payment or distribution
on account of the Company's Common Stock or to
any direct or indirect holder of the Company's
Common Stock in its capacity as such or (2) the
purchase, redemption or other acquisition or
retirement for value of any Common Stock of the
Company, (A) the Company may not include the
$5.0 million set forth in subclause (i) of this
clause (c) and may only include 25% of its
Consolidated Net Income for purposes of
subclause (ii) of this clause (c) in calculating
the amount available pursuant to this clause (c)
for the making of any such Restricted Payment
if, after giving effect to such Restricted
Payment, the Company's Leverage Ratio would
exceed 70% and (B) Consolidated Net Income for
purposes of this clause (c) shall exclude the
first $5.0 million of Consolidated Net Income of
the Company reported from July 29, 1996.
The foregoing provisions will not prohibit (i)
the payment of any dividend or other distribution 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 Subordinated Note
Indenture; (ii) the redemption, repurchase, retirement
or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of
the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from
clause (c) of the preceding paragraph; (iii) the
defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Debt or the
substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (c)
of the preceding paragraph; (iv) Investments in Real
Estate Subsidiaries in an amount not to exceed $10.0
million plus, to the extent that any such Investment is
sold for cash or otherwise liquidated or repaid for
cash, the net cash proceeds thereof (less the cost of
disposition); provided that the amount of any such net
cash proceeds shall be excluded from clause (c) of the
preceding paragraph; (v) the acquisition of Equity
Interests in Sugarloaf Mountain Corporation within the
six months following the consummation of the
Acquisition; (vi) contributions of real estate not used
in or essential to ski operations to Real Estate
Subsidiaries for Permitted Real Estate Projects; (vii)
conveyance of real estate not used in or essential to
ski operations to Unrestricted Subsidiaries with an
aggregate book value not in excess of $2.0 million;
(viii) Guarantees of Indebtedness of Real Estate
Subsidiaries to the extent that such Guarantees are
permitted to be incurred by the covenant described under
the caption "-- Incurrence of Indebtedness and Issuance
of Preferred Stock;" (ix) payments of principal of and
interest on the Demand Note; and (x) Investments
received by the Company and its Restricted Subsidiaries
as non-cash consideration from Asset Sales to the extent
permitted by the covenant described under the caption
"-- Repurchase at the Option of Holders -- Asset Sales."
The Board of Directors 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 by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and
will reduce the amount available for Restricted Payments
under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value
(as determined in good faith by the Board of Directors)
of such Investments at the time of such designation.
Such designation will only be permitted if such
Restricted Payment would be permitted at such time and
if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other
than cash) shall be the fair market value (evidenced by
a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Subordinated Note
Trustee) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Company or
such Subsidiary, as the case may be, pursuant to the
Restricted Payment. Not later than the date of making
any Restricted Payment, the Company shall deliver to the
Subordinated Note Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations
required by the covenant "Restricted Payments" were
computed, which calculations may be based upon the
Company's latest available financial statements.
Notwithstanding the foregoing, the Company and
its Restricted Subsidiaries may not (i) transfer any
property or assets that are a material part of the ski
operations of the Company and its Restricted
Subsidiaries to an Unrestricted Subsidiary or (ii)
designate as an Unrestricted Subsidiary any Restricted
Subsidiary of the Company that holds any property or
assets that are a material part of the ski operations of
the Company and its Restricted Subsidiaries.
Incurrence of Indebtedness and Issuance of Preferred
Stock
The Subordinated Note Indenture provides that
the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness
(including Acquired Debt), and will not permit any of
its Restricted Subsidiaries to issue any preferred
stock; provided, however, that, so long as no Default or
Event of Default has occurred and is continuing, the
Company and its Restricted Subsidiaries that are
Guarantors may incur Indebtedness (including Acquired
Debt), and its Restricted Subsidiaries that are
Guarantors may issue preferred stock, if the Fixed
Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal
quarterly financial statements are available immediately
preceding the date on which such additional Indebtedness
is incurred or such additional preferred stock is issued
would have been at least 2.0 to 1, determined on a pro
forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional
Indebtedness had been incurred or the additional
preferred stock had been issued at the beginning of such
four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company and its
Restricted Subsidiaries of Indebtedness pursuant
to the Bank Credit Agreements in an amount not
to exceed the greater of (a) $65.0 million and
(b) 1.5 times the Company's Consolidated Cash
Flow for the most recently ended four full
fiscal quarters for which internal quarterly
financial statements are available immediately
preceding the date on which such Indebtedness is
incurred, less, in either case, the aggregate
amount of all permanent reductions thereto
pursuant to the covenant described under "--
Repurchase at the Option of Holders -- Asset
Sales";
(ii) the incurrence by the Company and
its Restricted Subsidiaries of Existing
Indebtedness;
(iii) the incurrence by the Company and
the Guarantors of Indebtedness represented by
the Notes, the Subsidiary Guarantees, the
Indenture, the Subordinated Notes, the
Subordinated Note Subsidiary Guarantees and the
Subordinated Note Indenture;
(iv) the incurrence of intercompany
Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries
(other than Real Estate Subsidiaries); provided
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 Wholly Owned Restricted
Subsidiary of the Company, or any sale or other
transfer of any such Indebtedness to a Person
that is neither the Company nor a Wholly Owned
Restricted Subsidiary of the Company, shall be
deemed to constitute an incurrence of such
Indebtedness by the Company or such Restricted
Subsidiary, as the case may be;
(v) the incurrence by the Company or any
of its Restricted Subsidiaries of purchase money
Indebtedness to finance the purchase of property
or assets to be used in the ski operations of
the Company and its Restricted Subsidiaries or a
related business in an aggregate amount at any
one time outstanding not to exceed the lesser of
(a) the purchase price of such property or
assets and (b) $15.0 million;
(vi) the incurrence by the Company and
its Restricted Subsidiaries of Guarantees of
Indebtedness of Real Estate Subsidiaries in an
amount not to exceed $15.0 million at any one
time outstanding in connection with Permitted
Real Estate Projects, provided that the total
purchase price for the hotel, condominium,
interval ownership or other units comprising the
development to be constructed, in whole or in
part, with the proceeds of the Indebtedness so
guaranteed, that have been contracted for sale
(evidenced by executed purchase agreements and
security deposits from credit-approved
purchasers), equals at least 35% of the
estimated total cost of construction (as
determined in good faith by the Board of
Directors) of the Permitted Real Estate Projects
(except for the development of the Summit Hotel
at the Attitash resort, for which such total
purchase price must equal at least 25% of the
estimated total cost of construction (as
determined in good faith by the Board of
Directors));
(vii) the incurrence by the Company or
any of its Restricted Subsidiaries of Permitted
Refinancing Debt in exchange for, or the net
proceeds of which are used to extend, refinance,
renew, replace, defease or refund Indebtedness
that was permitted by the Subordinated Note
Indenture to be incurred;
(viii) the incurrence by Real Estate
Subsidiaries of Non-Recourse Real Estate Debt,
provided that if any such Indebtedness ceases to
be Non-Recourse Real Estate Debt of a Real
Estate Subsidiary, such event shall be deemed to
constitute an incurrence of Subordinated Note
Indebtedness by a Restricted Subsidiary of the
Company that is not a Real Estate Subsidiary;
(ix) the incurrence by the Company's
Unrestricted Subsidiaries of Non-Recourse Debt,
provided that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company; and
(x) the incurrence by the Company and its
Restricted Subsidiaries of additional
Indebtedness in an amount not to exceed $25.0
million at any one time outstanding, provided
that such Indebtedness is expressly subordinated
in right of payment to the Notes at least to the
same extent as the Notes are subordinated in
right of payment to Senior Debt of the Company.
Dividend and Other Payment Restrictions Affecting
Subsidiaries
The Subordinated Note Indenture provides that
the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become
effective any 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 on its Capital Stock or with
respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted
Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of
its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason
of: (a) Existing Indebtedness as in effect on the date
of the Subordinated Note Indenture; (b) applicable law;
(c) any instrument governing Indebtedness or Capital
Stock 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 was
incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or
assets of the Person, so acquired; (d) by reason of
customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent
with past practices; (e) 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; (f) any
instrument governing Non-Recourse Real Estate
Indebtedness of a Real Estate Subsidiary, which
encumbrance or restriction is not applicable to any
Person or the properties or assets of any Person other
than such Real Estate Subsidiary or the property or
asset of such Real Estate Subsidiary; (g) Subordinated
Note Senior Debt of the Company and Indebtedness of
Guarantors, provided that such Indebtedness was
permitted to be incurred pursuant to the Subordinated
Note Indenture; and (h) Permitted Liens.
Merger, Consolidation, or Sale of Assets
The Subordinated Note Indenture provides that
the Company may not consolidate or merge with or into
(whether or not the Company is the surviving entity),
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 corporation, Person or entity, unless (i) the
Company is the surviving entity or the entity 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 corporation
organized or existing under the laws of the United
States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any
such consolidation or merger (if other than the
Company) or the entity or 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 Subordinated Notes
and the Subordinated Note Indenture pursuant to a
supplemental indenture in a form reasonably
satisfactory to the Subordinated Note Trustee; (iii)
immediately after 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 Wholly Owned
Restricted Subsidiary of the Company, the Company or
the entity or 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 Fixed Charge 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."
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 a developing body of 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
Subordinated Notes to require the Company to repurchase
such Subordinated 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.
Transactions with Affiliates
The Subordinated Note Indenture provides the
Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly,
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 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
the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable
transaction with an unrelated Person and (ii) the
Company delivers to the Subordinated Note Trustee (a)
with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $0.5 million, a resolution
of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b)
with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as
to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of
national standing; provided that (1) any employment
agreement or arrangement in existence on the date of
the Indenture or entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the
Company or such Restricted Subsidiary, (2) transactions
between or among the Company and its Restricted
Subsidiaries and (3) Restricted Payments and Permitted
Investments that are permitted by the provisions of the
Indenture described above under the caption
"--Restricted Payments," in each case, shall not be
deemed Affiliate Transactions.
Independent Board of Directors
The Subordinated Note Indenture provides that
at least one member of the Board of Directors of the
Company shall be a disinterested director. The
Subordinated Note Indenture further provides that the
Company shall use its best efforts to have a
disinterested member of the Board of Directors by July
31, 1996.
Additional Subsidiary Guarantees
The Subordinated Note Indenture provides that
if the Company or any of its Restricted Subsidiaries
shall acquire or create another Subsidiary after the
date of the Subordinated Note Indenture, then such
newly acquired or created Subsidiary shall execute a
Subordinated Note Subsidiary Guarantee and deliver an
opinion of counsel in accordance with the terms of the
Indenture; provided, that this covenant shall not apply
to any Subsidiary that has been properly designated as
an Unrestricted Subsidiary in accordance with the
Subordinated Note Indenture for so long as it continues
to constitute an Unrestricted Subsidiary.
Payments for Consent
The Subordinated Note Indenture provides that
the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, pay
or cause to be paid any consideration, whether by way
of interest, fee or otherwise, to any Holder of any
Subordinated Notes for or as an inducement to any
consent, waiver or amendment of any of the terms or
provisions of the Subordinated Note Indenture or the
Subordinated Notes unless such consideration is offered
to be paid or is paid to all Holders of the
Subordinated 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 Subordinated Note Indenture provides that,
whether or not required by the rules and regulations of
the Commission, so long as any Subordinated Notes are
outstanding, the Company will furnish to the Holders of
Subordinated 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, including a "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" that describes the financial condition and
results of operations of the Company and its Restricted
Subsidiaries 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 has agreed that, for so long as
any Subordinated Notes remain outstanding, it 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 Securities Act.
Events of Default and Remedies
The Subordinated Note 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 the Subordinated Notes (whether or not
prohibited by the subordination provisions of the
Subordinated Note Indenture); (ii) default in payment
when due of the principal of or premium or Liquidated
Damages, if any, on the Subordinated Notes (whether or
not prohibited by the subordination provisions of the
Subordinated Note Indenture); (iii) failure by the
Company to comply with the provisions described under
the captions "-- Change of Control," "-- Asset Sales,"
"-- Restricted Payments" or "-- Incurrence of
Indebtedness and Issuance of Preferred Stock"; (iv)
failure by the Company for 30 days after notice to
comply with any of its other agreements in the
Subordinated Note Indenture or the Subordinated Notes;
(v) a continuing 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 Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness (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 $5.0 million or more; (vi)
failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in
excess of $5.0 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; and (vii) certain
events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is
continuing, the Subordinated Notes Trustee or the
Holders of at least 25% in principal amount of the then
outstanding Subordinated Notes may declare all the
Subordinated Notes 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, any Significant
Subsidiary of the Company or any group of Restricted
Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary of the Company, all
outstanding Subordinated Notes will become due and
payable without further action or notice. Holders of
the Subordinated Notes may not enforce the Subordinated
Notes Indenture or the Subordinated Notes except as
provided in the Subordinated Note Indenture. Subject to
certain limitations, Holders of a majority in principal
amount of the then outstanding Subordinated Notes may
direct the Subordinated Note Trustee in its exercise of
any trust or power. The Subordinated Notes Trustee may
withhold from Holders of the Subordinated Notes notice
of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of
principal or interest) if it determines that
withholding notice is in their interest.
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 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 Subordinated Notes pursuant to
the optional redemption provisions of the Subordinated
Notes Indenture, an equivalent premium shall also
become and be immediately due and payable to the extent
permitted by law upon the acceleration of the
Subordinated Notes. If an Event of Default occurs prior
to July 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding the prohibition
on redemption of the Subordinated Notes prior to such
date, then the premium specified in the Subordinated
Notes Indenture shall also become immediately due and
payable to the extent permitted by law upon the
acceleration of the Subordinated Notes.
The Holders of a majority in aggregate
principal amount of the Subordinated Notes then
outstanding by notice to the Subordinated Note Trustee
may on behalf of the Holders of all of the Subordinated
Notes waive any existing Default or Event of Default
and its consequences under the Subordinated Note
Indenture except a continuing Default or Event of
Default in the payment of the principal of or premium,
interest or Liquidated Damages on the Subordinated
Notes.
The Company is required to deliver to the
Subordinated Note Trustee annually a statement
regarding compliance with the Subordinated Note
Indenture, and the Company is required, upon becoming
aware of any Default or Event of Default, to deliver to
the Subordinated Note Trustee a statement specifying
such Default or Event of Default.
No Personal Liability of Directors, Officers,
Employees and Shareholders
No director, officer, employee, incorporator or
shareholder of the Company, as such, shall have any
liability for any Obligations of the Company under the
Subordinated Notes or the Subordinated Note Indenture
or for any claim based on, in respect of, or by reason
of, such Obligations or their creation. Each Holder of
Subordinated Notes by accepting a Subordinated Note
waives and releases all such liability. The waiver and
release are part of the consideration for issuance of
the Subordinated 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 Subordinated Notes ("Legal
Defeasance") except for (i) the rights of Holders of
outstanding Subordinated Notes to receive payments in
respect of the principal of and premium, interest and
Liquidated Damages, if any, on the Subordinated Notes
when such payments are due from the trust referred to
below, (ii) the Company's obligations with respect to
the Subordinated Notes concerning issuing temporary
Subordinated Notes, registration of Subordinated Notes,
mutilated, destroyed, lost or stolen Subordinated 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 Subordinated Note Trustee, and the Company's
obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Subordinated Note
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 Subordinated Note 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
Subordinated 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 Subordinated Notes.
In order to exercise either Legal Defeasance or
Covenant Defeasance, (i) the Company must irrevocably
deposit with the Subordinated Note Trustee, in trust,
for the benefit of the Holders of the Subordinated
Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts
as will be sufficient, without reinvestment, in the
opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and
premium, interest and Liquidated Damages, if any, on
the outstanding Subordinated Notes on the stated
maturity or on the applicable redemption date, as the
case may be, and the Company must specify whether the
Subordinated 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
Subordinated Note Trustee an opinion of counsel in the
United States reasonably acceptable to the Subordinated
Note 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 date
of the Subordinated Note Indenture, 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 Subordinated 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 Subordinated Note Trustee an
opinion of counsel in the United States reasonably
acceptable to the Subordinated Note Trustee confirming
that the Holders of the outstanding Subordinated Notes
will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant
Defeasance and will be subject t 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) or insofar as Events of
Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st
day after the date of 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
Subordinated Note 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 Subordinated Note
Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (vii) the
Company shall have delivered to the Subordinated Note
Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of
preferring the Holders of Subordinated 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 shall
have delivered to the Subordinated Note 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.
Transfer and Exchange
A Holder may transfer or exchange Subordinated
Notes in accordance with the Subordinated Note
Indenture. The Registrar and the Subordinated Note
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
Subordinated Note Indenture. The Company is not
required to transfer or exchange any Subordinated Note
selected for redemption. Also, the Company is not
required to transfer or exchange any Subordinated Note
for a period of 15 days before a selection of
Subordinated Notes to be redeemed.
The registered Holder of a Subordinated 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 Subordinated Note Indenture or the
Subordinated Notes may be amended or supplemented with
the consent of the Holders of at least a majority in
principal amount of the Subordinated Notes then
outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender
offer or exchange offer for, Subordinated Notes), and
any existing default or compliance with any provision
of the Subordinated Note Indenture or the Subordinated
Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding
Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for
Subordinated Notes).
Without the consent of each Holder affected, an
amendment or waiver may not (with respect to any
Subordinated Notes held by a non-consenting Holder):
(i) reduce the principal amount of Subordinated Notes
whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the
fixed maturity of any Subordinated Note or alter the
provisions with respect to the redemption of the
Subordinated Notes (other than provisions relating to
the covenants described above under the caption "--
Repurchase at the Option of Holders"), (iii) reduce the
rate of or change the time for payment of interest or
Liquidated Damages on any Subordinated Note, (iv) waive
a Default or Event of Default in the payment of
principal of or premium, interest or Liquidated Damages
on the Subordinated Notes (except a rescission of
acceleration of the Subordinated Notes by the Holders
of at least a majority in aggregate principal amount of
the Subordinated Notes and a waiver of the payment
default that resulted from such acceleration), (v) make
any Subordinated Note payable in money other than that
stated in the Subordinated Notes, (vi) make any change
in the provisions of the Subordinated Note Indenture
relating to waivers of past Defaults or the rights of
Holders of Subordinated Notes to receive payments of
principal of or premium, interest or Liquidated Damages
on the Subordinated Notes, (vii) waive a redemption
payment with respect to any Subordinated Note (other
than a payment required by one of the covenants
described above under the caption "--Repurchase at the
Option of Holders") or (viii) make any change in the
foregoing amendment and waiver provisions. In addition,
any amendment to the provisions of Article 10 of the
Subordinated Note Indenture (which relate to
subordination) requires the consent of the Holders of
at least 75% in aggregate principal amount of the
Subordinated Notes then outstanding if such amendment
would adversely affect the rights of Holders of the
Subordinated Notes.
Notwithstanding the foregoing, without the
consent of any Holder of Subordinated Notes, the
Company and the Subordinated Note Trustee may amend or
supplement the Subordinated Note Indenture or the
Subordinated Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated
Subordinated Notes in addition to or in place of
certificated Subordinated Notes, to provide for the
assumption of the Company's obligations to Holders of
Subordinated Notes in the case of a merger or
consolidation, to make any change that would provide
any additional rights or benefits to the Holders of
Subordinated Notes or that does not adversely affect
the legal rights under the Indenture of any such
Holder, or to comply with requirements of the
Commission in order to effect or maintain the
qualification of the Subordinated Note Indenture under
the Trust Indenture Act.
Concerning the Subordinated Note Trustee
The Subordinated Note Indenture contains
certain limitations on the rights of the Subordinated
Note 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
Subordinated Note Trustee will be permitted to engage
in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount
of the then outstanding Subordinated Notes will have
the right to direct the time, method and place of
conducting any proceeding for exercising any remedy
available to the Subordinated Note Trustee, subject to
certain exceptions. The Subordinated Note Indenture
provides that in case an Event of Default shall occur
(which shall not be cured), the Subordinated Note
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 Subordinated Note Trustee will be under no
obligation to exercise any of its rights or powers
under the Subordinated Note Indenture at the request of
any Holder of Subordinated Notes, unless such Holder
shall have offered to the Subordinated Note Trustee
security and indemnity satisfactory to it against any
loss, liability or expense.
Book-Entry, Delivery and Form
Except as set forth in the next paragraph, the
Subordinated Notes were initially issued in the form of
one Global Subordinated Note (the "Global Subordinated
Note"). The Global Subordinated Note was deposited on
the date of the closing of the sale of the Old
Subordinated Notes (the "Closing Date") with, or on
behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co.,
as nominee of the Depositary (such nominee being
referred to herein as the "Global Subordinated Note
Holder").
Subordinated Notes that are issued as described
below under "--Certificated Securities" will be issued
in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of
Certificated Securities, such Certificated Securities
may, unless the Global Subordinated Note has previously
been exchanged for Certificated Securities, be
exchanged for an interest in the Global Subordinated
Note representing the principal amount of Notes being
transferred.
The Depositary is a limited-purpose trust
company that was created to hold securities for its
participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and
to facilitate the clearance and settlement of
transactions in such securities between Participants
through electronic book-entry changes in accounts of
its Participants. The Depositary's Participants include
securities brokers and dealers (including Bear
Stearns), banks and trust companies, clearing
corporations and certain other organizations. Access to
the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or
the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who
are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the
Depositary's Participants or the Depositary's Indirect
Participants.
The Company expects that pursuant to procedures
established by the Depositary ownership of the
Subordinated Notes evidenced by the Global Subordinated
Note will be shown on, and the transfer of ownership
thereof will be effected only through, records
maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect
Participants. Prospective purchasers are advised that
the laws of some states require that certain persons
take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer
Subordinated Notes evidenced by the Global Subordinated
Note will be limited to such extent.
So long as the Global Subordinated Note Holder
is the registered owner of any Subordinated Notes, the
Global Subordinated Note Holder will be considered the
sole Holder under the Subordinated Note Indenture of
any Subordinated Notes evidenced by the Global
Subordinated Note. Beneficial owners of Subordinated
Notes evidenced by the Global Subordinated Note will
not be considered the owners or Holders thereof under
the Subordinated Note Indenture for any purpose,
including with respect to the giving of any directions,
instructions or approvals to the Subordinated Note
Trustee thereunder. Neither the Company nor the
Subordinated Note Trustee will have any responsibility
or liability for any aspect of the records of the
Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the
Subordinated Notes.
Payments in respect of the principal of and
premium, interest and Liquidated Damages, if any, on
any Subordinated Notes registered in the name of the
Global Subordinated Note Holder on the applicable
record date will be payable by the Subordinated Note
Trustee to or at the direction of the Global
Subordinated Note Holder in its capacity as the
registered Holder under the Subordinated Note
Indenture. Under the terms of the Subordinated Note
Indenture, the Company and the Subordinated Note
Trustee may treat the persons in whose names
Subordinated Notes, including the Global Subordinated
Note, are registered as the owners thereof for the
purpose of receiving such payments. Consequently,
neither the Company nor the Subordinated Note Trustee
has or will have any responsibility or liability for
the payment of such amounts to beneficial owners of
Subordinated Notes. The Company believes, however, that
it is currently the policy of the Depositary to
immediately credit the accounts of the relevant
Participants with such payments, in amounts
proportionate to their respective holdings of
beneficial interests in the relevant security as shown
on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect
Participants to the beneficial owners of Subordinated
Notes will be governed by standing instructions and
customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's
Indirect Participants.
Certificated Securities
Subject to certain conditions, any person
having a beneficial interest in the Global Note may,
upon request to the Subordinated Note Trustee, exchange
such beneficial interest for Subordinated Notes in the
form of Certificated Securities. Upon any such
issuance, the Subordinated Note Trustee is required to
register such Certificated Securities in the name of,
and cause the same to be delivered to, such person or
persons (or the nominee of any thereof). All such
certificated Subordinated Notes would be subject to the
legend requirements described herein under "Notice to
Investors." In addition, if (i) the Company notifies
the Subordinated Note Trustee in writing that the
Depositary is no longer willing or able to act as a
depositary and the Company is unable to locate a
qualified successor within 90 days or (ii) the Company,
at its option, notifies the Subordinated Note Trustee
in writing that it elects to cause the issuance of
Subordinated Notes in the form of Certificated
Securities under the Subordinated Note Indenture, then,
upon surrender by the Global Subordinated Note Holder
of its Global Subordinated Note, Subordinated Notes in
such form will be issued to each person that the Global
Subordinated Note Holder and the Depositary identify as
being the beneficial owner of the related Subordinated
Notes.
Neither the Company nor the Subordinated Note
Trustee will be liable for any delay by the Global
Subordinated Note Holder or the Depositary in
identifying the beneficial owners of Subordinated Notes
and the Company and the Subordinated Note Trustee may
conclusively rely on, and will be protected in relying
on, instructions from the Global Subordinated Note
Holder or the Depositary for all purposes.
Same-Day Settlement and Payment
The Subordinated Note Indenture requires that
payments in respect of the Subordinated Notes
represented by the Global Subordinated Note (including
principal, premium, interest and Liquidated Damages, if
any) be made by wire transfer of immediately available
funds to the accounts specified by the Global
Subordinated Note Holder. With respect to Certificated
Securities, the Company will make all payments of
principal, premium, interest and Liquidated Damages, if
any, by wire transfer of immediately available funds to
the accounts specified by the Holders thereof or, if no
such account is specified, by mailing a check to each
such Holder's registered address. The Subordinated
Notes represented by the Global Subordinated Note are
expected to be eligible to trade in the Depositary's
Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Subordinated
Notes will, therefore, be required by the Depositary to
be settled in immediately available funds. The Company
expect that secondary trading in the Certificated
Securities will also be settled in immediately
available funds.
Certain Definitions
Set forth below are certain defined terms used
in the Subordinated Note Indenture. Reference is made
to the Subordinated Note Indenture for a full
disclosure of all such terms. Capitalized terms not
defined below have the respective meanings assigned to
them under "Description of Senior Subordinated Notes --
Certain Definitions."
"Accreted Value" means, as of any date of
determination, the sum of (a) the initial offering
price of each Unit and (b) the portion of the excess of
the principal amount of each Subordinated Note over
such initial offering price which shall have been
accreted thereon through such date of determination,
such amount to be so accreted daily on a semi-annual
bond equivalent basis on January 15 and July 15 of each
year, at the rate of 13 3/4 % per annum.
"Designated Subordinated Note Senior Debt"
means (i) Subordinated Note Senior Debt incurred under
the Bank Credit Agreements and (ii) any other
Subordinated Note Senior Debt designated by the Company
as "Designated Subordinated Note Senior Debt" as
permitted under the Bank Credit Agreement by written
notice to the Trustee signed by both the Company and
the Subordinated Note Senior Agent.
"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), 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 Subordinated Notes mature.
"Permitted Refinancing Debt" 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 of the
Company or any such Restricted Subsidiary; provided
that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount (or accreted
value, if applicable) of 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 no earlier 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 Subordinated
Notes, such Permitted Refinancing Indebtedness has a
final maturity date no earlier than the final maturity
date of, and is subordinated in right of payment to,
the Subordinated Notes on terms at least as favorable
to the Holders of Subordinated Notes as those contained
in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred only
by the Company or the Restricted Subsidiary that is the
obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Subordinated Note Senior Agent" means (i)
until all Indebtedness under the Bank Credit Agreements
is paid in full, the agent (or the institution
performing similar functions) under the Bank Credit
Agreement under which the greatest aggregate principal
amount of Indebtedness is outstanding and (ii) if all
Indebtedness under the Bank Credit Agreements has been
paid in full, the Person (or representative thereof)
holding the greatest amount of Subordinated Note Senior
Debt.
"Subordinated Note Senior Debt" of any Person
means and includes all principal of, premium and
interest on and other Obligations with respect to (i)
the Bank Credit Agreements, (ii) the Notes and (iii)
any other Indebtedness of the Company (other than as
otherwise provided in this definition), whether
outstanding on the date of issuance of the Subordinated
Notes or thereafter incurred; provided, however, that
Subordinated Note Senior Debt shall not include (a) any
Indebtedness which by the terms of the instrument
creating or evidencing the same is pari passu with or
subordinated or junior in right of payment to the
Subordinated Notes or the Subordinated Note Subsidiary
Guarantees or (b) that portion of any Indebtedness
incurred in violation of the Subordinated Note
Indenture. Notwithstanding the foregoing, Subordinated
Note Senior Debt shall not include (1) Indebtedness
evidenced by the Subordinated Notes, (2) Indebtedness
which when incurred and without respect to any election
under Section 1111(b) of the United States Bankruptcy
Code is without recourse to such Person, (3) any
liability for foreign, federal, state, local or other
taxes owed or owing by such Person, (4) Indebtedness of
such Person to the extent such liability constitutes
Indebtedness to a Subsidiary or any other Affiliate of
such Person or any of such Affiliate's subsidiaries,
(5) Indebtedness for the purchase of goods or materials
in the ordinary course of business except
purchase-money Indebtedness secured by a security
interest in or Lien upon the goods or materials
purchased or (6) Indebtedness owed by such Person for
compensation to employees or for services.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock of which
978,300 shares of Common Stock are outstanding, 939,168
shares of which are owned by Leslie B. Otten and 39,132
shares of which are owned by purchasers of the Units.
The holders of Common Stock are entitled to one vote
per share on all matters to be voted upon by the
shareholders. The holders of Common Stock are entitled
to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors
out of funds legally available for that purpose. In the
event of a liquidation, dissolution or winding up of
the Company, the holders of the Common Stock are
entitled to share ratably in all assets remaining after
payment of liabilities. The Common Stock has no
preemptive or conversion rights or other subscription
rights. All outstanding shares of Common Stock are
fully paid and nonassessable. Neither the Articles of
Incorporation nor the Bylaws of the Company provide for
cumulative voting in the election of directors. The
Articles of Incorporation and the Bylaws of the Company
may be amended by the vote of the holders of a majority
of the outstanding Common Stock.
DESCRIPTION OF OTHER INDEBTEDNESS
In addition to the Notes and the Subordinated
Notes, the Company and its subsidiaries, after giving
effect to the acquisition of the 49% interest in
Sugarloaf and the divestitures of the Waterville Valley
and Mt. Cranmore resorts, pursuant to the Consent, at
July 28, 1996 would have outstanding indebtedness
totaling approximately $68.4 million. This indebtedness
includes (i) $34.4 million in borrowings under the
Senior Credit Facility (under which approximately $30.6
million would have been available for future borrowing),
(ii) an estimated $15.7 million of pre-existing
indebtedness of SKI and its subsidiaries, and (iii)
$13.1 million of pre-existing indebtedness of the
Company. See Note 3 to Consolidated Financial Statements
of SKI and Note 8 to Financial Statements of the
Company. In addition to such senior indebtedness, Sunday
River has outstanding a demand note in an original
principal amount of $5.2 million payable to Mr. Otten.
This obligation is more fully described under
"Management -- Certain Transactions with Management."
The Senior Credit Facility
The following is a summary of the Senior Credit
Facility, which does not purport to be complete and is
qualified in its entirety by reference to such Senior
Credit Facility, which document has been filed as an
exhibit to the Registration Statement and is
incorporated hereby by reference.
On the closing of the Acquisition, the Company
entered into the Senior Credit Facility with financial
institutions for whom Fleet National Bank ("Fleet") is
acting as agent. The Senior Credit Facility provides for
a $65.0 million revolving credit facility (which
includes a $3.5 million sub-facility for letters of
credit) under which approximately $42.8 million was
drawn in connection with the Acquisition and $24.7
million remained available for future borrowing at July
28, 1996.
The initial advances under the Senior Credit
Facility, proceeds from the issuance of the Notes and
available cash were used to pay the cash purchase price
payable in the Acquisition, to retire existing
indebtedness of the Company and SKI, to acquire the
minority interest in Sugarloaf, to fund the Pledge
Account and to pay fees and expenses in connection with
the Acquisition. See "The Acquisition; Antitrust
Matters; Use of Proceeds." Subsequent advances may be
applied to fund capital expenditures and the Company's
seasonal working capital needs. Amounts available for
borrowing under the Senior Credit Facility will
incrementally decline to $50.0 million over the period
ending July 1, 2000. The Senior Credit Facility will
mature on or about December 31, 2001.
The Company's obligations under the Senior
Credit Facility are guaranteed by the Guarantors, and
substantially all of the assets of the Guarantors have
been pledged to secure such guarantee obligations.
Borrowings under the Senior Credit Facility will
bear interest at a rate equal to Fleet's LIBOR Rate (as
defined) plus a margin of 1.5% to 2.5% per annum
(dependent upon the Company's Applicable Leverage Ratio)
or Fleet's Base Rate (as defined) plus a margin of up to
1.5% per annum (dependent upon the Company's Applicable
Leverage Ratio (as defined)), in each case as selected
by the Company. Applicable interest rates will be
increased by 2.0% per annum during the continuance of
any specified event of default under the Senior Credit
Facility. In addition to customary fronting and other
fees, the Company will pay a commitment fee of 0.5% per
annum on unused availability under the Senior Credit
Facility.
The Company is required to pay down the amounts
outstanding under the Revolving Credit Facility each
year, commencing in 1997, for a 45-day period which must
include March 31, to an amount declining from $25
million in 1997 to $10 million in 2000 and 2001. The
Company also may make optional prepayments, in full or
in part, on the Senior Credit Facility, upon up to three
business days' notice.
The obligation of the lenders under the Senior
Credit Facility to advance funds is subject to the
satisfaction of certain conditions customary in
agreements of this type. In addition, the Company is
subject to certain customary affirmative and negative
covenants contained in the Senior Credit Facility,
including, without limitation, covenants that restrict,
subject to specified exceptions, (i) incurrence of
additional indebtedness and other obligations; (ii) a
merger or consolidation with any other person (other
than pursuant to the Acquisition Agreement); (iii) asset
sales; (iv) granting of liens to secure any other
indebtedness (including the Notes); (v) prepayment or
modification of the terms of other indebtedness
(including the Notes); (vi) engaging in transactions
with affiliates; (vii) giving a negative pledge in favor
of any person other than the lenders; (viii) engaging in
sale and leaseback transactions; (ix) amending leases,
licenses and similar agreements or instruments; (x)
investing funds of the Company; and (xi) making capital
expenditures. Many of these covenants are more
restrictive than those in favor of holders of the Notes
as described herein and as set forth in the Indenture
and those in favor of holders of Subordinated Notes as
described herein and as set forth in the Subordinated
Note Indenture. In addition, the Senior Credit Facility
requires that the Company adhere to certain specified
financial covenants, including minimum interest and
fixed charge coverage ratios, maximum leverage ratio,
minimum net worth levels and ceilings tied to the
Company's Leverage Ratio (as defined) on real estate
investments and real estate financing guarantees,
expenditures on ski resort acquisitions and capital
expenditures.
The Senior Credit Facility also provides for
customary events of default. Occurrence of any of such
events of default could result in acceleration of the
Company's obligations under the Senior Credit Facility
and foreclosure on the collateral securing such
obligations, with material adverse results to holders of
the Notes. See "Risk Factors--Subordination of the Notes
and the Subordinated Notes."
The Senior Credit Facility provides for the DOJ
Divestiture by requiring that all or a specified portion
of the cash proceeds of the sale, including cash
realized from any non-cash consideration received from
the sale, be applied to permanently reduce the
availability under the Senior Credit Facility. In the
event the proceeds from the sale do not total an amount
specified in the Senior Credit Facility, Mr. Otten will
be required to contribute up to a specified amount of
cash equity to the Company to be applied to reduce the
amounts outstanding and available under the Senior
Credit Facility. The purchase price in the existing
agreement to sell both resorts exceeds this requirement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the
material federal income tax considerations relevant to
the purchase, ownership and disposition of the Notes and
the Subordinated Notes (collectively, the "Offered
Notes") by holders acquiring Offered Notes on original
issue for cash, but does not purport to be a complete
analysis of all potential tax effects. The discussion is
based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations, Internal Revenue
Service ("IRS") rulings and pronouncements and judicial
decisions all in effect as of the date hereof, all of
which are subject to change at any time, and any such
change may be applied retroactively in a manner that
could adversely affect a holder of the Offered Notes.
The discussion does not address all of the federal
income tax consequences that may be relevant to a holder
in light of such holder's particular circumstances or to
holders subject to special rules, such as certain
financial institutions, insurance companies, dealers in
securities, foreign corporations, nonresident alien
individuals and persons holding the Offered Notes as
part of a "straddle," "hedge" or "conversion
transaction." Moreover, the effect of any applicable
state, local or foreign tax laws is not discussed. The
discussion deals only with Offered Notes held as
"capital assets" within the meaning of section 1221 of
the Code.
The Company has not sought and will not seek any
rulings from the IRS with respect to the positions of
the Company discussed below. There can be no assurance
that the IRS will not take a different position
concerning the tax consequences of the purchase,
ownership or disposition of the Offered Notes or that
any such position would not be sustained.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE TAX
CONSIDERATIONS DISCUSSED BELOW TO THEIR PARTICULAR
SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS.
Stated Interest on the Offered Notes
Stated interest on the Notes will be taxable to
a holder as ordinary interest income at the time it
accrues or is received in accordance with the holder's
method of accounting for federal income tax purposes. As
discussed below, stated interest on the Subordinated
Notes will be treated as original issue discount and
will be included in income as such.
Original Issue Discount
The Offered Notes will be issued with original
issue discount for federal income tax purposes. A holder
generally is required to include original issue
discount, if any, in gross income as it accrues,
regardless of the holder's method of accounting for
federal income tax purposes. Accordingly, each holder
will be required to include amounts in gross income in
advance of the receipt of the cash to which such income
is attributable.
The amount of original issue discount with
respect to each Offered Note is equal to the excess of
the "stated redemption price at maturity" of such
Offered Note over the "issue price" of the Offered Note.
The stated redemption price at maturity of each Offered
Note will include all cash payments required to be made
thereunder until maturity, other than payments of
"qualified stated interest," which is defined generally
as interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at
least annually at a single fixed rate. Because there
will be no periodic payments of cash interest on the
Subordinated Notes prior to January 15, 2002, none of
the interest paid on the Subordinated Notes will
constitute qualified stated interest. The issue price of
a Note will be equal to the first price at which a
substantial amount of Notes is sold to the public for
money (excluding sales to underwriters, placement agents
or wholesalers, etc.). The issue price of a Subordinated
Note will be equal to that portion of the issue price of
the Unit of which such Subordinated Note is a part that
is allocable to the Subordinated Note as described in
the next paragraph. Accordingly, each Subordinated Note
will be issued subject to a substantial amount of
original issue discount.
Because the original purchasers of the
Subordinated Notes also acquired Unit Shares, each
Subordinated Note is likely to be treated for federal
income tax purposes as having been issued as part of an
"investment unit" consisting of the Subordinated Note
and associated Unit Share. The issue price of an
investment unit consisting of the Subordinated Note and
associated Unit Share will be the first price at which a
substantial amount of Units are sold to the public for
money (excluding sales to underwriters, placement agents
or wholesalers, etc.). The "issue price" of an
investment unit is allocated between its component parts
based on their relative fair market values. The Company
will allocate the issue price of the Units between the
Subordinated Notes and the Unit Shares in accordance
with their relative fair market values on the issue
date; that allocation is not, however, binding on the
IRS. A holder of a Unit must use the Company's
allocation unless the holder discloses on its federal
income tax return that it plans to use an allocation
that is inconsistent with the issuer's allocation.
Taxation of Original Issue Discount
Each holder of an Offered Note will be required
to include in gross income an amount equal to the sum of
the "daily portions" of the original issue discount of
the Offered Note for all days during each taxable year
in which the holder holds the Offered Note. The daily
portions of original issue discount will be determined
on a constant interest rate basis by allocating to each
day during the taxable year in which the holder holds
the Offered Note a pro rata portion of the original
issue discount thereon that is attributable to the
"accrual period" in which such day is included. The
amount of the original issue discount attributable to
each full accrual period will be the product of the
"adjusted issue price" of the Offered Note at the
beginning of such accrual period and the "yield to
maturity" of the Offered Note (adjusted to reflect the
length of the accrual period), less the amount of any
qualified stated interest allocable to the accrual
period. The adjusted issue price of an Offered Note at
the beginning of an accrual period is the original issue
price of the Offered Note plus the aggregate amount of
original issue discount that has accrued in all prior
accrual periods, less any cash payments on the Offered
Note on or before the first day of such accrual period
(other than payments of qualified stated interest). The
yield to maturity is the discount rate that, when used
in computing the present value of all principal and
interest payments to be made on the Offered Note,
produces an amount equal to its issue price.
The accrual period generally is the six-month
period ending on the day in each calendar year
corresponding to the day before the maturity date of the
Offered Note or the date six months before such date.
The initial accrual period of an Offered Note is the
short period beginning on the issue date and ending on
the day before the first day of the first full accrual
period. The amount of original issue discount
attributable to an initial short accrual period may be
computed under any reasonable method.
Sale or Retirement of an Offered Note
In general, a holder of an Offered Note will
recognize gain or loss upon the sale, retirement or
other taxable disposition of such Offered Note in an
amount equal to the difference between (a) the amount of
cash and the fair market value of property received in
exchange therefor (except to the extent attributable to
the payment of accrued interest or original issue
discount, which generally will be taxable to a holder as
ordinary income) and (b) the holder's adjusted tax basis
in such Offered Note.
A holder's tax basis in an Offered Note
generally will be equal to the price paid for such
Offered Note, increased by the amount of original issue
discount included in gross income prior to the date of
disposition, and decreased by the amount of any payments
on such Offered Note (other than payments of qualified
stated interest) prior to disposition.
Any gain or loss recognized on the sale,
retirement, or other taxable disposition of an Offered
Note generally will be capital gain or loss. Such
capital gain or loss generally will be long-term capital
gain or loss if the Offered Note had been held for more
than one year.
Holders should be aware that the resale of an
Offered Note may be affected by the "market discount"
rules of the Code under which a subsequent purchaser of
an Offered Note acquiring the Offered Note at a market
discount generally would be required to include as
ordinary income a portion of the gain realized upon the
disposition or retirement of such Offered Note to the
extent of the market discount that has accrued while the
debt instrument was held by such subsequent purchaser.
Backup Withholding and Information Reporting
A holder of an Offered Note may be subject to
backup withholding at a rate of 31% with respect to
interest and original issue discount on and gross
proceeds upon sale or retirement of an Offered Note
unless such holder (i) is a corporation or other exempt
recipient and, when required, demonstrates that fact, or
(ii) provides, when required, a correct taxpayer
identification number, certifies that backup withholding
is not in effect and otherwise complies with applicable
requirements of the backup withholding rules. Backup
withholding is not an additional tax; any amounts so
withheld are creditable against the holder's federal
income tax, provided the required information is
provided to the IRS.
The Company is required to furnish certain
information to the IRS, and will furnish annually to
record holders of Offered Notes, information with
respect to interest and original issue discount accruing
during the calendar year. That information will be based
upon the adjusted issue price of the Offered Note as if
the holder were the original holder of the Offered Note.
Holders who purchase Offered Notes for an amount other
than the adjusted issue price and/or on a date other
than the end of an accrual period will be required to
determine for themselves the amount of original issue
discount, if any, they are required to include in gross
income for federal income tax purposes.
Deductibility of Original Issue Discount
The deduction by the Company in respect of
original issue discount accrued with respect to the
Subordinated Notes will be limited in part and deferred
in part because the Subordinated Notes will be
"applicable high yield discount obligations." The
Subordinated Notes are applicable high yield discount
obligations because, among other things, the yield to
maturity of the Subordinated Notes exceeds the sum of
the applicable federal long-term rate (a rate published
by the IRS each month for application during the
following calendar month) in effect at the time of
issuance of the Subordinated Notes (the "AFR") plus five
percentage points. Accordingly, (i) if the yield to
maturity of the Subordinated Notes exceeds the sum of
the AFR plus six percentage points (such excess referred
to below as the "Disqualified Yield"), the deduction for
interest (including original issue discount) accrued on
the Subordinated Notes will be permanently disallowed to
the extent such interest or original issue discount is
attributable to the Disqualified Yield, and such
interest (including original issue discount) will be
treated as dividends to corporate holders of the
Subordinated Notes for purposes of the dividends-
received deduction (to the extent that such amounts
would have been treated as dividends had they been
distributions made by the Company with respect to its
stock) and (ii) the remainder of the original issue
discount on the Subordinated Notes will not be
deductible by the Company until paid.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE
OFFERS
In the opinion of Pierce Atwood, counsel to the
Company ("Counsel"), the following sets forth the
material anticipated federal income tax consequences of
the Exchange Offers. The following summary is based
upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the final, temporary and
proposed regulations promulgated thereunder, and
administrative rulings and judicial decisions now in
effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations.
Holders should note that Counsel's opinion is not
binding on the Internal Revenue Service (the "Service")
and there can be no assurance that the Service will take
a similar view with respect to the tax-consequences
described below. No ruling has been or will be
requested by the Company from the Service on any tax
matters relating to the New Notes or the New
Subordinated Notes. This summary is not intended to be
applicable to all categories of investors, some of
which, such as dealers in securities, banks, insurance
companies, tax-exempt organizations and foreign persons,
may be subject to special rules. ALL HOLDERS OF NOTES
AND/OR SUBORDINATED NOTES ARE ADVISED TO CONSULT THEIR
OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF EXCHANGING OLD NOTES FOR NEW
NOTES AND/OR OLD SUBORDINATED NOTES FOR NEW SUBORDINATED
NOTES.
The exchange of the New Notes for the Old Notes
and the exchange of the New Subordinated Notes for the
Old Subordinated Notes pursuant to the Exchange Offers
should not give rise to taxable income to the respective
Holders thereof for federal income tax purposes.
For a summary of the material anticipated
federal income tax consequences of the purchase,
ownership and disposition of the Notes and the
Subordinated Notes, see "Certain Federal Income Tax
Considerations."
PLAN OF DISTRIBUTION
Each broker-deal that receives New Notes or New
Subordinated Notes for its own account in connection
with either of the Exchange Offers must acknowledge that
it will deliver a prospectus in connection with any
resale of such New Notes or New Subordinated Notes.
This Prospectus, as it may be amended or supplemented
from time to time, may be used by Participating Broker-
Dealers during the period referred to below in
connection with resales of New Notes or New Subordinated
Notes received in exchange for Old Notes or Old
Subordinated Notes, as applicable, if such Old Notes or
Old Subordinated Notes were acquired by such
Participating Broker-Dealers for their own accounts as a
result of market-making activities or other trading
activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-
Dealer in connection with resales of such New Notes or
New Subordinated Notes for the lesser of (i) a period of
180 days from the date on which the Registration
Statement of which this Prospectus is a part is declared
effective or (ii) such period of time as such
Participating Broker-Dealers must comply with the
prospectus delivery requirements of the Securities Act
in order to resell such New Notes or New Subordinated
Notes received in exchange for Old Notes or Old
Subordinated Notes acquired for their own accounts as a
result of such market-making or other trading activities
(subject to extension under certain limited exceptions
described herein). See "The Exchange Offers - Resales
of New Notes and New Subordinated Notes."
The Company will not receive any cash proceeds
from the issuance of the New Notes and New Subordinated
Notes offered hereby. New Notes and New Subordinated
Notes received by broker-dealers for their own accounts
in connection with either of the Exchange Offers 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 New Notes or New
Subordinated 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 New Notes or New
Subordinated Notes. Any broker-dealer that resells New
Notes or New Subordinated Notes that were received by it
for its own account in connection with either of the
Exchange Offers and any broker or dealer that
participates in a distribution of such New Notes or New
Subordinated Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any profit
on any such resale of New Noes or New Subordinated Notes
and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation
under the Securities Act. Each of the Notes Letter of
Transmittal and the Subordinated Notes 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.
LEGAL MATTERS
The legality under state law of the New Notes
and the New Subordinated Notes (if and when issued) will
be passed upon for the Company by Pierce Atwood,
Portland, Maine. The legality of the Guarantees being
issued in connection with the Exchange Offers will be
passed upon for the Guarantors as follows: as to
matters of Maine law and Delaware law, by Pierce Atwood,
Portland, Maine; as to matters of New Hampshire law, by
Wadleigh, Starr, Peters, Dunn & Chiesa, and as to
matters of Vermont law, by Reiber, Kenlan, Schwiebert,
Hall & Facey.
EXPERTS
The consolidated balance sheet of the Company as
of July 30, 1995 and July 28, 1996 and the consolidated
statements of income, of changes in stockholders' equity
and of cash flows of the Company for the two years ended
July 28, 1996 included herein have been so included in
reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The combined statements of income, stockholder's
equity and cash flows of the Company for the year ended
July 31, 1994 included herein have been so included in
reliance on the report of Berry, Dunn, McNeil & Parker,
independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The consolidated balance sheet of SKI as of July
31, 1994 and 1995, and the consolidated statements of
income, stockholders' equity and cash flows of SKI for
each of the three years in the period ended July 31,
1995 included herein have been so included in reliance
on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as
experts in auditing and accounting.
The consolidated statements of operations,
stockholder's equity and cash flows of Sugarbush Resort
Corporation for the period from June 1, 1994 through May
15, 1995 and for the years ended May 31, 1994 and
May 31, 1993 included herein have been so included in
reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said
firm as experts in auditing and accounting.
As of September 1, 1995, the Company and its
independent accountants, Berry, Dunn, McNeil & Parker,
mutually agreed that the engagement of such accounting
firm would be terminated, based on their shared views as
to the Company's rapidly expanding needs for accounting,
tax and related services. Such firm's reports on the
Company's financial statements for the two years
preceding such decision did not contain any adverse
opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting
principles. During the two fiscal years of the Company
immediately preceding such decision and during the
subsequent interim period prior to such decision, there
were no disagreements with such firm on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedure. Price
Waterhouse LLP was engaged as the Company's independent
accountants on September 1, 1995.
INDEMNIFICATION
The Company is a Maine corporation. Section 719
of the Maine Business Corporation Act (13-A M.R.S.A.
101, et seq.) authorizes the indemnification by a
Maine corporation of any person who is a party or is
threatened to be made a party to any action, suit or
proceeding by reason of that person's status as a
director, officer, employee or agent of the corporation;
provided that no such indemnification may be provided
for any person if he or she shall have been finally
adjudicated (i) not to have acted honestly or in the
reasonable belief that his or her action was in or not
opposed to the best interests of the corporation or its
shareholders, or (ii) in any criminal proceeding, to
have had reasonable cause to believe his or her conduct
was unlawful. In the case of actions brought by or on
behalf of the corporation, indemnification may only be
provided if the court determines that such person is
fairly and reasonably entitled to the requested
indemnification. Indemnification must be provided to
the extent that a director, officer, employee or agent
has been successful, on the merits or otherwise, in
defense of an action of the type described in the second
sentence of this paragraph.
The Bylaws of the Company provide that it shall
indemnify any person who is made a party to any
threatened, pending or completed action, suit or
proceeding by reason of the fact that he or she is or
was a director or officer of the Company, and may
indemnify any employee or agent of the Company in such
circumstances, against expenses, including attorneys
fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with such action, suit or proceeding. No
indemnification may be provided for any person who shall
have been finally adjudicated not to have acted honestly
or in the reasonable belief that his or her action was
in or not opposed to the best interests of the Company
or who had reasonable cause to believe that his or her
conduct was unlawful. Indemnification must be provided
to any director, officer, employee or agent of the
Company to the extent such person has been successful,
on the merits or otherwise, in defense of any action or
claim described above. Any indemnification under this
provision of the Bylaws, unless required under the
Bylaws or ordered by a court, can be made only as
authorized in each specific case upon a determination by
a majority of disinterested directors or by independent
legal counsel or by the shareholders that such
indemnification is appropriate under the standard set
forth in the preceding sentence.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to
directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
OTHER MATTERS
No person has been authorized to give any
information or to make any representations, other than
those contained in this Prospectus. If given or made,
such information or representation may not be relied
upon as having been authorized by the Company. The
Company is not aware of any jurisdiction in which the
making of the Exchange Offers is not in compliance with
applicable law. If the Company becomes aware of any
jurisdiction in which the making of the Exchange Offers
would not be in compliance with applicable law, the
Company will make a good faith effort to comply with
such law. If, after such good faith effort, the Company
cannot comply with any such law, the Notes Exchange
Offer or the Subordinated Notes Exchange Offer, as
applicable, will not be made to (nor will tenders be
accepted from or on behalf of) holders of the Old Notes
or Old Subordinated Notes, as applicable, residing in
such jurisdictions. Neither the delivery of this
Prospectus nor any distribution of securities hereunder
shall under any circumstances create any implication
that the information contained herein is correct as of
any time subsequent not the date hereof or that there
has been no change in the information set forth herein
or in the affairs of the Company since the date hereof.
EXCHANGE AGENT
Holders of Old Notes or Old Subordinated Notes
who qualify to participate in the Exchange Offers and
who wish to accept the applicable Exchange Offer should
either (a) request their broker, dealer, commercial
bank, trust company or nominee to effect the transaction
for them or (b) complete and sign the applicable Letter
of Transmittal, having their signatures guaranteed if
required by the applicable Letter of Transmittal, and
forward such Letter of Transmittal together with such
Old Notes or Old Subordinated Notes, as the case may be,
and all other documents required by the applicable
Letter of Transmittal to the Exchange Agent at the
following address:
BY MAIL:
(insured or registered recommended)
United States Trust Company of New York
P.O. Box 843
Peter Cooper Station
New York, New York 10276
Attention: Corporation Trust
BY OVERNIGHT EXPRESS:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Services Window
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(800) 548-6565
FACSIMILE TRANSMISSION:
(for eligible institutions only)
(212) 420-6152
<PAGE>
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
American Skiing Company
<S> <C>
Report of Independent Accountants -- July 30, 1995 and F-2
July 28, 1996 and for the years then ended
Report of Independent Accountants -- For the year ended F-3
July 31, 1994
Consolidated Balance Sheet -- July 30, 1995 and July 28, F-4
1996
Consolidated Statement of Operations -- For the years F-5
ended July 31, 1994, July 30, 1995, and July 28, 1996
Consolidated Statement of Changes in Stockholders' Equity
- -- For the years ended July 31, 1994, July 30, 1995, and F-6
July 28, 1996
Consolidated Statement of Cash Flows -- For the years
ended July 31, 1994, July 30, 1995, and July 28, F-7
1996
Notes to Consolidated Financial Statements F-8
S-K-I Ltd.
Report of Independent Accountants F-27
Consolidated Balance Sheet -- July 31, 1994 and 1995 F-28
Consolidated Statement of Income -- For the years ended F-29
July 31, 1993, 1994, and 1995
Consolidated Statement of Changes in Stockholders' Equity
- -- F-30
For the three years ended July 31, 1995,
Consolidated Statement of Cash Flows -- For the years F-31
ended July 31, 1993, 1994, and 1995
Notes to Consolidated Financial Statements F-32
Consolidated Balance Sheet -- April 28, 1996 (unaudited) F-39
Consolidated Statement of Income -- For the nine months
ended April 30, 1995 F-40
and April 28, 1996 (unaudited)
Consolidated Statement of Cash Flows -- For the nine
months ended April 30, 1995 F-41
and April 28, 1996 (unaudited)
Notes to (Unaudited) Condensed Consolidated Financial F-42
Statements
Sugarbush Resort Corporation
Report of Independent Accountants F-44
Consolidated Statement of Operations - For the two years
ended May 31, 1994 F-45
and the period from June 1, 1994 through May 15, 1995
Consolidated Statement of Stockholder's Equity - For the
two years ended May 31, 1994 and the period from June 1, F-46
1994 through May 15, 1995
Consolidated Statement of Cash Flows - For the two years
ended May 31, 1994 F-47
and the period from June 1, 1994 through May 15, 1995
Notes to Consolidated Financial Statements F-48
</TABLE>
<PAGE>
Report of Independent Accountants
To The Stockholders of American Skiing Company
In our opinion, the accompanying consolidated balance
sheet and the related consolidated statements of
operations, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the
financial position of American Skiing Company and its
subsidiaries at July 28, 1996 and July 30, 1995, and the
results of their operations and their cash flows for the
years then ended in conformity with generally accepted
accounting principles. These financial statements are
the responsibility of the Company's management; our
responsibility is to express an opinion on these
financial statements based on our audits. We conducted
our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, MA
October 28, 1996
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Stockholders of American Skiing Company
We have audited the accompanying combined statements of
income, stockholder's equity and cash flows of American
Skiing Company for the year ended July 31, 1994. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally
accepted auditing standards. 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 our audits of the combined
statements of income, stockholder's equity and cash
flows provide a reasonable basis for our opinion.
In our opinion the combined statements of income,
stockholder's equity and cash flows referred to above
present fairly, in all material respects, the results of
operations and cash flows of American Skiing Company for
the year ended July 31, 1994 in conformity with
generally accepted accounting principles.
BERRY, DUNN, McNEIL & PARKER
Portland, Maine
December 22, 1995
<PAGE>
American Skiing Company
Consolidated Balance Sheet
<TABLE>
<CAPTION>
July 30, 1995 July 28, 1996
<S> <C> <C>
Assets
Current assets
Cash $1,362,000 $3,185,000
Restricted cash 309,000 902,000
Investments held in escrow -- 14,497,000
Accounts receivable, net 1,314,000 2,458,000
Inventory 1,381,000 5,025,000
Prepaid expenses 570,000 3,371,000
Prepaid loan fees -- 1,056,000
Property developed for sale 3,854,000 1,331,000
Assets held for sale -- 14,921,000
Deferred tax assets 95,000 588,000
Total current assets 8,885,000 47,334,000
Property and equipment, net 62,213,000 227,470,000
Goodwill -- 6,540,000
Prepaid loan fees -- 7,911,000
Long-term investments -- 4,343,000
Other assets -- 2,934,000
Assets held for sale -- 1,756,000
Note receivable, affiliate 387,000 444,000
Deferred tax assets 949,000 --
Total assets $ 72,434,000 $ 298,732,000
Liabilities and Stockholders' Equity
Current liabilities
Line of credit and current portion of $ 7,887,000 $ 22,893,000
long-term debt
Accounts payable and accrued expenses 4,010,000 13,406,000
Accrued leasehold 490,000 1,660,000
Accrued interest on subordinated -- 1,491,000
notes and debentures
Other liabilities 1,350,000 --
Due to Stockholder 186,000 175,000
Deposits and deferred revenue 537,000 3,541,000
Income taxes payable 303,000 671,000
Demand note, stockholder -- 5,200,000
Total current liabilities 14,763,000 49,037,000
Deferred income taxes -- 30,695,000
Long-term debt, excluding current 27,169,000 41,035,000
portion
Subordinated notes and debentures -- 146,792,000
Other long-term liabilities -- 6,778,000
Minority interest -- 2,492,000
Total liabilities 41,932,000 276,829,000
Stockholders' Equity
Common stock (See Note 2). 116,000 10,000
Additional paid-in capital 1,660,000 3,762,000
Retained earnings 28,726,000 18,131,000
Total stockholders' equity 30,502,000 21,903,000
Total liabilities and $ 72,434,000 $ 298,732,000
stockholders'equity Total liabilities and
stockholders' equity
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
American Skiing Company
Consolidated Statement of Operations
<TABLE>
<CAPTION>
Year Ended
July 31, 1994 July 30, 1995 July 28, 1996
<S> <C> <C> <C>
Revenues:
Ski and lodging $ 26,544,000 $ 46,794,000 $63,489,000
Real estate 6,682,000 7,953,000 9,933,000
Total revenues 33,226,000 54,747,000 73,422,000
Expenses:
Cost of operations
including 11,505,000 21,730,000 31,137,000
wages, maintenance and
supplies
Cost of real estate sold 3,179,000 3,994,000 5,844,000
Real estate and payroll 1,265,000 1,736,000 2,544,000
taxes
Utilities 1,854,000 4,132,000 5,819,000
Insurance 1,163,000 2,127,000 2,299,000
Selling, general and 5,940,000 9,394,000 11,289,000
administrative
Depreciation and 2,421,000 3,910,000 6,783,000
amortization
Total operating 27,327,000 47,023,000 65,715,000
expenses
Income from operations 5,899,000 7,724,000 7,707,000
Other Expenses:
Commitment fee -- -- 1,447,000
Interest expense 1,026,000 2,205,000 4,699,000
Income before provision for
income taxes and 4,873,000 5,519,000 1,561,000
minority interest in loss
of subsidiary
Provision for income taxes -- (400,000) (3,906,000)
Minority interest in loss
of subsidiary -- -- 108,000
Net income (loss) $ 4,873,000 $ 5,119,000 $(2,237,000
)
Net loss per weighted average
share outstanding (942,200
shares). (See Note 3). $ (2.37)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
American Skiing Company
Consolidated Statement of Changes in Stockholders'
Equity
<TABLE>
<CAPTION>
Additional
Common stock Paid-in Retained Total
capital earnings
<S> <C> <C> <C> <C>
Balance at July 25, $ 116,000 $722,000 $22,316,000 $ 23,154,000
1993
Net income -- -- 4,873,000 4,873,000
Distributions to -- -- (2,728,000) (2,728,000)
stockholder
Contributions -- 913,000 -- 913,000
Balance at July 31, 1994 116,000 1,635,000 24,461,000 26,212,000
Net income -- -- 5,119,000 5,119,000
Distributions to -- -- (854,000) (854,000)
stockholder
Contributions -- 25,000 -- 25,000
Balance at July 30, 1995 116,000 1,660,000 28,726,000 30,502,000
Net loss -- -- (2,237,000) (2,237,000)
Distributions to -- -- (8,358,000) (8,358,000)
stockholder
Contributions -- 1,020,000 -- 1,020,000
Conversion of affiliate
companies common stock
to American Skiing
Company common stock (106,000) 106,000 -- --
Issuance of shares of
common stock (See Note 10). -- 976,000 -- 976,000
Balance at July 28, 1996 $ 10,000 $3,762,000 $18,131,000 $ 21,903,000
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Skiing Company
Consolidated Statement of Cash Flows
Year ended
July 31, 1994 July 30, 1995 July 28, 1996
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 4,873,000 $5,119,000 $(2,237,000)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Minority interest in net loss of -- -- (108,000)
subsidiary
Depreciation and amortization 2,543,000 3,910,000 6,783,000
Amortization of debt discount -- -- 435,000
Income tax expense on conversion
of S corporations to C corporations C corporations -- -- 5,552,000
Deferred income taxes, net -- (488,000) (1,940,000)
Decrease (increase) in assets:
Accounts receivable (202,000) (684,000) 481,000
Inventory (226,000) (876,000) (373,000)
Prepaid expenses 65,000 (324,000) (648,000)
Properties developed for (662,000) 3,377,000 2,523,000
resale
Note receivable and other 2,000 54,000 (836,000)
assets
Increase (decrease) in
liabilities:
Accounts payable and accrued (847,000) 2,157,000 (3,606,000)
expenses
Other liabilities -- -- 490,000
Deposits and deferred revenue (108,000) 45,000 944,000
Income taxes payable -- 303,000 5,000
Net cash provided by operating 5,438,000 12,593,000 7,465,000
activities
Cash flows from investing activities
Payments for purchases of (3,060,000) (1,819,000) (97,079,000)
businesses, net of cash acquired
Proceeds from insurance settlement 1,817,000 -- --
Long-term investments -- -- (450,000)
Capital expenditures (7,798,000) (12,024,000) (25,054,000)
Net cash used by investing (9,041,000) (13,843,000) (122,583,000)
activities
Cash flows from financing activities
Net proceeds from senior credit -- -- 40,301,000
facility
Net proceeds from (payments of) line (6,961,000) 2,820,000 (5,776,000)
of credit
Net proceeds from (payments of) 15,915,000 1,150,000 (17,101,000)
revolving credit line
Proceeds from subordinated notes and
debentures, net of -- -- 121,126,000
investments held in escrow
Prepaid loan fees -- -- (8,485,000)
Proceeds from long-term debt 671,000 84,000 1,819,000
Payments of long-term debt (3,758,000) (765,000) (13,625,000)
Payments to former stockholders (57,000) (61,000) (156,000)
Distributions to stockholder (2,277,000) (854,000) (3,158,000)
Capital contribution 231,000 25,000 1,020,000
Issuance of shares of common stock -- -- 976,000
Net cash provided by financing 3,764,000 2,399,000 116,941,000
activities
Net increase in cash 161,000 1,149,000 1,823,000
Cash, beginning of year 52,000 213,000 1,362,000
Cash, end of year $ 213,000 $1,362,000 $ 3,185,000
Cash paid for interest $ 1,192,000 $1,056,000 2,408,000
Cash paid for income taxes $ -- $ -- 15,000
Supplemental Disclosure of Noncash
Activities:
Property acquired under capitalized $ 646,000 $1,050,000 $ 435,000
leases
Liabilities assumed associated with $ 2,616,000 $9,254,000 $ 58,497,000
purchased companies
Deferred tax liability associated $ -- $ -- $ 28,372,000
with purchased companies
Land contributed by stockholder $ 682,000 $ -- $ --
Note payable issued for distribution $ -- $ -- $ 5,200,000
to stockholder
</TABLE>
The accompanying notes are an integral part of these
financial statements.
1. Basis of Presentation
American Skiing Company (the "Company") is a
group of companies whose primary function is to
develop and operate ski areas. The Company
operates predominantly in a single industry
segment, which is the development and operation
of ski areas. American Skiing Company provides
ski recreation and related services to skiers, a
single customer group. Prior to the acquisition
of S-K-I Limited, Inc. on June 28, 1996 (See
Note 3), the Company was a combined group which
included the following companies:
Sunday River Skiway Corporation ("SRSC", a Maine C
corporation), operates the Sunday River Ski Resort in Newry, Maine.
SRSC also engages in real estate development at the ski resort as a
means of establishing the necessary lodging amenities required in a
destination resort, as well as to generate supplemental income.
Sunday River Ltd. ("SRL", a Maine C corporation), operates the
Summit Hotel at Sunday River.
Perfect Turn, Inc. ("PT", a Maine C corporation), operates the
skier development programs at each of the Company's ski resorts and
franchises the program to other nonaffiliated resorts.
Sunday River Transportation Co. ("SRTC", a Maine C
corporation), operates the Silver Bullet train.
Sugarbush Resorts Holdings, Inc. ("SRHI", a Vermont C
corporation), operates the ski resort, golf course and inn at the
Sugarbush Resort in Warren, Vermont.
Club Sugarbush, Inc. ("CS", a Vermont C corporation), operates
a health club at the Sugarbush Resort. CS is a wholly owned
subsidiary of SRHI.
Sugarbush Leasing Company (a Vermont C corporation), is an
inactive wholly owned subsidiary of SRHI.
Sugarbush Restaurants, Inc. (a Vermont C corporation), owns
various operating licenses for Sugarbush operations and is a wholly
owned subsidiary of SRHI.
Mountain Water Co. ("MWC", a Vermont C corporation), operates a
water utility at the Sugarbush Resort. MWC is a wholly owned
subsidiary of SRHI.
Mountain Waste Water Co. ("MWWC", a Vermont C corporation),
operates a sewage treatment plant at the Sugarbush Resort. MWWC is a
wholly owned subsidiary of SRHI.
LBO Holding, Inc. ("LBO", a Maine C corporation), operates the
Attitash/Bear Peak Ski Resort in Bartlett, New Hampshire.
Cranmore, Inc. ("Cranmore", a Maine C corporation), operates
the Mt. Cranmore Ski Resort in North Conway, New Hampshire. Cranmore
is a wholly owned subsidiary of LBO. See Notes 3 and 4.
On June 28, 1996, the Company consummated a
transaction with S-K-I Limited, Inc. ("S-K-I")
in which the Company purchased from the former
shareholders all of the shares of outstanding S-
K-I common stock for $18.00 per share.
Simultaneous with the acquisition of S-K-I and
the contribution of all of the outstanding
capital stock of the corporations comprising
Sunday River, Sugarbush, Attitash/Bear Peak and
Mt. Cranmore to the Company, the Company became
a consolidated entity. See Note 3.
1. Basis of Presentation (continued)
The acquired S-K-I companies which are included
in the Company's consolidated financial
statements as of July 28, 1996 include:
S-K-I Limited ("S-K-I", a Delaware C corporation) is the
corporate holding company for the former S-K-I entities.
Killington, Ltd. ("Killington", a Vermont C corporation)
operates the ski resort, golf course, and lodging facilities of
Killington Resort in Killington, Vermont.
Mount Snow Ltd. ("Mt. Snow", a Vermont C corporation) operates
the ski resort, golf course, and lodging facilities of the Mt.
Snow/Haystack Resort in Brattleboro, Vermont.
Waterville Valley Ski Area, Ltd. ("Waterville", a New Hampshire
C corporation) operates the Waterville Valley Ski resort and lodging
facilities in Waterville Valley, NH. See Note 3.
Sugarloaf Mountain Corporation ("Sugarloaf", a Maine C
corporation) operates the ski resort, golf course, and lodging
facilities of Sugarloaf Resort in Carrabassett Valley, Maine.
Killington, Mt. Snow, and Waterville are each
wholly-owned subsidiaries of S-K-I at July 28,
1996, and Sugarloaf is a 51% owned subsidiary at
that date. The Company purchased the remaining
49% minority interest in Sugarloaf on August 30,
1996. See Note 3.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of American
Skiing Company (see Note 1). All significant
intercompany accounts and transactions have been
eliminated. Significant accounting policies
followed in preparing these consolidated
financial statements are presented below.
Fiscal Year
The Company's fiscal year is a fifty-two week or
fifty-three week period ending on the Sunday
nearest the end of July. The periods for 1994,
1995 and 1996 consisted of fifty-three, fifty-
two and fifty-two weeks, respectively.
Restricted Cash
Restricted cash represents amounts held in
escrow for the buyers of properties developed
for resale. The cash will be available to the
Company when the properties are sold.
Marketable Securities
Included in other assets are U.S. Government and
Agency obligations and corporate obligations.
It is management's intent to hold these
securities until maturity. These securities are
carried at amortized cost, which approximates
quoted market values at July 28, 1996.
2. Summary of Significant Accounting Policies
(continued)
Investments Held in Escrow
Investments held in escrow consist of U.S.
Treasury Notes maturing on January 15, and July
15, 1997 for payment of interest on Subordinated
Notes. These T-Notes are classified as held to
maturity and are carried at amortized cost which
approximates quoted market values at July 28,
1996. See Note 10.
Inventories
Inventories are stated at the lower of cost
(first-in, first-out) or market, and consist
primarily of retail goods, food and beverage
products and mountain operating supplies.
Property and Equipment
Property and equipment are recorded at cost and
are depreciated by the straight-line method over
the assets' estimated useful lives which
generally range from 9 to 40 years for
buildings, 3 to 12 years for machinery and
equipment and 10 to 50 years for leasehold
improvements, lifts, lift lines and trails.
Assets under capital lease are depreciated over
the shorter of their useful lives or the
respective lease lives.
Intangibles Resulting from Business Acquisitions
The Company has classified as goodwill the cost
in excess of fair value of the net assets
(including tax attributes) of companies acquired
in purchase transactions. Goodwill is being
amortized using the straight-line method over 40
years. Amortization of goodwill charged to
continuing operations amounted to $14,000 for
1996. Prepaid loan fees are amortized on a
straight-line basis over their loan terms
ranging from five to ten years. Amortization
expense of prepaid loan fees amounted to $81,000
for 1996.
Revenue Recognition
The Company recognizes revenue at the point of
service, except for real property sales (see
Note 5). Revenue includes sales of lift
tickets, tuition from ski schools, sales from
restaurants, bars and retail shops, and real
estate rentals and sales of real property.
Interest
Interest is expensed as incurred except when it
is capitalized in conjunction with major capital
additions and development of properties for
resale. The amounts of interest capitalized are
determined by applying current interest rates to
the funds required to finance the construction.
Employee Benefits
SRSC has a profit sharing plan pursuant to
Section 401(k) of the Internal Revenue Code,
whereby participants may contribute a percentage
of compensation. SRSC will match ten percent of
participant contributions up to one percent of
participant compensation and may also make
profit-sharing contributions to the plan at the
discretion of the Board of Directors. LBO
temporarily assumed a defined contribution plan
of the former Mt. Attitash Lift Corporation.
Subsequent to July 31, 1995 the plan was
terminated. Former employees were paid out and
existing employee benefits were rolled into a
separate savings plan pursuant to Section 401(k)
of the Internal Revenue Code which the employees
of SRHI were already able to participate in.
Pursuant to this plan, which LBO and SRHI
employees are now both eligible to participate
in, the employer will match twenty-five percent
of employee contributions up to 4% of annual
salary. The plans' 1994, 1995 and 1996
contribution expenses of $16,000, $107,000 and
$87,000, respectively, are included in "cost of
operations including wages, maintenance, and
supplies".
2. Summary of Significant Accounting Policies
(continued)
S-K-I has a trusteed noncontributory profit
sharing retirement plan covering substantially
all of its full-time employees. There have been
no contributions made to the plan and charged to
operations for 1996.
S-K-I has a savings plan under Section 401(k) of
the Internal Revenue Code. The plan allows all
full-time employees to defer up to 15% of their
income in an amount up to $9,240 on a pretax
basis.
Advertising Costs
Advertising costs are expensed the first time
the advertising takes place. The amount charged
to advertising expense for the years ended July
31, 1994, July 30, 1995 and July 28, 1996 was
$1,042,000, $4,518,000 and $5,693,000,
respectively.
Use of Estimates
The preparation of financial statements requires
management to make estimates and assumptions
that affect the financial statements. Actual
results could differ from those estimates.
Seasonality
The occurrence of adverse weather conditions
during key periods of the ski season could
adversely affect the Company's operating
results. In addition, the Company's revenues
are highly seasonal in nature, with the majority
of its revenues historically being generated in
the second and third quarters, of which a
significant portion is produced in two weeks -
the Christmas and Presidents' Day vacation
weeks.
Earnings Per Share
At July 28, 1996 there are 10,000,000 shares of
common stock ($.01 par value) authorized,
978,300 shares issued and outstanding.
For the year ended July 28, 1996, the
computation of net loss per common share is
based on the weighted average of shares
outstanding during the year (942,200 for the
year ended July 28, 1996). Prior to June 28,
1996, all of the Company's outstanding common
stock was owned by the same individual (the
"Stockholder"), and accordingly earnings per
share has not been presented for fiscal years
ended 1994 and 1995.
Income Taxes
The Company utilizes the asset and liability
method of accounting for income taxes, as set
forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). SFAS 109 requires the recognition
of deferred tax assets and liabilities for the
expected future tax consequences of temporary
differences between the financial statement and
tax bases of assets and liabilities, utilizing
currently enacted tax rates. The effect of any
future change in tax rates is recognized in the
period in which the change occurs.
As described in Note 13, certain of the
Company's subsidiaries had previously elected to
be taxed under the provisions of Subchapter S of
the Internal Revenue Code of 1986, as amended,
with income or loss and credits passed through
to the stockholder. Concurrent with the
acquisition of S-K-I, these subsidiaries'
election to be treated as S corporations
terminated (see Note 13). The companies will
continue to file separate tax returns.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No.
121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" was
recently issued and its adoption is required for fiscal
years beginning after December 15, 1995. SFAS No. 121
mandates specific methodologies to be used for
identifying and measuring the impairment of long-lived
assets. Adoption of SFAS No. 121 is not expected to
materially impact the Company's financial statements.
3. Acquisition of S-K-I
On June 28, 1996, the Company acquired S-K-I
(the "Acquisition") for a total purchase price,
including direct costs, of $104.6 million plus
liabilities assumed (excluding deferred taxes)
of $58.5 million for all of the shares
outstanding of S-K-I common stock. Pursuant to
the transaction, S-K-I became a wholly-owned
subsidiary of the Company. The acquisition was
accounted for using the purchase accounting
method. The consolidated financial statements
contained herein reflect the results of
operations of the acquired S-K-I entities
subsequent to June 28, 1996 and include the
balance sheet accounts of the acquired S-K-I
entities at July 28, 1996.
The purchase price was allocated to the fair
values of S-K-I's assets and liabilities at the
date of acquisition as follows:
<TABLE>
<CAPTION>
Fair Value of
Net Assets Acquired
<S> <C>
Cash $ 7,540,000
Accounts receivable, net 1,625,000
Inventory 3,271,000
Prepaid expenses 2,153,000
Property and equipment, net 163,745,000
Long-term investments 3,893,000
Goodwill 6,554,000
Other assets 2,156,000
Total assets $ 190,937,000
Accounts payable and accrued $ (16,567,000)
expenses
Other liabilities (5,301,000)
Minority interest (2,600,000)
Debt acquired (34,029,000)
Deferred income taxes (27,820,000)
Total liabilities $ (86,317,000)
Total $ 104,620,000
Concurrent with the Acquisition, the stockholder
contributed all of his outstanding capital stock
of the corporations comprising Sunday River,
Sugarbush, Attitash/Bear Peak and Mt. Cranmore
to the Company.
Pursuant to a consent decree with the U.S.
Department of Justice in connection with the
Merger, the Company has signed a sales agreement
to divest the assets constituting the Waterville
Valley and Mt. Cranmore resorts for $17.5
million. The divestitures are expected to be
consummated no later than December 1, 1996. The
assets held for sale of the Mt. Cranmore resort
included in the accompanying consolidated
balance sheet as of July 28, 1996 are
approximately $4.4 million and the net income
for the year ended July 28, 1996 of the Mt.
Cranmore resort included in the accompanying
consolidated statement of operations is
approximately $251,000. The assets held for
sale of the Waterville resort included in the
accompanying consolidated balance sheet as of
July 28, 1996 are approximately $12.3 million
and the net loss for the period June 28 through
July 28, 1996 of the Waterville resort included
in the accompanying consolidated statement of
operations is approximately $269,000.
3. Acquisition of S-K-I (continued)
On August 30, 1996, the Company purchased the
remaining 49% minority interest in Sugarloaf for
$2.0 million cash and payment of a $600,000
prepayment penalty related to certain
indebtedness of Sugarloaf. Up to $1 million
additional purchase price may be paid pursuant
to an earnings based formula covering the period
from August 31, 1996 through November 30, 2002.
The following unaudited pro forma summary
presents the consolidated results of operations
as if the acquisition of S-K-I, the divestitures
of Waterville Valley and Mt. Cranmore, the
purchase of the minority interest of Sugarloaf,
and the termination of the S corporation status
of the S corporations (which reflects the
estimated results of operations as if SRSC, SRL,
PT and SRTC had been subject to corporate income
taxes) had occurred on July 31, 1995 and August
1, 1994:
Year Ended Year Ended
July 30, July 28,
1995 1996
Revenues $149,031,000 $171,996,000
Expenses 157,164,000 175,779,000
Net Loss $ (8,133,000) $
(3,783,000)
The unaudited pro forma summary for the year
ended July 30, 1995 presents the consolidated
results of operations as if the acquisitions of
SRHI and LBO had occurred on August 1, 1994.
See Note 4.
The pro forma financial information is not
intended to be indicative of the results of
operations that actually would have occurred had
the transactions taken place at the beginning of
the years presented or of future results of
operations.
4. Other Business Developments and Acquisitions
In July of 1994, LBO Holding, Inc. acquired
substantially all of the outstanding common
stock of Mt. Attitash Lift Corporation.
Subsequent to this transaction, LBO merged Mt.
Attitash Lift Corporation into itself, resulting
in LBO's assumption of all of the assets and
liabilities at the ski resort known as
Attitash/Bear Peak. The purchase price of the
stock was approximately $6,139,000, including
direct costs of the acquisition.
In May of 1995, Sugarbush Resort Holding, Inc.
acquired the operating assets of the Sugarbush
Resort from its former owner, Claneil
Enterprises Incorporated (Claneil). In
connection with this transaction, SRHI also
acquired the issued and outstanding shares of
stock of MWC, MWWC and CS. The purchase price
of the assets acquired and liabilities assumed
was approximately $8,670,000, including direct
costs of the acquisition. From November of 1994
through the closing date, SRHI operated the
resort and the related supporting functions
pursuant to an operating lease with the seller.
In connection with the SRHI acquisition,
Sugarbush Land Corp. (an affiliate of American
Skiing Company) acquired certain developmental
land parcels adjacent to the resort from Claneil
for $2,973,000. No development or sales of
these parcels have occurred.
4. Other Business Developments and Acquisitions
(continued)
On June 30, 1995, LBO acquired the assets of Mt.
Cranmore from Cranmore Country Corp. (a wholly
owned subsidiary of BayBank (a Massachusetts
Trust Company)). The purchase price of the
assets acquired and liabilities assumed was
approximately $2,403,000, including direct costs
of the acquisition. The purchase price included
an amount of $1,350,000 which was not paid as of
July 30, 1995, and is included in other
liabilities in the accompanying financial
statements. This amount was paid during the
year ended July 28, 1996.
Each acquisition was accounted for using the purchase
accounting method, and in each case virtually all of the
purchase price was allocated to property and equipment. The
combined financial statements contained herein reflect the
operations of each acquired business subsequent to its
respective acquisition date.
The following unaudited pro forma summary presents the combined
results of operations as if the acquisitions of SRHI and LBO
occurred on July 26, 1993:
Revenues $ 56,177,000
Expenses 53,036,000
Net income $ 3,141,000
5. Real Estate Operations
Incidental to its ski operations, the Company engages
in various real estate activities including rental
services and the development of property for resale.
During development, real estate taxes, insurance,
interest, planning and permitting costs are
capitalized. Such costs were determined based upon an
allocation methodology and are relieved on a specific
identification methodology as sales occur. Profit is
recognized from the sale of such property at the time
of closing, at which time the Company has no ongoing
involvement in the specific property sold, and at least
10% (of the sales value) cash down payment has been
received. The carrying value of the property developed
for resale is reduced to net realizable value, if the
asset carrying value is determined not to be
recoverable through expected undiscounted future cash
flows.
Properties developed for resale consist of the
following:
</TABLE>
<TABLE>
<CAPTION>
July 30, 1995 July 28,1996
<S> <C> <C>
Summit hotel units $2,848,000 $36,000
Locke mountain - 603,000
Other condominiums 1,006,000 692,000
$3,854,000 $1,331,000
</TABLE>
6. Property and Equipment
The following reflects the combination of both owned
property and equipment as well as assets acquired
pursuant to capital leases.
<TABLE>
<CAPTION>
July 30, 1995 July 28, 1996
<S> <C> <C>
Buildings and grounds $ 16,904,000 $ 62,301,000
Machinery and equipment 21,749,000 53,422,000
Lifts and lift lines 16,858,000 56,370,000
Trails 7,441,000 11,064,000
Land improvements 2,427,000 10,819,000
65,379,000 193,976,000
Less - accumulated
depreciation and
amortization 14,756,000 20,737,000
50,623,000 173,239,000
Land 6,729,000 50,685,000
Construction-in-process 4,861,000 3,546,000
Net property and equipment $ 62,213,000 $227,470,000
</TABLE>
Property and equipment includes approximately
$2,422,000 and $3,518,000 of machinery and
equipment held under capital leases at July 30,
1995 and July 28, 1996, respectively. Related
accumulated amortization at July 30, 1995 and July
28, 1996 on property and equipment under capital
leases was approximately $599,000 and $1,026,000,
respectively. Amortization expense for property
and equipment under capital leases and included in
depreciation expense was approximately $82,000,
$406,000 and $493,000 for 1994, 1995 and 1996,
respectively. Depreciation expense was
$2,421,000, $3,805,000 and $6,688,000 for 1994,
1995 and 1996, respectively.
7. Note Receivable, Affiliate
The note receivable in the amount of $250,000 at
July 30, 1995 and $265,000 at July 28, 1996 is
from Ski Dorms, Inc., a company which is
principally owned by the Stockholder of the
Company, and is secured by a mortgage on land
and building. Interest is charged at the bank's
prime rate plus 1 1/2% and principal and any unpaid
interest are due in December, 1999. Accrued
interest receivable on this note at July 30,
1995 and July 28, 1996 was $137,000 and
$179,000, respectively.
8. Demand Note, Stockholder
In June 1996, prior to the Merger, SRSC
delivered to the Stockholder a demand note in
the principal amount of $5.2 million for the
amount expected to become payable by the
Stockholder in 1996 and 1997 for income taxes
with respect to SRSC's pre-Merger income as an S
corporation. The demand note is unsecured and
bears interest at 5.4% per annum, the applicable
federal rate in effect at the time of issuance.
9. Long-Term Debt
Long-term debt consists of:
<TABLE>
<CAPTION>
July 30,1995 July 28, 1996
<S> <C> <C>
American Skiing Company
Senior Credit Facility (See Note 11) $ -- $40,301,000
Sunday River Corporation
Note payable to bank with interest at bank's
base rate plus 1/2%, 9.25% at July 30, 1995;
the loan is a charge revolving credit loan
with a maximum amount available of
$17,250,000. In connection with the Merger,
this note payable was paid in full with 17,101,000 --
certain proceeds from the Senior Credit
Facility.
Promissory note in the amount of $576,000
issued to KeyCorp Leasing Ltd. by SRTC.
Principal and interest at 8.73% are payable
monthly, and the final payment is due in the
year 2003. The note is collateralized by an - 547,000
airplane.
LBO Holding, Inc.
Subordinated debentures issued to the former
shareholders in Mt. Attitash Lift Corporation
by LBO, with an original face value of
$2,151,000 (a discount has been reflected
based on the Company's incremental borrowing
rate at the time). The initial coupon rate
is 6% per annum, to be adjusted annually
based on the revenues of LBO, as defined in
the agreement. Interest is payable annually
on May 1st, beginning in 1995. LBO may
prepay the outstanding principal balance from
time to time. Any prepayment prior to April
30, 1999 is subject to a discount, as
described in the agreement. Holders of the
debentures have certain redemption rights
prior to May 1 of each year, subject to 1,636,000 1,709,000
limitation and discount as described in the
agreement.
Coupons redeemable for single day ski passes
at Attitash and Sunday River issued to former
shareholders of Mt. Attitash Lift Corporation
by LBO, with a face value of $777,000 (a
discount has been reflected based upon the
coupons' cash equivalent basis at the date of
issuance). The coupons expire at various
dates, beginning July 31, 1996 through July 567,000 440,000
31, 2001.
July 30,1995 July 28, 1996
Sugarbush Resorts Holdings, Inc.
Promissory note issued to Snowridge, Inc. by
SRHI, with a face value of $6,120,000 (a
discount has been reflected based on an
imputed interest rate of 9.5%) and an
interest rate of 6.25%. Interest is payable
quarterly beginning June 30, 1995. A
principal payment of $620,000 is due November
1, 1995 and the remaining principal and all
accrued interest outstanding are due on
December 31, 1999. The note is collateralized
by certain assets (as defined in the loan $5,482,000 $4,984,000
agreement) of Sugarbush.
Promissory note in the amount of $2,311,000
issued to LHC Corporation (an affiliate of
Snowridge, Inc.) by MWWC, which is secured by
the stock of MWC and MWWC as well as letters
of credit in the amount of $100,000. The
note bears interest at 9% or prime plus 1%,
which is due June 1 of each year beginning in
1995. Principal payments of $154,000 are due
each June 1, beginning in 1997, with the
balance due on June 1, 2003. 2,311,000 2,311,000
A bank mortgage payable to Chittenden Bank by
MWC in the amount of $135,000. Principal and
interest at 6.25% are payable monthly, and
the final payment is due in the year 2000.
The loan is collateralized by equipment.
105,000 86,000
A bank mortgage payable to the Howard Bank by
SRHI in the amount of $96,000. Principal and
adjustable rate interest are payable monthly
for thirty years, with the balance due in
December of
2024. The loan is collateralized by a 83,000 81,000
residential condominium in Warren, Vermont.
9. Long-Term Debt (continued)
July 30,1995 July 28, 1996
S-K-I, Inc.
Vermont Industrial Development Bonds,
fluctuating interest rates, 1995 -3.89% -
4.66%; 1996 -3.56% to 4.83%; due in varying
installments through 1999, secured by certain
machinery and equipment and real estate. $-- $2,695,000
Town of Carrabassett Valley, Maine,
$3,700,000 term loan due 8/27/13 in serial
maturities, interest at rates ranging from
5.0% to 8.5%, secured by first mortgages on -- 3,515,000
property, plant and equipment.
First National Bank of Boston, $1,600,000
revolving loan due 8/31/96 interest at prime
plus .5% (8.75%) at 7/28/96. -- 1,600,000
Fleet Bank of Maine, 10% unsecured promissory
note due in varying installments through
7/31/02, interest and principal payments
commencing -- 450,000
7/31/96.
Boston Concessions Group, Inc. 10 % unsecured
promissory note due in varying installments
through 7/31/02, interest and principal
payments commencing on 7/31/96. -- 208,000
Boston Concessions Group, Inc. 10% note due
7/31/01, secured by assignment of concession
revenues -- 161,000
Peoples Heritage Bank, 10% note due 8/13/01
secured by a mortgage on commercial property. -- 171,000
Other
Obligations under capital leases 1,431,000 1,301,000
Other notes payable 336,000 3,368,000
29,052,000 63,928,000
9. Long-Term Debt (continued)
July 30,1995 July 28, 1996
Less: current portion $1,883,000
$22,893,000
Long-term debt, excluding current portion $27,169,000
$41,035,000
The non-current portion of long-term debt
matures as follows:
1998 $3,332,000 $7,189,000
1999 2,926,000 12,185,000
2000 2,732,000 5,884,000
2001 8,161,000 10,575,000
2002 and thereafter 11,231,000 6,322,000
Interest related to capitalized leases (103,000) (77,000)
Debt discount $(1,110,000)
$(1,043,000)
$27,169,000
$41,035,000
</TABLE>
The carrying values of the above debt instruments approximate
their respective fair values in all material respects,
determined by discounting future cash flows at current market
interest rates as of July 28, 1996.
Subordinated debentures (included in subordinated notes and
debentures on the accompanying consolidated balance sheet) of
Killington of $10,950,000 at July 28, 1996 are due as follows:
Year Interest Amount
1999 6% $455,000
2000 6% 673,000
2001 8% 525,000
2002 8% 549,000
2003 8% 1,074,000
2004 8% 1,466,000
2010 8% 1,292,000
2012 6% 1,155,000
2013 6% 1,065,000
2015 6% 1,500,000
2016 6% 1,196,000
$10,950,000
During 1994, 1995 and 1996, American Skiing Company incurred
total interest cost of $1,208,000, $2,429,000 and $5,143,000,
respectively of which $182,000, $224,000 and $444,000,
respectively, has been capitalized to property and equipment
and properties held for sale.
9. Long-Term Debt (continued)
At July 28, 1996, SRSC had letters of credit
outstanding totaling $2,607,000, while S-K-I had
letters of credit outstanding totaling
$1,000,000.
10. Subordinated Notes
On June 25, 1996, in connection with the
Acquisition, the Company issued $120,000,000 of
12% senior subordinated notes (the "Notes") and
39,132 units consisting of $39,132,000 of 13.75%
subordinated discount notes (the "Subordinated
Notes") and 39,132 shares of common stock in a
private placement. The Notes and Subordinated
Notes are general unsecured obligations of the
Company, subordinated in right of payment to all
existing and future debt of the Company,
including all borrowings of the Company under
the Senior Credit Facility (see Note 11). The
Notes and Subordinated Notes mature July 15,
2006 and January 15, 2007, respectively, and
will be redeemable at the option of the Company,
in whole or in part, at any time after July 15,
2001. In issuing these notes, the Company
incurred approximately $7,536,000 of prepaid
loan fees which are being amortized over 10
years, the terms of the Notes. Pursuant to a
registration rights agreement, the Company has
filed a registration statement with respect to
an offer to exchange the Notes for a new issue
of notes of the Company registered under the
Securities Act of 1933, with identical terms.
This registration statement is not yet
effective.
The Notes were issued with an original issue
discount of $3,402,000, and as a result the
effective interest rate exceeds the stated
interest rate. Interest on the Notes is payable
semiannually on January 15 and July 15 of each
year, commencing on January 15, 1997. Interest
expense on the Notes amounted to $1,121,000 in
1996.
The Subordinated Notes were issued with an
original issue discount of $19,025,000.
Interest on the Subordinated Notes will not
accrue prior to July 15, 2001; thereafter,
interest will accrue at the rate of 13.75% per
annum and will be payable semi-annually on
January 15 and July 15 of each year, commencing
on January 15, 2002. Interest expense on the
Subordinated Notes amounted to $206,000 in 1996.
The shares, which represent 4% of the total
common stock outstanding, were valued at
$976,000 as of June 28, 1996.
At the time of issuance of the Notes, a portion
of the proceeds were invested into a segregated
pledge account (the "Pledge Account") to secure
the payment of the first year's interest on the
Notes. At July 28, 1996, the balance of the
Pledge Account was $14,497,000 and was invested
in U.S. Treasury obligations. Following the
July 15, 1997 interest payment, any amounts
remaining in the Pledge Account will be released
to the Company.
11. Senior Credit Facility
On June 25, 1996, the Company entered into the
Senior Credit Facility with Fleet National Bank
("Fleet"). The Senior Credit Facility provides
for a $65 million revolving credit facility
(which includes a $3.5 million sub-facility for
letters of credit). The Company's obligations
under the Senior Credit Facility are guaranteed
by substantially all of the assets of the
Company and its subsidiaries. The Senior Credit
Facility will bear interest at a rate equal to
Fleet's LIBOR rate plus 1.5% to 2.5% per annum
or Fleet's Base rate plus up to 1.5% per annum.
The Company will pay a commitment fee of 0.5%
per annum on unused availability under the
credit facility. Amounts available for
borrowing under the Senior Credit Facility will
incrementally decline to $50 million over the
period ending July 1, 2000, and the Senior
Credit Facility will mature on or about December
31, 2001. The Company is required to pay down
the amounts outstanding each year, commencing in
1997, for a 45-day period which must include
March 31, to an amount declining from $25
million in 1997 to $10 million in 2000 and 2001.
As of July 28, 1996, the outstanding balance of
the Senior Credit Facility amounted to
$40,301,000. In establishing the Senior Credit
Facility, the Company incurred approximately
$1,512,000 of prepaid loan fees which are being
amortized over 5 years, the term of the credit
facility.
11. Senior Credit Facility (continued)
The credit facility contains a number of
covenants, representations and events of default
typical of a credit facility of this size and
nature, including financial covenants related to
the level and nature of total debt outstanding.
The Senior Credit Facility requires that certain
of the cash proceeds from the sale of Waterville
Valley and Mt. Cranmore be applied to
permanently reduce the availability under the
credit facility. See Note 3.
Prior to June 28, 1996, the Company maintained a
$6 million Seasonal Line of Credit and $35
million Revolving Note which were paid off by
the Senior Credit Facility. The Seasonal Line
of Credit and Revolving Note were collateralized
by a first mortgage on virtually all of the
corporate assets of the Company, with the
exception of certain "non-skiing" assets of
SRHI, assignment of various land leases and
assignment of $7.5 million in life insurance
policies on the life of the Stockholder. The
outstanding balance of the Line of Credit at
July 30, 1995 was $6,004,000, including accrued
interest.
12. Guarantors of Debt
The Notes and Subordinated Notes are fully and
unconditionally guaranteed by ASC and all of its
subsidiaries with the exception of LBO
Development Company, Ski Insurance Company,
Killington West Ltd, Mountain Water Company,
and Club Sugarbush, Inc., (the "NonGuarantors").
Prior to the Acquisition and issuance of the
notes on June 28, 1996, the American Skiing
Company bank loan agreements were collateralized
by virtually all of the assets of the companies
comprising American Skiing Company. The
Guarantor Subsidiaries are wholly-owned
subsidiaries of ASC and the guarantees are full,
unconditional, and joint and several.
The Non-Guarantors are individually and in the
aggregate not significant to the financial
position and results of operations of the
Company. Following is summarized combined
information regarding such Non-Guarantors:
<TABLE>
<CAPTION>
As of As of
July 30, 1995 July 28, 1996
<S> <C> <C>
Current assets $ 106,000 $ 1,380,000
Non-current assets 382,000 7,200,000
Total assets $ 488,000 $ 8,580,000
Current liabilities $ 93,000 $ 1,226,000
Non-current liabilities 86,000 4,847,000
Total liabilities $ 179,000 $ 6,073,000
For the For the
Year Year
Ended Ended
July 30, July 28,
1995 1996
Revenues $ 215,000 $ 280,000
Cost of Sales 123,000 147,000
Operating Income $ 92,000 $ 133,000
Net Income $ 29,000 $ 67,000
12. Guarantors of Debt (continued)
There were no non-guarantor subsidiaries of
American Skiing Company for the year ended July
31, 1994. The summarized information shown
above for the Non-Guarantors as of July 28, 1996
and for the year then ended gives effect to the
acquisition of the Non-Guarantors of S-K-I,
which were acquired by the Company on June 28,
1996 (See Note 3). Following is the summarized
historical information for the Non-Guarantors
for the two years and the eleven month period
preceding their acquisition by the Company:
</TABLE>
<TABLE>
<CAPTION>
As of As of
July 31, 1994 July 31, 1995
<S> <C> <C>
Current assets $ 2,756,000 $ 3,256,000
Non-current assets 760,000 1,962,000
Total assets $ 3,516,000 $ 5,218,000
Current liabilities $ -- $ --
Non-current liabilities 3,280,000 4,859,000
Total liabilities $ 3,280,000 $ 4,859,000
</TABLE>
<TABLE>
<CAPTION>
For the Year For the Period
For the Year Ended Ended August 1,
Ended July 31, 1995 1995 to
July 31, 1994 June 28, 1996
<S> <C> <C> <C>
Revenues $ 2,432,000 $ 2,644,000 $ 3,005,000
Cost of sales 1,991,000 2,268,000 2,191,000
Operating income $ 441,000 $ 376,000 $ 814,000
Net income $ 247,000 $ 124,000 $(1,072,000)
</TABLE>
13. Income Taxes
Prior to June 28, 1996, certain companies
comprising American Skiing Company (SRSC, SRL,
PT and SRTC) had elected to be taxed under the
provisions of Subchapter S of the Internal
Revenue Code of 1986, as amended. Accordingly,
no income tax provision or liability has been
made for these companies for the year ended July
30, 1995 and the period from August 1, 1995 to
June 28, 1996. For federal and state income tax
purposes, taxable income, losses and tax credits
are passed through to the Stockholder, who is
individually responsible for reporting his share
of such items. The Company distributed to the
Stockholder amounts sufficient to pay his
personal income taxes based on the S
corporations' earnings.
In conjunction with the acquisition of all of
the common stock of S-K-I (see Note 3), the S
corporations (SRSC, SRL, PT and SRTC) changed
from S corporation status to C corporation
status. As a result, the income or loss of
SRSC, SRL, PT and SRTC subsequent to June 28,
1996 will be subject to corporate income tax.
The income tax provision described below for the
year ended July 28, 1996 includes the income
taxes related to SRSC, SRL, PT and SRTC since
June 28, 1996.
At the time of conversion of the S corporations
to C corporations, a net deferred tax liability
of $5,552,000 was recorded through the income
tax provision. This deferred tax liability was
primarily comprised of the tax effect of the
cumulative book and tax basis differences of
property and equipment.
13. Income Taxes (continued)
The provision for income taxes charged to
continuing operations was as follows:
<TABLE>
<CAPTION>
Year ended
July 30, July 28,
1995 1996
<S> <C> <C>
Current tax expense
Federal $ 248,000 $ --
State 55,000 --
303,000 --
Deferred tax expense
Federal 77,000 (1,330,000)
State 20,000 (316,000)
97,000 (1,646,000)
Change in tax status from S -- 5,552,000
corp. to C corp.
Total provision $ 400,000 $ 3,906,000
</TABLE>
Deferred income taxes reflect the tax impact of
temporary differences between the amounts of
assets and liabilities for financial reporting
purposes and such amounts as measured by tax
laws and regulations. Under SFAS 109, the
benefit associated with future deductible
temporary differences and operating loss or
credit carryforwards is recognized if it is more
likely than not that a benefit will be realized.
Deferred tax expense (benefit) represents the
change in the net deferred tax asset or
liability balance.
Deferred tax liabilities (assets) are comprised
of the following at July 30, 1995 and July 28,
1996:
<TABLE>
<CAPTION>
Year ended
<S> <C> <C>
July 30, 1995 July 28, 1996
Property, plant and equipment basis $ 623,000 $
differential 36,917,000
Other 23,000
753,000
Gross deferred tax liabilities 646,000
37,670,000
Tax loss and credit carryforwards (1,572,000)
(11,414,000)
Capitalized costs --
(1,473,000)
Other (118,000)
(1,764,000)
Gross deferred tax assets (1,690,000)
(14,651,000)
Valuation allowance --
7,369,000
(1,044,000)
30,388,000
Less: Net deferred tax liability
related to assets held for sale --
(see Note 3) 281,000
$ (1,044,000) $
30,107,000
</TABLE>
The provision for income taxes differs from the
amount of income tax determined by applying the
applicable U.S. statutory federal income tax
rate of 35% to pretax income from continuing
operations as a result of the following
differences:
13. Income Taxes (continued)
<TABLE>
<CAPTION>
Year ended
July 30, 1995 July 28, 1996
<S> <C> <C>
Income tax provision at the $ 1,932,000 $ 546,000
statutory U.S. tax rates
Increase (decrease) in rates
resulting from:
Change in tax status from S -- 5,552,000
corp. to C corp.
Income from S corporations
not taxable for (1,679,000) (2,371,000)
corporate income tax
purposes
State taxes, net 115,000 --
Nondeductible items 32,000 41,000
Other -- 138,000
Income tax provision at the $ 400,000 $ 3,906,000
effective tax rates
</TABLE>
The Company currently contemplates that it will
file a consolidated Federal income tax return
adopting a January year end for tax purposes.
The Company incurred a consolidated Federal
income tax loss of approximately $4.7 million
for the one-month period ended July 28, 1996.
Management believes the tax benefits of such
interim tax loss will be realized in the
Company's first consolidated return for the tax
year ended January 1997.
At July 28, 1996, the Company has net operating
loss carryforwards for Federal tax purposes of
approximately $6 million from the separate
return years of LBO ($5 million) and SRSC ($1
million) that expire in varying amounts through
the year 2011 and may only offset each company's
contribution to consolidated taxable income in
future years. In addition, due to an ownership
change that occurred when LBO acquired the
Attitash/Bear Peak resort in July 1994,
approximately $3.3 million of the LBO net
operating loss carryforward is subject to an
annual limitation ($185,000) of the amount of
LBO's separate company taxable income that may
be reduced by such carryforward. Approximately
$213,000 of investment tax credit carryforwards
that expire in varying amounts through the year
2001 and that are also subject to an annual
limitation of the amount of LBO's separate
company tax that may be reduced by such
carryforward. Subsequent changes in ownership
could further affect the limitation in future
years.
At July 28, 1996, Sugarloaf was not a member of
the Company's affiliated group that files a
consolidated Federal income tax return. At July
28, 1996, Sugarloaf has net operating loss
carryforwards for Federal tax purposes of
approximately $17 million that expire in varying
amounts through the year 2009. Due to an
ownership change that occurred in 1992,
approximately $16 million of Sugarloaf's net
operating loss carryforward is subject to an
annual limitation ($110,000) of its separate
company taxable income that may be reduced by
such carryforward. Approximately $209,000 of
investment tax credit carryforwards that expire
in varying amounts through the year 2000 are
also subject to an annual limitation of the
amount of its tax that may be reduced by such
carryforward. Subsequent changes in ownership
could further offset the limitation in future
years.
A valuation allowance is provided when it is
more likely than not that some portion of all of
the deferred tax assets will not be realized.
Management believes that the valuation allowance
of $7.4 million is appropriate as the
realization of the majority of the tax benefits
of the Sugarloaf net operating loss, (some
portion of the LBO net operating loss and
investment tax carryforwards) and all investment
tax credit carryforwards is not more likely than
not.
14. Related Party Transactions
Sunday River Skiway Corporation has guaranteed
amounts outstanding under subordinated
debentures due in 2002 that were issued by LBO
Holdings, Inc., as part of the acquisition of
Mt. Attitash Lift Corporation. Payments under
the guarantee are subordinated to all secured
indebtedness of SRSC to any bank, thrift
institution or other institutional lender.
American Skiing Company collects receipts and
advances amounts on behalf of its subsidiaries during
its normal operations.
During 1994, 1995 and 1996, SRSC paid Western
Maine Leasing, Inc., (a Maine Corporation owned
by the Stockholder) $43,000, $34,000 and
$37,000, respectively, for the use of
construction equipment.
15. Commitments, Lease Contingencies and Contingent
Liabilities
SRSC leases substantially all of the land
presently used for skiing terrain at Sunday
River under a lease expiring in 2030. Charges
to operations for this lease were $486,000,
$490,000 and $539,000 in 1994, 1995 and 1996,
respectively. Lease payments are computed as a
percentage of gross profits from property sales
and as a percentage of other revenues.
LBO leases 264.5 acres of the approximately 600
acres it uses to operate the Attitash/Bear Peak
Ski Resort area from the U. S. Forest Service.
A Term Special Use Permit covering 44.5 acres
expires in 2010 and may be renewed by mutual
agreement. A revocable permit, covering
approximately 220 acres, is terminable at any
time at the discretion of the U.S. Forest
Service. LBO does not feel this permit will be
revoked in the near future. The leases call for
annual rental payments based on a percentage of
gross revenue. Total rent expense under these
operating leases was $20,000 and $15,000 in 1995
and 1996, respectively.
LBO also leases a water slide for use under an
operating lease during the summer months at
Attitash/Bear Peak. The rental payment, a
percentage of gross receipts, was $51,000 and
$52,000 in 1995 and 1996, respectively.
SRHI leases approximately 262 of the
approximately 413 skiable acres it uses to
operate the Sugarbush Ski Resort area from the
U.S. Forest Service. The Special Use Permit
expires in 2035 and may be renewed by mutual
agreement. Annual rental payments are based on
a percentage of gross revenue. Total rent
expense under this lease was $58,000 and
$138,000 in 1995 and 1996, respectively.
Killington Ltd. leases from the State of Vermont
certain portions of land and facilities it uses
known as the Killington section of the Calvin
Coolidge State Forest. The leases together with
extensions run to the year 2060. All
installments affixed to the land become the
property of the State.
Mount Snow Ltd. and Waterville Valley operate
certain portions of the skiing terrain under
special use permits granted by the U.S. Forest
Service.
Amounts payable under these leases and permits
are measured in terms of percentages of revenues
from certain activities. Charges for these
leases and permits are included in cost of
operations.
In addition to the leases described above, the
companies comprising the American Skiing Company
are committed under several operating and
capital leases for various equipment. Rent
expense under all operating leases was $803,000,
$1,007,000 and $994,000 for the years ended
1994, 1995 and 1996, respectively.
15. Commitments, Lease Contingencies and Contingent
Liabilities (continued)
Future minimum lease payments for lease
obligations at July 28, 1996 are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
<S> <C> <C>
1997 $ 781,000 $
3,638,000
1998 552,000
3,347,000
1999 101,000
2,955,000
2000 31,000
579,000
2001 1,000
403,000
Total payments $ 1,466,000 $
10,922,000
Less interest 165,000
Present value of net 1,301,000
minimum payments
Less current portion 694,000
Long-term obligations $ 607,000
</TABLE>
Certain claims, suits and complaints associated
with the ordinary course of business are pending
or may arise against the companies comprising
the American Skiing Company. In the opinion of
management, all matters are adequately covered
by insurance or, if not covered, are without
merit or are of such kind, or involve such
amounts as would not have a material effect on
the financial position, results of operations
and cash flows of the Company if disposed of
unfavorably.
16. Proceeds from Insurance Claim
In February 1993, the Company experienced a fire
which destroyed compressors and other snowmaking
equipment at Sunday River Skiway Corporation
with a net book value of $975,000. These assets
were insured for replacement cost which amounted
to $2,567,000. The Company received proceeds for
the replacement cost of $750,000 in 1993 and
$1,817,000 in 1994. The Company recorded a gain
in 1993 of $1,592,000 for the difference between
the insurance proceeds and the net book value of
the destroyed equipment.
17. Subsequent Event (Unaudited)
The Company entered into a Purchase and Sale
Agreement in October 1996 to purchase
substantially all of the assets of the Pico
Mountain Ski Resort located in Sherburne,
Vermont. The purchase price is divided into two
components (1) $3,350,000 of cash payable at
closing and (2) $3,350,000 in contingent
purchase price payable upon the occurrence of
certain future events. Results of operations of
Pico are not expected to be material to the
consolidated financial statements of the
Company.
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors of S-K-I Ltd.
In our opinion, the accompanying consolidated
balance sheet and the related consolidated statements of
income, of changes in stockholders' equity and of cash
flows present fairly, in all material respects, the
financial position of S-K-I Ltd. and its subsidiaries at
July 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three
years in the period ended July 31, 1995, in conformity
with generally accepted accounting principles. These
financial statements are the responsibility of the
company's management; our responsibility is to express
an opinion on these financial statements based on our
audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards
which 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,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
August 31, 1995
<TABLE>
<CAPTION>
S-K-I LTD.
CONSOLIDATED BALANCE SHEET
July 31, July 31,
1994 1995
Assets
<S> <C> <C>
Current assets:
Cash and short-term investments
(at cost, which approximates market value) $2,704,302 $2,790,645
Accounts receivable, net (Note 1) 1,423,430 2,677,434
Notes receivable 371,739 244,775
Inventories 3,472,492 3,955,722
Prepaid expenses 1,456,222 1,360,460
Total Current Assets 9,428,185 11,029,036
Property and equipment, at cost:
Buildings and grounds 32,730,561 41,557,838
Machinery and equipment 71,690,813 73,123,058
Leasehold improvements 39,066,623 48,082,570
Lifts, liftlines and trails on corporate property 16,162,939 33,787,212
159,650,936 196,550,678
Less--accumulated depreciation and amortization 86,638,454 89,929,914
73,012,482 106,620,764
Construction in progress 8,996,570 1,684,442
Land and development costs 12,762,352 13,469,642
Net Property and Equipment 94,771,404 121,774,848
Long-term investments (Note 1) 464,663 1,628,477
Other assets (Note 1) 2,125,756 2,289,152
Total Assets $106,790,008 $136,721,513
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt and subordinated
debentures $955,746 $3,858,184
(Note 3)
Accounts payable 1,741,131 1,617,621
Income taxes payable (Note 5) 257,684 272,252
Accrued lease payments--Vermont (Note 4) 1,171,865 1,039,366
Accrued wages, profit sharing and incentive compensation 464,907 529,874
(Note 8)
Deposits and other unearned revenue 695,328 1,706,017
Other accrued expenses (Note 1) 4,184,664 5,157,743
Total Current Liabilities 9,471,325 14,181,057
Long-term debt (Note 3) 17,766,857 38,790,032
Subordinated debentures (Note 3) 11,400,000 11,400,000
Deferred income taxes (Note 5) 7,478,492 8,479,956
Other long-term liabilities (Note 1) 3,487,042 4,432,027
Minority interest -- 1,876,188
Total Liabilities 49,603,716 79,159,260
Commitments (Notes 3 and 4)
Stockholders' equity (Notes 3, 6 and 7):
Common stock $.10 par value (12,500,000 shares authorized,
5,785,932 shares in 1995, 5,781,432 shares in 1994) 578,144 578,594
Paid-in capital 6,577,440 6,617,551
Retained earnings 50,030,708 50,366,108
Total Stockholders' Equity 57,186,292 57,562,253
Total Liabilities and Stockholders' Equity $106,790,008 $136,721,513
See accompanying notes to consolidated financial statements.
</TABLE>
S-K-I LTD
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended July 31
<S> <C> <C> <C>
1993 1994 1995
Revenues (Note 1):
Resort services $60,441,799
$62,532,813 $74,252,723
Sale of goods 19,832,479
21,008,869 23,648,797
Rental and other income 16,434,113
15,365,537 16,058,192
96,708,391
98,907,219 113,959,712
Expenses:
Cost of operations including
wages, maintenance
and supplies:
Resort services 21,070,994
22,483,982 29,611,497
Sale of goods 11,658,737
12,729,442 15,146,037
Rental and other expense 7,173,101
7,346,163 6,799,809
Other taxes 7,632,343
8,015,487 8,599,706
Utilities 6,655,016
6,044,889 8,070,911
Insurance 5,115,333
5,518,243 6,634,837
Selling, general and 16,871,496
administrative expenses 15,298,138 19,494,655
Interest 2,228,385
2,214,309 3,818,893
Depreciation and amortization 10,941,869
(Note 1) 11,440,122 14,055,796
89,347,274
91,090,775 112,232,141
Income before income taxes and 7,361,117
minority interest 7,816,444 1,727,571
Income taxes (Note 5) 2,952,310
3,169,956 997,123
Net income before minority 4,408,807
interest 4,646,488 730,448
Minority interest in loss of -- --
subsidiary 298,949
Net Income $4,408,807
$4,646,488 $1,029,397
Net income per common and common
equivalent
share: 5,783,480 in 1995, $0.77 $0.81
5,764,663 in 1994, $0.18
5,728,908 in 1993 (Note 6)
See accompanying notes to consolidated financial
statements.
</TABLE>
S-K-I LTD.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder
of Sugarbush Resort Corporation
In our opinion, the accompanying
consolidated statements of
operations, of stockholder's equity
and of cash flows present fairly, in
all material respects, the results of
Sugarbush Resort Corporation's
operations and its cash flows for the
period from June 1, 1994 through May
15, 1995 and for the years ended May
31, 1994 and 1993 in conformity with
generally accepted accounting
principles. These financial
statements are the responsibility of
the Company's management; our
responsibility is to express an
opinion on these financial statements
based on our audits. We conducted
our audits of these statements in
accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and
significant estimates made by
management, and evaluating the
overall financial statement
presentation. We believe that our
audits provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, MA
June 11, 1996
Sugarbush Resort Corporation
Consolidated Statement of Operations
Period Year ended
from June
1, 1994
through May 31, May 31,
May 15, 1994 1993
1995
<S> <C> <C> <C>
Revenues:
Ski related $82,000 $8,688,000 $7,685,000
Property
management and 1,779,000 4,524,000 4,180,000
lodging
Utility fees
and 265,000 751,000 783,000
services
Other 412,000 942,000 870,000
Total
revenues 2,538,000 14,905,000 13,518,000
Expenses:
Cost of
operations
including 2,015,000 10,210,000 8,956,000
wages,
maintenance and
supplies
Selling, general
and 2,550,000 5,635,000 6,121,000
administrative
Interest 128,000 356,000 281,000
Depreciation 822,000 764,000 522,000
Total expenses 5,515,000 16,965,000 15,880,000
Net loss $(2,997,000) $(2,060,000) $(2,362,000)
The accompanying notes are an
integral part of these financial
statements.
Sugarbush Resort Corporation
Consolidated Statement of
Stockholder's Equity
</TABLE>
<TABLE>
<CAPTION>
Additiona
l Accumulat
Paid in ed
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance May 31, 100 $ -- $60,000,0 $(56,635, $ 3,365,000
1992 00 000)
Advances from 3,350,000 3,350,000
Parent
Net loss for
the year ended (2,362,00 (2,362,000)
May 31, 1993 0)
Balance May 31, 100 -- 63,350,00 (58,997,0 4,353,000
1993 0 00)
Advances from 4,050,000 4,050,000
Parent
Net loss for
the year ended (2,060,00 (2,060,000)
May 15, 1994 0)
Balance May 31, 100 -- 67,400,00 (61,057,0 6,343,000
1994 0 00)
Advances from 2,025,000 2,025,000
Parent
Net loss for
the period (2,977,00 (2,977,000)
ended May 15, 0)
1995
Balance May 15, 100 $ -- $69,425,0 $(64,034, $ 5,391,000
1995 00 000)
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
Sugarbush Resort Corporation
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Period
from June
1, 1994
through May 31, May 31,
May 15, 1994 1993
1995
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $(2,977, $(2,060,0 $ (2,362,000)
000) 00)
Adjustments to reconcile
net loss to net
cash provided by
operating activities:
Depreciation and 844,000 816,000 723,000
amortization
Gain on disposal of assets, -- (8,000) (71,000)
net
(Increase) decrease in 713,000 (45,000) 26,000
accounts receivable
(Increase) decrease in 152,000 (14,000) (23,000)
inventory
(Increase) decrease in 901,000 (167,000) 418,000
prepaid expenses
Increase (decrease) in
accounts payable and accrued (961,900) 101,000 (526,000)
expenses
Increase (decrease) in (174,000) 45,000 54,000
deferred income
Net cash used in operating (1,502,9 (1,332,00 (1,761,00
activities 00) 0) 0)
Cash flows from investing
activities:
Capital expenditures (893,000) (3,265,00 (1,555,00
0) 0)
Proceeds from disposal of -- 101,000 139,000
assets
Purchase of other assets -- (18,000) --
Net cash used in investing (893,000) (3,182,00 (1,416,00
activities 0) 0)
Cash provided by financing
activities:
Increase in notes payable -- 754,000 --
and long-term debt
Repayment of long-term debt (17,100) (365,000) (245,000)
Advances from parent 2,025,000 4,050,000 3,350,000
Net cash provided by 2,007,900 4,439,000 3,105,000
financing activities
Net decrease in cash (388,000) (75,000) (72,000)
Cash at beginning of year 388,000 463,000 535,000
Cash at end of year $ -- $388,000 $ 463,000
</TABLE>
Cash paid for interest amounted to
$139,100, $300,000 and $289,000 in
1995, 1994 and 1993, respectively.
The accompanying notes are an
integral part of these financial
statements.
Sugarbush Resort Corporation
Notes to Consolidated Financial
Statements
1. Summary of Significant Accounting
Policies
Basis of Consolidation
The accompanying consolidated
financial statements include the
accounts of Sugarbush Resort
Corporation (a Delaware
corporation) and its wholly-owned
subsidiaries, Snowridge, Inc.,
Sugar Ridge, Inc., The Sugarbush
Inn Corporation, and their
respective subsidiaries, all of
which are Vermont corporations
(collectively referred to as the
"Company"). The Company was a
wholly owned subsidiary of Claneil
Enterprises, Inc. (the "Parent").
The Company operates predominantly
in a single industry segment, which
is the development and operation of
the Sugarbush Ski Resort in Warren,
Vermont providing ski recreation
and related services to skiers, a
single customer group. All
significant intercompany balances
and transactions have been
eliminated.
Fiscal Year
The accompanying consolidated
financial statements are presented
based on the Company's fiscal year
ended May 31, which differs from
the Company's tax year-end of
February 28.
Property and Equipment
Property and equipment is recorded
at cost and is depreciated by the
straight-line method over the
assets' estimated useful lives
which generally range from 9 to 40
years for buildings, 3 to 12 years
for machinery and equipment and 10
to 50 years for leasehold
improvements, lifts, lift lines and
trails. Expenditures for
maintenance and repairs are
expensed as incurred. Depreciation
expense for 1995, 1994 and 1993
amounted to $822,000, $764,000 and
$522,000, respectively.
Intangible Assets
Intangible assets relate to
organizational fees and are
amortized by the straight-line
method over sixty months.
Amortization expense related to
these assets was approximately
$22,000, $52,000 and $201,000
during 1995, 1994 and 1993,
respectively.
Revenue Recognition
The Company recognizes revenue at
the point of service, except for
brokerage commissions which are
recognized as income upon the
consummation of the sale. Revenue
includes sales of lift tickets,
tuition from ski schools, sales
from restaurants, bars and retail
shops, real estate rentals and
sales of real property.
Interest
Interest is expensed as incurred
except when it is capitalized in
conjunction with major capital
additions. The amount of interest
capitalized is determined by
applying current interest rates to
the funds required to finance the
construction.
Employee Benefits
The Company participates in a
savings plan (the "Plan")
administered by an affiliate. To
qualify for the Plan, employees
must work for one year and have
attained the age of twenty-one.
Company contributions to the Plan
are based on employee contributions
and compensation. The Company
contributed $17,200, $34,000 and
$31,000 for 1995, 1994 and 1993,
respectively.
Advertising Costs
Advertising costs are expensed the
first time the advertising takes
place. The amount charged to
advertising expense during 1995,
1994, and 1993 was $656,000,
$1,019,000 and $520,000,
respectively.
Use of Estimates
The preparation of financial
statements requires management to
make estimates and assumptions that
affect the financial statements.
Actual results could differ from
those estimates.
Sugarbush Resort Corporation
Notes to Consolidated Financial
Statements (continued)
1. Summary of Significant Accounting
Policies (continued)
Income Taxes
The operations of the Company were
included in the consolidated income
tax return of its ultimate parent
(Claneil Enterprises, Inc.). It is
the parent's policy not to allocate
income tax amounts to the Company.
Accordingly, no provision or
benefit for income taxes has been
recorded in the accompanying
consolidated financial statements.
Recent Accounting Pronouncements
Statement of Financial Accounting
Standards (SFAS) No. 121,
"Accounting for the Impairment of
Long-Lived Assets and for Long-
Lived Assets to be Disposed Of,"
was recently issued and its
adoption is required for fiscal
years beginning after December 15,
1995. SFAS No. 121 mandates
specific methodologies to be used
for identifying and measuring the
impairment of long-lived assets.
Adoption of SFAS No. 121 is not
expected to materially impact the
Company's consolidated financial
statements.
2. Related Party Transactions
The Company received cash advances
in the form of contributions of
capital of $2,025,000, $4,050,000
and $3,350,000 during 1995, 1994
and 1993, respectively, from its
Parent to meet its operating and
capital needs. Such advances are
non-interest bearing.
3.Commitments, Lease Contingencies
and Contingent Liabilities
The Company leases air compression,
automotive and other equipment and
certain office facilities under
operating leases with terms ranging
from less than one year to five
years. Future minimum lease
payments for lease obligations at
May 15, 1995 are as follows:
1996 $163,000
1997 123,000
1998 74,000
1999 29,000
$389,000
Total rent expense for all
operating leases was $82,700,
$263,000 and $173,000 during 1995,
1994 and 1993, respectively.
Certain portions of the skiing
terrain are operated under a ten
year Special Use Permit granted by
the U.S. Forest Service which
expires in 1998. Annual rental
payments are based on a percentage
of gross revenue from certain
activities. Total rent expense
under this permit was $10,000,
$66,000 and $48,000 during 1995,
1994 and 1993, respectively.
The Company maintains employment
agreements with three officers.
The employment agreements contain
change in control provisions that
would entitle each of the officers
to receive an amount equal to their
annual salary if there is a change
in control of the Company as
defined in the agreement. In
addition, there is a termination
provision which provides for one
times the annual salary if an
officer is terminated without
cause. During 1993, the Company
paid $150,000 upon termination of
employment of two such officers.
During fiscal year 1994, litigation
against the Company relating to
respective parties rights on
utility improvements resulted in
charges to operations of $703,000,
which includes legal fees, payments
to customers and interest.
Sugarbush Resort Corporation
Notes to Consolidated Financial
Statements (continued)
3.Commitments, Lease Contingencies
and Contingent Liabilities
(continued)
The Company is a co-defendant in a
$3 million civil suit alleging
violations of the anti-trust and
trademark laws of the United
States, and Vermont statutory and
common law. Management believes
the allegations are without merit
and that the outcome of this matter
will not have a material effect on
its financial position, results of
operations or cash flows.
Certain claims, suits and
complaints associated with the
ordinary course of business are
pending or may arise against the
companies comprising Sugarbush
Resort Corporation. In the opinion
of management, all matters are
adequately covered by insurance or,
if not covered, are without merit
or are of such kind, or involve
such amounts as would not have a
material effect on the financial
position, results of operations or
cash flows of the Company if
disposed of unfavorably.
4. Subsequent Event
On May 16, 1995, the Company's
Parent sold substantially all of
the assets of the Company.
Effective October 15, 1994 through
May 15, 1995, the buyer of the
Company operated the ski resort
under a lease agreement with the
Company's ultimate parent. The
accompanying financial statements
do not reflect any adjustments that
might arise as a result of this
transaction.
No person has been authorized to
give any information or make any
representations not contained in
this Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by the Company. The
Exchange Offers are not being
made to, nor will the Company
accept surrenders for exchange
from, Holders of Old Notes or Old
Subordinated Notes in any
jurisdiction in which the
relevant Exchange Offer or the
acceptance thereof would not be
in compliance with the securities
or blue sky laws of such
jurisdiction. Neither the
delivery of this Prospectus nor
any sale made hereunder shall,
under any circumstances, create
an implication that there has not
been any change in the facts set
forth in this Prospectus or in
the affairs of the Company since
the Date hereof.
________________________
Summary
The Acquisition; Antitrust
Matters; Use of Proceeds
Recent Developments
Risk Factors
The Exchange Offers
Pro Forma Capitalization
Pro Forma Financial Data
Selected Historical
Financial Data
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations
Industry Overview
Business
Management
Description of Senior
Subordinated Notes
Description of Subordinated
Notes
Description of the Company's
Capital Stock
Description of Other
Indebtedness
Certain Federal Income Tax
Considerations
Certain Federal Income Tax
Consequences of the Exchange
Offers
Plan of Distribution
Legal Matters
Experts
Indemnification
Other Matters
Exchange Agent
Index to Financial
Statements
AMERICAN SKIING COMPANY
Offer to Exchange its 12% Series
B Subordinated Notes due 2006
which have been registered under
the Securities Act (Guaranteed by
substantally all of its
subsidiaries) for any and all of
its 12% Series A Subordinated
Notes due 2006 (Guaranteed by
substantially all of its
subsidiaries)
Offer to Exchange its 13 3/4%
Series B Subordinated Discount
Notes due 2007 which have been
registered under the Securities
Act (Guaranteed by substantially
all of its subsidiaries) for any
and all of its 13 3/4% Series A
Subordinated Discount Notes due
2007 (Guaranteed by substantially
all of its subsidiaries)
________________________
PROSPECTUS
________________________
November 12, 1996
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 20. Indemnification of
Directors and Officers
The Company is a Maine corporation.
Section 719 of the Maine Business
Corporation Act (13-A M.R.S.A. 101,
et seq.) authorizes the
indemnification by a Maine
corporation of any person who is a
party or is threatened to be made a
party to any action, suit or
proceeding by reason of that person's
status as a director, officer,
employee or agent of the corporation;
provided that no such indemnification
may be provided for any person if he
or she shall have been finally
adjudicated (i) not to have acted
honestly or in the reasonable belief
that his or her action was in or not
opposed to the best interests of the
corporation or its shareholders, or
(ii) in any criminal proceeding, to
have had reasonable cause to believe
his or her conduct was unlawful. In
the case of actions brought by or on
behalf of the corporation,
indemnification may only be provided
if the court determines that such
person is fairly and reasonably
entitled to the requested
indemnification. Indemnification
must be provided to the extent that a
director, officer, employee or agent
has been successful, on the merits or
otherwise, in defense of an action of
the type described in the second
sentence of this paragraph.
The Bylaws of the Company
provide that it shall indemnify any
person who is made a party to any
threatened, pending or completed
action, suit or proceeding by reason
of the fact that he or she is or was
a director or officer of the Company,
and may indemnify any employee or
agent of the Company in such
circumstances, against expenses,
including attorneys fees, judgments,
fines and amounts paid in settlement
actually and reasonably incurred by
him or her in connection with such
action, suit or proceeding. No
indemnification may be provided for
any person who shall have been
finally adjudicated not to have acted
honestly or in the reasonable belief
that his or her action was in or not
opposed to the best interests of the
Company or who had reasonable cause
to believe that his or her conduct
was unlawful. Indemnification must
be provided to any director, officer,
employee or agent of the Company to
the extent such person has been
successful, on the merits or
otherwise, in defense of any action
or claim described above. Any
indemnification under this provision
of the Bylaws, unless required under
the Bylaws or ordered by a court, can
be made only as authorized in each
specific case upon a determination by
a majority of disinterested directors
or by independent legal counsel or by
the shareholders that such
indemnification is appropriate under
the standard set forth in the
preceding sentence.
Item 21. Exhibits and Financial
Statement Schedules
(a) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of
Merger, dated as of
February 13, 1996, by and
among LBO Resort
Enterprises (the
predecessor of the
Company), LBO Acquisition
Co. and S-K-I Limited*
3.1 Articles of Incorporation
of the Company*
3.2 Bylaws of the Company*
3.3 Articles of Incorporation
of Sunday River Skiway
Corporation*
3.4 Bylaws of Sunday River
Skiway Corporation*
3.5 Articles of Incorporation
of Sunday River Ltd.*
3.6 Bylaws of Sunday River
Ltd.*
3.7 Articles of Incorporation
of Perfect Turn, Inc.*
3.8 Bylaws of Perfect Turn,
Inc.*
3.9 Articles of Incorporation
of LBO Holding, Inc.*
3.10 Bylaws of LBO Holding,
Inc.*
3.11 Articles of Incorporation
of Sunday River
Transportation, Inc.*
3.12 Bylaws of Sunday River
Transportation, Inc.*
3.13 Articles of Incorporation
of Sugarbush Resort
Holdings, Inc.*
3.14 Bylaws of Sugarbush Resort
Holdings, Inc.*
3.15 Articles of Incorporation
of Sugarbush Leasing
Company*
3.16 Bylaws of Sugarbush Leasing
Company*
3.17 Articles of Incorporation
of Sugarbush Restaurants,
Inc.*
3.18 Bylaws of Sugarbush
Restaurants, Inc.*
3.19 Articles of Incorporation
of Cranmore, Inc.*
3.20 Bylaws of Cranmore, Inc.*
3.21 Certificate of
Incorporation of S-K-I
Ltd.*
3.22 Bylaws of S-K-I Ltd.*
3.23 Articles of Association of
Killington Ltd.*
3.24 Bylaws of Killington Ltd.*
3.25 Articles of Association of
Mount Snow Ltd.*
3.26 Bylaws of Mount Snow Ltd.*
3.27 Articles of Incorporation
of Waterville Valley Ski
Area, Ltd.*
3.28 Bylaws of Waterville Valley
Ski Area, Ltd.*
3.29 Articles of Incorporation
of Sugarloaf Mountain
Corporation*
3.30 Bylaws of Sugarloaf
Mountain Corporation*
3.31 Articles of Association of
Killington Restaurants,
Inc.*
3.32 Bylaws of Killington
Restaurants, Inc.*
3.33 Articles of Association of
Dover Restaurants, Inc.*
3.34 Bylaws of Dover
Restaurants, Inc.*
3.35 Articles of Association of
Resort Technologies, Inc.*
3.36 Bylaws of Resort
Technologies, Inc.*
3.37 Articles of Association of
Resort Software Services,
Inc.*
3.38 Bylaws of Resort Software
Services, Inc.*
3.39 Articles of Incorporatoin
of LBO Hotel Co.*
3.40 Bylaws of LBO Hotel Co.*
3.41 Articles of Association of
Mountain Wastewater
Treatment, Inc.*
3.42 Bylaws of Mountain
Wastewater Treatment, Inc.*
3.43 Articles of Incorporation
of Mountainside*
3.44 Bylaws of Mountainside*
3.45 Articles of Incorporation
of Sugartech*
3.46 Bylaws of Sugartech*
3.47 Articles of Incorporation
of Deerfield Operating
Company*
3.48 Bylaws of Deerfield
Operating Company*
3.49 Articles of Association of
Pico Ski Area Management
Company*
3.50 Bylaws of Pico Ski Area
Management Company*
4.1 Indenture among the
Company, the Guarantors and
United States Trust Company
of New York, relating to
the Old Notes and the New
Notes, dated as of June 28,
1996.*
4.2 Indenture among the
Company, the Guarantors and
United States Trust Company
of New York, relating to
the Old Subordinated Notes
and the New Subordinated
Notes, dated as of June 28,
1996.*
4.3 Registration Rights
Agreement dated June 28,
1996 among the Company, the
Guarantors and the Initial
Purchasers.*
4.4 Purchase Agreement dated
June 25, 1996 among the
Company, certain of the
Guarantors and the Initial
Purchasers.*
4.5 Registration Rights
Agreement dated June 28,
1996 among the Company, the
Guarantors and Bear
Stearns.*
4.6 Pledge and Disbursement
Agreement, dated as of June
28, 1996, by and among the
Company, the Guarantors and
United States Trust Company
of New York, as collateral
agent.*
4.7 Shareholders' Agreement
dated June 28, 1996, among
Leslie B. Otten, the
Company and Bear Stearns*
5.1 Opinion of Pierce Atwood,
including consent
5.2 Opinion of Reiber, Kenlan,
Schwiebert, Hall & Facey,
including consent
5.3 Opinion of Wadleigh, Starr,
Peters, Dunn & Chiesa,
including consent
8.1 Opinion of Pierce Atwood
with regard to federal
income tax consequences of
the Exchange Offers.
10.1 Credit Agreement dated as
of June 28, 1996, among the
Company, its Subsidiaries,
parties thereto and Fleet.*
10.2 Security Agreement dated
June 28, 1996, among the
Company, its Subsidiaries,
parties thereto and Fleet.*
10.3 Revolving Credit Notes
dated June 28, 1996, issued
by the Company and certain
Subsidiaries to Fleet in
the aggregate principal
amount of $65,000,000.*
10.4 Swing Line Note dated June
28, 1996, issued by the
Company and certain
Subsidiaries to Fleet in
the aggregate principal
amount of $5,000,000.*
10.5 Fee and Leasehold Mortgage,
Assignment of Leases and
Rents and Security
Agreement, each dated as of
June 28, 1996, by and
between each of Sunday
River Skiway Corporation,
Sunday River, Ltd., LBO
Holding, Inc., Cranmore,
Inc., Sugarbush Resort
Holdings, Inc., Mountain
Water Company, Mountain
Wastewater Treatment, Inc.,
Killington, Ltd., Mount
Snow Ltd. and Waterville
Valley Ski Area Ltd. and
Fleet.*
10.6 Collateral Assignments of
Leases and Rents, each
dated as of June 28, 1996,
by and between each of
Sunday River Skiway
Corporation, Sunday River,
Ltd., LBO Holding, Inc.,
Cranmore, Inc., Sugarbush
Resort Holdings, Inc.,
Mountain Water Company,
Mountain Wastewater
Treatment, Inc.,
Killington, Ltd., Mount
Snow Ltd. and Waterville
Valley Ski Area Ltd. and
Fleet.*
10.7 Assignment in Trust, dated
as of June 28, 1996,
between Waterville Valley
Ski Area, Ltd. and Fleet*
10.8 Assignment in Trust, dated
as of June 28, 1996,
between LBO Holding, Inc.
and Fleet.*
10.9 Assignment of Agreements,
Permits and Contracts,
among the Company, certain
Subsidiaries and Fleet*
10.10 Assignment of Trademarks
and Service Marks (U.S.),
dated June 28, 1996, among
the Company, certain
Subsidiaries and Fleet.*
10.11 Hazardous Materials
Indemnification Agreement,
dated June 28, 1996, among
the Company, certain
Subsidiaries and Fleet.*
10.12 Guaranty Agreement dated
June 28, 1996, by LBO Hotel
Co., in favor of Fleet.*
10.13 Guaranty Agreement dated
June 28, 1996, by Sugarloaf
Mountain Corporation in
favor of Fleet.*
10.14 Intercreditor Agreement
dated as of June 20, 1996,
among the Company, certain
Subsidiaries, Doppelmayr
USA, Inc. and Fleet.*
10.15 Intercreditor Agreement,
dated as of June 28, 1996,
among the Company, certain
Subsidiaries, Snowridge,
Inc. (for itself and as
agent for Innacq
Corporation) and Fleet.*
10.16 Loan and Security
Agreement, dated as of
October 1, 1984, among the
State of Vermont, acting by
and through the Vermont
Industrial Development
Authority, Sherburne
Corporation (predecessor to
Killington, Ltd.), Proctor
Bank and The First National
Bank of Boston*
10.17 Loan and Security
Agreement, dated as of
October 1, 1984, among the
State of Vermont, acting by
and through the Vermont
Industrial Development
Authority, Mt. Snow,
Proctor Bank and The First
National Bank of Boston*
10.18 Form of Subordinated Note,
dated as of June 30, 1992,
from Sugarloaf Mountain
Corporation to certain note
holders*
10.19 Indenture, dated October
24, 1990, among Killington,
Ltd. and The Howard Bank,
as trustee (representative
of indentures with respect
to similar indebtedness
aggregating approximately
$2,995,000, in original
principal amount and
maturing at various times
from 2015 to 2016)*
10.20 Indenture, dated September
25, 1986, among Killington,
Ltd. and The Howard Bank,
as trustee (representative
of indentures with respect
to similar indebtedness
aggregating approximately
$10,873,500, in original
principal amount and
maturing at various times
from 1997 to 2013)*
10.21 Restated Concession
Agreement, dated April 30,
1992, between Sugarloaf
Mountain Corporation and
Boston Concessions Group,
Inc., together with
Amendment thereto, Loan
Agreement, and $150,000
Promissory Notes, each
dated July 31, 1995*
10.22 $500,000 Note, dated August
27, 1993, from Sugarloaf
Mountain Corporation and
Warren Cook to Fleet Bank
of Maine*
10.23 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated July 7, 1995, by and
between Doppelmayr USA,
Inc., and Sunday River
Skiway Corporation*
10.24 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated September 4, 1995, by
and between Doppelmayr USA,
Inc., and Sugarbush
Holdings, Inc. (Gate House
Chair)*
10.25 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated September 26, 1995,
by and between Doppelmayr
USA, Inc., and Sugarbush
Holdings, Inc.*
10.26 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated September 4, 1995, by
and between Doppelmayr USA,
Inc., and Sugarbush Resort
Holdings, Inc. (Sugar Bravo
Lift)*
10.27 Lift Relocation Agreement,
dated September 4, 1995, by
and between Doppelmayr USA,
Inc., and Sugarbush Resort
Holdings, Inc. (North Link
Chair)*
10.28 Lift Relocation Agreement,
dated September 4, 1995, by
and between Doppelmayr USA,
Inc., and Sugarbush Resort
Holdings, Inc. (North Ridge
Chair)*
10.29 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated September 4, 1995, by
and between Doppelmayr USA,
Inc., and Sugarbush Resort
Holdings, Inc. (Green
Mountain Chair)*
10.30 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated July 14, 1995, by and
between Doppelmayr USA,
Inc., and LBO Holding,
Inc., d/b/a Attitash/Bear
Peak.*
10.31 Doppelmayr Ski Lift Supply
and Installation Agreement,
dated July 14, 1995, by and
between Doppelmayr USA,
Inc., and LBO Holding,
Inc., d/b/a Cranmore, Inc.*
10.32 $2,311,838 Promissory Note
from Mountain Wastewater
Treatment, Inc. to LHC
Corporation dated May 16,
1995.*
10.33 $6,120,000 Promissory Note,
Senior Mortgage, and Junior
Mortgage from Sugarbush
Resort Holdings, Inc. to
Snowridge, Inc. and
Sugarbush, Inc. dated May
16, 1995*
10.34 Form of Subordinated
Debenture due 2002 from LBO
Holding, Inc. to former
shareholders of Mt.
Attitash Lift Corporation*
10.35 Purchase and Sale
Agreement, dated April 13,
1994, among Mt. Attitash
Lift Corporation and LBO
Holding, Inc. for purchase
of Attitash/Bear Peak Ski
Resort*
10.36 Stock Purchase Agreement,
dated August 16, 1994, for
purchase of 51% interest in
Sugarloaf Ski Resort, among
Sugarloaf Mountain
Corporation and S-K-I,
Ltd.*
10.37 Purchase and Sale
Agreement, dated August 30,
1994, among Waterville
Company, Inc., and S-K-I,
Ltd. for purchase of
Waterville Valley Ski
Resort*
10.38 Purchase and Sale
Agreement, dated May 16,
1995, among Sugarbush
Resort Holdings, Inc.,
Sugarbush Resort
Corporation, Snowridge,
Inc., Sugar Ridge, Inc.,
Sugarbush Inn Corporation
and Bev Ridge, Inc. for
purchase of Sugarbush Ski
Resort*
10.39 Purchase and Sale Agreement
among Cranmore Country
Corp. and Sunday River
Skiway Corporation for
purchase of Cranmore Ski
Resort*
10.40 Lease, dated October 15,
1980, among H. Donald
Penley, Joseph Penley,
Albert Penley and Sunday
River Skiway Corporation*
10.41 Lease, dated July 19, 1984,
between John Blake and LBO
Holding, Inc.*
10.42 Lease, dated July 1, 1993,
between Snowridge, Inc. and
Mountain Water Company*
10.43 Lease, dated March 1, 1988,
between Snowridge, Inc. and
Mountain Wastewater
Treatment, Inc.*
10.44 Lease, dated November 10,
1960, between the State of
Vermont and Sherburne
Corporation (predecessor to
Killington, Ltd.)*
10.45 Lease, dated February 20,
1990, between Pico Pond
Associates and Killington,
Ltd.*
10.46 Lease, dated June 21, 1994,
between the Town of
Wilmington and Mt. Snow,
Ltd.*
10.47 Lease, dated April 24,
1995, between Sargent, Inc.
and Mt. Snow, Ltd.*
10.48 United States Forest
Service Special Use Permit
No. 4040/01 issued November
29, 1989, to Mt. Snow,
Ltd.*
10.49 United States Forest
Service Special Use Permit
No. 4059/01 issued July 19,
1994, to LBO Holding, Inc.*
10.50 United States Forest
Service Special Use Permit
No. 4002/01 issued October
31, 1994, to Waterville
Valley Ski Area, Ltd.*
10.51 United States Forest
Service Special Use Permit
No. 4041 issued May 15,
1995, to Sugarbush Resort
Holdings, Inc.*
10.52 Lease, dated September 10,
1984, between the
Inhabitants of the Town of
Carrabassett Valley and
Mountain Greenery*
10.53 Turnkey Sales Agreement,
dated June 5, 1992, between
POMA of America and
Killington, Ltd.*
10.54 Agreement between S-K-I,
Ltd., and Henry B. Lunde*
10.55 Agreement, dated July 26,
1995, between Bombardier
Corporation, Killington,
Ltd., Mt. Snow, Ltd.,
Waterville Valley Ski Area,
Ltd., Bear Mountain, Ltd.,
and Sugarloaf Mountain
Corporation*
10.56 Agreement dated June 3,
1996, between the Company
and Eastern Resorts
Company, LLC*
10.57 Warren Cook Employment
Agreement*
10.58 Partnership Agreement,
dated March 1993 relating
to Sugarloaf Land Partners
I*
10.59 Partnership Agreement,
dated March 1993 relating
to Sugarloaf Land Partners
II*
10.60 Limited Guaranty of Payment
and Performance from the
Company to Key Bank of
Maine dated October 3, 1996
10.61 Purchase and Sale Agreement
between Waterville Valley
Ski Area, Ltd., Cranmore,
Inc., American Skiing
Company and Booth Creek Ski
Acquisition Corp., dated as
of August 30, 1996
10.62 Purchase and Sale Agreement
between Sherburne Pass
Mountain Properties, LLC,
Pico Mountain Sports
Center, LLC, Pico Mountain
Operating Company, LLC,
Harold L. and Edith
Herbert, and Pico Ski Area
Management Company dated
October 16, 1996
10.63 Letter Agreement between S-
K-I Limited and Sugarloaf
Minority Shareholders dated
August 22, 1996
12.1 Statement re Computation of
Ratio of Earnings to Fixed
Charges
16.1 Letter from Berry, Dunn,
McNeil & Parker re change
in certifying accountants*
21.1 Subsidiaries of the
Company*
23.1 Consent of Price Waterhouse
LLP
23.2 Consent of Berry, Dunn,
McNeil & Parker
23.3 Consents of Pierce Atwood
(included in Exhibits 5.1
and 8.1)
23.4 Consent of Reiber, Kenlan,
Schwiebert, Hall & Facey
(included in Exhibit 5.2)
23.5 Consent of Wadleigh, Starr,
Peters, Dunn & Chiesa
(included in Exhibit 5.3)
24.1 Powers of Attorney (see
pages II-9 through II-34 of
this Registration
Statement)*
25.1 Statement of Eligibility of
United States Trust Company
of New York, as trustee
under the Indenture filed
as Exhibits 4.1 and 4.2, on
Form T-1 (filed under
separate cover).
99.1 Form of Notes Letter of
Transmittal to be used in
connection with the Notes
Exchange Offer.
99.2 Form of Subordinated Notes
Letter of Transmittal to be
used in connection with the
Subordinated Notes Exchange
Offer.
99.3 Notice of Guaranteed
Delivery regarding Old
Notes
99.4 Notice of Guaranteed
Delivery regarding Old
Subordinated Notes
* Previously filed
Item 22. Undertakings
The undersigned registrants
hereby undertake with respect to the
securities offered by them:
1. Insofar as indemnification
for liabilities arising under the
Securities Act of 1933, as amended
(the "Act") may be permitted as to
directors, officers and controlling
persons of any Registrant pursuant to
the provisions described in Item 20
or otherwise, the Registrants have
been advised that in the opinion of
the Commission such indemnification
is against public policy as expressed
in the Act and is, therefore
unenforceable. In the event a claim
for indemnification against such
liabilities (other than the payment
by any Registrant of expenses
incurred or paid by a director,
officer or controlling person of such
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,
such 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.
2. The Registrants hereby
undertake to respond to requests for
information that is incorporated by
reference into the prospectus
pursuant to Items 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 includes
information contained in documents
filed subsequent to the effective
date of the registration statement
through the date of responding to the
request.
3. The undersigned Registrants
hereby undertake 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 the
registration statement when it became
effective.
The undersigned registrants
hereby undertake:
(1) To file, during any period
in which offers or sales are being
made, a post-effective amendment to
this registration statement:
(i) To include any prospectus
required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the
prospectus any facts or events
arising after the effective date of
the registration statement (or the
most recent post-effective amendment
thereof) which, individually or in
the aggregate, represent a
fundamental change in the information
set forth in the registration
statement. Notwithstanding the
foregoing, any increase or decrease
in volume of securities offered (if
the total dollar value of securities
offered would not exceed that which
was registered) and any deviation
from the low or high end of the
estimated maximum offering range may
be reflected in the form of
prospectus filed with the Commission
pursuant to Rule 424(b) promulgated
under the Securities Act of 1933 if,
in the aggregate, the changes in
volume and price represent no more
than a 20% change in the maximum
aggregate offering price set forth in
the "Calculation of Registration Fee"
table in the effective registration
statement.
(iii) To include any
material information with respect to
the plan of distribution not
previously disclosed in the
registration statement or any
material change to such information
in the registration statement.
(2) That, for the purpose of
determining any liability under the
Securities Act of 1933, each such
post-effective amendment 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.
(3) To remove from registration
by means of a post-effective
amendment any of the securities being
registered which remain unsold at the
termination of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
AMERICAN SKIING COMPANY,
a Maine corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUNDAY RIVER SKIWAY
CORPORATION, a Maine
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUNDAY RIVER LTD., a
Maine corporation
By:`/s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
PERFECT TURN INC., a
Maine corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
LBO HOLDING, INC., a
Maine corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUNDAY RIVER
TRANSPORTATION, INC., a
Maine corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUGARBUSH RESTAURANTS,
INC., a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
Roger Amidon
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Allen Wilson
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUGARBUSH LEASING COMANY,
a Vermont corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUGARBUSH RESORT
HOLDINGS, INC., a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
CRANMORE, INC., a Maine
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
S-K-I LIMITED, a Delaware
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
KILLINGTON LTD., a
Vermont corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
MOUNT SNOW LTD., a
Vermont corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
WATERVILLE VALLEY SKI
AREA, LTD., a New
Hampshire corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUGARLOAF MOUNTAIN
CORPORATION,
a Maine corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
Burton Mills
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Christopher Brink
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Warren C. Cook
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
William Haggett
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Joseph O'Donnell
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
KILLINGTON RESTAURANTS,
INC., a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
Roger Amidon
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Allen Wilson
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
DOVER RESTAURANTS, INC.,
a Vermont corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive Officer
and 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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
Roger Amidon
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
Allen Wilson
By: /s/ Thomas M. Richardson Director
November 12, 1996
Thomas M. Richardson
Acting under Power of
Attorney Dated August 6, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
RESORT TECHNOLOGIES,
INC., a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
PICO SKI AREA MANAGEMENT
COMPANY, a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
MOUNTAIN WASTEWATER
TREATMENT, INC., a
Vermont corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
DEERFIELD OPERATING
COMPANY, a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
RESORT SOFTWARE SERVICES,
INC., a Vermont
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
LBO HOTEL CO., a Maine
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
MOUNTAINSIDE, a Maine
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to
this Registration Statement to be signed
on its behalf by the undersigned,
thereunto duly authorized, in the City
of Bethel, State of Maine on the 12th
day of November, 1996.
SUGARTECH, a Maine
corporation
By: /s/ Leslie B. Otten
Leslie B. Otten
Chief Executive
Officer and
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
/s/ Leslie B. Otten Director,
November 12, 1996
Leslie B. Otten Chief Executive
Officer and
President
/s/ Thomas M. Richardson Chief
Financial November 12, 1996
Thomas M. Richardson Officer
and Treasurer
(Principal Financial
and Accounting
Officer)
Registration No. 33-9763
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
EXHIBITS
TO
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
American Skiing Company
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
No. No.
<S> <C> <C>
2.1 Agreement and Plan of Merger,
dated as of February 13, 1996,
by and among LBO Resort
Enterprises (the predecessor of
the Company), LBO Acquisition
Co. and S-K-I Limited*
3.1 Articles of Incorporation of the
Company*
3.2 Bylaws of the Company*
3.3 Articles of Incorporation of
Sunday River Skiway Corporation*
3.4 Bylaws of Sunday River Skiway
Corporation*
3.5 Articles of Incorporation of
Sunday River Ltd. *
3.6 Bylaws of Sunday River Ltd. *
3.7 Articles of Incorporation of
Perfect Turn, Inc. *
3.8 Bylaws of Perfect Turn, Inc. *
3.9 Articles of Incorporation of LBO
Holding, Inc. *
3.10 Bylaws of LBO Holding, Inc. *
3.11 Articles of Incorporation of
Sunday River Transportation,
Inc. *
3.12 Bylaws of Sunday River
Transportation, Inc. *
3.13 Articles of Incorporation of
Sugarbush Resort Holdings, Inc.
*
3.14 Bylaws of Sugarbush Resort
Holdings, Inc. *
3.15 Articles of Incorporation of
Sugarbush Leasing Company*
3.16 Bylaws of Sugarbush Leasing
Company*
3.17 Articles of Incorporation of
Sugarbush Restaurants, Inc. *
3.18 Bylaws of Sugarbush Restaurants,
Inc. *
3.19 Articles of Incorporation of
Cranmore, Inc. *
3.20 Bylaws of Cranmore, Inc. *
3.21 Certificate of Incorporation of
S-K-I Ltd. *
3.22 Bylaws of S-K-I Ltd. *
3.23 Articles of Association of
Killington Ltd. *
3.24 Bylaws of Killington Ltd. *
3.25 Articles of Association of Mount
Snow Ltd. *
3.26 Bylaws of Mount Snow Ltd. *
3.27 Articles of Incorporation of
Waterville Valley Ski Area, Ltd.
*
3.28 Bylaws of Waterville Valley Ski
Area, Ltd. *
3.29 Articles of Incorporation of
Sugarloaf Mountain Corporation*
3.30 Bylaws of Sugarloaf Mountain
Corporation*
3.31 Articles of Association of
Killington Restaurants, Inc. *
3.32 Bylaws of Killington
Restaurants, Inc. *
3.33 Articles of Association of Dover
Restaurants, Inc. *
3.34 Bylaws of Dover Restaurants,
Inc. *
3.35 Articles of Association of
Resort Technologies, Inc. *
3.36 Bylaws of Resort Technologies,
Inc. *
3.37 Articles of Association of
Resort Software Services, Inc. *
3.38 Bylaws of Resort Software
Services, Inc. *
3.39 Articles of Incorporatoin of LBO
Hotel Co. *
3.40 Bylaws of LBO Hotel Co. *
3.41 Articles of Association of
Mountain Wastewater Treatment,
Inc. *
3.42 Bylaws of Mountain Wastewater
Treatment, Inc. *
3.43 Articles of Incorporation of
Mountainside*
3.44 Bylaws of Mountainside*
3.45 Articles of Incorporation of
Sugartech*
3.46 Bylaws of Sugartech*
3.47 Articles of Incorporation of
Deerfield Operating Company*
3.48 Bylaws of Deerfield Operating
Company*
3.49 Articles of Association of Pico
Ski Area Management Company*
Page
No.
3.50 Bylaws of Pico Ski Area
Management Company*
4.1 Indenture among the Company, the
Guarantors and United States
Trust Company of New York,
relating to the Old Notes and
the New Notes, dated as of June
28, 1996. *
4.2 Indenture among the Company, the
Guarantors and United States
Trust Company of New York,
relating to the Old Subordinated
Notes and the New Subordinated
Notes, dated as of June 28,
1996. *
4.3 Registration Rights Agreement
dated June 28, 1996 among the
Company, the Guarantors and the
Initial Purchasers. *
4.4 Purchase Agreement dated June
25, 1996 among the Company,
certain of the Guarantors and
the Initial Purchasers. *
4.5 Registration Rights Agreement
dated June 28, 1996 among the
Company, the Guarantors and Bear
Stearns. *
4.6 Pledge and Disbursement
Agreement, dated as of June 28,
1996, by and among the Company,
the Guarantors and United States
Trust Company of New York, as
collateral agent. *
4.7 Shareholders' Agreement dated
June 28, 1996, among Leslie B.
Otten, the Company and Bear
Stearns*
5.1 Opinion of Pierce Atwood,
including consent
5.2 Opinion of Reiber, Kenlan,
Schwiebert, Hall & Facey,
including consent
5.3 Opinion of Wadleigh, Starr,
Peters, Dunn & Chiesa, including
consent
8.1 Opinion of Pierce Atwood with
regard to federal income tax
consequences of the Exchange
Offers.
10.1 Credit Agreement dated as of
June 28, 1996, among the
Company, its Subsidiaries,
parties thereto and Fleet. *
10.2 Security Agreement dated June
28, 1996, among the Company, its
Subsidiaries, parties thereto
and Fleet. *
10.3 Revolving Credit Notes dated
June 28, 1996, issued by the
Company and certain Subsidiaries
to Fleet in the aggregate
principal amount of $65,000,000.
*
10.4 Swing Line Note dated June 28,
1996, issued by the Company and
certain Subsidiaries to Fleet in
the aggregate principal amount
of $5,000,000. *
10.5 Fee and Leasehold Mortgage,
Assignment of Leases and Rents
and Security Agreement, each
dated as of June 28, 1996, by
and between each of Sunday River
Skiway Corporation, Sunday
River, Ltd., LBO Holding, Inc.,
Cranmore, Inc., Sugarbush Resort
Holdings, Inc., Mountain Water
Company, Mountain Wastewater
Treatment, Inc., Killington,
Ltd., Mount Snow Ltd. and
Waterville Valley Ski Area Ltd.
and Fleet. *
10.6 Collateral Assignments of Leases
and Rents, each dated as of June
28, 1996, by and between each of
Sunday River Skiway Corporation,
Sunday River, Ltd., LBO Holding,
Inc., Cranmore, Inc., Sugarbush
Resort Holdings, Inc., Mountain
Water Company, Mountain
Wastewater Treatment, Inc.,
Killington, Ltd., Mount Snow
Ltd. and Waterville Valley Ski
Area Ltd. and Fleet. *
10.7 Assignment in Trust, dated as of
June 28, 1996, between
Waterville Valley Ski Area, Ltd.
and Fleet*
10.8 Assignment in Trust, dated as of
June 28, 1996, between LBO
Holding, Inc. and Fleet. *
10.9 Assignment of Agreements,
Permits and Contracts, among the
Company, certain Subsidiaries
and Fleet*
10.10 Assignment of Trademarks and
Service Marks (U.S.), dated June
28, 1996, among the Company,
certain Subsidiaries and Fleet.
*
10.11 Hazardous Materials
Indemnification Agreement, dated
June 28, 1996, among the
Company, certain Subsidiaries
and Fleet. *
Page
No.
10.12 Guaranty Agreement dated June
28, 1996, by LBO Hotel Co., in
favor of Fleet. *
10.13 Guaranty Agreement dated June
28, 1996, by Sugarloaf Mountain
Corporation in favor of Fleet. *
10.14 Intercreditor Agreement dated as
of June 20, 1996, among the
Company, certain Subsidiaries,
Doppelmayr USA, Inc. and Fleet.
*
10.15 Intercreditor Agreement, dated
as of June 28, 1996, among the
Company, certain Subsidiaries,
Snowridge, Inc. (for itself and
as agent for Innacq Corporation)
and Fleet. *
10.16 Loan and Security Agreement,
dated as of October 1, 1984,
among the State of Vermont,
acting by and through the
Vermont Industrial Development
Authority, Sherburne Corporation
(predecessor to Killington,
Ltd.), Proctor Bank and The
First National Bank of Boston*
10.17 Loan and Security Agreement,
dated as of October 1, 1984,
among the State of Vermont,
acting by and through the
Vermont Industrial Development
Authority, Mt. Snow, Proctor
Bank and The First National Bank
of Boston*
10.18 Form of Subordinated Note, dated
as of June 30, 1992, from
Sugarloaf Mountain Corporation
to certain note holders*
10.19 Indenture, dated October 24,
1990, among Killington, Ltd. and
The Howard Bank, as trustee
(representative of indentures
with respect to similar
indebtedness aggregating
approximately $2,995,000, in
original principal amount and
maturing at various times from
2015 to 2016) *
10.20 Indenture, dated September 25,
1986, among Killington, Ltd. and
The Howard Bank, as trustee
(representative of indentures
with respect to similar
indebtedness aggregating
approximately $10,873,500, in
original principal amount and
maturing at various times from
1997 to 2013) *
10.21 Restated Concession Agreement,
dated April 30, 1992, between
Sugarloaf Mountain Corporation
and Boston Concessions Group,
Inc., together with Amendment
thereto, Loan Agreement, and
$150,000 Promissory Notes, each
dated July 31, 1995*
10.22 $500,000 Note, dated August 27,
1993, from Sugarloaf Mountain
Corporation and Warren Cook to
Fleet Bank of Maine*
10.23 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
July 7, 1995, by and between
Doppelmayr USA, Inc., and Sunday
River Skiway Corporation*
10.24 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
September 4, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Holdings, Inc.
(Gate House Chair) *
10.25 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
September 26, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Holdings, Inc. *
10.26 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
September 4, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Resort Holdings,
Inc. (Sugar Bravo Lift) *
10.27 Lift Relocation Agreement, dated
September 4, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Resort Holdings,
Inc. (North Link Chair) *
10.28 Lift Relocation Agreement, dated
September 4, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Resort Holdings,
Inc. (North Ridge Chair) *
Page
No.
10.29 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
September 4, 1995, by and
between Doppelmayr USA, Inc.,
and Sugarbush Resort Holdings,
Inc. (Green Mountain Chair)*
10.30 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
July 14, 1995, by and between
Doppelmayr USA, Inc., and LBO
Holding, Inc., d/b/a
Attitash/Bear Peak. *
10.31 Doppelmayr Ski Lift Supply and
Installation Agreement, dated
July 14, 1995, by and between
Doppelmayr USA, Inc., and LBO
Holding, Inc., d/b/a Cranmore,
Inc. *
10.32 $2,311,838 Promissory Note from
Mountain Wastewater Treatment,
Inc. to LHC Corporation dated
May 16, 1995. *
10.33 $6,120,000 Promissory Note,
Senior Mortgage, and Junior
Mortgage from Sugarbush Resort
Holdings, Inc. to Snowridge,
Inc. and Sugarbush, Inc. dated
May 16, 1995*
10.34 Form of Subordinated Debenture
due 2002 from LBO Holding, Inc.
to former shareholders of Mt.
Attitash Lift Corporation*
10.35 Purchase and Sale Agreement,
dated April 13, 1994, among Mt.
Attitash Lift Corporation and
LBO Holding, Inc. for purchase
of Attitash/Bear Peak Ski
Resort*
10.36 Stock Purchase Agreement, dated
August 16, 1994, for purchase of
51% interest in Sugarloaf Ski
Resort, among Sugarloaf Mountain
Corporation and S-K-I, Ltd. *
10.37 Purchase and Sale Agreement,
dated August 30, 1994, among
Waterville Company, Inc., and
S-K-I, Ltd. for purchase of
Waterville Valley Ski Resort*
10.38 Purchase and Sale Agreement,
dated May 16, 1995, among
Sugarbush Resort Holdings, Inc.,
Sugarbush Resort Corporation,
Snowridge, Inc., Sugar Ridge,
Inc., Sugarbush Inn Corporation
and Bev Ridge, Inc. for purchase
of Sugarbush Ski Resort*
10.39 Purchase and Sale Agreement
among Cranmore Country Corp. and
Sunday River Skiway Corporation
for purchase of Cranmore Ski
Resort*
10.40 Lease, dated October 15, 1980,
among H. Donald Penley, Joseph
Penley, Albert Penley and Sunday
River Skiway Corporation*
10.41 Lease, dated July 19, 1984,
between John Blake and LBO
Holding, Inc. *
10.42 Lease, dated July 1, 1993,
between Snowridge, Inc. and
Mountain Water Company*
10.43 Lease, dated March 1, 1988,
between Snowridge, Inc. and
Mountain Wastewater Treatment,
Inc. *
10.44 Lease, dated November 10, 1960,
between the State of Vermont and
Sherburne Corporation
(predecessor to Killington,
Ltd.) *
10.45 Lease, dated February 20, 1990,
between Pico Pond Associates and
Killington, Ltd. *
10.46 Lease, dated June 21, 1994,
between the Town of Wilmington
and Mt. Snow, Ltd. *
10.47 Lease, dated April 24, 1995,
between Sargent, Inc. and Mt.
Snow, Ltd. *
10.48 United States Forest Service
Special Use Permit No. 4040/01
issued November 29, 1989, to Mt.
Snow, Ltd. *
10.49 United States Forest Service
Special Use Permit No. 4059/01
issued July 19, 1994, to LBO
Holding, Inc. *
10.50 United States Forest Service
Special Use Permit No. 4002/01
issued October 31, 1994, to
Waterville Valley Ski Area, Ltd.
*
Page
No.
10.51 United States Forest Service
Special Use Permit No. 4041
issued May 15, 1995, to
Sugarbush Resort Holdings, Inc.
*
10.52 Lease, dated September 10, 1984,
between the Inhabitants of the
Town of Carrabassett Valley and
Mountain Greenery*
10.53 Turnkey Sales Agreement, dated
June 5, 1992, between POMA of
America and Killington, Ltd. *
10.54 Agreement between S-K-I, Ltd.,
and Henry B. Lunde*
10.55 Agreement, dated July 26, 1995,
between Bombardier Corporation,
Killington, Ltd., Mt. Snow,
Ltd., Waterville Valley Ski
Area, Ltd., Bear Mountain, Ltd.,
and Sugarloaf Mountain
Corporation*
10.56 Agreement dated June 3, 1996,
between the Company and Eastern
Resorts Company, LLC*
10.57 Warren Cook Employment
Agreement*
10.58 Partnership Agreement, dated
March 1993 relating to Sugarloaf
Land Partners I*
10.59 Partnership Agreement, dated
March 1993 relating to Sugarloaf
Land Partners II*
10.60 Limited Guaranty of Payment and
Performance from the Company to
Key Bank of Maine dated October
3, 1996
10.61 Purchase and Sale Agreement
between Waterville Valley Ski
Area, Ltd., Cranmore, Inc.,
American Skiing Company and
Booth Creek Ski Acquisition
Corp., dated as of August 30,
1993
10.62 Purchase and Sale Agreement
between Sherburne Pass Mountain
Properties, LLC, Pico Mountain
Sports Center, LLC, Pico
Mountain Operating Company, LLC,
Harold L. and Edith Herbert, and
Pico Ski Area Management Company
dated October 16, 1996
10.63 Letter Agreement between S-K-I
Limited and Sugarloaf Minority
Shareholders dated August 22,
1996
12.1 Statement re Computation of
Ratio of Earnings to Fixed
Charges
16.1 Letter from Berry, Dunn, McNeil
& Parker re change in certifying
accountants*
21.1 Subsidiaries of the Company*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Berry, Dunn, McNeil &
Parker
23.3 Consents of Pierce Atwood
(included in Exhibits 5.1 and
8.1)
23.4 Consent of Reiber, Kenlan,
Schwiebert, Hall & Facey
(included in Exhibit 5.2)
23.5 Consent of Wadleigh, Starr,
Peters, Dunn & Chiesa (included
in Exhibit 5.3)
24.1 Powers of Attorney (see pages II-
9 through II-34 of this
Registration Statement) *
25.1 Statement of Eligibility of
United States Trust Company of
New York, as trustee under the
Indenture filed as Exhibits 4.1
and 4.2, on Form T-1 (filed
under separate cover).
99.1 Form of Notes Letter of
Transmittal to be used in
connection with the Notes
Exchange Offer.
99.2 Form of Subordinated Notes
Letter of Transmittal to be used
in connection with the
Subordinated Notes Exchange
Offer.
99.3 Notice of Guaranteed Delivery
regarding Old Notes
99.4 Notice of Guaranteed Delivery
regarding Old Subordinated Notes
</TABLE>
_______________________________________
* Previously filed
[LETTERHEAD OF PIERCE ATWOOD]
November 12, 1996
American Skiing Company
P.O. Box 450
Bethel, ME 04217
Re: Registration Statement on Form S-4
- -- File No. 333-9763
Ladies and Gentlemen:
We have acted as counsel to
American Skiing Company in connection
with the issuance of the New Notes and
New Subordinated Notes by American
Skiing Company, and the Subsidiary
Guarantees and Subordinated Note
Subsidiary Guarantees of such
obligations by certain of the Guarantors
(as those terms are defined in the
Prospectus). In that capacity, we
render the following opinion:
The New Notes and the New
Subordinated Notes will, when sold, be
legally issued, fully paid and
nonassessable, and will be binding
obligations of American Skiing Company,
and the Subsidiary Guarantees and the
Subordinated Note Subsidiary Guarantees
issued with respect to the New Notes and
the New Subordinated Notes,
respectively, by those Guarantors which
are organized under the laws of the
State of Maine and the State of Delaware
will, when issued, be legally issued,
fully paid and will represent legally
binding obligations of such Guarantors.
The foregoing opinion is subject to the
following qualification: the
enforceability of any obligation of
American Skiing Company or any Guarantor
(including the New Notes, New
Subordinated Notes, Subsidiary
Guarantees and Subordinated Note
Subsidiary Guarantees) may be limited by
bankruptcy, insolvency, reorganization,
moratorium, or other laws or rules of
law or equity affecting the enforcement
generally of creditors rights and
remedies, the discretion of the court
before which equitable relief is
requested, and laws relating to
fraudulent transfers or conveyances,
preferences and equitable subordination.
We consent to being named in the
above-captioned Registration Statement
and related Prospectus under the caption
"Legal Matters" as counsel who are
passing upon the validity of issuance of
the New Notes and the New Subordinated
Notes and such Subsidiary Guarantees and
Subordinated Note Subsidiary Guarantees
and to your filing copies of this letter
as an Exhibit to such Registration
Statement.
PIERCE ATWOOD
By: /s/ PIERCE
ATWOOD
Its Partner
[Letterhead of Reiber, Kenlan,
Schwiebert, Hall & Facey]
November 12, 1996
American Skiing Company
P.O. Box 450
Bethel, ME 04217
Re: Registration Statement on Form S-4
- -- File No. 333-9763
Ladies and Gentlemen:
We have acted as special local
Vermont counsel to Sugarbush Resort
Holdings, Inc., Sugarbush Leasing
Company, Sugarbush Restaurants, Inc.,
Killington, Ltd., Mount Snow, Ltd.,
Mountain Wastewater Treatment, Inc.,
Killington Restaurants, Inc., Dover
Restaurants, Inc., Resorts Technologies,
Inc., Resort Software Services, Inc.,
Deerfield Operating Company, and Pico
Ski Area Management Company, each a
Vermont corporation (the "Subsidiaries"
and each a "Subsidiary") in connection
with the issuance of the Subsidiary
Guarantees and the Subordinated Note
Subsidiary Guarantees by certain of the
Guarantors of the obligations of
American Skiing Company as evidenced by
the New Notes and the New Subordinated
Notes. Terms in the opinion given
herein are defined in the Registration
Statement dated August 8, 1996
pertaining to the American Skiing
Company $120,000,000 12% Senior
Subordinated Notes due 2006 and
$39,132,000 of 13 3/4% Subordinated
Discount Notes due 2007 (the "Notes").
We call your attention to the fact
that the Indenture and Subordinated Note
Indenture provide that the internal law
of the State of New York shall govern
and be used to construe the Indentures,
Notes, and Subsidiary Guarantees and
Subordinated Note Subsidiary Guarantees,
respectively, and that we are not
rendering any opinion with respect to
New York law. Therefore, we have not
examined the question of what law would
govern the interpretation or enforcement
of the Indentures, Notes, Subsidiary
Guarantees and the Subordinated Note
Subsidiary Guarantees, and our opinion
is based on the assumption that the
internal laws of the State of Vermont
would govern the matters upon which we
are opining herein. We note that, if
the Indentures, Notes, Subordinated
Notes, Subsidiary Guarantees and the
Subordinated Note Subsidiary Guarantees
are not in fact legal, valid, binding
and enforceable under the laws of New
York, the Subsidiary Guarantees and
Subordinated Note Subsidiary Guarantees
may not be enforced by a Vermont court
under applicable legal principles,
including conflict of law principles.
The opinion given herein is
retrospective as of June 28, 1996 and is
limited to the laws of the State of
Vermont. We express no opinion with
respect to federal laws. We express no
opinion with respect to anti-fraud
provisions of any state or federal
securities law or any state or federal
anti-trust law, and no opinion is
rendered regarding the accuracy of the
Registration Statement or the
Prospectus. Further, we express no
opinion with respect to the
enforceability of any rights, remedies
or waivers contained in the Subsidiary
Guarantees and the Subordinated Note
Subsidiary Guarantees.
In rendering the following opinion,
we have examined the following
documents:
(i) A copy of the Subsidiary
Guarantee attached as Exhibit
D to a copy of the executed
Indenture and Article 11 of
the Indenture;
(ii) A copy of the Subordinated
Note Subsidiary Guarantee
attached as Exhibit D to a
copy of the executed
Subordinated Note Indenture
and Article 11 of the
Subordinated Note Indenture;
(iii) A copy of the Articles of
Incorporation of each of the
Subsidiaries and all
amendments thereto (the
"Articles"), as certified by
the Clerk of each of the
Subsidiaries as of June 28,
1996;
(iv) A copy of the By-Laws of each
of the Subsidiaries (the "By-
laws"), as certified by the
Clerk of each of the
Subsidiaries as of June 28,
1996;
(v) A copy of the Unanimous
Consent of the sole director
of each of the Subsidiaries,
certified by the Clerk of each
of the Subsidiaries as being
adopted on June 28, 1996, with
respect to the authority to
issue, and the execution and
delivery of the documents
necessary to guaranty the
indebtedness incurred by
American Skiing Company;
(vi) A certification by the
Treasurer of each of the
Subsidiaries with respect tot
he consideration for the
Subsidiary Guarantees and the
Subordinated Note Subsidiary
Guarantees; and
(vii) A certification by the
Treasurer of American Skiing
Company to the effect that
American Skiing Company
received full consideration
for the Notes and the
Subordinated Notes and no
further consideration for the
Notes and the Subordinated
Notes is due from American
Skiing Company therefor.
In rendering the following opinion,
we have made the following
assumptions:
(a) The Trustee has, or as of the
delivery thereof shall have,
authenticated the Notes, the
Subordinated Notes, the New
Notes and the New Subordinated
Notes; and
(b) The Subsidiary Guarantees and
the Subordinated Note
Subsidiary Guarantees have
been executed in the form of
the copies presented to and
reviewed by us.
Based upon the foregoing and
subject to the further qualifications
set forth below, we render the following
opinion:
The Subsidiary Guarantees and the
Subordinated Note Subsidiary Guarantees
issued with respect to the New Notes and
the New Subordinated Notes,
respectively, by each of the
Subsidiaries, will, when issued, be
legally issued, and will represent
legally binding obligations of each of
the Subsidiaries. The foregoing opinion
is subject to the following
qualification: the enforceability of
any obligation of any Subsidiary
(including the Subsidiary Guarantees and
the Subordinated Note Subsidiary
Guarantees) may be limited by
bankruptcy, insolvency, reorganization,
moratorium or other laws or rules of law
or equity affecting the enforcement
generally of creditors rights and
remedies, the discretion of the court
before which equitable relief is
requested, and laws related to
fraudulent transfers or conveyances,
preferences and equitable subordination.
We consent to being named in the
above-captioned Registration Statement
and Prospectus under the caption "Legal
Matters" as counsel who are passing upon
the validity of issuance of such
Subsidiary Guarantees and Subordinated
Note Subsidiary Guarantees by each of
the Subsidiaries and to your filing
copies of this letter as an Exhibit to
such Registration Statement.
REIBER, KENLAN, SCHWIEBERT, HALL &
FACEY, P.C.
By: /s/ REIBER, KENLAN, SCHWIEBERT,
HALL & FACEY, P.C.
Its Partner
[Letterhead of Wadleigh, Starr, Peters,
Dunn & Chiesa]
November 12, 1996
American Skiing Company
P.O. Box 450
Bethel, ME 04217
Re: Registration Statement on Form S-4 -
- - File No. 333-9763
Ladies and Gentlemen:
We have acted as special local New
Hampshire counsel to Waterville Valley
Ski Area Ltd., a New Hampshire
corporation in connection with the
issuance of the Subsidiary Guarantees and
the Subordinated Note Subsidiary
Guarantees by certain of the Guarantors
of the obligations of American Skiing
Company as evidenced by the New Notes and
the New Subordinated Notes. Terms in the
opinion given herein are defined in the
Registration Statement dated August 8,
1996 pertaining to the American Skiing
Company $120,000,000 12% Senior
Subordinated Notes due 2006 and
$39,132,000 of 13 3/4% Subordinated
Discount Notes due 2007 (the "Notes").
We call your attention to the fact
that the Indenture and Subordinated Note
Indenture provide that the internal law
of the State of New York shall govern and
be used to construe the Indentures,
Notes, Subordinated Notes, and Subsidiary
Guarantees and Subordinated Note
Subsidiary Guarantees, respectively, and
that we are not rendering any opinion
with respect to New York law. Therefore,
we have not examined the question of what
law would govern the interpretation or
enforcement of the Indentures, the Notes,
the Subsidiary Guarantees and the
Subordinated Note Subsidiary Guarantees,
and our opinion is based on the
assumption that the internal laws of the
State of New Hampshire would govern the
matters upon which we are opining herein.
We note that, if the Indentures, Notes,
Subordinated Notes, Subsidiary Guarantees
and the Subordinated Note Subsidiary
Guarantees are in fact legal, valid,
binding and enforceable under the laws of
New York, the Subsidiary Guarantees and
Subordinated Note Subsidiary Guarantees
may not be enforced by a New Hampshire
court under applicable legal principles,
including conflicts-of-law principles.
The opinion given herein is
retrospective as of June 28, 1996 and is
limited to the laws of the State of New
Hampshire. We express no opinion with
respect to federal laws. We express no
opinion with respect to anti-fraud
provisions of any state or federal
securities law or any state or federal
anti-trust law, and no opinion is
rendered regarding the accuracy of the
Registration Statement. Further, we
express no opinion with respect to the
enforceability of any rights, remedies or
waivers contained in the Subsidiary
Guarantees and the Subordinated Note
Subsidiary Guarantees.
We have examined the following
documents:
(i) A copy of the Subsidiary
Guarantee attached as Exhibit D
to a copy of the executed
Indenture and Article 11 of the
Indenture;
(ii) A copy of the Subordinated Note
Subsidiary Guarantee attached
as Exhibit D to a copy of the
executed Subordinated Note
Indenture and Article 11 of the
Subordinated Note Indenture;
(iii) A copy of the Articles of
Incorporation of Waterville
Valley Ski Area Ltd., and all
amendments thereto (the
"Articles"), on file in the
office of the Secretary of
State for the State of New
Hampshire, as certified by said
Secretary of State attesting to
the continued corporate
existence of Waterville Valley
Ski Area Ltd., as of October
28, 1996;
(iv) A copy of the By-Laws of
Waterville Valley Ski Area
Ltd., as certified by its Clerk
as of June 28, 1996 (the "By-
Laws");
(v) A copy of the Unanimous Consent
of the sole director of
Waterville Valley Ski Area
Ltd., certified by its Clerk as
being adopted on June 28, 1996,
with respect to the authority
to issue, and the execution and
delivery of the documents
necessary to guaranty the
indebtedness incurred by
American Skiing Company;
(vi) A certification by the
Treasurer of Waterville Valley
Ski Area Ltd. with respect to
the consideration for the
Subsidiary Guarantees and the
Subordinated Note Subsidiary
Guarantees; and
(vii) A certification by the
Treasurer of American Skiing
Company to the effect that
American Skiing Company
received full consideration for
the Notes and no further
consideration is due to
American Skiing Company
therefor
In rendering the following opinion,
we have made the following
assumptions:
(a) The Trustee has, or as of the
delivery thereof shall have,
authenticated the Notes and the
New Notes; and
(b) The Subsidiary Guarantees and
the Subordinated Note
Subsidiary Guarantees have been
executed in the same form of
the copies presented to and
reviewed by us.
Based upon the foregoing and subject
to the further qualifications set forth
below, we render the following opinion:
The Subsidiary Guarantees and the
Subordinated Note Subsidiary Guarantees
issued with respect to the New Notes and
the New Subordinated Notes, respectively,
by Waterville Valley Ski Area Ltd., a New
Hampshire corporation, will, when issued,
be legally issued, and will represent
legally binding obligations of Waterville
Valley Ski Area Ltd. The foregoing
opinion is subject to the following
qualification: the enforceability of any
obligation of Waterville Valley Ski Area
Ltd. (including the Subsidiary Guarantees
and Subordinated Note Subsidiary
Guarantees) may be limited by bankruptcy,
insolvency, reorganization, moratorium or
other laws or rules of law or equity
affecting the enforcement generally of
creditors rights and remedies, the
discretion of the court before which
equitable relief is requested, and laws
related to fraudulent transfers or
conveyances, preferences and equitable
subordination.
We consent to being named in the
above-captioned Registration Statement
and Prospectus under the caption "Legal
Matters" as counsel who are passing upon
the validity of issuance of such
Subsidiary Guarantees and Subordinated
Note Subsidiary Guarantees by Waterville
Valley Ski Area Ltd. and to your filing
copies of this letter as an Exhibit to
such Registration Statement.
WADLEIGH, STARR, PETERS, DUNN &
CHIESA
By: WADLEIGH, STARR, PETERS,
DUNN & CHIESA
Partner
[LETTERHEAD OF PIERCE ATWOOD]
November 12, 1996
American Skiing Company
P.O. Box 450
Bethel, ME 04217
Re: Registration Statement on Form S-4
- -- File No. 333-9763
Ladies and Gentlemen:
We have acted as counsel to
American Skiing Company in connection
with the issuance of the New Notes and
New Subordinated Notes by American
Skiing Company, and the Subsidiary
Guarantees and Subordinated Note
Subsidiary Guarantees of such
obligations by certain of the Guarantors
(as those terms are defined in the
Prospectus). In that capacity, we
render the following opinion as to the
material anticipated federal income tax
consequences of the Exchange Offers (as
that term is defined in the Prospectus).
The following opinion is based upon
the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"),
the final, temporary and proposed
regulations promulgated thereunder, and
administrative rulings and judicial
decisions now in effect, all of which
are subject to change (possibly with
retroactive effect) or different
interpretations. Holders should note
that our opinion is not binding on the
Internal Revenue Service (the "Service")
and there can be no assurance that the
Service will take a similar view with
respect to the tax consequences
described below. No ruling has been or
will be requested by the Company from
the Service on any tax matters relating
to the New Notes or the New Subordinated
Notes. This opinion is not intended to
be applicable to all categories of
investors, some of which, such as
dealers in securities, banks, insurance
companies, tax-exempt organizations and
foreign persons, may be subject to
special rules. All holders of Notes
and/or Subordinated Notes are advised to
consult their own tax advisors regarding
the federal, state, local and foreign
tax consequences of exchanging Old Notes
for New Notes and/or Old Subordinated
Notes for New Subordinated Notes.
In the capacity set forth above and
subject to the foregoing limitations and
restrictions, it is our opinion that the
exchange of the New Notes for the Old
Notes and the exchange of the New
Subordinated Notes for the Old
Subordinated Notes pursuant to the
Exchange Offers should not give rise to
taxable income to the respective Holders
thereof for federal income tax purposes.
PIERCE ATWOOD
By: /S/ PIERCE ATWOOD
Its Partner
--
LIMITED
GUARANTY OF PAYMENT AND PERFORMANCE
GUARANTY by AMERICAN SKIING
COMPANY, a Maine corporation (the
"Guarantor"), in favor of KEY BANK OF
MAINE, a Maine bank with its head
office at One Canal Plaza, Portland,
Maine 04101 (the "Lender"). In
consideration of the Lender's giving,
in its discretion, time, credit or
banking facilities or accommodations to
LBO HOTEL CO., a Maine corporation,
(together with its successors, the
"Customer"), the Guarantor agrees as
follows:
1. LIMITED GUARANTY OF PAYMENT
AND PERFORMANCE. Subject to the
limitations of Section 3 below, the
Guarantor hereby guarantees to the
Lender the full and punctual payment
when due (whether at maturity, by
acceleration or otherwise), and the
performance, of a Construction Term
Loan Agreement of even or recent date
and a Note of even or recent date in
the amount of up to Eight Million Five
Hundred Thousand Dollars
($8,500,000.00) together with interest,
fees and other amounts as therein
provided, all together with any and all
renewals, modifications, consolidations
and extensions thereof, and all other
agreements and other obligations of the
Customer to the Lender which evidence,
govern or secure the foregoing loan
agreement and note and/or any and all
renewals, modifications, consolidations
and extensions thereof (collectively
the "Obligations"). Subject to the
limitations of Section 3 below, this
Guaranty is an absolute, unconditional
and continuing guaranty of the full and
punctual payment and performance of the
Obligations and not of their
collectibility only and is in no way
conditioned upon any requirement that
the Lender first attempt to collect any
of the Obligations from the Customer or
resort to any security or other means
of obtaining their payment. Should the
Customer default in the payment or
performance of any of the Obligations,
the obligations of the Guarantor
hereunder shall become immediately due
and payable to the Lender, without
demand or notice of any nature, all of
which are expressly waived by the
Guarantor. Payments by the Guarantor
hereunder may be required by the Lender
on any number of occasions.
2. GUARANTOR'S AGREEMENT TO PAY.
Subject to the limitations of Section 3
below, the The Guarantor further
agrees, as the principal obligor and
not as a guarantor only, to pay to the
Lender, on demand, (a) all costs and
expenses (including court costs and
legal expenses, including reasonable
attorneys' and paralegal fees) incurred
or expended by the Lender in connection
with the Obligations and the
enforcement thereof, together with
interest on amounts recoverable under
this Guaranty from the time such
amounts become due until payment, at
the highest rate per annum provided in
the Obligations, and (b) all costs and
expenses (including court costs and
legal expenses, including reasonable
attorneys' and paralegal fees) incurred
or expended by the Lender in connection
with the Guaranty and the enforcement
thereof together with interest on
amounts recoverable under this Guaranty
from the time such amounts become due
until payment, at the highest rate per
annum provided in the Obligations.
3. AMOUNT OF GUARANTY. The
aggregate liability of the Guarantor
under this Guaranty, including amounts
due amounts due under Section 2(a)
above, shall be limited to FOUR MILLION
DOLLARS ($4,000,000.00) plus, if this
Guaranty is not paid when due, an
additional FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00) with respect to
amounts due under Section 2(b) above
(all collectively the "Cap Amount").
Furthermore, upon the satisfaction
of all of the following conditions, (i)
the substantial completion of Phase I
at the Borrower's Summit Hotel at Mt.
Attitash/Bear Peak project consisting
of 105 quartershare units plus the
commercial unit (the "Project") with
certificates of occupancy issued for
the Project so that the closing of
individual quartershare unit sales may
occur and (ii) the reduction of the
outstanding balance on the Note to
Three Million Five Hundred Thousand
Dollars ($3,500,000.00) or less, (iii)
if the then outstanding balance of the
Note does not exceed forty percent
(40%) of the fair market value of the
remaining unsold inventory of
quartershare units in the Project
available for sale to third parties,
and (iv) the Obligations are not
otherwise in default, then upon receipt
of Guarantor's written request this
Guaranty shall be released.
The liability on this Guaranty is
separate from and independent of the
Guarantor's obligation to contribute
equity to Borrower consisting of: (i)
$5,000,000 in cash and prepaid
expenses, and in addition, (ii) land
and related easements with value of
$650,000, and in connection therewith
further reference being made to a
separate Debt Subordination Agreement
of even or recent date between
Guarantor and Lender.
4. WAIVERS BY GUARANTOR; BANK'S
FREEDOM TO ACT. The Guarantor agrees
that the Obligations will be paid and
performed strictly in accordance with
their respective terms regardless of
any law, regulation or order now or
hereafter in effect in any jurisdiction
affecting any of such terms or the
rights of the Lender with respect
thereto. The Guarantor waives
presentment, demand, protest, notice of
acceptance, notice of Obligations
incurred and all other notices of any
kind, all defenses which may be
available by virtue of any valuation,
stay, moratorium law or other similar
law now or hereafter in effect, any
right to require the marshalling of
assets of the Customer, and all
suretyship defenses generally. Without
limiting the generality of the
foregoing, the Guarantor agrees to the
provisions of any instrument
evidencing, securing or otherwise
executed in connection with any
Obligation and agrees that the
obligations of the Guarantor hereunder
shall not be released or discharged, in
whole or in part, or otherwise affected
by (i) the failure of the Lender to
assert any claim or demand or to
enforce any right or remedy against the
Customer; (ii) any extensions or
renewals of any Obligation; (iii) any
rescissions, waivers, amendments or
modifications of any of the terms or
provisions of any agreement evidencing,
securing or otherwise executed in
connection with any Obligation; (iv)
the substitution or release of any
entity primarily or secondarily liable
for any Obligation; (v) the adequacy of
any rights the Lender may have against
any collateral or other means of
obtaining repayment of the Obligations;
(vi) the impairment of any collateral
securing the Obligations, including
without limitation the failure to
perfect or preserve any rights the
Lender might have in such collateral or
the substitution, exchange, surrender,
release, loss or destruction of any
such collateral; or (vii) any other act
or omission which might in any manner
or to any extent vary the risk of the
Guarantor or otherwise operate as a
release or discharge of the Guarantor,
all of which may be done without notice
to the Guarantor.
5. UNENFORCEABILITY OF
OBLIGATIONS AGAINST CUSTOMER. If for
any reason the Customer has no legal
existence or is under no legal
obligation to discharge any of the
Obligations, or if any of the
Obligations have become irrecoverable
from the Customer by operation of law
or for any other reason, this Guaranty
shall nevertheless be binding on the
Guarantor to the same extent as if the
Guarantor at all times had been the
principal obligor on all such
Obligations. In the event that
acceleration of the time for payment of
the Obligations is stayed upon the
insolvency, bankruptcy or
reorganization of the Customer, or for
any other reason, all such amounts
otherwise subject to acceleration under
the terms of any agreement evidencing,
securing or otherwise executed in
connection with any Obligation shall be
immediately due and payable by the
Guarantor.
6. SUBROGATION; SUBORDINATION.
Until the payment and performance in
full of all Obligations of the Customer
to the Lender, the Guarantor shall not
exercise any rights against the
Customer arising as a result of payment
by the Guarantor hereunder, by way of
subrogation, exoneration, or otherwise,
and will not prove any claim in
competition with the Lender in respect
of any payment hereunder in bankruptcy
or insolvency proceedings of any
nature; the Guarantor will not claim
any set-off or counterclaim against the
Customer in respect of any liability of
the Guarantor to the Customer; and the
Guarantor waives any benefit of and any
right to participate in any collateral
which may be held by the Lender.
The payment of any amounts due
with respect to any indebtedness of the
Customer now or hereafter held by the
Guarantor is hereby subordinated to the
prior payment in full of the
Obligations, provided that so long as
no default in the payment or
performance of the Obligations has
occurred and is continuing, or no
demand for payment of any of the
Obligations has been made that remains
unsatisfied, the Customer may make, and
the Guarantor may demand and accept,
any scheduled payments of principal of
and interest on such subordinated
indebtedness in the amounts, at the
rates and on the dates specified in
such instruments, securities or other
writings as shall evidence such
subordinated indebtedness. The
Guarantor agrees that after the
occurrence of any default in the
payment or performance of the
Obligations, the Guarantor will not
demand, sue for or otherwise attempt to
collect any such indebtedness of the
Customer to the Guarantor until the
Obligations shall have been paid in
full. If, notwithstanding the
foregoing sentence, the Guarantor shall
collect, enforce or receive any amounts
in respect of such indebtedness, such
amounts shall be collected, enforced
and received by the Guarantor as
trustee for the Lender and be paid over
to the Lender on account of the
Obligations without affecting in any
manner the liability of the Guarantor
under the other provisions of this
Guaranty.
7. FURTHER ASSURANCES/FINANCIAL
STATEMENTS/AUTHORITY. The Guarantor
agrees that it will, from time to time
at the request of the Lender, provide
to the Lender its internal quarterly
and annual audited financial
statements, and related statements of
income and changes in financial
condition, together with such other
information relating to the business
and affairs of the Guarantor as the
Lender may reasonably request. The
Guarantor also agrees to do all such
things and execute all such documents,
as the Lender may consider necessary or
desirable to give full effect to this
Guaranty and to perfect and preserve
the rights and powers of the Lender
hereunder or under the accompanying
loan documents.
Guarantor represents and warrants
to Lender that Guarantor's execution
and delivery of this Guaranty and the
accompanying Debt Subordination
Agreements and the transactions
contemplated hereby by Guarantor (i)
are within the authority of Guarantor,
(ii) have been duly authorized by all
necessary proceedings on the part of
Guarantor, (iii) do not conflict with
or result in any breach or
contravention of any provision of law,
statute, rule or regulation to which
Guarantor is subject or any judgment,
order, writ, injunction, license or
permit applicable to Guarantor or any
indebtedness to which Guarantor is a
party and (iv) do not conflict with any
provision of the articles of
incorporation or bylaws of, or any
agreement or other instrument binding
upon, Guarantor, including without
limitation, Guarantor's obligations
under:
(i) the Credit Agreement entered into
among Guarantor, Guarantor's affiliates
and Fleet National Bank as Agent for
itself, The First National Bank of
Boston and Lender under its loan dated
on or about June 28, 1996 or to United
States Trust Company as Trustee under
certain Senior Subordinated Debentures
dated on or about June 28, 1996 and
(ii) the Indenture among Guarantor,
Guarantor's affiliates and United
States Trust Company pursuant to which
Guarantor issued its $120,000,000 12%
Senior Subordinated Notes due 2006 and
its 13.75% Subordinated Discount Notes
due 2007
8. TERMINATION; REINSTATEMENT.
This Guaranty shall remain in full
force and effect until the Lender is
given written notice of the Guarantor's
termination of this Guaranty
specifically referring to this Section,
notwithstanding any intermediate or
temporary payment or settlement of the
whole or any part of the Obligations.
No such notice shall be effective
unless received and acknowledged by an
officer of the Lender at its head
office or at the branch of the Lender
where this Guaranty is given. No such
notice shall affect any rights of the
Lender or of any affiliate hereunder
including, without limitation, the
rights set forth in Sections 4 and 6,
with respect to Obligations incurred
prior to the receipt of such notice or
Obligations incurred pursuant to any
contract or commitment in existence
prior to such receipt, and all checks,
drafts, notes, instruments (negotiable
or otherwise) and writings made by or
for the account of the Customer and
drawn on the Lender or any of its
agents purporting to be dated on or
before the date of receipt of such
notice, although presented to and paid
or accepted by the Lender after that
date, shall form part of the
Obligations. This Guaranty shall
continue to be effective or be
reinstated, notwithstanding any such
notice, if at any time any payment made
or value received with respect to an
Obligation is rescinded or must
otherwise be returned by the Lender
upon the insolvency, bankruptcy or
reorganization of the Customer, or
otherwise, all as though such payment
had not been made or value received.
9. SUCCESSORS AND ASSIGNS. This
Guaranty shall be binding upon the
Guarantor, its successors and assigns,
and shall inure to the benefit of and
be enforceable by the Lender and its
successors, transferees and assigns.
Without limiting the generality of the
foregoing sentence, the Lender may
assign or otherwise transfer any
agreement or any note held by it
evidencing, securing or otherwise
executed in connection with the
Obligations, or sell participations in
any interest therein, to any other
person or entity, and such other person
or entity shall thereupon become
vested, to the extent set forth in the
agreement evidencing such assignment,
transfer or participation, with all the
rights in respect thereof granted to
the Lender herein.
10. AMENDMENTS AND WAIVERS. No
amendment or waiver of any provision of
this Guaranty nor consent to any
departure by the Guarantor therefrom
shall be effective unless the same
shall be in writing and signed by the
Lender. No failure on the part of the
Lender to exercise, and no delay in
exercising, any right hereunder shall
operate as a waiver thereof; nor shall
any single or partial exercise of any
right hereunder preclude any other or
further exercise thereof or the
exercise of any other right.
11. NOTICES. All notices and
other communications called for
hereunder shall be made in writing and,
unless otherwise specifically provided
herein, shall be deemed to have been
duly made or given when delivered by
hand or mailed first class mail postage
prepaid or, in the case of telegraphic
or telexed notice, when transmitted,
answer back received, addressed as
follows: if to the Guarantor, at the
address set forth herein, and if to the
Lender, at One Canal Plaza, Portland,
Maine 04101, Attention: Senior
Commercial Loan Officer, or at such
address as either party may designate
in writing.
12. GOVERNING LAW; CONSENT TO
JURISDICTION. This Guaranty is
intended to take effect as a sealed
instrument and shall be governed by,
and construed in accordance with, the
laws of the State of Maine. The
Guarantor agrees that any suit for the
enforcement of this Guaranty may be
brought in the courts of the States of
Maine or New Hampshire or any Federal
Court sitting therein and consents to
the non-exclusive jurisdiction of such
court and to service of process in any
such suit being made upon the Guarantor
by mail at the address specified in
Section 1112 hereof. The Guarantor
hereby waives any objection that it may
now or hereafter have to the venue of
any such suit or any such court or that
such suit was brought in an
inconvenient court.
13. MISCELLANEOUS. This Guaranty
and a separate Debt Subordination
Agreement of even or recent date
constitutes the entire agreement of the
Guarantor with respect to the matters
set forth herein. The rights and
remedies herein provided are cumulative
and not exclusive of any remedies
provided by law or any other agreement,
and this Guaranty shall be in addition
to any other guaranty of the
Obligations. The invalidity or
unenforceability of any one or more
sections of this Guaranty shall not
affect the validity or enforceability
of its remaining provisions. Captions
are for the ease of reference only and
shall not affect the meaning of the
relevant provisions. The meanings of
all defined terms used in this Guaranty
shall be equally applicable to the
singular and plural forms of the terms
defined.
14. Waiver of Right of Set-Off.
Lender affirmatively waives any right
of common law set-off against any
accounts of Guarantor with Lender, but
this waiver shall not restrict Lender's
rights to prejudgment trustee process
and attachment nor shall it limit
Lender's rights to recover on any
judgment against Guarantor.
1514. JURY WAIVER. THE LENDER
(BY ITS ACCEPTANCE HEREOF) AND THE
GUARANTOR AGREE THAT NEITHER OF THEM,
INCLUDING ANY ASSIGNEE OR SUCCESSOR
SHALL SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM, OR ANY OTHER
LITIGATION PROCEDURE BASED UPON, OR
ARISING OUT OF, THIS GUARANTY, ANY
RELATED INSTRUMENTS, ANY COLLATERAL OR
THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG ANY OF THEM. NEITHER
THE LENDER NOR THE GUARANTOR SHALL SEEK
TO CONSOLIDATE ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN
FULLY DISCUSSED BY THE LENDER AND THE
GUARANTOR, AND THESE PROVISIONS SHALL
NOT BE SUBJECT TO ANY EXCEPTIONS.
NEITHER LENDER NOR THE GUARANTOR HAS
AGREED WITH OR REPRESENTED TO THE OTHER
THAT THE PROVISIONS OF THIS PARAGRAPH
WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
1617. NOTICE: Under Maine law, no
promise, contract or agreement to
lend money, extend credit,
forebear from collection of a debt
or make any other accommodation
for the repayment of a debt for
more than $250,000 may be enforced
in court against the Lender unless
the promise, contract, or
agreement is in writing and signed
by the Lender. Accordingly the
Guarantor cannot enforce any oral
promise unless it is contained in
a Loan Document signed by the
Lender, nor can any change,
forbearance other accommodation
relating to the Obligations or any
other loan document be enforced
unless it is in writing signed by
the Lender. Guarantor also
understands that all future
promises, contracts and agreements
of the Lender relating to any
other transactions between the
Guarantor or Customer and the
Lender cannot be enforced in court
unless they are in writing and
signed by the Lender.
IN WITNESS WHEREOF, the Guarantor
has executed this Guaranty under seal
at _____________ __________, Maine as
ofon October 3___, 1996.
AMERICAN SKIING COMPANY
_____________________________
by: ______________________________
Witness
its ____________________________
GUARAN.DOC
XXX 0, 0000 0:00 AM10/04/96 2:02
PM10/04/96 9:11 AM
PURCHASE AND SALE AGREEMENT
by and between
WATERVILLE VALLEY SKI AREA, LTD.
and
CRANMORE, INC.
("Sellers")
AMERICAN SKIING COMPANY
("American SKI")
and
BOOTH CREEK SKI ACQUISITION CORP.
("Buyer")
dated as of
August 30, 1996
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and
entered into as of this 30th day of
August 1996, among Waterville Valley
Ski Area, Ltd., a New Hampshire
corporation with a principal place of
business at Waterville Valley, New
Hampshire ("WVSAL"), Cranmore, Inc.,
a Maine corporation with a principal
place of business at North Conway,
New Hampshire ("CI") (WVSAL and CI
being collectively referred to as the
"Sellers", American Skiing Company, a
Maine corporation with a principal
place of business at Bethel, Maine
("American SKI") and Booth Creek Ski
Acquisition Corp., a Delaware
corporation with a principal place of
business at Vail, Colorado.("Buyer"),
all of the issued and outstanding
stock of which is beneficially owned
by George N. Gillett, Jr. of Vail,
Colorado.
RECITALS
1. WVSAL owns and operates the
Waterville Valley Ski Resort located
in Waterville Valley, New Hampshire
(the "WVSAL Resort") and CI owns and
operates the Mount Cranmore Ski
Resort located in North Conway, New
Hampshire (the "CI Resort"). The
WVSAL Resort and CI Resort are
hereinafter collectively referred to
as the "Ski Areas".
2. WVSAL and CI wish to sell
to Buyer, and Buyer wishes to
purchase and acquire from WVSAL and
CI the Ski Areas and all WVSAL's
assets located in Waterville Valley,
New Hampshire and all CI's assets
located in North Conway, New
Hampshire.
3. The sale and purchase and
the other transactions contemplated
hereby will be subject to the
approval of the United States
Department of Justice ("USDOJ") as
provided in the Stipulation and Final
Judgment in the proceeding entitled
United States of America v. American
Skiing Company and S-K-I Limited,
United States District Court,
District of Columbia, Docket No. 96-
1308 (the "Consent Decree").
AGREEMENT
NOW, THEREFORE, in consideration
of the mutual agreements herein
contained, and for other good and
valuable consideration, the receipt
and adequacy of which is hereby
acknowledged, the parties hereto,
intending to be legally bound, hereby
agree as follows:
ARTICLE I
PURCHASED ASSETS
Subject to the terms and
conditions of this Agreement, Sellers
agree to sell, convey, transfer, set
over, assign and deliver to Buyer,
and Buyer agrees to purchase and
accept from Sellers all right, title
and interest in and to the assets,
real, personal and mixed, tangible
and intangible, of every kind, nature
and description pertaining to or used
or useful in the operations of the
Ski Areas (excluding, however, the
Excluded Assets), including without
limitation the following assets (the
"Purchased Assets"):
1.01 Real Property.
The real property
consisting of:
(a) All real property
owned by WVSAL,
together with all
buildings and other
improvements located
thereon, including
those described in
Schedule 1.01(a) (the
"WVSAL Real Estate");
(b) All real property
owned by CI, together
with all buildings and
other improvements
located thereon,
including those
described in Schedule
1.01(b) (the "CI Real
Estate"); and
(c) All easements, rights,
privileges, rights of
way and appurtenances
belonging to Sellers,
whether or not
appurtenant to,
adjoining or adjacent
to the WVSAL Real
Estate and/or the CI
Real Estate and all
buildings, fixtures
and improvements
thereon, including any
interest in adjoining
or adjacent highways,
roads, streets and
lanes, whether public
or private, used by
Sellers for the
benefit of the WVSAL
Real Estate and/or the
CI Real Estate, and
including all
development rights
owned by either WVSAL
or CI, including but
not limited to those
described in Schedule
1.01(c) (the
"Easements"); the
WVSAL Real Estate, CI
Real Estate and
Easements being
hereinafter referred
to as the "Sellers'
Real Estate". Without
limiting the
foregoing, the
Sellers' Real Estate
shall include the
Waterville Valley
Conference Center, the
Mt. Cranmore Mountain
Club and those certain
recreational easements
pertaining to Black
Cap Mountain described
on Schedule 1.01(c).
1.02 United States Forest
Service Permits.
WVSAL's rights under the
United States Forest Service Permit
No. 4008-01 dated October 31, 1994
("USFS Permit") for alpine skiing on
Mt. Tecumseh and Snow's Mountain and
cross-country skiing, all taking
place on White Mountain National
Forest lands in Waterville Valley,
New Hampshire.
1.03 Ski Areas
Improvements.
All buildings, structures,
lifts, snowmaking equipment, fixtures
and other improvements owned by
Sellers which are utilized in any way
in the operation of the Ski Areas,
including, but not limited to, the
parking lots, lifts, snowmaking
systems, snowmaking compressor and
pumphouse buildings, services
buildings and base lodges, including
those described in Schedule 1.03 (the
"Ski Areas Improvements").
1.04 Personal Property.
All inventory, supplies,
materials, computers, phone
equipment, vehicles, machinery and
equipment, furniture and other
personal property owned by Sellers
which are utilized in any way in the
operation of the Ski Areas, including
without limitation the personal
property described in Schedule 1.04
(the "Personal Property").
1.05 Licenses and Permits.
To the extent assignable by
Sellers, all of Sellers' rights under
all governmental licenses,
authorizations and permits relating
to operation of the Ski Areas,
including but not limited to the
licenses, authorizations and permits
listed on Schedule 1.06 ("Assumed
Permits").
1.06 Books and Records.
All Sellers' books,
records, reports, studies, documents,
data and other information relating
to the Purchased Assets or the
Sellers ("Records").
1.07 Intellectual Property.
All rights to any
trademarks, tradenames, servicemarks
(whether or not registered),
registrations thereof, applications
for registration, copyrights (whether
or not registered) and any other
intangible assets or property, and
any applications for registration
thereof, used in connection with
Sellers' operation of the Ski Areas,
including without limitation as
listed on Schedule 1.07
("Intellectual Property Rights").
1.08 Contract Rights.
All of the contracts,
agreements leases and commitments,
and all amendments, extensions,
renewals, substitutions and
replacements thereof, necessary for
or used or useful in the operations
of the Ski Resorts.
1.09 Claims, Suits, etc.
All claims, suits, and
causes of action that either Seller
has against third parties with
respect to the Ski Resorts, including
without limitation, any rights or
claims arising from manufacturer
warranties with respect to machinery
and equipment included in the
Purchased Assets.
1.10 Accounts Receivable;
Deposits.
All of Sellers' accounts
receivable for services to be
performed or products to be delivered
on or after the Closing and all
deposits, prepaid expenses and
refunds (including deposits received
in connection with the 1996-7 ski
season and any ski season
thereafter), excepting those that are
prorated as of Closing in accordance
with the standards set forth on
Schedule 1.10.
1.11 Cash.
All of the Sellers' cash on
hand and any cash equivalents in the
form of bank accounts, investment
securities and other deposits,
prepaid expenses and refunds, which
specifically relate to the sale of a
ski pass for the 1996-1997 season or
any season thereafter for use at
either Ski Area.
1.12 Going Concern
The business of the Ski
Resorts as a going concern.
ARTICLE II
EXCLUDED ASSETS
The assets listed below shall be
excluded from the Purchased Assets
(the "Excluded Assets"):
2.01 Cash.
All of the Sellers' cash on
hand and any cash equivalents in the
form of bank accounts, investment
securities and other deposits,
prepaid expenses and refunds,
excepting those that specifically
relate to the sale of a ski pass for
the 1996-1997 season or any season
thereafter for use at either Ski Area
and excepting those that are prorated
as of the Closing in accordance with
Section 1.10.
2.02 Accounts Receivable.
All of Sellers' accounts
receivable for services performed or
products delivered on or prior to the
Closing, the collection of which is
addressed in Section 13.20 hereof.
ARTICLE III
NO ASSUMPTION OF LIABILITIES
3.01 No Assumption by
Buyer.
Except for the liabilities of
Sellers assumed by Buyer as described
in Schedule 3.01 hereof ("Assumed
Liabilities"), Buyer does not, and
shall not be obligated to, assume or
become liable for any of Sellers'
liabilities, obligations, debts,
contracts or other commitments
whatsoever, whether known or unknown,
fixed or contingent, now existing or
hereafter existing.
3.02 No Assumption by
Sellers.
Nothing in the foregoing shall
be deemed to constitute an assumption
by Sellers of any of Buyer's
liabilities, obligations, debts,
contracts or other commitments
whatsoever, whether known or unknown,
fixed or contingent, now existing or
hereafter arising which relate to
Buyer's ownership of or the
operation, or removal by Buyer of any
of, the Purchased Assets after the
Closing Date other than those
liabilities, obligation, debts,
contracts or other commitments,
whether known or unknown, which exist
or shall be deemed to have occurred
prior to Buyer's ownership and
operation of the Ski Areas and which
were not specifically assumed by
Buyer pursuant to Section 3.01.
ARTICLE IV
PURCHASE AND SALE
4.01 Determination of
Purchase Price.
(a) In consideration
of Sellers' sale, assignment and
transfer of the Purchased Assets to
Buyer and Sellers' agreement to
perform the terms, covenants and
provisions of this Agreement on its
part to be performed, at Closing (as
hereinafter defined) Buyer will
assume the Assumed Liabilities, and
will pay to Sellers an amount equal
to Seventeen Million Five Hundred
Thousand Dollars ($17,500,000) minus
the Adjustment (as defined in this
Section 4.01(a)) (the "Purchase
Price"). The "Adjustment" shall be
the amount of the diminution in value
in excess of $500,000 of the
Purchased Assets, the business of the
Sellers and or the Ski Areas
resulting from (i) any breach or
breaches of a representation or
warranty by either of the Sellers or
(ii) one or more failures by either
of the Sellers to comply with any of
the other provisions of this
Agreement. In the event that the
diminution referred to above is
greater than $1,500,000 (in which
case the Adjustment would be greater
than $1,000,000) and the Buyer
requests an Adjustment in excess of
$1,000,000, the Sellers and Buyer
shall have the right to terminate
this Agreement under this Section
4.01(a), it being understood that the
Sellers shall not have the right to
terminate this Agreement under this
Section 4.01(a) if the Buyer does not
request an Adjustment in excess of
$1,000,000 and the Buyer shall not
have the right to terminate this
Agreement under this Section 4.01(a)
if the diminution referred to above
is not greater than $1,500,000.
(b) If the Buyer
believes that any Adjustment is
necessary, the Buyer shall provide
prompt notice thereof to Sellers
prior to Closing (the "Buyer's
Adjustment Notice") for each such
Adjustment, which notice shall
contain an explanation of the Buyer's
basis for the Adjustment. The
Sellers shall have five (5) business
days from receipt of such Buyer's
Adjustment Notice to accept or
disapprove thereof. If Seller shall
approve of the Adjustment provided in
such Buyer's Adjustment Notice, or
shall fail to notify Buyer of
Sellers' disapproval thereof within
said five (5) business day period,
then the Adjustment shown in such
Buyer's Adjustment Notice shall be
the amount of the Adjustment for such
Buyer's Adjustment Notice. If
Sellers shall disapprove of the
amount of the Adjustment as shown on
such Buyer's Adjustment Notice,
Sellers shall so notify Buyer within
such five (5) business day period and
shall accompany such notice with
Sellers' calculation of the
Adjustment (the "Sellers'
Calculation"). The Buyer and Sellers
shall negotiate in good faith to
resolve any dispute over the amount
or existence of any Adjustment
arising from each Buyer's Adjustment
Notice. If the Buyer and Sellers
cannot resolve their differences over
the proposed Adjustment for any
Buyer's Adjustment Notice within ten
(10) business days following receipt
by Buyer of the Sellers' Calculation,
then the Sellers and the Buyer shall
submit their disagreement to Sno
Engineering whose determination on
the matter shall be final and
conclusive and binding on the parties
hereto.
4.02 Deposit.
Upon the execution of
this Agreement Seven Hundred Fifty
Thousand Dollars ($750,000.00) (the
"Deposit") shall be deposited with
the Sellers either in cash or in the
form of an assignment of Vail
Resorts, Inc. common stock sufficient
to generate a value of $750,000.
Buyer shall initially place 25,000
shares of Vail Resorts, Inc. common
stock on deposit with the Escrow
Agent. In the event the Sellers are
entitled to retain the Deposit in
accordance with the terms of this
Agreement and the Deposit Escrow
Agreement referred to below, then the
number of shares, together with any
cash portion of the Deposit,
necessary to generate a Deposit value
of $750,000 shall be determined using
the procedure set forth below as of
the date of the termination of this
Agreement which entitles the Sellers
to retain the Deposit.
Notwithstanding anything herein to
the contrary, the number of shares of
Vail Resorts, Inc. common stock to be
deposited with the Escrow Agent or to
be retained by the Sellers shall not
exceed 25,000. The value of Vail
Resorts, Inc. common stock shall be
determined using the following
procedure, in the order of priority
specified:
(1) By mutual
agreement of the parties;
(2) By independent
appraisal performed by Bear, Stearns
& Co. Inc., which independent
appraisal shall be final, binding and
conclusive as to the per share value
of Vail Resorts, Inc. common stock.
Any common stock remaining in the
Deposit after application of the
number of shares necessary to achieve
a $750,000 Deposit value shall be
reassigned to Buyer. The Deposit
shall be made pursuant to and in
accordance with the terms of the
Deposit Escrow Agreement to be
entered into by the Buyer, the
Sellers, George N. Gillett, Jr. and
an escrow agent. The Deposit Escrow
Agreement shall be entered into on
the date and in accordance with the
terms provided for in that certain
Letter Agreement dated as of the date
hereof by and among the Buyer and the
Sellers. The Escrow Agent under the
Deposit Escrow Agreement shall be
acceptable to Buyer and Sellers (the
"Escrow Agent"). The Deposit shall
be applied as follows:
(a) If the Closing
shall occur, the cash portion of the
Deposit together with any earnings
thereon to the Closing Date (as
defined in Article V) shall be
applied as a credit against the
Purchase Price as provided in Section
4.03(a). The parties hereto
acknowledge that any Vail Resorts,
Inc. stock assigned pursuant to this
Section 4.02 shall not be credited
against the Purchase Price at
Closing, but rather shall be re-
assigned by Sellers to Buyer upon
payment of the full Purchase Price.
(b) If the Closing
shall not occur by reason of a
material breach of this Agreement by
Buyer, including by failing to close
the transactions contemplated hereby
upon satisfaction by Sellers of the
conditions set forth in Article VIII
hereof, and the Sellers are not in
material breach of this Agreement any
and all of which breaches, if
measurable as a diminution in value,
do not result in an Adjustment under
Section 4.01 in excess of $1,000,000,
then upon termination of this
Agreement Sellers shall be entitled
to retain the Deposit, together with
any earnings thereon, for their own
account as liquidated damages in lieu
of all claims, actions or remedies
which Sellers may have against Buyer
arising out of such breach.
(c) If the Closing
shall not occur for any reason other
than pursuant to clause (b) of this
Section 4.02 (it being understood
that termination of this Agreement by
Buyer or Sellers pursuant to Section
4.01(a) of this Agreement shall be
deemed pursuant to this Section
4.02(c), and not Section 4.02(b)),
then upon termination of this
Agreement the Deposit, together with
any earnings thereon, shall be
returned to Buyer.
4.03 Payment of Purchase
Price.
(a) The Deposit,
together with any earnings thereon,
shall be credited as a payment
against the Purchase Price; provided
that any Vail Resorts, Inc. stock
assigned pursuant to Section 4.02
shall not be credited against the
purchase price at Closing, but rather
shall be re-assigned by Sellers to
Buyer upon payment of the full
purchase price.
(b) (i) Fourteen
Million Seven Hundred Fifty Thousand
Dollars ($14,750,000), less .50 times
the aggregate of any Adjustments and
less the credit provided for in
Section 4.03(a) shall be paid by
Buyer in cash by wire transfer or
other acceptable means of delivering
same day good funds; and (B) Two
Million Seven Hundred Fifty Thousand
Dollars ($2,750,000) less .50 times
the aggregate of any Adjustments
shall be paid by a promissory note
from Buyer to Sellers. The note
shall bear interest at the rate of
12% per annum, provide for a seven
and one-half year maturity with the
principal due according to the
schedule below, and contain semi-
annual interest payment dates, with
the first interest payment date
occurring on the six month
anniversary of the Closing. The note
will be secured by a second mortgage
lien, security interest or collateral
assignment (as applicable) in all
Purchased Assets, junior only to
Purchaser's senior credit facilities,
Purchaser's purchase money financing
and certain other customary permitted
liens, all to the extent consented to
by the senior lenders of Buyer. The
note shall contain customary terms
and provisions including provision
for payment of costs and collection.
The required principal payments shall
be as follows:
Date Amount
11/30/96 $250,000.00
1/31/98 100,000.00
1/31/99 150,000.00
1/31/00 200,000.00
1/31/01 250,000.00
1/31/02 300,000.00
1/31/03 350,000.00
Maturity Remaining
Date Principal.
4.04 Adjustment for Taxes,
Prepayments and Deposits.
Real property taxes,
personal property taxes, other ad
valorem taxes, any governmental
levies, charges or assessments,
utilities, water, sewer and any other
charges attributable to the Purchased
Assets for the fiscal year during
which the Closing Date occurs as well
as any other prepayments and deposits
with respect to the Purchased Assets
shall be prorated and adjusted as of
the Closing Date. All of such taxes,
prepayments and deposits are listed
on Schedule 4.02. If the real
property taxes or personal property
taxes for the fiscal year during
which the Closing Date occurs are not
finally determined, then such taxes
for the immediately prior fiscal year
shall be used for the purposes of
prorating taxes on the Closing Date,
with a further adjustment to be made
after the Closing Date as soon as
such taxes are finalized.
Installments of special taxes or
assessments with respect to the
Purchased Assets which are payable
for the fiscal period in which the
Closing Date occurs shall be prorated
as of the Closing Date. Sellers' and
Buyer's obligation to make post-
Closing Date adjustments for taxes,
prepayments and deposits shall
survive the Closing.
4.05 Adjustment for
Utilities.
Sellers shall cause all
meters for electricity, gas, water,
sewer and other utility usage at the
Ski Areas to be read on the Closing
Date, and Sellers shall pay all
charges for such utilities which have
accrued on or prior to the Closing
Date. If the utility companies are
unable or refuse to read the meters
on the Closing Date, all charges for
such utilities to the extent unpaid
shall be prorated and adjusted as of
the Closing Date based on the most
recent bills therefor. The Sellers
shall provide notice to Buyer within
three (3) days before the Closing
Date setting forth (i) whether
utility meters will be read as of the
Closing Date and (ii) a copy of the
most recent bill for any utility
charges which are to be prorated and
adjusted as of the Closing Date. If
the meters cannot be read as of the
Closing Date and, therefore, the most
recent bill is used to prorate and
adjust as of the Closing Date, then
to the extent that the amount of such
prior bill proves to be more or less
than the actual charges for the
period in question, a further
adjustment shall be made after the
Closing Date as soon as the actual
charges for such utilities are
available, which Buyer shall have
read as soon as possible after the
Closing Date. Sellers' and Buyer's
obligation to make such post-Closing
Date adjustments for utilities shall
survive the Closing.
4.06 Transfer Taxes.
Buyer, on the one hand, and
the Sellers, on the other hand, shall
each pay 50% of any state or local
transfer tax, deed excise tax (or any
other tax based upon the transfer of
the Purchased Assets) and the
recording fee for all deeds imposed
in connection with the purchase and
sale.
4.07 Adjustment Payment.
Within five (5) days of the
date upon which the amount of each
adjustment is finally determined
pursuant to this Article IV, payments
required thereby will be made by
check or wire transfer payable to the
appropriate party.
ARTICLE V
CLOSING
The closing (the "Closing") of
the transaction contemplated by this
Agreement will take place at Pierce
Atwood, One Monument Square,
Portland, Maine, at 10:00 a.m. local
time on the fifth business day
following the date upon which all of
the conditions precedent set forth in
Articles VIII and IX of this
Agreement are satisfied or waived by
the appropriate party hereto, subject
to Article XII of this Agreement, or
at such other time and place as the
parties may agree in writing. The
date of Closing is sometimes referred
to herein as the "Closing Date".
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
SELLERS
Sellers hereby represent and
warrant to Buyer as follows:
6.01 Corporate
Organization.
WVSAL is a corporation duly
organized, validly existing and in
good standing under the laws of the
State of New Hampshire. CI is a
corporation duly organized, validly
existing and in good standing under
the laws of the State of Maine.
American SKI is a corporation duly
organized, validly existing and in
good standing under the laws of the
State of Maine, Sellers and American
SKI have full power and authority to
own or lease their properties and to
carry on their businesses as now
conducted and to execute and deliver
this Agreement and to carry out the
terms hereof.
6.02 Authorization of
Agreement.
The execution and delivery
of this Agreement and the agreements
contemplated hereby (the "Related
Agreements") by Sellers and American
SKI the performance by Sellers and
American SKI of the obligations to be
performed hereunder and thereunder
have been duly authorized by all
necessary and appropriate action by
the Board of Directors and
stockholders of Sellers and American
SKI. The execution and delivery of
this Agreement and the Related
Agreements and the consummation of
the transactions contemplated hereby
and thereby do not and will not (i)
conflict with, or result in a breach
of, or default under, or permit
acceleration of any obligation under,
any of the terms, conditions, or
provisions of any note, bond,
mortgage, indenture, license,
material agreement or other material
instrument or obligation (including
without limitation its Articles of
Incorporation and By-laws) to which
Sellers or American SKI are a party,
or by which it or any of its
properties or assets may be bound or
affected or (ii) violate any order,
writ, injunction, decree or statute,
or any rule, regulation, permit,
license or conditions thereto
(excepting the necessity of obtaining
the approvals, transfers and
reissuances of Licenses and Permits
described in Section 6.04 below), or
(iii) result in the creation or
imposition of any lien, charge or
encumbrance of any nature upon any of
the Purchased Assets. This Agreement
and the Related Agreements are valid
and binding obligations of Sellers
and American SKI enforceable in
accordance with their terms, subject
to equitable principles and
applicable bankruptcy and other
creditors' rights laws, regulations
and rulings.
6.03 Compliance with Laws.
Except as set forth in
Schedule 6.03, Sellers are not in
violation of any applicable federal,
state and local laws, rules,
regulations, ordinances, codes or
orders ("Laws") governing the
Purchased Assets and the operation of
the Ski Areas and has not received
written notification of any asserted
past or present failure by it to
operate the Ski Areas in accordance
with any such law, ordinance or
regulation and to Sellers' knowledge
no event has occurred which with
notice or the passage of time would
constitute such a default.
6.04 Licenses and Permits.
(a) No permits,
licenses, approvals, clearances or
other governmental consents are
required for the transfer of the
Purchased Assets to Buyer pursuant to
the terms of this Agreement except
for:
(i) a receipt of
all necessary approvals from the
USDOJ pursuant to the Consent Decree;
(ii) reissuance
by the U.S. Forest Service of the
USFS Permit to Buyer;
(iii) the
transfer or reissuance of the other
governmental licenses, permits,
authorizations, approvals and
certificates listed in Schedule 1.05
and 6.04 ("Licenses and Permits")
from Sellers to Buyer.
(b) The Sellers have
not disposed of or permitted to lapse
any license, permit or other
authorization from any federal, state
or local authorities related to the
Purchased Assets or the operation of
the Ski Areas.
(c) The Licenses and
Permits listed on Schedule 6.04 are
all of the governmental licenses,
permits, authorizations, approvals
and certificates known to Sellers
which are needed to operate the Ski
Areas at full capacity.
6.05 Environmental Matters;
Health and Safety.
(a) Except as
disclosed in Schedule 6.05, there are
no outstanding or, to Sellers'
knowledge, threatened actions,
claims, proceedings, determinations
or judgments by any party, including,
but not limited to, any governmental
authority or agency, against or
involving the Sellers, arising under
the Comprehensive Environmental
Response, Compensation and Liability
Act of 1980, 42 U.S.C. 9601 et. seq.
("CERCLA") or any other federal,
state, local or other environmental,
health or safety law, regulation,
order or requirement. Except as
listed in Schedule 6.05, there are no
outstanding or to Sellers' knowledge
threatened orders, determinations or
notices of violation issued by any
federal, state, local or other
governmental authority administering
environmental or health and safety
laws in connection with operation of
the Ski Areas which have not been
complied with or resolved to the
satisfaction of such governmental
authority.
(b) Except as set
forth in Schedule 6.05, Sellers are
operating the Ski Areas in compliance
with all applicable federal, state,
and local environmental or health and
safety laws, regulations and
ordinances governing the Ski Areas.
6.06 Title.
Except as set forth in
Schedules 1.01(a) through 1.01(c),
Sellers hold good and clear record
and marketable title to the Sellers'
Real Estate, free of all liens,
restrictions and encumbrances, except
applicable zoning and land use laws,
regulations, rules and ordinances and
the sale of the Sellers' Real Estate
does not require the consent of any
person or entity other than those
listed in Section 6.04. Except for
those listed on Schedule 6.13,
Sellers have no outstanding leases,
licenses, occupancy agreements or any
contracts or agreements with respect
to the Sellers' Real Estate.
6.07 Title to Other
Purchased Assets.
Except as set forth in
Schedule 6.07, Sellers hold and will
transfer to the Buyer good and
marketable title to all Purchased
Assets, other than Sellers' Real
Estate, free and clear of all
encumbrances, liens, charges or other
restrictions of any kind. Except for
those listed on Schedule 6.07,
Sellers have no outstanding contracts
or agreements with respect to or
affecting the Purchased Assets. None
of the contracts or agreements listed
in Schedule 6.07 shall be binding
upon Buyer, unless listed in Schedule
3.01.
6.08 Applicable Zoning and
Use.
The existing operations of
the Ski Areas are permitted uses
within the zoning districts in which
they are located or otherwise
permitted under the USFS Permit and
other Licenses and Permits held by
Sellers.
6.09 Litigation.
Except as provided in
Schedule 6.09, there is no action,
suit, proceeding at law or in equity
by any person or entity, or any
arbitration or any administrative or
other proceeding by or before any
governmental or other instrumentality
or agency, pending, or, to Sellers'
knowledge, threatened, against either
of Sellers with respect to their
respective businesses or any of the
Purchased Assets.
6.10 Warranty of Purchased
Assets.
(a) Except as provided in
Schedule 6.01(a), all of the
Purchased Assets to be purchased,
sold or otherwise transferred or
assigned pursuant to this Agreement,
are in good condition and repair,
ordinary wear and tear excepted, and
suitable for their intended use.
(b) Except as provided in
Schedule 6.01(b), all of the rights,
properties and assets utilized or
required by the Sellers in connection
with the ownership or operation of
the Purchased Assets or the Ski Areas
are included fully in the Purchased
Assets.
6.11 Sellers Not "Foreign
Persons".
Sellers are not "foreign
persons" as defined in Internal
Revenue Code (the "Code") Section
1445, and Sellers will execute and
deliver to Buyer at Closing an
affidavit in compliance with Code
Section 1445(b)(2).
6.12 Taxes.
Except as described in
Schedule 6.12, Sellers have timely
filed all tax returns, tax
information returns and reports
required to be filed through the
Closing Date which relate to the
Purchased Assets and have paid all
taxes and other charges which have
become due pursuant to such returns
and reports, or pursuant to any
assessment received by it, except for
any taxes the validity of which
Sellers may be contesting in good
faith in appropriate proceedings.
Sellers are not delinquent in the
payment of any tax assessment or
governmental charge which relates to
any of the Purchased Assets, no
deficiencies for any taxes which
relate to any of the Purchased Assets
have been proposed, threatened,
asserted or assessed against Sellers,
and no requests for waivers of the
time to assess or pay any such tax
are pending. There are no tax liens
upon any of the Purchased Assets and
no such liens will arise as a result
of the transaction contemplated
hereby. For the purposes of this
Agreement, the term "Tax" shall
include all federal, state, local and
foreign income, property, sales,
excise and other taxes of any nature
whatsoever. Sellers have withheld
all required amounts from their
employees, agents, contractors, and
nonresidents and remitted such
amounts to the proper agencies and
have paid all employer contributions
and premiums in compliance with
applicable laws, including ERISA and
the Code.
6.13 Contracts and
Commitments.
Schedule 6.13 sets forth a
description of all contracts,
agreements and commitments of
Sellers, with respect to or affecting
the Purchased Assets. Each executed
contract or commitment set forth in
Schedule 6.13 hereto is in full force
and effect and, except as set forth
in Schedule 6.13, the Sellers are not
in default under any such contract or
commitment.
6.14 Intellectual Property.
Attached as Schedule 1.07
is a list of Sellers' trademarks
(whether or not registered),
tradenames, servicemarks (whether or
not registered), copyrights (whether
or not registered), trademark and
service mark registrations (and
pending applications therefor).
Sellers have not granted any
outstanding licenses or other rights
to use any Intellectual Property
Rights, and Sellers are not liable,
nor have Sellers made any contract or
arrangement whereby it may become
liable, to any person for any royalty
or other compensation for the use of
any Intellectual Property Rights.
None of the rights of Sellers in, to
or under any Intellectual Property
Rights will be adversely affected by
the consummation of the transactions
contemplated hereby. Use of the
Intellectual Property Rights in the
operation of the Ski Areas in the
manner conducted by Sellers prior to
the Closing will not infringe any
patent or copyright of any third
party, nor constitute a
misappropriation of the trade secrets
or other proprietary rights of any
third party.
6.15 Employee Benefit
Plans.
All of the pension,
retirement, profit sharing, savings,
stock option, severance, bonus,
fringe benefit, insurance or other
employee benefit plan or arrangement
of Sellers or applicable to their
employees is listed in Schedule 6.15.
Each of the above plans has been
operated and administered in
accordance with applicable laws,
including ERISA and the Code.
6.16 Labor and Employee
Relations.
There are no agreements
between any union, labor organization
or other bargaining agent in respect
of any employee of Sellers who is
employed in Sellers' operation of the
Ski Areas business ("Employee"). To
the best knowledge of the Sellers,
(i) there are no labor trouble,
dispute, grievance, strike or request
for union representation pending or
threatened and (ii) none of the
Sellers' management personnel have
given notice of resignation or
threatened to resign. At the Closing
Date, all Employees will be free of
all employment obligations to Sellers
and will be free to become the
employees of Buyer if Buyer so
desires.
6.17 Absence of Certain
Developments.
Since the Balance Sheet
Date the Sellers each has conducted
its business only in the ordinary
course and has not:
(a) declared or paid any
dividend or otherwise declared, paid
or distributed to any shareholder any
property of any type or nature, other
than in cash, or purchased, redeemed,
or otherwise acquired or agreed to
purchase, redeem, or otherwise
acquire, any of its shareholders'
capital stock other than for cash
prior to the Closing;
(b) made any loans or
advances to, or guarantees for the
benefit of, any Person other than
guarantees shown on Schedule 6.13 to
be discharged at Closing;
(c) except as provided in
Schedule 6.17(c), increased the
annualized level of compensation of
or granted any bonuses, benefits or
other forms of direct or indirect
compensation to any employee,
officer, director, employee, agent or
consultant other than routine
increases in the ordinary course of
business, or increased any bonus,
percentage compensation, service
award or other like benefit, granted
made or agreed to for any such
officer, director, employee, agent
or consultant, or increased any
welfare, pension, retirement or
similar payment or arrangement made
or agreed to which is greater than
any such bonus, percentage
compensation, service award or other
like benefit or any welfare, pension
retirement or similar payment or
arrangement existing or made pursuant
to arrangements, agreements, or plans
existing at the Balance Sheet Date;
(d) experienced any theft,
damage, destruction or loss of or to
any property or properties owned or
used by it, whether or not covered by
insurance, adversely affecting the
properties or business of either
Seller;
(e) changed its accounting
methods or practices (including,
without limitation, any change in
depreciation or amortization methods,
policies, or rates or income
recognition methods);
(f) entered into, amended
or terminated any contract,
commitment, lease, license,
collective bargaining agreement,
employee benefit plan, or any other
material agreement, to which it is a
party, or by which it or any of its
assets or properties are bound,
except, in the ordinary course of
business;
(g) waived, canceled or
released any right, claim or debts,
except in the ordinary course of
business;
(h) except as provided in
Schedule 6.17(h), received notice of
any violation of any law, rule or
regulation, of any governmental
entity or agency;
(i) received any claim for
damages arising out of actual or
alleged negligence or other tort, or
breach of contract not fully covered
by insurance;
(j) sold, assigned,
mortgaged, pledged, leased,
transferred, or disposed of any of
its assets, properties, or rights
(tangible or intangible) except in
the ordinary course of business
consistent with past practices;
(k) except the collateral
interests established in connection
with American Ski's acquisition of S-
K-I Limited, which are shown on
Schedule 6.13 as to be discharged at
Closing, mortgaged, pledged, or
subjected to any lien, charge, or
other encumbrance, any of its assets,
except liens for current property
taxes not yet due and payable;
(l) except as provided in
Schedule 6.17(l), made any capital
expenditures or commitments therefor
that aggregate in excess of $100,000;
(m) revalued any of its
assets; or
(n) agreed to do any of
the things described in the preceding
clauses (a) through (m).
6.18 Affiliate Transactions.
Except as set forth in Schedule
6.18, neither of the Sellers has any
business relationship with any of
their affiliates.
6.19 Financial Statements and
Related Matters.
(a) The Financial Statements
were prepared in accordance with
generally accepted accounting
principles consistently applied and
present fairly the financial position
and results of operations of Sellers
at the dates and for the periods
indicated therein.
(b) On the Balance Sheet Date,
Seller had no liability of any nature
(whether accrued, absolute,
contingent or otherwise) of the type
which should be reflected in balance
sheets (including the notes thereto)
prepared in accordance with generally
accepted accounting principles, which
was not fully disclosed, reflected or
reserved against in the Balance
Sheet; and except for liabilities
which have been incurred since the
Balance Sheet Date in the ordinary
and regular course of the business of
the Ski Areas or which are set forth
in Schedule 6.19, since the Balance
Sheet Date, Sellers have not incurred
any liability of any nature (whether
accrued, absolute, contingent or
otherwise).
(c) "Financial Statements"
shall mean the financial statements
for WVSAL and CI for the twelve
months ended April 28, 1996. The
"Balance Sheet Date" shall be April
28, 1996. The "Balance Sheet" shall
be the balance sheet contained in the
Financial Statements.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
BUYER
Buyer hereby represents and
warrants to Sellers as follows:
7.01 Corporate
Organization.
Buyer is a corporation duly
organized, validly existing and in
good standing under the laws of
Delaware with full power and
authority to own or lease its
property and to carry on its
businesses as now conducted.
7.02 Authorization of
Agreement.
The execution and delivery
of this Agreement and the Related
Agreements by Buyer and the
performance by Buyer of the
obligations to be performed hereunder
and thereunder have been duly
authorized by all necessary and
appropriate action by the directors
of Buyer and no shareholder approval
is required in connection therewith.
The execution and delivery of this
Agreement and the Related Agreements
and the consummation of the
transactions contemplated hereby and
thereby do not and will not conflict
with or result in a breach of, or
constitute a default under, the terms
and conditions of Buyer's Certificate
of Incorporation, By-Laws, any court
or administrative order or process by
which Buyer is bound, any agreement
or instrument to which Buyer is a
party or by which any is bound, or
any statute or regulation of any
governmental agency. This Agreement
and the Related Agreements are the
valid and binding obligations of
Buyer, enforceable in accordance with
their terms, subject to equitable
principles and applicable bankruptcy
and other creditors' rights, laws,
regulations and rulings.
7.03 Regulatory Approvals.
Except as described in
Section 6.04 to Buyer's knowledge no
consents, approvals, authorizations
and other requirements prescribed by
any law, rule or regulation are
required to be obtained or satisfied
by Buyer in connection with the
execution, delivery or performance by
Buyer of this Agreement or any
documents to be executed and
delivered by Buyer in connection
herewith. Buyer will make an
application as expeditiously as
possible to the United States Forest
Service to have the USFS Permit
reissued to Buyer in lieu of WVSAL
and to all other governmental
agencies and authorities required in
order to effect the transfer or
reissuance of the Licenses and
Permits described in Section 6.04.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
BY BUYER ON THE CLOSING DATE
The obligations of Buyer to
consummate the transactions
contemplated by this Agreement are
subject to the satisfaction of each
of the following conditions precedent
being satisfied on or before the
Closing Date, subject to the right of
Buyer to waive any one or more of
such conditions:
8.01 Closing Documents.
Sellers shall have
delivered or caused to be delivered
to Buyer, or Buyer shall have
otherwise received, on or before the
Closing Date, in a form reasonably
satisfactory to Buyer:
(a) Consents, waivers
and authorizations of any Person to
the Assumption of the Assigned
Contracts and other Purchased Assets
by Buyer and to the transactions
contemplated by this Agreement,
except for the USFS Permit and the
Assigned Permits, for which provision
is made in Section 8.04.
(b) Deeds to Buyer
conveying good and clear record and
marketable title to the Sellers' Real
Estate, free and clear of any liens
or encumbrances except as described
in Schedules 1.01(a) through 1.01(c)
and except for those leases,
licenses, or occupancy agreements or
other instruments which have been
assumed by the Buyer as Assumed
Liabilities.
(c) An owner's or
leasehold title insurance policy,
issued at Buyer's expense, dated the
Closing Date on such ALTA Forms as
are reasonably acceptable to Buyer
and its counsel with coverage
identical in all respects to the
title coverage described in Schedules
1.01(a) through 1.01(c), covering the
Sellers' Real Estate, and Sellers
shall have provided all statements,
affidavits, certificates, surveys
(which surveys shall be at Buyer's
expense) and indemnity agreements,
which are customarily required of
sellers by title insurance companies
in order for the title insurance
company to provide Buyer with each of
the title insurance policies (and
related endorsements) described in
this Agreement.
(d) Bills of Sale
conveying all Purchased Assets to
Buyer duly executed by Sellers
(Sellers and Buyer hereby agreeing
that neither the representations and
warranties nor the rights and
remedies of any party hereunder shall
be deemed to be enlarged, modified or
altered in any way by such Bills of
Sale);
(e) Certified copies
of the resolutions adopted by
Sellers' Board of Directors (and
stockholders where required)
authorizing the sale of the Purchased
Assets to Buyer in accordance with
this Agreement and Sellers' execution
and delivery of this Agreement;
(f) An affidavit,
under penalty of perjury, indicating
Seller's United States taxpayer
identification number and stating
that Sellers are not a foreign
person, in a form sufficient to
exempt Buyer from the withholding
provisions of Section 1445 of the
Code; and
(g) A good standing
certificate from the State of New
Hampshire of recent date for WVSAL, a
good standing certificate of recent
date from the State of Maine for CI,
and incumbency certificates of
Sellers, together with a certified
copy of each Sellers' Certificates of
Incorporation and By-Laws.
(h) An opinion of
counsel to Sellers in form and
substance acceptable to Buyer's
counsel.
(i) An Agreement to
be entered into by Buyer, Sellers and
American Ski relating to the certain
administrative and services to be
provided to Buyer on a transition
basis, which services shall relate,
without limitation, to the Smart
Ticket Technology, the AS 400 System
and Ski Areas' Reservation Systems.
(j) Within seven (7)
business days after the date hereof,
Buyer shall be, in its reasonable
judgment, satisfied with the
management of the Sellers, including
their willingness to be employed by
Buyer after the Closing.
8.02 Failure to Deliver the
Purchased Assets by the Closing Date.
If Sellers are unable to
deliver the Purchased Assets in
accordance with terms and conditions
of this Agreement and in a condition
substantially similar to their
condition as of the date hereof on
the Closing Date because of damage by
fire or casualty, then Buyer shall
have the right to terminate this
Agreement at any time thereafter.
8.03 Litigation and
Regulatory Action.
No litigation or regulatory
action shall have been filed or
brought against Sellers or the
Purchased Asset which forbids or
restricts the transactions
contemplated hereby.
8.04 Permits and Licenses.
Sellers shall have
delivered or caused to be delivered
to Buyer, or Buyer shall have
otherwise received, on or before the
Closing Date, in a form reasonably
satisfactory to Buyer:
(a) All necessary
USDOJ approvals of Buyer and the
transaction contemplated hereby under
the Consent Decree.
(b) Reissuance of the
USFS permit to Buyer upon Buyer's
application therefor, Buyer hereby
agreeing to exercise its best efforts
to obtain such reissuance.
(c) All necessary
agreements, waivers, authorizations
and consents to the assignments or
reissuances of all Assigned Permits,
and all other consents, approvals,
transfers and reissuances of Licenses
and Permits required in the operation
of the Ski Areas or in connection
with the Purchased Assets.
8.05 Other Documents.
All such other
documents as are required to be
delivered in connection with the
consummation of this transaction by
Sellers hereunder or as Buyer or its
counsel may reasonably request to
carry out the purpose of this
Agreement have been so delivered.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING BY
SELLERS ON THE CLOSING DATE
The obligations of Sellers to
consummate the transactions
contemplated by this Agreement are
subject to the satisfaction of each
of the following conditions precedent
being satisfied on or before the
Closing Date, subject to the right of
Sellers to waive any one or more of
such conditions:
9.01 Compliance.
The representations and
warranties of Buyer contained in this
Agreement or in any of the Schedules
attached hereto or in any agreement
or document delivered in connection
herewith shall be true and correct in
all material respects on and as of
the Closing Date as if made on and as
of the Closing Date. The Buyer shall
have performed and complied with all
of its obligations and covenants
required to be performed or complied
with on or before the Closing Date.
9.02 Closing Documents.
Buyer shall have delivered
to Sellers, in a form reasonably
satisfactory to counsel for Sellers:
(a) certified copies
of the resolutions adopted by Buyer's
Board of Directors (and stockholders
where required) authorizing the
purchase of the Purchased Assets from
Sellers in accordance with this
Agreement and Buyer's execution and
delivery of this Agreement;
(b) an assumption
agreement or agreements in form
acceptable to Sellers with respect to
the Assumed Liabilities;
(c) the promissory
note required pursuant to Section
4.01(a)(ii) hereof and to the extent
applicable, such mortgages, security
agreements, collateral assignments
and other documents and agreements,
in form and substance satisfactory to
Sellers, as may be required by
Sellers to establish and perfect the
mortgage liens, security interests
and collateral assignments described
in Section 4.03(b) hereof; and
(d) such other
documents and certificates as are
contemplated hereby or as Sellers or
their counsel may reasonably request.
(e) an opinion of
Buyer's counsel in form and substance
acceptable to Seller's counsel.
9.03 Payment of Money.
Buyer shall have paid the
cash portion of the Purchase Price to
the Sellers as provided in Section
4.03.
ARTICLE X
COVENANTS OF SELLERS AS TO INTERIM
OPERATION
Sellers hereby covenant and
agree with Buyer as follows:
10.01 Conduct of
Business.
From the date hereof to the
Closing Date, Sellers will carry on
its Ski Area businesses and
activities in substantially the same
manner as they have previously been
carried out, in the ordinary course
of business, and will not employ
methods of manufacture, purchase,
sale, lease, management, accounting,
or operation that vary from those
methods used by Sellers outside of
the ordinary course of business
consistent with past practices
recognizing that American Ski has
owned WVSAL since only June 28, 1996.
Without limiting the foregoing except
as specifically contemplated in this
Agreement, from the date of this
Agreement to the Closing, Sellers
will:
(a) not engage in any
transaction which would be
inconsistent with any representation,
warranty or covenant of Sellers set
forth herein or which would cause a
breach of any such representation,
warranty or covenant;
(b) except as
provided on Schedule 10.01(b) and in
the ordinary course of business, not
sell, transfer, convey, assign,
lease, license or otherwise dispose
of any of the Purchased Assets;
(c) not mortgage,
pledge, subject to a lien, or grant a
security interest in, or otherwise
encumber, any of the Purchased
Assets;
(d) use reasonable
efforts (without making any
commitments on behalf of Buyer) to
keep its business organizations
intact, keep available its present
employees and to preserve its present
relationships with customers,
suppliers, employees and others
having business relationships with
Sellers;
(e) not cause a
breach of any contract or commitment,
collective bargaining agreement,
employee benefit plan, or any other
material agreement to which either
Seller is a party, or by which it or
any of its assets or properties are
bound;
(f) not violate or
fail to comply with laws applicable
to it or its properties or business;
(g) furnish within
fifteen (15) days after the end of a
fiscal month an unaudited
consolidated balance sheet and income
statement of the Sellers for such
period, each such balance sheet and
income statement to be prepared in a
manner consistent with the
preparation of the Financial
Statements (subject to normal year-
end adjustments);
(h) not amend,
change, terminate or otherwise modify
any lease, contract, agreement or
commitment other than in the ordinary
course of business;
(i) not enter into,
or become obliged under, any
contract, agreement, lease or other
commitment relating to the Ski Areas,
other than any contract, agreement,
lease or other commitment having a
term of one (1) year or less and
involving a payment by or to either
Seller of less than $25,000 which is
entered into in the ordinary course
of business;
(j) not commit any
act or permit the occurrence of any
event or the existence of any
condition of the type described in
clauses (a) through (n) of Section
6.17 hereof;
(k) upon obtaining
knowledge of the existence of any
matter specific to Sellers' business
or the Purchased Assets that could
reasonably likely result in a
diminution of the Purchased Assets
and or the business of Sellers and or
the Ski Areas , the Sellers shall
promptly inform Buyer of such matter;
(l) agree not to do
any of the acts listed above (other
than pursuant to clauses (d), (g) and
(k) or under the circumstances
specified above).
10.02 Risk of Loss.
Sellers shall bear the risk
of loss, damage or destruction with
respect to the Purchased Assets from
any casualty until the successful
consummation of the sale and purchase
of the Purchased Assets on the
Closing Date. In the event of any
such loss, damage or destruction, the
proceeds of any claim for any loss
payable under any insurance policy
covering such loss shall be payable
to Sellers. In the event of any such
material loss or damage, Sellers
shall specify in writing to Buyer
with particularity the loss or damage
incurred, the cause thereof, if known
or reasonably ascertainable, and the
extent to which restoration,
replacement and repair of the
Purchased Assets lost or destroyed
will be reimbursed under any
insurance policy with respect
thereto. Buyer's right to terminate
this Agreement in such circumstances
shall be governed by Section 8.02 of
this Agreement. To the extent that
Buyer determines not to terminate
this Agreement, it shall be entitled
to any insurance proceeds provided
with respect to such loss to the
extent not used by Sellers to restore
the Purchased Assets.
10.03 Access to
Information.
From the date hereof to the
Closing Date, Sellers will afford to
the representatives of Buyer,
including its counsel, auditors, and
potential lenders and other sources
of financing to Buyer, during normal
business hours, access to any and all
of the Purchased Assets to the end
that Buyer may have a reasonable
opportunity to make such a full
investigation of the Purchased Assets
and of Sellers' Ski Area businesses
in advance of the Closing Date as it
shall reasonably desire, and the
officers of Sellers will confer with
representatives of Buyer and will
furnish to Buyer, either orally or by
means of such records, documents, and
memoranda as are available such
information as Buyer may reasonably
request, and Sellers will furnish to
Buyer's auditors all consents and
authority that they may reasonably
request in connection with any
examination by Buyer.
10.04 Consent of Third
Parties.
Sellers shall use their
best efforts to obtain, as soon as
practicable after the date hereof,
but in any event prior to the Closing
Date, the consent in writing of all
necessary persons to the transactions
contemplated by this Agreement,
including but not limited to any and
all governmental authorities as set
forth in Section 6.04; provided,
however, that the parties hereto
understand and agree that, with
respect to those authorities which
require the reissuance of permits to
Buyer such as the USFS and the State
Liquor Commission, Buyer must
initiate the application process for
reissuance and Sellers shall be
deemed to be using its "best efforts"
to the extent that it provides all
cooperation which Buyer reasonably
requests.
10.05 Insurance
Coverage.
Existing insurance
coverages for the Purchased Assets
shall be maintained in effect by
Sellers between the date hereof and
the Closing Date.
10.06 Maintenance of
Purchased Assets.
At all times from the
execution of this Agreement to the
Closing Date, Sellers agree to
maintain the Purchased Assets in good
operation, condition and repair,
except for ordinary wear and tear.
Sellers shall (i) not alter,
disassemble or remove any Purchased
Assets from the Property or take any
other action in connection with the
Purchased Assets which is
inconsistent with the transactions
contemplated by this Agreement
(except for removal of lift towers
resulting from the shortening of the
High Country lift) and (ii) maintain
in full force and effect any and all
contracts, permits and licenses which
are Purchased Assets or Assumed
Liabilities. Sellers shall notify
Buyer promptly of any material change
in the condition of the Purchased
Assets.
10.07 No Solicitation;
Break-Up Fee.
(a) Sellers shall not
invite proposals concerning, or
entertain, solicit, encourage,
cooperate with or facilitate (by way
of furnishing information, or
otherwise) or accept or discuss any
inquiries or proposals (other than
the transaction contemplated hereby)
from any Person for the acquisition
of the stock, assets or business of,
either Seller or the Ski Areas or any
proposed business combination or
other extraordinary business
transaction involving either Seller
or the Ski Areas (any such
individually or collectively shall be
herein referred to as a "Company
Sale"). The Sellers and their
respective officers, directors,
representatives, agents and
affiliates immediately shall cease
and cause to be terminated all
existing discussions, conversations,
negotiations and other communications
with any Persons heretofore conducted
with respect to any of the foregoing.
(b) If in breach this
Agreement Sellers terminate or
abandon this Agreement in connection
with, as a result of, or at a time in
which there exists a proposal of a
Company Sale made to the Sellers or
American Ski, or either Sellers or
American Ski accept any such Company
Sale proposal and within one (1) year
of such termination or abandonment
either Seller, American Ski or its
stockholders shall consummate or
agree to consummate a Company Sale
with a third party, then the Sellers
shall promptly pay to Buyer a fee
equal to excess of the purchase price
received in such third party sale
over the Purchase Price.
10.08 Further
Assurances.
From and after the Closing
Date, Sellers shall execute and
deliver to Buyer all such further
assignments, endorsements and other
documents as Buyer may reasonably
request for the purpose of effecting
transfer of Sellers' title to the
Purchased Assets and/or carrying out
the provisions of this Agreement.
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification
By Sellers and American SKI.
Subject to the provisions
of Sections 11.03 through 11.06
hereof, Sellers and American SKI
shall, jointly and severally,
indemnify and hold Buyer harmless
from and against all losses,
liabilities, costs and expenses,
including reasonable attorneys' fees,
actually suffered, incurred, paid or
required under penalty of law to be
paid by Buyer (collectively referred
to as "Buyer's Damages") resulting in
whole or in part from (i) any breach
or violation of this Agreement by
Sellers, (ii) any inaccuracy in or
breach of any representation,
warranty or covenant made by Sellers
herein or in the Schedules attached
hereto; (iii) any inaccuracy or
misrepresentation in the Schedules
attached hereto or in any
certificate, document, instrument or
affidavit delivered by Sellers in
accordance with the provisions of
this Agreement; and (iv) any and all
claims, debts, liabilities, taxes and
other obligations of Sellers or the
Ski Resorts whether accrued,
absolute, contingent or otherwise,
not expressly agreed to be assumed or
undertaken by the Buyer pursuant to
Section 3.01 of this Agreement.
11.02 Indemnification
By Buyer.
Subject to the
provisions of Sections 11.03 through
11.06 hereof, Buyer shall indemnify
and hold Sellers harmless from and
against all losses, liabilities,
costs and expenses, including
reasonable attorneys' fees, actually,
suffered, incurred, paid or required
under penalty of law to be paid by
Sellers (collectively referred to as
"Sellers' Damages") resulting in
whole or in part from (i) any breach
or violation of this Agreement by
Buyer, (ii) any inaccuracy in or
breach of any representation,
warranty or covenant made by Buyer
herein or in the Schedules attached
hereto; (iii) any inaccuracy or
misrepresentation in the Schedules
attached hereto or in any
certificate, document, instrument or
affidavit delivered by Buyer in
accordance with the provisions of
this Agreement; and (iv) any and all
claims, debts, liabilities, taxes and
other obligations assumed by Buyer
pursuant to Section 3.01 of this
Agreement.
11.03 Notification of
Claim.
The party seeking
indemnification (the "Indemnitee"),
upon obtaining knowledge of any claim
or demand which has given rise to, or
could reasonably give rise to, a
claim for identification hereunder,
shall in writing notify the other
party (the "Indemnitor") of such
claim, shall provide the Indemnitor
with a copy of such claim or other
documents received, and shall
otherwise make available to the
Indemnitor all relevant information
material to the defense of such claim
and within the Indemnitee's
possession. Subject to the
limitations set forth in Section
11.05, no failure or delay by the
Indemnitee in the performance of the
foregoing shall reduce or otherwise
affect the obligation of the
Indemnitor to indemnify and hold the
Indemnitee harmless, except to the
extent that such failure or delay
shall have adversely affected
Indemnitor's ability to defend
against, settle or satisfy any
liability, loss, damage, expense,
claim or demand for which Indemnitee
is entitled to indemnification
hereunder. If the claim or demand
set forth in the notice given by
Indemnitee is a claim or demand
asserted by a third party, Indemnitor
shall have thirty (30) days after
receipt of such notice to notify
Indemnitee in writing of its election
to defend, at its sole cost and
expense, against such claim, either
in its own name or in the name of the
Indemnitee, as may be required, and
the Indemnitee, at its sole cost and
expense, shall have the right to
participate in such defense. If
Indemnitor elects to defend such
third party claim or demand, the
Indemnitor shall have the right to
settle any such claim, except where
such settlement would have an adverse
effect on the Indemnitee in which
case the Indemnitor shall have the
right to settle any such claim only
after obtaining the written consent
of Indemnitee thereto. If the
Indemnitor elects not to defend such
third party claim or demand or does
not defend such third party claim or
demand in good faith, the Indemnitee
may, at Indemnitor's expense, elect
to defend such third party claim or
demand; provided, however, that
Indemnitee shall not have any
obligation to participate in the
defense of or defend any such third
party claim or demand and
Indemnitee's defense of or
participation in the defense of any
such third party claim or demand
shall not in any way diminish or
lessen the obligations of Indemnitor
under the agreements of
indemnification set forth herein.
The Indemnitor shall have the right
to provide a defense under a
reservation of rights regarding
entitlement to indemnity. The
Indemnitee shall not settle or
compromise the claim unless (a) it
shall first obtain the written
consent of the Indemnitor, (b) suit
shall have been instituted against
the Indemnitee and the Indemnitor
shall have failed, after the lapse of
a reasonable time (not to exceed 20
days) after written notice to it of
such suit, to take action to defend
the same, or (c) Indemnitor shall
have failed to notify Indemnitee in
writing of its intention to contest
the claim within twenty (20) days
after the above notice from
Indemnitee to Indemnitor.
11.04 Buffer.
Except as provided in
the following two sentences,
notwithstanding anything to the
contrary contained hereinabove in
this Article XI, no claims for
indemnification shall be made by one
party against the other except to the
extent that all such claims by one
party for the other party's payment
of indemnification claims hereunder
shall aggregate in excess of Five
Hundred Thousand Dollars
($500,000.00), whereupon such parties
shall be entitled to indemnification
hereunder for indemnification claims
for all losses, damages or expenses
suffered in excess of such amount.
The provisions of the immediately
preceding sentence shall not apply
with respect to any Buyer's Damages
arising from a breach by the Sellers
of the representations set forth in
Sections 6.05 and 6.12 of this
Agreement or a breach by Sellers of
the provisions of Section 3.01 of
this Agreement. The Buyer shall be
entitled to indemnification hereunder
from the Sellers and American Ski for
one-half of all Buyer's Damages
arising from a breach by the Sellers
of the representation set forth in
Section 6.05 of this Agreement
without regard to (a) the unlimited
scope of the indemnity described in
Section 11.01, or (b) the $500,000
threshold set forth above.
11.05 Time Limitations.
No claim may be
asserted under this Article XI after
the lapse of twelve (12) months from
the Closing Date, except (a) any
claim arising from a breach of the
representation, warranties and
covenants set forth in Section 6.12
hereof, in which case Buyer shall not
be entitled to assert any right of
indemnification after the expiration
of the statute of limitations
(including any extensions thereof)
imposed by the Code, or any other
applicable law with respect to
foreign, federal or state tax
liability of Sellers for all taxable
years or periods ending on or prior
to the Closing Date, (b) any claim
arising from a breach of the
warranty, representation and
covenants contained in Section 6.05
hereof, in which case Buyer shall be
entitled to assert any
indemnification claim relating
thereto at any time prior to the
three year anniversary of the Closing
Date, and (c) if there shall then be
pending any dispute, claim,
proceeding or action at the end of
the twelve (12) month period from the
Closing Date or, in the case of
indemnification claims arising from
Sections 6.12 or 6.05 hereof, at the
expiration of the applicable statute
of limitations or at the time of the
three year anniversary of the Closing
Date, respectively, in which case
Buyer shall continue to have the
right to be indemnified with respect
to such indemnification, dispute,
claims, proceeding or action.
11.06 Limitation.
Anything in this
Article XI to the contrary
notwithstanding, the Sellers shall
not be liable to the Buyer under
Section 11.01 or otherwise for any
loss, cost, damage or expense of the
Buyer arising after the Closing and
arising from the continuation by the
Buyer of any course of dealing or non-
compliance with law or other
commitments practiced by the Sellers
prior to the Closing, whether or not
the Sellers' description thereof and
this Agreement and the Schedules
attached hereto constituted a breach
of a representation or warranty.
11.07 Mitigation of
Damages.
The Buyer and the
Sellers shall be obligated to take
all reasonable steps consistent with
sound business practices (as
determined by Buyer or Sellers in its
or their reasonable discretion)
necessary to mitigate their losses,
costs, damages and expense, and
nothing in this Article XI shall
excuse Buyer or Sellers from such
obligation to mitigate such loss,
cost, damage or expense.
11.08 Intentional
Misrepresentations.
Nothing contained in
the foregoing provisions shall
relieve any officer, member,
shareholder, or director of Buyer or
Sellers of any liability which it may
have on account of the delivery by
one party hereto to the other party
of any certificate required to be
delivered by any party hereto under
the terms hereof which said
certificate is untrue in any respect
and which is at the Closing known by
such person executing and delivering
the same to be untrue.
ARTICLE XII
TERMINATION
12.01 Termination.
This Agreement may be
terminated at any time prior to
Closing:
(a) By the mutual
written consent of Buyer and Sellers;
(b) By Buyer, upon
written notice to Sellers, if the
Closing Date has not occurred on or
before October 31, 1996 (which date
shall be automatically extended to
November 27, 1996 to the extent
necessary to satisfy the condition
precedent set forth in Section 8.04
hereof), or such later date as the
parties may agree in writing,
provided that the Buyer is not in
breach or default under this
Agreement;
(c) By Sellers, upon
written notice to Buyer, if the
Closing Date has not occurred on or
before October 31, 1996 (which date
shall be automatically extended to
November 27, 1996 if so extended
under clause (b) of this Section
12.01), or such later date as the
parties may agree in writing,
provided that the Sellers are not in
breach or default under this
Agreement;
(d) By Sellers or
Buyer pursuant to Section 4.01(a);
(e) By Buyer pursuant
to Section 8.02 hereof;
provided, however, that no party
shall have the right to terminate
this Agreement unilaterally if the
event giving rise to such right is
primarily attributable to such party
or to any affiliated party, and,
provided further, that the party
terminating this Agreement shall give
notice of its election to terminate
and shall specify in such notice the
reason(s) therefor.
12.02 Effect of
Obligations.
Termination of this
Agreement pursuant to this Article
shall terminate all obligations of
the parties hereunder, except for the
obligations under Sections 4.02,
10.07, 13.02 and 13.15 and the Escrow
Agreement.
12.03 Waiver.
At any time prior to
the Closing, any party hereto may (a)
extend the time for performance of
any of the obligations or other acts
of any other party hereto or (b)
waive compliance with any of the
agreements of any other party or with
any conditions to its own
obligations, in each case only to the
extent such obligations, agreements
and conditions are intended for its
benefit.
ARTICLE XIII
MISCELLANEOUS
13.01 Consents to
Assignment by Third Parties.
This Agreement shall not
constitute an agreement to assign any
asset, claim, contract, permit,
franchise, license or similar
agreement or right if any attempted
assignment of the same without the
consent of the other party thereto
would constitute a breach thereof or
in any way affect the rights of
Sellers or Buyer thereunder.
13.02 Confidentiality.
Buyer acknowledges that in
the course of preparing this
Agreement, Buyer has obtained
information concerning the business
of Sellers which is of a confidential
and/or proprietary nature (the
"Confidential Information"). Buyer
(including the directors, officers,
employees and agents thereof) agrees
to retain in confidence and not to
disclose any of the Confidential
Information of Sellers to any third
party (other than Buyer's advisors,
counsel, accountants and potential
financing sources) and if this
Agreement is terminated and the
transactions contemplated hereby are
not concluded, to promptly return all
such Confidential Information to
Sellers and not retain or use any
Confidential Information or copies
thereof for any purpose, except as
disclosure may be required by law or
government regulation or order or
regulatory process or unless the
information sought to be disclosed or
used (i) is publicly known as of the
date hereof or becomes publicly known
though no fault of Buyer, or (ii) is
lawfully received by Buyer from a
third party not bound in a
confidential relationship to any
party whose confidential information
is to be protected hereunder.
13.03 Brokers.
Each of Buyer and Sellers
represents and warrants to the other
that they have not engaged any
brokers and there are no brokerage or
finders' fees payable in connection
with the transactions contemplated
hereby resulting from any actions
taken by them.
13.04 Representations
and Warranties.
Sellers and Buyer hereby
agree that statements made in the
Schedules attached hereto and the
certificates delivered in connection
herewith shall be representations and
warranties for purposes of this
Agreement. The representations and
warranties made in this Agreement
shall only survive the Closing to the
extent specifically described herein.
13.05 Further
Assurances.
From and after the Closing
Date, upon the reasonable request of
Buyer from time to time, and at
Buyer's expense, Sellers shall
execute and deliver all documents,
make all rightful oaths, testify in
any proceedings and do all other acts
which may be reasonably necessary or
desirable in the opinion of Buyer to
protect or defend the right, title or
interest of Buyer in and to the
Purchased Assets.
13.06 Tax Matters.
The aggregate purchase
price for the Purchased Assets paid
by Buyer in accordance with this
Agreement will be allocated among the
Purchased Assets by Buyer and Sellers
in accordance with Section 1060 of
the Code and the regulations
thereunder, as set forth in Schedule
13.06 attached hereto. Buyer and
Sellers covenant and agree that the
Buyer and Sellers shall each timely
file (with the appropriate Internal
Revenue Service) Form 8594 in
substantially the form attached to
Schedule 13.06. The covenants and
agreements of the Buyer and Sellers
set forth in this Section shall
survive the Closing and shall
continue so long as the Buyer or
Sellers (as the case may be) is
obligated under the Internal Revenue
Code of 1986, as amended or the
regulations or rulings promulgated
thereunder, to file Form 8594,
including any Supplemental Statement
under Part IV of Form 8594. Buyer
and Sellers will furnish each other
with a copy of the purchase price
allocation information they submit to
the Internal Revenue Service, in
connection with the filing of their
fiscal 1996 federal income tax
returns. [Subject to review].
13.07 Amendment.
This Agreement may not be
amended except by written agreement
of Sellers and Buyer.
13.08 Governing Law;
Severability.
This Agreement shall be
construed in all respects in
accordance with, and governed by, the
internal laws (as opposed to
conflicts of laws provisions) of
Maine. If any provision, clause or
part of this Agreement, or the
application thereof under certain
circumstances, is held invalid, the
remainder of this Agreement, or the
applications of each provision,
clause or part under other
circumstances, shall not be affected
thereby.
13.09 Retention of
Books and Records.
Buyer and Sellers shall
retain for a period of three (3)
years from the Closing all of their
books and records (including such
records as may be stored in computer
databases) relating to the Purchased
Assets. During such three-year
period, each party will make such
books and records available to the
other for purposes of inspection and
copying, upon a proper purpose being
stated. If any party requires the
original of any document in
possession of the other, such party
shall provide the same, if available,
subject to the providing party's
right to inspect and copy it. Each
party will have the right to destroy
such books and records at any time
after the end of such three-year
period; provided, however, that it
shall give written notice to the
other party prior to the time it
intends to destroy such books and
records so that if the other party
wishes to take possession of all or
some part of such books and records
it may do so, at its expense.
13.10 Waiver.
The failure of Sellers or
Buyer to insist, in any one or more
instances, upon performance of any of
the terms or conditions of this
Agreement, shall not be construed as
a waiver or relinquishment of any
rights granted hereunder or the
future performance of any such term,
covenant or condition.
13.11 Headings.
The descriptive headings in
this Agreement are inserted for
convenience only and do not
constitute a part of this Agreement.
13.12 Counterparts.
This Agreement may be
executed in any number of
counterparts, and each such
counterpart hereof shall be deemed to
be an original instrument, but all
such counterparts together shall
constitute but one agreement.
13.13 Notices.
Any notice to be given
hereunder shall be given in writing
and delivered or mailed by registered
or certified mail, return receipt
requested, in the case of Sellers,
to:
American Skiing Company
Sunday River Access Road
P.O. Box 450
Bethel, ME 04217
Attention: Michael Krongel
with a copy to:
Christopher E. Howard, Esq.
Pierce Atwood
One Monument Square
Portland, ME 04101
and, in the case of Buyer, to
Booth Creek Ski Acquisition
Corp.
1000 South Frontage Road, Suite
100
Vail, CO 81657
Attention: George N. Gillett,
Jr.
with a copy to:
Bruce A. Toth, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
or to such other address as Sellers
or Buyer may designate by notice in
writing to the other, provided that
no party may designate that notices
be sent to more than two locations at
any particular time.
13.14 Benefit.
This Agreement may not be
transferred, assigned, pledged or
hypothecated by any party hereto
without the prior written consent of
the other parties hereto other than
by Buyer to financing sources. Upon
prior written consent being obtained,
this Agreement shall be binding upon
and shall inure to the benefit of the
parties hereto and their respective
successors and assigns.
13.15 Expenses.
Subject to the provisions
of Section 10.07, all expenses
incurred by, on behalf of, or for the
benefit of Sellers or Buyer in
connection with the closing of
transactions contemplated hereby,
including without limitation,
engineering, legal, advisory,
investment banking and accounting
fees, shall be the responsibility of
and for the account of the party or
parties who ordered or for whose
benefit the particular service or
particular expense was incurred.
13.16 Public
Announcement.
Except as required by law,
prior to the Closing Date, no public
announcement of the transactions
contemplated hereby shall be made by
way of press release, disclosure to
the trade or otherwise, except as
mutually agreed upon by the parties
hereto. Sellers may inform the
citizens of the Towns of Waterville
Valley and North Conway of the
existence of the Agreement and the
identity of Buyer.
13.17 Third Party
Beneficiaries.
Each party hereto intends
that this Agreement shall not benefit
or create any right or cause of
action in or on behalf of any person
other than the parties hereto or
their permitted assigns.
13.18 Entire Agreement.
This Agreement and the
related closing documents executed
and delivered in connection herewith
constitute the entire agreement
between Sellers and Buyer with
respect to the transactions
contemplated hereby, superseding all
prior understandings and agreements
among Sellers and Buyer with respect
to the subject matter hereof.
13.19 Solicitation of
Employees.
None of the Sellers or
American SKI will prior to June 30,
1997 solicit for hire or hire any
individual employed as of the date of
this Agreement by either of the
Sellers or subsequently employed by
either of the Sellers.
13.20 Collection of
Accounts Receivable.
Sellers and Buyer shall
each cooperate in the other's
attempts and efforts to collect the
accounts receivable belonging to such
party under the terms of this
Agreement. Upon receipt by either
Seller or American Ski of any
payments of the accounts receivable
which constitute Purchased Assets
under Section 1.10 hereof, whether
such payments were received prior to
or after the Closing, Sellers and
American Ski shall transfer such
payments to Buyer. Upon receipt by
Buyer of any payments of the accounts
receivable which constitute Excluded
Assets under Section 2.02 hereof,
Buyer shall transfer such payments to
Sellers.
IN WITNESS WHEREOF, the
undersigned have caused this
Agreement to be executed under seal
as of the day and year first above
written.
BOOTH CREEK SKI ACQUISITION CORP.
By:
Its:
WATERVILLE VALLEY SKI AREA, LTD.
By:
Its:
AMERICAN SKIING COMPANY
By:
Its:
CRANMORE, INC.
By:
Its:
PURCHASE AND SALE AGREEMENT
by and between
SHERBURNE PASS MOUNTAIN PROPERTIES, LLC
PICO MOUNTAIN SPORTS CENTER, LLC
PICO MOUNTAIN OPERATING COMPANY, LLC
(collectively "Sellers")
HAROLD L. AND EDITH HERBERT
("Herberts")
and
PICO SKI AREA MANAGEMENT COMPANY
("Buyer")
dated as of
October 16, 1996
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and
entered into as of this 16th day of
October, 1996, among Sherburne Pass
Mountain Properties, LLC, ("Real
Estate Co."), Pico Mountain Sports
Center, LLC ("Sports Center Co."),
Pico Mountain Operating Company, LLC
("Equipment Co."), all Vermont
limited liability companies with a
place of business in Sherburne,
Vermont (collectively referred to as
the "Sellers") and Harold L. and
Edith Herbert of Milltown, New Jersey
("Herberts") and Pico Ski Area
Management Company, a Vermont
corporation with a principal place of
business at Sherburne, Vermont
("Buyer").
RECITALS
1. Real Estate Co. owns the
real property used in the operation
of the Pico Mountain Ski Resort, all
buildings at the resort (except the
Sports Center and certain residential
condominium units), all commercial
space in condominium buildings, all
ski lifts and associated equipment
and the other real and personal
property more specifically identified
in this Agreement.
2. Sports Center Co. owns the
real and personal property
constituting the Sports Center at the
Pico Mountain Ski Resort, as more
specifically identified in this
Agreement.
3. Equipment Co. owns certain
machinery, furniture, fixtures and
equipment located at and used in the
operation of the Pico Mountain Ski
Resort and more specifically
identified in this Agreement.
4. Sellers wish to sell to
Buyer, and Buyer wishes to purchase
and acquire from Sellers all assets
owned by Sellers and located in
Sherburne, Vermont, which consists
principally of the Pico Mountain Ski
Resort.
AGREEMENT
NOW, THEREFORE, in consideration
of the mutual agreements herein
contained, and for other good and
valuable consideration, the receipt
and adequacy of which is hereby
acknowledged, the parties hereto,
intending to be legally bound, hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
Subject to the terms and
conditions of this Agreement, Sellers
agree to sell, convey, transfer, set
over, assign and deliver to Buyer,
and Buyer agrees to purchase and
accept from Sellers all of Sellers'
right, title and interest in and to
the following assets (the "Purchased
Assets"):
1.01 Real Property.
All real property owned by any
one or more of the Sellers located
anywhere within Sherburne, Vermont,
together with all buildings and other
improvements located thereon,
including without limitation the real
property described in Schedule 1.01;
together with all easements, rights
of way, water or riparian rights and
appurtenances and beneficial
interests of any nature belonging to
Sellers, which are appurtenant to,
adjoining or adjacent to such real
estate, including any interest in
adjoining or adjacent highways,
roads, streets and lanes, whether
public or private, used by any of
Sellers for the benefit of such real
estate, and including all development
rights owned by any of the Sellers,
including but not limited to those
described in Schedule 1.01; together
with any and all rights of Sellers
in, to and under any and all
declarations of condominium at,
adjacent or proximate to the real
estate described herein and in the
Declaration of Protective Covenants
and Easements affecting the Pico
Planned Unit Development, as well as
all easements and other beneficial
interests associated therewith (all
such real estate being hereinafter
referred to as the "Sellers' Real
Estate").
Sellers and Buyer acknowledge
and agree that attached hereto as
Schedule 1.01 are descriptions of the
Sellers' real estate as currently
known to Sellers and Buyers. Prior
to closing Buyer and Sellers will
conduct a comprehensive asset search
to identify all real estate interests
of any nature whatsoever owned by any
one or more of Sellers and detailed
descriptions of such real estate
shall be prepared and used in any and
all deeds or other conveyancing
documents necessary and appropriate
to fully convey any and all interests
Sellers may have in and to such real
estate interests at Closing.
1.02 Stock and Wastewater
Disposal Units.
All right, title and interest of
any one or more of the Sellers in and
to:
(a) The capital stock of
Upland Water Company,
Inc.; and
(b) The capital stock of
and all wastewater
disposal units issued
by Alpine Pipeline
Company.
1.03 Ski Areas
Improvements.
All buildings (including,
without limitation, lift buildings,
base lodges, sports center,
commercial condominium units, service
buildings and pumphouse buildings),
structures, lifts, towers, snowmaking
equipment, fixtures and other
improvements owned by any one or more
of Sellers which are either utilized
in any way in the operation of the
Pico Peak Ski Resort or located in
Sherburne, Vermont, all as described
in Schedule 1.03 (the "Ski Area
Improvements").
1.04 Personal Property.
All inventory, rental
inventory, supplies, materials,
computers, phone equipment, vehicles,
groomers, machinery and equipment,
furniture and other personal property
of any nature whatsoever (including
any leasehold interests in the same)
owned by any one or more of Sellers
which are either utilized in any way
in the operation of the Ski Areas or
located in Sherburne, Vermont,
including without limitation the
personal property described in
Schedule 1.04 (the "Personal
Property"). Sellers and Buyer
acknowledge and agree that in
addition to the available inventory
of personal property attached hereto
as Schedule 1.04, Sellers and Buyer
shall perform a comprehensive
inventory on a pre-closing basis and
prepare an itemized list of all
personal property falling within the
foregoing description and such lists
shall be used as an exhibit to the
bill of sale conveying Sellers'
interest in Personal Property at
Closing.
1.05 Licenses and Permits.
All right, title and
interest in, and all rights and
benefits under, any and all
governmental licenses, permits and
approvals relating to the Purchased
Assets or any businesses, activities
or enterprises operated or engaged in
at, or in any way involving, the
Purchased Assets ("Ski Area Use"),
including but not limited to the
licenses and permits listed on
Schedule 1.05 ("Assumed Permits").
1.06 Books and Records.
All books, records,
reports, studies, data and other
information owned by or under the
control of one or more Sellers
relating in any way to the Purchased
Assets or the Ski Area Use
("Records").
1.07 Intellectual Property.
All rights to any
trademarks, tradenames, servicemarks
(whether or not registered),
registrations thereof, applications
for registration, copyrights (whether
or not registered) and any
applications for registration,
relating to or associated with the
Ski Area Use, including without
limitation as listed on Schedule 1.07
("Intellectual Property Rights").
1.08 Contract Rights.
All of the right, title and
interest of any one or more of
Sellers in, to or under any and all
contracts, agreements, leases and
commitments, and all amendments,
extensions, renewals, substitutions
and replacements thereof, necessary
for or relating to, the Purchased
Assets or any Ski Area Use.
1.09 Claims, Suits, etc.
All claims, suits, and
causes of action that any one or more
Sellers has against third parties
with respect to the Ski Area Use,
including, without limitation, any
rights or claims arising from
manufacturer warranties with respect
to machinery and equipment included
in the Purchased Assets.
1.10 Accounts Receivable;
Deposits.
All of Sellers' accounts
receivable for services to be
performed or use of any of the
Purchased Assets on or after the
Closing and all deposits, prepaid
expenses and refunds.
It is the intention of Sellers
and Buyer that the foregoing
description of the Purchased Assets
be construed broadly so as to
identify any and all real, personal
or mixed property and property
interests, of any nature whatsoever,
owned by any one or more of Sellers
that either (a) constitutes, relates
to or is in any way associated with
the Ski Area Use, or (b) constitutes,
relates to or is in any way
associated with property owned by any
or more of Sellers located in
Sherburne, Vermont. Sellers hereby
acknowledge and agree that Buyer will
undertake a comprehensive asset
search prior to Closing and shall
refine the descriptions of the
Purchased Assets set forth above and
attached hereto in the Schedules
identified above, and the more
comprehensive asset descriptions
shall be used in transferring and
conveying Sellers' right, title and
interest in and to Purchased Assets
at the Closing.
ARTICLE II
EXCLUDED ASSETS
The assets listed below shall be
excluded from the Purchased Assets
(the "Excluded Assets"):
2.01 Cash.
All of the Sellers' cash on
hand and any cash equivalents in the
form of bank accounts, investment
securities and other deposits,
prepaid expenses and refunds,
excepting those identified in Section
1.10.
2.02 Accounts Receivable.
All of Sellers' accounts
receivable for services performed or
use of any of the Purchased Assets on
or prior to the Closing.
2.03 Other Assets.
Assets listed on Schedule
2.03, if any.
ARTICLE III
NO ASSUMPTION OF LIABILITIES
3.01 No Assumption by
Buyer.
Except for the liabilities
of Sellers assumed by Buyer as
described in Schedule 3.01A hereof
("Assumed Liabilities"), Buyer does
not, and shall not be obligated to,
assume or become liable for any of
Sellers' liabilities, obligations,
debts, contracts or other commitments
whatsoever, whether known or unknown,
fixed or contingent, now existing or
hereafter arising. Sellers
acknowledge and agree that the
Purchased Assets are not currently a
going concern and have no going
concern value. Buyers are acquiring
the Purchased Assets at a time when
such assets are not being operated as
a going concern and, absent a sale to
a third party, are not anticipated to
be operated for the 1996-1997 ski
season. Seller and Buyer acknowledge
and agree that the Purchased Assets
were previously leased to or used by
Pico Mountain, Inc., which operated
the Purchased Assets, together with
assets owned by Pico Mountain, Inc.,
as a ski resort, and that Pico
Mountain, Inc. has filed a voluntary
petition under Chapter 7 of the
United States Bankruptcy Code. Buyer
is not continuing the operation of
Purchased Assets by Pico Mountain,
Inc. and shall have no liability or
responsibility arising out of prior
operations involving the Purchased
Assets. Buyer is not purchasing any
assets owned by Pico Mountain, Inc.,
a schedule of which is attached
hereto as Schedule 3.01B.
ARTICLE IV
PURCHASE AND SALE
4.01 Purchase Price.
In consideration of
Sellers' sale, assignment and
transfer of the Purchased Assets to
Buyer and Sellers' agreement to
perform the terms, covenants and
provisions of this Agreement on its
part to be performed, at Closing, (as
hereinafter defined), Buyer will
assume the Assumed Liabilities, and
will pay to Sellers the following
amounts in the manner and upon the
conditions specified below (the
"Purchase Price"):
(a) Deposit. Upon
the execution of this Agreement Two
Hundred Fifty Thousand Dollars
($250,000.00) (the "Deposit") shall
be deposited with Fleet National
Bank, as Escrow Agent, pursuant to
the Deposit Escrow Agreement dated as
of the date hereof among Buyer,
Sellers and Fleet National Bank.
(i) If the
Closing shall occur, the Deposit
together with any earnings thereon to
the Closing Date (as defined in
Article V) shall be paid to Sellers
at Closing.
(ii) If the
Closing shall not occur by reason of
a material breach of this Agreement
by Buyer, including by failing to
close the transaction contemplated
hereby upon satisfaction by Sellers
of the conditions set forth in
Article VIII hereof, and the Sellers
are not in breach of this Agreement
in any material respect, then upon
termination of this Agreement Sellers
shall be entitled to retain the
Deposit, together with any earnings
thereon, for their own account as
liquidated damages in lieu of all
claims, actions or remedies which
Sellers may have against Buyer
arising out of such breach.
(iii) If the
Closing shall not occur for any
reason other than as set forth in
clause (ii) of this Section 4.01(a),
then upon termination of this
Agreement the Deposit, together with
any earnings thereon, shall be
returned to Buyer.
(b) Cash at Closing.
At Closing Buyer shall pay to Sellers
the amount of Two Million Seven
Hundred Fifty Thousand Dollars
($2,750,000.00), plus the amount of
the Deposit, together with any
earnings thereon, in cash by wire
transfer or other acceptable means of
delivering same day good funds.
(c) Earn-Out Purchase
Price. Buyer agrees to pay to
Sellers the amounts specified below
upon the occurrence of the events
described below:
(i) Three
Hundred Twenty-Five Thousand Dollars
($325,000) within 10 days after
issuance of all Act 250 approvals for
connection by pipeline of the base
area facilities at the Killington Ski
Resort to the Alpine Pipeline, which
approvals Buyer agrees to diligently
pursue.
(ii) Three
Hundred Twenty-Five Thousand Dollars
($325,000) at such time as the
Killington Ski Resort and the Pico
Mountain Ski Resort have, on a
consolidated basis, generated at
least 1,135,000 skier visits in a
single season after Closing. A
"skier visit" shall mean a single
skier purchasing a ticket to ski at
either or both resorts for any
portion of one day for a fee. A
season's pass for either or both
resorts shall be counted as 20 skier
visits per year. The number of skier
visits credited to multi-day lift
tickets shall be equal to the number
of days covered by the ticket. Multi-
area tickets and passes allowing
access to all American Skiing Company
resorts located in Vermont shall be
included only if purchased at or
processed through or allocated to the
Killington or Pico Mountain resorts,
consistent with industry practice.
Buyer will provide Seller with an
accounting of skier visits within 60
days following the close of skiing at
the resort. Seller shall have the
right to audit Buyer's records
relevant to the skier visit
calculation during normal business
hours upon reasonable advance notice.
(iii) One
Thousand Dollars ($1,000.00) shall be
paid to Sellers at the closing of the
sale of each quartershare interest in
any condominium hotel development at
the Pico Mountain Ski Resort
undertaken by Buyer, or any affiliate
of Buyer, whether or not actually
located on real property purchased
hereunder or on adjacent property
owned or hereafter acquired by Buyer,
or any affiliate of Buyer. Five
Hundred Dollars ($500.00) shall be
paid to Sellers at the closing of the
sale of each quartershare interest in
any condominium hotel development at
the Killington Ski Resort undertaken
by Buyer, or any affiliate of Buyer.
The maximum amount payable under this
subsection 4.01(c)(iii) shall be
Seven Hundred Thousand Dollars
($700,000), in the aggregate,
including developments at either or
both resorts.
Payment of the amounts listed in
this Section 4.01(c) shall be
guaranteed by American Skiing
Company, a Maine corporation.
(d) Contingent
Installment Payments. At such time
as the Killington and Pico Mountain
Ski Resorts generate either (i) at
least 4,000,000 skier visits (as
defined above) on a cumulative basis
from the Closing through March 1,
2000 or (ii) 1,400,000 skier visits
(as herein defined) in any single ski
season following the Closing, then
Buyer shall pay to Seller the amount
of Two Million Dollars ($2,000,000)
in equal annual installments of Two
Hundred Thousand Dollars ($200,000)
each, beginning as of the March 1st
following the season in which such
condition is satisfied, and
continuing on each March 1 thereafter
until paid in full. Payment of the
foregoing amounts is to be guaranteed
by American Skiing Company, a Maine
corporation. In the event Buyer fails
to operate the ski resort for any
period of 10 consecutive days during
the period December 15 to March 15
for each ski season, then for
purposes of calculation of skier
visits, the resort shall have
attributed to it 5,000 skier visits
for each 10 consecutive day period
the resort is closed to skiing during
such period. Buyer will provide
Seller with an accounting of skier
visits within 60 days following the
close of skiing at the resort.
Seller shall have the right to audit
Buyer's records relevant to the skier
visit calculation during normal
business hours upon reasonable
advance notice.
(e) Assumption of
Condominium Obligation. Buyer will
assume the obligation secured by the
lien on the Purchased Assets in favor
of the Village Square at Pico
Condominium Owners Association in an
amount not to exceed $40,032.47.
(f) Certain Real
Estate Sales. (i) Buyer will
exercise its best efforts to sell the
asset listed below to the parties
identified below, and turn over the
net proceeds of such sales remaining
after deducting all reasonable
expenses of such sales, reasonable
fees and expenses associated with
resolving any disputes relating to
such sales, and all taxes associated
with such sales (including allowance
for federal and state income taxes
due to the gain realized on such
sales) to Sellers.
<TABLE>
<CAPTION>
<S> <C>
Asset Purchaser
Well No. 4 currently Upland Water
leased, licensed or Company, Inc.
otherwise made
available to Upland
Water Company, Inc.,
as more particularly
described in Schedule
4.01(f)
</TABLE>
(ii) Buyer shall
purchase the tower site described in
Schedule 4.01(f) for an amount equal
to $350,000 payable in cash at
Closing.
(g) POMA and CTEC
Resolution. Buyer shall undertake all
action necessary to cause CTEC
Garavanta, Inc. and POMA of America,
Inc. to release and discharge any and
all claims each creditor may have
against Sellers, the Purchased Assets,
the Herberts or Pico Mountain, Inc.
for payment of amounts due for
services rendered or materials
supplied, including without limitation
payment of any such claims by Buyer.
4.02 Purchase Price
Adjustment.
(a) The Purchase Price
payable to Sellers shall be reduced on
a dollar-for-dollar basis by the
amount necessary to deliver free,
clear and unencumbered title to all
Purchased Assets. Initially, the
adjustment will be made by deducting
such amounts from cash payable at
Closing to reflect amounts paid,
incurred or required to discharge all
liens and encumbrances, and satisfy
all liabilities that have been
identified as of the Closing Date
which could mature or otherwise be
perfected into or result in the
establishment of a lien or encumbrance
upon, or a claim to or against any of
the Purchased Assets, or a claim
against Buyer as the owner of the
Purchased Assets.
(b) All Purchase Price
payable to Sellers on a post-Closing
basis, together with amounts payable
under the Consulting Agreement, shall
be subject to reduction on a dollar-
for-dollar basis by the amount paid by
Buyer to satisfy any further or
additional liens or encumbrances upon,
or claims to or against the Purchased
Assets, or claims against Buyer as the
owner of the Purchased Assets, or any
liabilities or obligations imposed
upon Buyer as the purchaser of the
Purchased Assets in order to obtain
free, clear and unencumbered title to
all Purchased Assets, or any such
claims, causes of action, liabilities,
penalties, costs, charges or expenses
as may otherwise result from pre-
Closing operations of Sellers for
which Buyer is or becomes responsible
(provided that no assumption of such
obligations, liabilities or
responsibilities is hereby implied).
Any reduction in Purchase Price shall
be effected in accordance with the
following procedure. Prior to
effecting any reduction in Purchase
Price, Buyer shall provide Sellers
with written notice of the claim,
liability or encumbrance resulting in
the reduction, which shall (i)
describe the claimant or creditor;
(ii) provide a brief description of
the nature of the claim, and (iii)
state the amount of the claim.
Sellers shall have a period of ten
(10) days following receipt of such
notice to advise Buyer in writing
whether Sellers dispute the amount,
validity or any other matter with
respect to the claim. Notwithstanding
anything to the contrary in the
foregoing, Buyer may not compromise or
pay any claim or liability, or agree
with any claimant to do the same
unless any of the following conditions
exist: (i) such claim, liability or
encumbrance is reduced to a judgment,
lien, claim, encumbrance, other
interest or right ("Creditor
Interest") that is or becomes, or with
the passage of time or giving of
notice, or both, would be or become,
immediately enforceable against either
the Purchased Assets, or any portion
thereof, or the Buyer, (ii) Sellers
fail to contest the amount or validity
thereof in good faith by appropriate
proceedings within the period provided
by applicable law, rule, regulation or
ordinance to commence proceedings to
appeal or contest and the enforcement
of such Creditor Interest is not
stayed or suspended at all times
pending the completion of the
proceedings to appeal or contest, or
(iii) the full amount thereof is
neither bonded by the Sellers nor
secured by other collateral posted by
the Sellers with the Buyer in an
amount and of a character such as to
provide reasonably adequate security
for all claims and liabilities. Buyer
agrees to use reasonable efforts to
cooperate and assist in the defense or
contest of such claims by the Sellers,
at the Sellers' expense, including in
proceedings where the Buyer or the
Purchased Assets, or any portion
thereof in rem, are parties to the
proceedings; provided, that nothing
herein shall be construed to authorize
Sellers to act on Buyer's behalf in
respect of such claims. Sellers may
not act for or on behalf of Buyer in
attempting to resolve such disputes or
claims, but rather shall contest,
dispute or resolve such claims at
Sellers' sole cost and expense, and in
Sellers' name. Nothing set forth
herein shall in any way prevent,
prohibit or restrict Buyer from taking
any action, or refraining from any
action, Buyer deems necessary or
appropriate to defend, protect or
advance its interests with respect to
such claims, whether or not consistent
with Sellers' position as to such
matters.
(c) Buyer agrees to
establish at Closing, and maintain in
a segregated account, an escrow to
fund the liens, encumbrances and other
liabilities identified in Schedule
4.02. Sellers shall be afforded an
opportunity to resolve any and all
disputes with respect to the liens,
encumbrances and other liabilities
identified in Schedule 4.02; provided,
however, that Buyer reserves the right
to apply the escrowed proceeds to pay
such claims and receive a discharge of
any such liens, encumbrances or other
liabilities at any time, and in any
manner, Buyer deems appropriate, in
Buyer's sole discretion, in order to
preserve and protect its property
interest in the Purchased Assets.
Sellers may not act for or on behalf
of Buyer in attempting to resolve such
disputes or claims, but rather shall
contest, dispute or resolve such
claims at Sellers' sole cost and
expense and in Sellers' name. Nothing
set forth herein shall in any way
prevent, prohibit or restrict Buyer
from taking any action, or refraining
from any action, Buyer deems necessary
or appropriate to defend, protect or
advance its interests with respect to
such claims, whether or not consistent
with Sellers' position as to such
matters.
(d) In the event Sellers do
not receive at least One Million
Dollars ($1,000,000) in cash at
Closing net of any reduction under
Section 4.02(a), Sellers may terminate
this Agreement, in which case Buyer
will receive a refund of its deposit
and the parties agree to negotiate in
good faith a restructuring of the
transaction described herein.
4.03 Consulting Agreement.
Separate and apart from, and
in addition to, the Purchase Price, as
a condition of Closing, Buyer shall
enter into a consulting agreement with
a partnership to be formed by William
and Harold Herbert pursuant to which
the partnership shall agree to provide
consulting services to Buyer on a
basis acceptable to both Buyer and
Seller for a period of five years
following the Closing. Consideration
to be paid to the partnership for such
services shall total Five Hundred
Thousand Dollars ($500,000.00) paid in
five equal annual installments of One
Hundred Thousand Dollars
($100,000.00). Payments will commence
on the first anniversary of the
Closing and conclude on the fifth
anniversary of the Closing.
4.04 Adjustment for Taxes,
Prepayments and Deposits.
Real property taxes,
personal property taxes, other ad
valorem taxes, any governmental
levies, charges or assessments,
utilities, water, sewer and any other
charges attributable to the Purchased
Assets for the fiscal year during
which the Closing Date occurs as well
as any other prepayments and deposits
with respect to the Purchased Assets
shall be prorated and adjusted as of
the Closing Date. If the real
property taxes or personal property
taxes for the fiscal year during which
the Closing Date occurs are not
finally determined, then such taxes
for the immediately prior fiscal year
shall be used for the purposes of
prorating taxes on the Closing Date,
with a further adjustment to be made
after the Closing Date as soon as such
taxes are finalized. Installments of
special taxes or assessments with
respect to the Purchased Assets which
are payable for the fiscal period in
which the Closing Date occurs shall be
prorated as of the Closing Date.
Sellers' and Buyer's obligation to
make post-Closing Date adjustments for
taxes, prepayments and deposits shall
survive the Closing. Sellers'
obligations hereunder not funded
separately by Sellers at Closing shall
be deducted from cash payable to
Sellers at Closing and paid by Buyer.
4.05 Adjustment for
Utilities.
Sellers shall cause all
meters for electricity, gas, water,
sewer and other utility usage related
to the Purchased Assets to be read on
the Closing Date, and Sellers shall
pay all charges for such utilities
which have accrued on or prior to the
Closing Date. If the utility
companies are unable or refuse to read
the meters on the Closing Date, all
charges for such utilities to the
extent unpaid shall be prorated and
adjusted as of the Closing Date based
on the most recent bills therefor.
The Sellers shall provide notice to
Buyer within three (3) days before the
Closing Date setting forth (i) whether
utility meters will be read as of the
Closing Date and (ii) a copy of the
most recent bill for any utility
charges which are to be prorated and
adjusted as of the Closing Date. If
the meters cannot be read as of the
Closing Date and, therefore, the most
recent bill is used to prorate and
adjust as of the Closing Date, then to
the extent that the amount of such
prior bill proves to be more or less
than the actual charges for the period
in question, a further adjustment
shall be made after the Closing Date
as soon as the actual charges for such
utilities are available, which Buyer
shall have read as soon as possible
after the Closing Date. Sellers' and
Buyer's obligation to make such post-
Closing Date adjustments for utilities
shall survive the Closing. Sellers'
obligations hereunder not funded
separately by Sellers at Closing shall
be deducted from cash payable to
Sellers at Closing.
4.06 Transfer Taxes.
Buyer shall pay all state or
local transfer tax, deed excise tax
(or any other tax based upon the
transfer of the Purchased Assets) and
the recording fee for all deeds
imposed in connection with the
purchase and sale. Sellers shall pay
any Vermont Land Gain Tax due upon
sale of the Purchased Assets.
Sellers' obligations hereunder not
funded separately by Sellers at
Closing shall be deducted from cash
payable to Sellers at Closing and paid
by Buyer.
4.07 Adjustment Payment.
Within five (5) days after
the date upon which the amount of each
adjustment which is permitted to be
made after the Closing is finally
determined pursuant to this Article
IV, payments required thereby will be
made by check or wire transfer payable
to the appropriate party.
ARTICLE V
CLOSING
The closing (the "Closing") of
the transaction contemplated by this
Agreement will take place at the
offices of Killington, Ltd. or such
other location in the Rutland or
Sherburne, Vermont area as Buyer may
designate at 10:00 a.m. local time on
the fifth business day following the
date upon which all of the conditions
precedent set forth in Articles VIII
and IX of this Agreement are satisfied
or waived by the appropriate party
hereto, subject to Article XII of this
Agreement, or at such other time and
place as the parties may agree in
writing. The date of Closing is
sometimes referred to herein as the
"Closing Date". In the event the
Closing has not occurred on or before
November 15, 1996, this Agreement
shall terminate and the Deposit shall
be refunded to Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
SELLERS
Sellers hereby represent and
warrant to Buyer as follows:
6.01 Corporate Organization.
Real Estate Co., Sports
Center Co. and Equipment Co. are
limited liability companies duly
organized and legally and validly
existing under the laws of the State
of Vermont. Sellers each have full
power and authority to own or lease
their properties and to carry on their
businesses as now conducted and to
execute and deliver this Agreement and
to carry out the terms hereof.
6.02 Authorization of
Agreement.
The execution and delivery
of this Agreement and the agreements
contemplated hereby (the "Related
Agreements") by Sellers and the
performance by Sellers of the
obligations to be performed hereunder
and thereunder have been duly
authorized by all necessary and
appropriate action by Sellers under
their Operating Agreements. The
execution and delivery of this
Agreement and the Related Agreements
and the consummation of the
transactions contemplated hereby and
thereby do not and will not (i)
conflict with, or result in a breach
of, or default under, or permit
acceleration of any obligation under,
any of the terms, conditions, or
provisions of any note, bond,
mortgage, indenture, license, material
agreement or other material instrument
or obligation to which Sellers are a
party, or by which it or any of its
properties or assets may be bound or
affected or (ii) violate any order,
writ, injunction, decree or statute,
or any rule, regulation, permit,
license or conditions thereto, or
(iii) result in the creation or
imposition of any lien, charge or
encumbrance of any nature upon any of
the Purchased Assets. This Agreement
and the Related Agreements are valid
and binding obligations of Sellers
enforceable in accordance with their
terms, subject to equitable principles
and applicable bankruptcy and other
creditors' rights laws, regulations
and rulings.
6.03 Compliance with Laws.
Except as set forth in
Schedule 6.03 to the best of Sellers'
knowledge Sellers are not in violation
of any applicable federal, state and
local laws, rules, regulations,
ordinances, codes or orders ("Laws")
governing the Purchased Assets and the
operation of the Ski Areas and have
not received written notification of
any asserted material past or present
failure by any of them to operate the
Purchased Assets and Ski Area Business
in accordance with any such law,
ordinance or regulation and no event
has occurred which with notice or the
passage of time would constitute such
a default.
6.04 Licenses and Permits.
(a) No permits,
licenses, approvals, clearances or
other governmental consents are
required for the transfer of the
Purchased Assets to Buyer pursuant to
the terms of this Agreement except for
the transfer or reissuance of the
governmental licenses, permits,
authorizations, approvals and
certificates identified in Section
1.05 from Sellers to Buyer.
(b) The Sellers have
not disposed of or permitted to lapse
any license, permit or other
authorization from any federal, state
or local authorities related to the
Purchased Assets or the operation of
the Ski Area Business.
(c) Except as reported
in Schedule 1.05, the Licenses and
Permits listed on Schedule 1.05 are
all of the governmental licenses,
permits, authorizations, approvals and
certificates known to Sellers which
are required for use of the Purchased
Assets for the Ski Area Use at full
capacity.
6.05 Environmental Matters;
Health and Safety.
(a) Except as
disclosed in Schedule 6.05, there are
no outstanding or, to Sellers'
knowledge, threatened actions, claims,
proceedings, determinations or
judgments by any party, including, but
not limited to, any governmental
authority or agency, against or
involving the Sellers, arising under
the Clear Air Act, the Federal Water
Pollution Control Act of 1972, the
Comprehensive Environmental Response,
Compensation and Liability Act of
1980, the Solid Waste Disposal Act,
the Resource Conservation and Recovery
Act and the Toxic Substances Control
Act, and any amendments or extensions
of the foregoing statutes, and all
other applicable environmental
requirements or any other federal,
state, local or other environmental,
health or safety law, regulation,
order or requirement requiring the
remediation or removal of an existing
condition or substance. Except as
listed in Schedule 6.05, there are no
outstanding or, to the best of
Sellers' knowledge, threatened orders,
determinations or notices of violation
issued by any federal, state, local or
other governmental authority
administering environmental or health
and safety laws in connection with
operation of the Purchased Assets or
the Ski Area Business, which have not
been complied with or resolved to the
satisfaction of such governmental
authority.
(b) Except as set
forth in Schedule 6.05, the Purchased
Assets and the Ski Area Business is in
compliance with all applicable
federal, state, and local
environmental or health and safety
laws, regulations and ordinances.
6.06 Title.
Except as set forth in
Schedules 1.01, Sellers hold and shall
convey to Buyer at Closing good and
marketable title to the Sellers' Real
Estate, free of all liens,
restrictions and encumbrances, except
such encumbrances as will be
discharged at Closing in accordance
with Section 4.02, applicable zoning
and land use laws, regulations, rules
and ordinances and such restrictions
as do not interfere with the use of
the Purchased Assets for Ski Area Use,
and the sale of the Sellers' Real
Estate does not require the consent of
any person or entity. Except for
those listed on Schedule 6.13, Sellers
have no outstanding leases, licenses,
occupancy agreements or any contracts
or agreements with respect to the
Sellers' Real Estate.
6.07 Title to Other
Purchased Assets.
Except as set forth in
Schedule 6.07 and such encumbrances as
will be discharged at Closing in
accordance with Section 4.02, Sellers
have and shall convey to Buyer at
Closing good and marketable title to
all Purchased Assets, other than
Sellers' Real Estate, free and clear
of all encumbrances, liens, charges or
other restrictions of any kind, except
such restrictions as do not interfere
with the use of the Purchased Assets
for Ski Area Use. Except for those
listed on Schedule 6.13, Sellers have
no outstanding contracts or agreements
with respect to or affecting the
Purchased Assets. None of the
contracts or agreements listed in
Schedule 6.13 shall be binding upon
Buyer, unless listed in Schedule 3.01.
6.08 Applicable Zoning and
Use.
The existing uses of the
Purchased Assets are permitted uses
within the zoning districts in which
they are located and otherwise
permitted under the Assumed Permits
held by Sellers.
6.09 Litigation.
Except as provided in
Schedule 6.09, there is no action,
suit, proceeding at law or in equity
by any person or entity, or any
arbitration or any administrative or
other proceeding by or before any
governmental or other instrumentality
or agency, pending, or, to Sellers'
knowledge, threatened, against any of
Sellers with respect to the Ski Area
Business or any of the Purchased
Assets.
6.10 Warranty of Purchased
Assets.
Except as provided in
Schedule 6.10(a), all of the Purchased
Assets consisting of buildings,
machinery and equipment and other
tangible personal property or
improvements to real estate are in
good condition and repair, ordinary
wear and tear excepted, and suitable
for their intended use.
6.11 Sellers Not "Foreign
Persons".
Sellers are not "foreign
persons" as defined in Internal
Revenue Code (the "Code") Section
1445, and Sellers will execute and
deliver to Buyer at Closing an
affidavit in compliance with Code
Section 1445(b)(2).
6.12 Taxes.
Except as described in
Schedule 6.12, Sellers have timely
filed all tax returns, tax information
returns and reports required to be
filed through the Closing Date which
relate to the Purchased Assets and
Sellers' activities, and have paid all
taxes and other charges which have
become due pursuant to such returns
and reports, or pursuant to any
assessment received by it, except for
any taxes the validity of which
Sellers may be contesting in good
faith in appropriate proceedings.
Sellers are not delinquent in the
payment of any tax assessment or
governmental charge which relates to
any of the Purchased Assets, no
deficiencies for any taxes which
relate to any of the Purchased Assets
have been proposed, threatened,
asserted or assessed against Sellers,
and no requests for waivers of the
time to assess or pay any such tax are
pending, except such as are listed in
Schedule 6.12 and will be paid and
discharged at Closing. There are no
tax liens upon any of the Purchased
Assets and no such liens will arise as
a result of the transaction
contemplated hereby. For the purposes
of this Agreement, the term "tax"
shall include all federal, state,
local and foreign income, property,
sales, excise and other taxes of any
nature whatsoever.
6.13 Contracts and
Commitments.
Schedule 6.13 sets forth a
description of all material contracts,
agreements and commitments of Sellers,
constituting or affecting the
Purchased Assets. Each executed
contract or commitment set forth in
Schedule 6.13 hereto is in full force
and effect and, except as set forth in
Schedule 6.13, the Sellers are not in
default under any such contract or
commitment.
6.14 Intellectual Property.
Attached as Schedule 1.07 is
a list of Sellers' trademarks (whether
or not registered), tradenames,
servicemarks (whether or not
registered), copyrights (whether or
not registered), trademark and service
mark registrations (and pending
applications therefor). Sellers have
not granted any outstanding licenses
or other rights to use any
Intellectual Property Rights, and
Sellers are not liable, nor have
Sellers made any contract or
arrangement whereby it may become
liable, to any person for any royalty
or other compensation for the use of
any Intellectual Property Rights.
None of the rights of Sellers in, to
or under any Intellectual Property
Rights will be adversely affected by
the consummation of the transactions
contemplated hereby. To the best of
Sellers' knowledge, the use of the
Intellectual Property Rights in the
manner conducted by Sellers during the
1995-1996 ski season will not infringe
any patent or copyright of any third
party, nor constitute a
misappropriation of the trade secrets
or other proprietary rights of any
third party.
6.15 Employee Benefit Plans.
All of the pension,
retirement, profit sharing, savings,
stock options, severance bonus, fringe
benefit, insurance or other employee
benefit plan or arrangement of Sellers
or applicable to their employees is
listed in Schedule 6.15. Each of the
above plans has been operated and
administered in accordance with
applicable laws, including ERISA and
the Code. Buyers assume no
responsibility, liability or
obligation with respect to such plans
and such plans shall be administered
by Sellers following the Closing.
6.16 Labor and Employee
Relations.
Seller has no ongoing
employment relationships. No persons
have employment obligations to Sellers
that will restrict their freedom to
become the employees of Buyer if Buyer
so desires. Buyer is under no
obligation to employ any of Sellers'
employees.
6.17 Ski Passes.
No tickets or passes for
skiing at the Pico Mountain Ski Resort
for all of any portion of the 1996-
1997 ski season have been issued, sold
or otherwise distributed by Sellers,
or to the best of Sellers knowledge,
by any other parties.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
BUYER
Buyer hereby represents and
warrants to Sellers as follows:
7.01 Corporate Organization.
Buyer is a corporation duly
organized, validly existing and in
good standing under the laws of
Vermont with full power and authority
to own or lease its property and to
carry on its businesses as now
conducted and to execute, deliver and
perform its obligations hereunder and
under the Related Agreements.
7.02 Authorization of
Agreement.
The execution and delivery
of this Agreement and the Related
Agreements by Buyer and the
performance by Buyer of the
obligations to be performed hereunder
and thereunder have been duly
authorized by all necessary and
appropriate action by the directors
of Buyer and no shareholder approval
is required in connection therewith.
The execution and delivery of this
Agreement and the Related Agreements
and the consummation of the
transactions contemplated hereby and
thereby do not and will not conflict
with or result in a breach of, or
constitute a default under, the terms
and conditions of Buyer's Certificate
of Incorporation, By-Laws, any court
or administrative order or process by
which Buyer is bound, or any agreement
or instrument to which Buyer is a
party or is bound. This Agreement and
the Related Agreements are the valid
and binding obligations of Buyer,
enforceable in accordance with their
terms, subject to equitable principles
and applicable bankruptcy and other
creditors' rights, laws, regulations
and rulings.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
BY BUYER ON THE CLOSING DATE
The obligations of Buyer to
consummate the transactions
contemplated by this Agreement are
subject to the satisfaction of each of
the following conditions precedent
being satisfied on or before the
Closing Date, subject to the right of
Buyer to waive any one or more of such
conditions:
8.01 Compliance.
The representations and
warranties of Sellers contained in
this Agreement or in any of the
Schedules attached hereto or any
agreement or document delivered in
connection herewith shall be true and
correct in all material respects on
and as of the Closing Date as if made
on and as of the Closing Date. The
Sellers shall have performed and
complied with all of its obligations
and covenants required to be performed
or complied with on or before the
Closing Date.
8.02 No Material Adverse
Change.
There shall have been no
material adverse change in the
condition of the Purchased Assets from
the date of this Agreement.
8.03 Closing Documents.
Sellers shall have delivered
or caused to be delivered to Buyer, or
Buyer shall have otherwise received,
on or before the Closing Date, in a
form reasonably satisfactory to Buyer:
(a) Consents, waivers
and authorizations of any person to
the assumption of the Assigned
Contracts and other Purchased Assets
by Buyer and to the transactions
contemplated by this Agreement, except
for the Assigned Permits, for which
provision is made in Section 8.04.
(b) Warranty deeds to
Buyer conveying good and marketable
title to the Sellers' Real Estate as
described in Section 6.06 and except
for those leases, licenses, or
occupancy agreements or other
instruments which have been assumed by
the Buyer as Assumed Liabilities.
(c) An owner's title
insurance policy dated the Closing
Date on such ALTA Forms as are
reasonably acceptable to Buyer and its
counsel with extended coverage
guaranteeing over the standard
exceptions to title customarily
contained in such policies and the
Endorsements, covering the Sellers'
Real Estate issued by a title
insurance company acceptable to Buyer,
at Buyer's expense, insuring the fee
simple of Sellers in such real
property in the amount of at least $6
million; and Sellers shall have
provided all statements, affidavits,
and certificates which are customarily
required of sellers by title insurance
companies in order for the title
insurance company to provide Buyer
with the title insurance policies (and
related endorsements) described in
this Agreement, which Buyer shall
exercise its best efforts to obtain.
(d) Bills of Sale
conveying all Purchased Assets to
Buyer duly executed by Sellers
(Sellers and Buyer hereby agreeing
that neither the representations and
warranties nor the rights and remedies
of any party hereunder shall be deemed
to be enlarged, modified or altered in
any way by such Bills of Sale);
(e) Certified copies
of the authorization by each of
Sellers of the sale of the Purchased
Assets to Buyer in accordance with
this Agreement and Sellers' execution
and delivery of this Agreement;
(f) An affidavit,
under penalty of perjury, indicating
Seller's United States taxpayer
identification number and stating that
Sellers are not a foreign person, in a
form sufficient to exempt Buyer from
the withholding provisions of Section
1445 of the Code;
(g) A certificate of
legal existence from the State of
Vermont for each of Sellers and
incumbency certificates of Sellers,
together with a certified copy of each
of Sellers' Operating Agreement and
other organizational documents;
(h) An opinion of
counsel to Sellers addressing such
matters as Buyer may reasonably
require and in form and substance
acceptable to Buyer;
(i) An environmental
assessment or assessments of the
Purchased Assets confirming that
Sellers' Real Estate, Ski Area
Improvements and Personal Property do
not contain, or otherwise have present
in, on, at or under such properties,
any conditions, substances or
circumstances, the presence of which
presently has, or could in the future
have, a material adverse affect upon
(a) the value of any such properties,
(b) the Buyer's ability to use and
develop such properties on a
continuing basis following the Closing
as a first class ski resort, (c)
Buyer's ability to effectively utilize
such properties as collateral to
finance its purchase of the Purchased
Assets, or (d) once owned by the
Buyer, the Buyer's financial condition
all as determined by Buyer in its
reasonable judgment; and
(j) A written
statement from the Vermont Department
of Revenue certifying that each of the
Corporate Sellers has no past-due
state income or employment tax
liability, except such as will be
satisfied at Closing with the proceeds
of the sale.
8.04 Permits and Licenses.
Sellers shall have delivered
or caused to be delivered to Buyer, or
Buyer shall have otherwise received,
on or before the Closing Date, in a
form reasonably satisfactory to Buyer,
all necessary agreements, waivers,
authorizations and consents to the
transfer, assignment or reissuance of
all Assumed Permits required for the
ownership and operation of the
Purchased Assets as a four season
resort consistent with its historical
operations.
8.05 Failure to Deliver the
Purchased Assets by the Closing Date.
If Sellers are unable to
deliver any material portion of the
Purchased Assets in accordance with
terms and conditions of this Agreement
and in a condition substantially
similar to their condition as of the
date hereof on the Closing Date
because of damage by fire or casualty,
then Buyer shall have the right to
terminate this Agreement at any time
thereafter. In the event of casualty
loss involving any of the Purchased
Assets which either does not result in
a termination of this Agreement,
Seller shall pay over to Buyer all
proceeds of insurance, or claims
therefor, relating to any such
casualty loss.
8.06 Litigation and
Regulatory Action.
No litigation or regulatory
action shall have been filed, brought
or otherwise commenced against any of
Sellers, Buyer or the Purchased Assets
which forbids, prohibits or in any way
restricts the transactions
contemplated hereby, including without
limitation the inclusion,
incorporation or joinder of Buyer, any
of the Sellers or the Purchased Assets
in any pending proceedings.
8.07 Closing Waterville
Valley and Cranmore.
Closing the sale of the
Waterville Valley Ski Resort and the
Cranmore Ski Resort to Booth Creek Ski
Acquisition Corp. pursuant to a
Purchase and Sale Agreement between
such parties dated as of August 30,
1996.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING BY
SELLERS ON THE CLOSING DATE
The obligations of Sellers to
consummate the transactions
contemplated by this Agreement are
subject to the satisfaction of each of
the following conditions precedent
being satisfied on or before the
Closing Date, subject to the right of
Sellers to waive any one or more of
such conditions:
9.01 Compliance.
The representations and
warranties of Buyer contained in this
Agreement or in any of the Schedules
attached hereto or in any agreement or
document delivered in connection
herewith shall be true and correct in
all material respects on and as of the
Closing Date as if made on and as of
the Closing Date. The Buyer shall
have performed and complied with all
of its obligations and covenants
required to be performed or complied
with on or before the Closing Date.
9.02 Closing Documents.
Buyer shall have delivered
to Sellers, in a form reasonably
satisfactory to counsel for Sellers:
(a) certified copies
of the resolutions adopted by Buyer's
Board of Directors (and stockholders
where required) authorizing the
purchase of the Purchased Assets from
Sellers in accordance with this
Agreement and Buyer's execution and
delivery of this Agreement; certified
copies of the resolutions adopted by
American Skiing Company's Board of
Directors authorizing the guaranty set
forth at the conclusion of this
Agreement;
(b) an assumption
agreement or agreements in form
acceptable to Sellers with respect to
the Assumed Liabilities;
(c) a guaranty of
Buyer's obligations under subsection
4.01(c) (d) hereof by American Skiing
Company in form reasonably acceptable
to Sellers and Buyer;
(d) such other
documents and certificates as are
contemplated hereby or as Sellers or
their counsel may reasonably request;
and
(e) an opinion of
counsel to Buyer and American Skiing
Company addressing such matters as
Sellers may reasonably require and in
form and substance acceptable to
Sellers.
9.03 Payment of Money.
Buyer shall have paid the
Deposit as provided in Section 4.01(a)
and the cash portion of the Purchase
Price to the Sellers as provided in
Section 4.01(b).
ARTICLE X
COVENANTS OF SELLERS AS TO INTERIM
OPERATION
Sellers hereby covenant and agree
with Buyer as follows:
10.01 Conduct of
Business.
From the date hereof to the
Closing Date, Sellers will carry on
its activities in substantially the
same manner as they have previously
been carried out, in the ordinary
course of business, and will not
employ methods of manufacture,
purchase, sale, lease, management,
accounting, or operation that vary
from those methods used by Sellers
outside of the ordinary course of
business consistent with past
practices and as reflected in
paragraph 3.01 recognizing that the
ski area is not currently being
operated. Without limiting the
foregoing except as specifically
contemplated in this Agreement, from
the date of this Agreement to the
Closing, Sellers will:
(a) not engage in any
transaction which would be
inconsistent with any representation,
warranty or covenant of Sellers set
forth herein or which would cause a
breach of any such representation,
warranty or covenant;
(b) except as provided
on Schedule 10.01(b) and in the
ordinary course of business, not sell,
transfer, convey, assign, lease,
license or otherwise dispose of any of
the Purchased Assets;
(c) not mortgage,
pledge, subject to a lien, or grant a
security interest in, or otherwise
encumber, any of the Purchased Assets;
(d) use reasonable
efforts (without making any
commitments on behalf of Buyer) to
keep its business organizations
intact, keep available its present
employees and to preserve its present
relationship with customers,
suppliers, employees and other having
business relationships with Sellers;
(e) not cause a breach
of any material contract or
commitment, collective bargaining
agreement, employee benefit plan, or
any other material agreement to which
either Sellers are a party, or by
which it or any of its assets or
properties are bound;
(f) not violate or
fail to comply with laws applicable to
it or its properties or business if
such violation will have or is
reasonably likely to have a material
adverse affect upon the ability to
continue the Ski Area Use or develop
any of Sellers' Real Estate for resort
purposes;
(g) not amend, change,
terminate or otherwise modify any
lease, contract, agreement or
commitment other than in the ordinary
course of business;
(h) not enter into, or
become obliged under, any contract,
agreement, lease or other commitment
relating to the Purchased Assets or
Ski Area Use, other than any contract,
agreement, lease or other commitment
entered into in the ordinary course of
business consistent with past
practice; and
(i) upon obtaining
knowledge of the existence of any
matter specified to Sellers' business
or the Purchased Assets that could
reasonably likely result in a
diminution of the Purchased Assets and
or the Ski Area Use, the Sellers shall
promptly inform Buyer of such matter.
10.02 Risk of Loss.
Sellers shall bear the risk
of loss, damage or destruction with
respect to the Purchased Assets from
any casualty until the successful
consummation of the sale and purchase
of the Purchased Assets on the Closing
Date. In the event of any such loss,
damage or destruction, the proceeds of
any claim for any loss payable under
any insurance policy covering such
loss shall be payable to Sellers. In
the event of any such material loss or
damage, Sellers shall specify in
writing to Buyer with particularity
the loss or damage incurred, the cause
thereof, if known or reasonably
ascertainable, and the extent to which
restoration, replacement and repair of
the Purchased Assets lost or destroyed
will be reimbursed under any insurance
policy with respect thereto. Buyer's
right to terminate this Agreement in
such circumstances shall be governed
by Section 8.05 of this Agreement. To
the extent that Buyer determines not
to terminate this Agreement and the
Closing occurs, it shall be entitled
to any insurance proceeds provided
with respect to such loss to the
extent not used by Sellers to restore
the Purchased Assets.
10.03 Access.
(a) From the date hereof to
the Closing Date, Sellers will afford
to the representatives of Buyer,
including its counsel and auditors,
during normal business hours, access
to any and all of the Purchased Assets
to the end that Buyer may have a
reasonable opportunity to make such a
full investigation of the Purchased
Assets and of Sellers' Ski Area
Business in advance of the Closing
Date as it shall reasonably desire,
and the officers of Sellers will
confer with representatives of Buyer
and will furnish to Buyer, either
orally or by means of such records,
documents, and memoranda as are
available such information as Buyer
may reasonably request, and Sellers
will furnish to Buyer's auditors all
consents and authority that they may
reasonably request in connection with
any examination by Buyer.
(b) From the date hereof to
the Closing Date, Buyer shall have the
right, at its expense, to enter upon
the Sellers' Real Estate and undertake
all such actions as may be necessary
to prepare the Purchased Assets to
open for the 1996-7 ski season,
including all maintenance, making
improvements, acquiring or updating
permits and approvals and any such
other actions as may be required, and
to operate the Purchased Assets for
Buyer's own account and at Buyer's
sole expense (although no obligation
to undertake any such action is hereby
implied). Buyer shall indemnify and
hold Sellers harmless from and against
any claims, liability, loss, cost or
expense resulting from any bodily
injury, death or property damage
occurring as a proximate result of
Buyer's use of the Purchased Assets or
action, or failure to act, at the
Sellers' Real Estate. Buyer shall
extend the same liability insurance as
is currently in place at the
Killington Ski Resort to the Sellers'
Real Estate during the period of
Buyer's use or occupancy of the same
under this Section 10.03(b), and shall
have the Sellers named as an
additional insured on such policy(s)
of insurance. In the event the
transaction contemplated hereby does
not close for any reason, Buyer shall
have, for a reasonable period, the
right to remove any and all
improvements made by Buyer to the
Purchased Assets; provided however,
that Buyer shall have no claim against
Sellers for the value of any
improvements made to the Purchased
Assets.
10.04 Consent of Third
Parties.
Sellers shall use their best
efforts to obtain, as soon as
practicable after the date hereof, but
in any event prior to the Closing
Date, the consent in writing of all
persons whose consent is required to
consummate to the transactions
contemplated by this Agreement,
including but not limited to any and
all governmental authorities as set
forth in Section 1.05.
10.05 Insurance
Coverage.
Existing insurance coverages
for the Purchased Assets shall be
maintained in effect by Sellers
between the date hereof and the
Closing Date.
10.06 Maintenance of
Purchased Assets.
At all times from the
execution of this Agreement to the
Closing Date, Sellers agree to
maintain the Purchased Assets in
substantially the same condition as of
the date of this Agreement, provided
that Sellers shall not be required to
spend any money on maintenance, repair
or replacement of any Purchased
Assets. Sellers shall (i) not alter,
disassemble or remove any Purchased
Assets from the Property or take any
other action in connection with the
Purchased Assets which has or is
likely to have a material adverse
affect upon the value of, or
beneficial use of, the Purchased
Assets or the ability to continue to
engage in the Ski Area Use, and (ii)
maintain in full force and effect any
and all contracts, permits and
licenses which are Purchased Assets or
Assumed Liabilities. Sellers shall
notify Buyer promptly of any material
change in the condition of the
Purchased Assets.
10.07 No Solicitation;
No Publicity.
Sellers hereby covenant and
agree to hold and maintain the
discussions between Sellers and Buyer,
the existence of this Agreement, the
terms and provisions of this Agreement
and any and all further discussions,
relationships or arrangements by and
between Buyer and Sellers in
confidence and not disclose the same
to any parties, private, public or
governmental (including without
limitation the news media) without the
express prior written consent of
Buyer; provided, however, that Sellers
may disclose information relating to
this Agreement on an as needed basis
to Sellers' legal and financial
advisors and as necessary in order to
obtain required consents and approvals
for the transaction contemplated
hereby. Buyer agrees to work in
cooperation with Sellers to discuss
the existence and terms and provisions
of this Agreement with certain private
parties necessary in order to
forestall foreclosure on all or any
portion of the Purchased Assets
provided adequate assurances of
confidentiality are established with
such parties. Sellers shall not
entertain, discuss, invite, encourage,
solicit, accept or facilitate any
competing offers for the Purchased
Assets during the term of this
Agreement. The foregoing covenants
and agreements are of the essence of
this Agreement. Violation of the
foregoing will give rise to Buyer's
right to terminate this Agreement.
10.08 Further
Assurances.
From and after the Closing
Date, Sellers shall execute and
deliver to Buyer all such further
assignments, endorsements and other
documents as Buyer may reasonably
request for the purpose of effecting
transfer of Sellers' title to the
Purchased Assets and/or carrying out
the provisions of this Agreement.
ARTICLE XI
INDEMNITY
11.01 Sellers'
Indemnity.
Sellers shall, jointly and
severally, indemnify and hold harmless
Buyer and its directors, officers and
employees from and against all
expenses, claims, costs, damages or
liabilities, including reasonable
attorneys' fees (each an "Indemnified
Expense"), arising out of or relating
to (i) the untruth or inaccuracy of
any representation or warranty made by
any of Sellers or the Herberts in this
Agreement, (ii) any breach of Sellers'
or Herberts' covenants contained
herein, (iii) the existence,
operations or other conduct of Sellers
or the Herberts prior to the Closing,
including without limitation, any
liabilities arising under federal or
state environmental laws and
liabilities arising under federal or
state plant closing, employee
termination or similar laws, except to
the extent the same are assumed
hereunder, (iv) any and all claims,
obligations, liabilities or other
amounts paid or incurred by Buyer
described in Section 4.02(b) hereof
and (v) any and all actions, suits,
proceedings, demands, assessments,
judgments, costs and legal fees and
other expenses associated with any of
the foregoing. Without in any way
limiting the remedies of Buyer
hereunder, Buyer shall be entitled to
offset any Indemnified Expense against
any of the payments of Purchase Price
to be made to Sellers under Article IV
of this Agreement and/or against
payments under the Consulting
Agreement described in Section 4.03.
Sellers shall have no obligation to
indemnify Buyer with respect to an
Indemnified Expense unless notice of
the Indemnified Expense is provided to
Sellers on or before the seventh
anniversary of the Closing Date;
provided, however, that the foregoing
limitation shall not apply to
Indemnified Expenses resulting from
federal, state or local tax liability
of Sellers or the Herberts relating to
any period ended on or before Closing.
11.02 Buyer's Indemnity.
Buyer shall indemnify and
hold harmless Sellers, their
directors, officers and employees from
and against all expenses, claims,
costs, damages or liabilities,
including reasonable attorneys' fees
(each an "Indemnified Expense"),
arising exclusively out of or relating
exclusively to the operation of the
Purchased Assets by Buyer following
the Closing. Sellers hereby
acknowledge and agree that nothing set
forth in this Section 11.02 shall in
any way limit or restrict their
obligations under Section 11.01 and
4.02 hereof.
ARTICLE XII
MISCELLANEOUS
12.01 Consents to
Assignment by Third Parties.
This Agreement shall not
constitute an agreement to assign any
asset, claim, contract, permit,
franchise, license or similar
agreement or right if any attempted
assignment of the same without the
consent of the other party thereto
would constitute a breach thereof or
in any way affect the rights of
Sellers or Buyer thereunder.
12.02 Confidentiality.
Buyer acknowledges that in
the course of preparing this
Agreement, Buyer has obtained
information concerning the business of
Sellers which is of a confidential
and/or proprietary nature (the
"Confidential Information"). Buyer
(including the directors, officers,
employees and agents thereof) agrees
to retain in confidence and not to
disclose any of the Confidential
Information of Sellers to any third
party and if this Agreement is
terminated and the transactions
contemplated hereby are not concluded,
to promptly return all such
Confidential Information to Sellers
and not retain or use any Confidential
Information or copies thereof for any
purpose, except as disclosure may be
required by law or government
regulation or order or unless the
information sought to be disclosed or
used (i) is publicly known as of the
date hereof or becomes publicly known
though no fault of Buyer, or (ii) is
lawfully received by Buyer from a
third party not bound in a
confidential relationship to any party
whose confidential information is to
be protected hereunder.
12.03 Brokers.
Each of Buyer and Sellers
represents and warrants to the other
that they have not engaged any brokers
and there are no brokerage or finders'
fees payable in connection with the
transactions contemplated hereby
resulting from any actions taken by
them.
12.04 Representations
and Warranties.
Sellers and Buyer hereby
agree that statements made in the
Schedules attached hereto and the
certificates delivered in connection
herewith shall be representations and
warranties for purposes of this
Agreement.
12.05 Further
Assurances.
From and after the Closing
Date, upon the reasonable request of
Buyer from time to time, and at
Buyer's expense, Sellers shall execute
and deliver all documents, make all
rightful oaths, testify in any
proceedings and do all other acts
which may be reasonably necessary or
desirable in the opinion of Buyer to
protect or defend the right, title or
interest of Buyer in and to the
Purchased Assets.
12.06 Tax Matters.
The aggregate purchase price
for the Purchased Assets paid by Buyer
in accordance with this Agreement will
be allocated among the Purchased
Assets by Buyer and Sellers in
accordance with Section 1060 of the
Code and the regulations thereunder,
as set forth in Schedule 12.06
attached hereto. Buyer and Sellers
covenant and agree that the Buyer and
Sellers shall each timely file (with
the appropriate Internal Revenue
Service) Form 8594 in substantially
the form attached to Schedule 12.06.
The covenants and agreements of the
Buyer and Sellers set forth in this
Section shall survive the Closing and
shall continue so long as the Buyer or
Sellers (as the case may be) is
obligated under the Internal Revenue
Code of 1986, as amended or the
regulations or rulings promulgated
thereunder, to file Form 8594,
including any Supplemental Statement
under Part IV of Form 8594. Buyer and
Sellers will furnish each other with a
copy of the purchase price allocation
information they submit to the
Internal Revenue Service, in
connection with the filing of their
fiscal 1996 federal income tax
returns.
12.07 Amendment.
This Agreement may not be
amended except by written agreement of
Sellers and Buyer.
12.08 Governing Law;
Severability.
This Agreement shall be
construed in all respects in
accordance with, and governed by, the
internal laws (as opposed to conflicts
of laws provisions) of Maine. The
parties agree that the state and
federal courts located in Maine shall
have jurisdiction with respect to all
matters arising under this Agreement
and hereby submit to such
jurisdiction. If any provision,
clause or part of this Agreement, or
the application thereof under certain
circumstances, is held invalid, the
remainder of this Agreement, or the
applications of each provision, clause
or part under other circumstances,
shall not be affected thereby.
12.09 Retention of Books
and Records.
Buyer and Sellers shall
retain for a period of three (3) years
from the Closing all of their books
and records (including such records as
may be stored in computer databases)
relating to the Purchased Assets.
During such three-year period, each
party will make such books and records
available to the other for purposes of
inspection and copying, upon a proper
purpose being stated. If any party
requires the original of any document
in possession of the other, such party
shall provide the same, if available,
subject to the providing party's right
to inspect and copy it. Each party
will have the right to destroy such
books and records at any time after
the end of such three-year period;
provided, however, that it shall give
written notice to the other party
prior to the time it intends to
destroy such books and records so that
if the other party wishes to take
possession of all or some part of such
books and records it may do so, at its
expense.
12.10 Waiver.
The failure of Sellers or
Buyer to insist, in any one or more
instances, upon performance of any of
the terms or conditions of this
Agreement, shall not be construed as a
waiver or relinquishment of any rights
granted hereunder or the future
performance of any such term, covenant
or condition.
12.11 Headings.
The descriptive headings in
this Agreement are inserted for
convenience only and do not constitute
a part of this Agreement.
12.12 Counterparts.
This Agreement may be
executed in any number of
counterparts, and each such
counterpart hereof shall be deemed to
be an original instrument, but all
such counterparts together shall
constitute but one agreement.
12.13 Notices.
Any notice to be given
hereunder shall be given in writing
and delivered or mailed by registered
or certified mail, return receipt
requested, in the case of Sellers, to:
William Herbert
12 Nassau Court
Skillman, NJ 08558
with a copy to:
Victor S. Elgort, Esq.
Norris, McLaughlin & Marcus
P.O. Box 1018
Somerville, NJ 08876-1018
and, in the case of Buyer, to
Michael J. Krongel
Sunday River Skiway
Corporation
P.O. Box 450
Bethel, ME 04217
with a copy to:
Christopher E. Howard, Esq.
Pierce Atwood
One Monument Square
Portland, ME 04101
or to such other address as Sellers or
Buyer may designate by notice in
writing to the other, provided that no
party may designate that notices be
sent to more than two locations at any
particular time.
12.14 Benefit.
This Agreement may not be
transferred, assigned, pledged or
hypothecated by any party hereto
without the prior written consent of
the other parties hereto. Upon prior
written consent being obtained, this
Agreement shall be binding upon and
shall inure to the benefit of the
parties hereto and their respective
successors and assigns.
12.15 Expenses.
All expenses incurred by, on
behalf of, or for the benefit of
Sellers or Buyer in connection with
the closing of transactions
contemplated hereby, including without
limitation, engineering, legal,
advisory, investment banking and
accounting fees, shall be the
responsibility of and for the account
of the party or parties who ordered or
for whose benefit the particular
service or particular expense was
incurred.
12.16 Public
Announcement.
Except as required by law,
prior to the Closing Date, no public
announcement of the transactions
contemplated hereby shall be made by
way of press release, disclosure to
the trade or otherwise, except as
mutually agreed upon by the parties
hereto.
12.17 Third Party
Beneficiaries.
(Remainder of this page left
intentionally blank)
Each party hereto intends
that this Agreement shall not benefit
or create any right or cause of action
in or on behalf of any person other
than the parties hereto or their
permitted assigns.
12.18 Entire Agreement.
This Agreement and the
related closing documents executed and
delivered in connection herewith
constitute the entire agreement
between Sellers and Buyer with respect
to the transactions contemplated
hereby, superseding all prior
understandings and agreements among
Sellers and Buyer with respect to the
subject matter hereof.
ARTICLE XIII
HERBERT JOINDER
13.01 Representation and
Warranty.
The Herberts hereby
represent and warrant to Buyer that
the Herberts do not own or have any
ownership interest in any real,
personal or mixed assets of any nature
that (a) constitute a portion of, (b)
have previously constituted a portion
of, (c) are or were used in the
operation of or in connection with the
operation of or (d) would be useful in
the operation or development of or are
in any way appurtenant, associated,
related, used, useful or otherwise
connected with the Purchased Assets or
the Ski Area Use.
13.02 Quitclaim Bill of
Sale.
The Herberts shall execute
and deliver at Closing a quitclaim
deed or bill of sale, as appropriate,
conveying to Buyer any and all
interest the Herbert's may have,
residual or otherwise, in and to the
assets described in Section 13.01.
IN WITNESS WHEREOF, the
undersigned have caused this Agreement
to be executed under seal as of the
day and year first above written.
SHERBURNE PASS MOUNTAIN PROPERTIES,
LLC
By:
Its
PICO MOUNTAIN SPORTS CENTER, LLC
By:
Its
PICO MOUNTAIN OPERATING COMPANY, LLC
By:
Its
________________
Harold Herbert
________________
Edith Herbert
PICO SKI AREA MANAGEMENT COMPANY
By:
Its
GUARANTY COMMITMENT
American Skiing Company, a Maine
corporation with a principal place of
business at Newry, Maine ("ASC") does
hereby agree to guaranty the
obligations of Buyer set forth in
Sections 4.01(c) and (d) of the
foregoing Agreement. In connection
therewith, ASC covenants and agrees as
follows:
ASC is a corporation duly
organized, validly existing and in
good standing under the laws of Maine
with full power and authority to own
or lease its property and to carry on
its businesses as now conducted.
The execution and delivery of
this Agreement and the Related
Agreements by ASC and the performance
by ASC of the obligations to be
performed hereunder and thereunder
have been duly authorized by all
necessary and appropriate action by
the directors of ASC and no
shareholder approval is required in
connection therewith. The execution
and delivery of this Agreement and the
Related Agreements and the
consummation of the transactions
contemplated hereby and thereby do not
and will not conflict with or result
in a breach of, or constitute a
default under, the terms and
conditions of ASC's Certificate of
Incorporation, By-Laws, any court or
administrative order or process by
which ASC is bound, or any agreement
or instrument to which ASC is a party
or is bound. This Agreement and the
Related Agreements are the valid and
binding obligations of ASC,
enforceable in accordance with their
terms, subject to equitable principles
and applicable bankruptcy and other
creditors' rights, laws, regulations
and rulings.
AMERICAN SKIING COMPANY
By:
Its:
SCHEDULE 12.06
Buyer and Sellers covenant and
agree that the Purchase Price shall be
allocated among the Purchased Assets
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Assets Amount
Allocate
d
Sports Equipment
Real Center Co.
Estate Co.
Co.
Class Cash
I
Demand
Deposits
Class CD's
II
Government
Securities
Marketable
Securities
Class Furniture 100,000
III
Land 4,500,00 100,000
0
Buildings 590,000 200,000
Equipment 650,000 50,000 200,000
Class Customer
IV List and
Records/
Expirations
Covenant Not
to Compete
Goodwill
</TABLE>
Form 8594 shall be prepared in a form
acceptable to Buyer and Seller based
upon actual balances and allocations
at closing.
COR:89362-1.DOC
LIST OF SCHEDULES
Schedule
1.01 Property Description
1.03 Ski Area Improvements
1.04 Personal Property
1.05 Assumed Permits
1.07 Intellectual Property
Rights
2.03 Assets
3.01A Assumed Liabilities
3.01B Excluded Assets
4.01(f) Well No. 4 Site
4.02 Liens, Encumbrances
and Other Liabilities
6.03 Compliance with Laws
6.05 Environmental Matters
6.07 Title to Other
Purchased Assets
6.09 Litigation
6.10(a) Warranty of Purchased
Assets
6.12 Taxes
6.13 Contracts and
Commitments
6.15 Employee Benefit Plans
10.01(b) Ordinary Course of
Business
12.06 Tax Matters
Page 7
August 22, 1996
S-K-I Limited
Post Office Box 450
Bethel, Maine 04217
August 22, 1996
Warren C. Cook
Boston Concessions Group, Inc.
Diversified Credit Extension Trust
Fred M. Seed Annuity Trust
William E. Haggett
Jordan Lumber Company
James M. Seed
c/o Warren C. Cook
Sugarloaf USA
RR 1, Box 5000
Carrabassett Valley, ME 04947
Re: Additional Performance-Based
Purchase Price for Minority
Shares Under Shareholders'
Agreement Dated August 24, 1994
Ladies and Gentlemen:
By letter dated June 28, 1996 we
notified you that S-K-I Limited ("S-K-
I") consummated a merger transaction
through which all of the issued and
outstanding stock of S-K-I Limited
became owned by American Skiing
Company (the "Company"). That letter
provided notice of S-K-I Limited's
exercise of its right to purchase the
shares of common stock of Sugarloaf
Mountain Corporation owned by each of
you pursuant to Sections 2(b) and 3 of
the Shareholders' Agreement dated
August 24, 1994 for an aggregate
purchase price of $2 million.
Since the exercise of S-K-I
Limited's option to purchase, we have
been discussing with Warren Cook a
commitment from S-K-I Limited to pay
an additional performance-based
purchase price for such shares. This
letter constitutes S-K-I Limited's
commitment to pay an additional
performance-based purchase price for
such shares as more particularly
described below.
1. No Legal Commitment. S-K-I
Limited is not legally obligated to
pay any purchase price above the $2
million option price specified in the
Shareholders' Agreement. This
additional performance-based purchase
price is being paid in an effort to
generate a sense of goodwill within
the Sugarloaf community and to be
certain that Mr. Cook and his
investors feel well treated by the
Company.
2. Formula. S-K-I Limited
commits to pay to the shareholders
whose stock is acquired through the
exercise of the purchase option
described in Section 3 of the
Shareholders Agreement (the "Minority
Group") additional purchase price for
shares purchased (the "Minority
Shares") based upon the future EBITDA
of Sugarloaf Mountain Corporation.
For purposes of this calculation,
EBITDA shall mean for each fiscal year
beginning with the fiscal year ended
July 31, 1997 (a) net income or loss
of Sugarloaf Mountain Corporation
determined in accordance with
generally accepted accounting
principles without giving effect to
extraordinary gains or losses from
sales, exchanges or other dispositions
of property not in the ordinary course
of business, and non-recurring items,
plus, to the extent deducted in
calculating net income, (b) the sum
of, without duplication (i)
depreciation expense, (ii)
amortization expense, (iii) interest
expense, (iv) income tax expense, and
(v) other non-cash items. For
purposes of this calculation "interest
expense" shall mean interest expense
on Sugarloaf Mountain Corporation's
indebtedness, as determined in
accordance with generally accepted
accounting principles consistently
applied, which shall include all
obligations for borrowed money however
evidenced, all obligations for
deferred purchase price of property or
services, all capital lease
obligations, all debt of others
secured by any lien, mortgage security
interest or pledge of any property or
revenues of Sugarloaf Mountain
Corporation, all debt of other
guaranteed by Sugarloaf Mountain
Corporation and all obligations of
Sugarloaf Mountain Corporation,
contingent or otherwise in respect of
letters of credit, bankers acceptances
and similar instruments. The
additional purchase price formula
shall be annual EBITDA multiplied by a
factor of .11, with that product then
being multiplied by a factor of 49%.
The product of the foregoing formula
shall constitute the total annual
additional performance-based purchase
price payable to the Minority Group.
The amount payable to each shareholder
shall be determined on a per share
basis by dividing the total aggregate
performance-based additional purchase
price by the number of shares owned by
each member of the Minority Group.
Payments shall be made on or before
November 30 of each of the years 1997
through 2002. The total amount of
additional performance-based purchase
price shall be limited to $1 million.
At such time as the total amount of
additional performance-based purchase
price paid to Minority Shareholders
equals $1 million no further payments
shall be made. Attached hereto as
Exhibit A is an illustration of the
results of the foregoing formula based
upon an approximate 10% growth in
EBITDA. This example is provided for
illustrative purposes only and is not
intended to reflect amounts
anticipated to be earned or paid based
upon the foregoing formula.
3. Calculations. Calculation
of the additional performance-based
purchase price shall be performed by S-
K-I based upon Sugarloaf Mountain
Corporation's results of operations
for each fiscal year as reported in
American Skiing Company's annual
audited financial statement. S-K-I's
calculation of additional performance-
based purchase price shall be final
and binding upon S-K-I and the
Minority Group, absent manifest error.
For purposes of the foregoing
calculation, Sugarloaf Mountain
Corporation's allocable share of S-K-
I's corporate overhead and American
Skiing Company's corporate overhead
shall be made on a basis consistent
with allocation of corporate overhead
to all subsidiaries of American Skiing
Company and S-K-I Limited. The
corporate overhead allocation
methodology within the American Skiing
Company group of subsidiaries has not
been determined as of this date, and
may change, from time to time,
throughout the period over which the
additional performance-based purchase
price is payable. S-K-I's commitment
is to allocate corporate overhead in
an equitable manner pursuant to a
formula or methodology that is the
same in all material respects as that
applied to all other American Skiing
Company subsidiaries.
4. Coordination with Warrant
Exercise. Under the Shareholder's
Agreement, any shares of common stock
of Sugarloaf Mountain Corporation
purchased through the exercise of
warrants prior to the closing on S-K-I
Limited's exercise of its option to
acquire the Minority Shares are
automatically included in the Minority
Shares and are therefore subject to
purchase under the option at no
additional purchase price. The
closing on the exercise of S-K-I
Limited's option is scheduled for
August 30, 1996. Contemporaneously
with the execution and delivery of
this letter, information explaining
the terms of this letter and the
exercise of S-K-I Limited's option is
being provided to the warrant holders.
In order to provide the warrant
holders with sufficient time to
evaluate whether or not to exercise
their warrants, S-K-I Limited and the
Minority Group hereby agree to provide
the warrant holders until September
24, 1996 to inform Sugarloaf Mountain
Corporation whether they intend to
exercise their warrants and have the
shares of common stock received as a
result of that exercise included in
the Minority Shares for purposes of S-
K-I Limited's option. As a result of
extending that grace period to the
warrant holders, S-K-I Limited and the
Minority Group hereby agree that
$530,978 of the $2,000,000 in cash
payable to the Minority Group at the
closing of the exercise of the option
will be escrowed until the number of
warrant holders exercising their
warrants on or before September 24,
1996 is finally determined. At that
time, a final determination of the
cash portion of the purchase price of
the Minority Shares (including shares
acquired by warrant holders through
the exercise of their warrants) will
be determined and a final payment of
purchase price will be made.
Investment earnings, if any, on the
escrowed funds shall be included in
the purchase price for purposes of
determining amounts payable.
5. Priority of Payment. The
payment of additional performance-
based purchase price pursuant to
paragraph 2 above, if any, is hereby
subordinated in right of payment to
the prior payment in full in cash of
all Debt of S-K-I and the Company,
whether outstanding as of the date
hereof or hereafter incurred.
Upon any distribution of cash,
securities or other property to
creditors of S-K-I and the Company in
a liquidation or dissolution of S-K-I
and the Company or in a bankruptcy,
reorganization, insolvency,
receivership or similar proceeding
relating to S-K-I and the Company or
its property, in an assignment for the
benefit of creditors or any marshaling
of S-K-I and the Company's assets and
liabilities, the holders of all Debt
of S-K-I and the Company will be
entitled to receive payment in full in
cash of all Debt (including interest
after the commencement of any such
proceeding at the rate applicable to
the Debt) before the Minority Group
will be entitled to receive any
payment of additional performance-
based purchase price hereunder, and
until all Debt of S-K-I and the
Company is paid in full in cash, any
distribution to which the Minority
Group would be entitled hereunder
shall be made to the holders of such
Debt.
S-K-I and the Company also may
not make and the Minority Group may
not accept or seek to enforce any
payment hereunder if (a) a default in
the payment of the principal of,
premium if any, or interest on any
Debt of S-K-I and the Company occurs
and is continuing or (ii) any other
default occurs and is continuing with
respect to any Debt or any agreements,
lease, indenture, mortgage or other
instrument relating thereto that
permits holders of such Debt as to
which such default relates to
accelerate its maturity. Payments
hereunder may and shall be resumed
upon the date on which such default is
cured or waived so long as no other
default exists.
For purposes of the preceding
paragraph the term "Debt" means, as of
each date of determination, without
duplication (a) all obligations of S-K-
I Limited and/or the Company for
borrowed money whether evidenced by
bonds, debentures, notes or similar
instruments, including, without
limitation, all principal, interest,
fees, costs, enforcement expenses
(including legal fees and
disbursements), collateral protection
expenses and other reimbursement and
indemnity obligations; (b) all
obligations of S-K-I Limited and/or
the Company for the deferred purchase
price of property or services
(including without limitation deferred
payment obligations which are part of
the consideration provided for in
agreements not to compete), except
trade accounts payable and accrued
liabilities arising in the ordinary
course of business which are not
overdue by more than sixty days or
which are being contested in good
faith by appropriate proceedings; (c)
all capital lease obligations of S-K-I
Limited and/or the Company; (d) all
Debt of others secured by any lien,
mortgage, security interest or pledge
on or involving any properties, assets
or revenues of S-K-I Limited and/or
the Company; (e) all Debt of others
guaranteed by S-K-I Limited and/or the
Company; and (f) all obligations of S-
K-I Limited and/or the Company,
contingent or otherwise, in respect of
letters of credit or bankers'
acceptances or similar instruments.
6. Skiing Privileges. S-K-I
Limited hereby commits to the Minority
Shareholders, as additional purchase
price, to make available to each
member of the Minority Group
("Minority Shareholder") beginning
with the 1996-1997 ski season the
following privileges:
(a) A lifetime, non-transferable
30% discount on all non-sale
items in all ski shops owned
by Sugarloaf Mountain
Corporation;
(b) A lifetime, non-transferable
pass for the Minority
Shareholder, the Minority
Shareholder's spouse, the
Minority Shareholder's
children and their spouse to
the Sugarloaf Mountain
Corporation's health and
fitness facility; plus
(c) The number of transferable
lifetime adult skiing passes
(or two transferable
lifetime children's skiing
passes) for the Sugarloaf
resort specified for each
Minority Shareholder listed
below:
William E. Haggett
11
Fred M. Seed Annuity Trust
8
Boston Concessions Group,
Inc. 8
Warren C. Cook
5
Jordan Lumber Company
0
Diversified Credit Extension
Trust 0
James M. Seed
0
(d) Each Minority Shareholder
(or designee if a Minority
Shareholder is not an
individual) shall also be
entitled for his or her
lifetime to purchase non-
transferable seasons passes
for the Sugarloaf resort for
the holder's spouse and
children for $100 per pass
per year.
Such lifetime passes,
discounts and rights to
purchase passes will be
valid for the greater of:
(i) the lifetime of the
Minority Shareholder (or for
the life of a person
designated by the Minority
Shareholder thereof if such
holder is not an
individual), or (ii) six (6)
years after the date hereof.
If such Minority Shareholder
or designee should die
before the lapsing of such
six (6) year period, the
personal representative of
the estate of such person
shall be entitled to
exercise such person's
rights hereunder for the
balance of such six (6) year
period. Such individual
will be entitled annually
during his lifetime to
designate the name(s) of the
person(s) entitled to
utilize the passes described
in subparagraph (c) above.
(e) Each Minority Shareholder
shall have the right, for
six (6) years following the
date hereof, to exchange any
two (2) transferable
season's passes for the
Sugarloaf resort for two non-
transferable season's passes
to all American Skiing
Company resorts.
7. Status of Commitment. This
commitment modifies the terms and
provisions of Sections 2(b) and 3 of
the Shareholders' Agreement regarding
determination of purchase price
payable upon the exercise of S-K-I's
option to purchase the Minority
Shares. Except as specifically
provided herein, the remaining terms
and conditions of the Shareholders'
Agreement shall continue in full force
and effect as originally set forth in
the Shareholders' Agreement.
8. Miscellaneous Provisions.
(a) This letter sets forth
S-K-I Limited's entire commitment
with respect to the subject
matter hereof and, together with
the Shareholders' Agreement and
its June 28, 1996 letter
exercising its right to purchase
the minority shares, constitutes
the entire agreement with respect
to the subject matter hereof and
supersedes any and all prior oral
or written agreements or
understandings with respect
thereto.
(b) This commitment shall
be governed by and construed in
accordance with the laws of the
State of Maine, excluding
conflict of laws principles.
(c) This commitment may not
be assigned by the Minority
Stockholders without the express
prior written consent of S-K-I
Limited.
Very truly yours,
S-K-I LIMITED
By:
Leslie B. Otten
Its President
/kas
<PAGE>
Minority Shareholder Consent
The undersigned, representing at
least 66 2/3% of the outstanding
shares of common stock of Sugarloaf
Mountain Corporation, do hereby agree
to the foregoing modification of the
Shareholders Agreement pursuant to
Section 8 thereof.
<PAGE>
EXHIBIT A
[For Demonstrative Purposes Only]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/97-
02 Pmt.
Aggrega Per
Fiscal te Former
Year EBITDA< Fact Factor Minorit Minority
Ended F1> or Total y Share Share<F2>
at 49%
7/97 2,530,0 .11 278,300 136,367 .04415
00
7/98 2,783,0 .11 306,130 150,003 .04855
00
7/99 3,061,3 .11 336,743 165,004 .05342
00
7/00 3,367,4 .11 370,417 181,504 .05876
30
7/01 3,704,1 .11 407,459 199,654 .06464
73
7/02 4,074,5 .11 334,936 167,468 .05422
90 <F3> <F3>
1,000,0 .32378
00
<FN>
<F1> Assumes approximately 10% growth
per annum
<F2> Assumes minority shares of
3,088,428
<F3> 11/30/02 payment limited due to
$1,000,000 aggregate payment ceiling
</TABLE>
American Skiing Company
Calculation of Earnings to Fixed Charges
For the Year ended 7/28/96
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year
Ended
July
28,
1996
Histori Histori Histori Pro Pro
cal ASC cal S-K- cal Forma Forma
I Combine Adjustme Combined
d nts
Calculation 1,562,0 (6,036, (4,474, (13,114, (17,588,
of earnings 00 000) 000) 000) 000)
Pre-tax
income from
continuing
operations
Add fixed 4,997,0 11,177, 13,114,0
charges 00 6,180,0 000 00 24,291,0
less 00 00
capitalized
interest
Add PY's
cap'lized 5,000 25,000 30,000 30,000
int.,
amortized
during
period
Earnings as 6,564,0 0
defined 00 169,000 6,733,0 6,733,00
00 0
Calculation 4,699,0 13,114,0
of fixed 00 4,593,0 9,292,0 00 22,406,0
charges 00 00 00
Interest
expense
plus amort.
of debt
disc. and
prem. (b)
Capitalized
interest 444,000 21,000 465,000 465,000
Rental
expense 298,000 1,587,0 1,885,0 1,885,00
representin 00 00 0
g interest
(a)
Fixed 5,441,0 11,642, 13,114,0
charges as 00 6,201,0 000 00 24,756,0
defined 00 00
Ratio of
earnings to 12.64%
fixed
charges
Deficiency (6,032, (4,909, (18,023,
of earnings 000) 000) 000)
to fixed
charges
</TABLE>
American Skiing Company
Calculation of Earnings to Fixed Charges
Pro Forma Basis
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year
Ended
July
30,
1996
Histor Histor Histor Pro Forma Pro Forma
ical ical S- ical Adjustmen Combined
LBO K-I Combin ts
ed
Calculatio
n of
earnings
$5,519 $1,727 $7,246 ($15,226, ($7,979,42
Pre-tax ,000 ,571 ,571 000) d 9)
income
from
continuing
operations
Add fixed 22,517,147
charges 2,612, 4,679, 7,291, 15,226,00
less 000 147 147 0
capitalize d
d interest
Add PY's 21,979
cap'lized 5,000 16,979 21,979
int.,
amortized
during
period
Earnings 14,559 0
as defined 8,136, 6,423, ,697 14,559,697
000 697
Calculatio
n of fixed
charges
Interest
expense 2,205, 3,818, 6,023, 15,226,00 21,249,893
000 893 893 0 d
Capitalize
d interest 224,00 215,53 439,53 439,536
0 6 6
Amort. of
debt 105,00 27,480 132,48 132,480
expense, 0 0
disc. or
prem. (b)
Rental
expense 302,00 832,77 1,134, 1,134,774
representi 0 4 774
ng
interest
(a)
Fixed $2,836 $4,894 $7,730 $15,226,0 $22,956,68
charges as ,000 ,683 ,683 00 3
defined
Ratio of 188.34
earnings 286.88 131.24 %
to fixed % %
charges
Deficiency ($8,396,98
of 6)
earnings
to fixed
charges
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the
Prospectus constituting part of this
Registration Statement on Form S-4 of
American Skiing Company of our report
dated October 28, 1996 relating to the
financial statements of American Skiing
Company, which appears in such
Prospectus. We also consent to the
references to us under the headings
"Experts," "Summary Historical Financial
Data" and "Selected Historical Financial
Data" in such Prospectus. However, it
should be noted that Price Waterhouse
LLP has not prepared or certified such
"Summary Historical Financial Data" or
"Selected Historical Financial Data."
We hereby consent to the use in the
Prospectus constituting part of this
Registration Statement on Form S-4 of
American Skiing Company of our report
dated June 11, 1996 relating to the
financial statements of Sugarbush Resort
Corporation, which appears in such
Prospectus. We also consent to the
reference to us under the headings
"Experts" in such Prospectus.
We hereby consent to the use in the
Prospectus constituting part of this
Registration Statement on Form S-4 of
American Skiing Company of our report
dated August 31, 1995 relating to the
financial statements of S-K-I Ltd.,
which appears in such Prospectus. We
also consent to the references to us
under the headings "Experts," "Summary
Historical Financial Data" and "Selected
Historical Financial Data" in such
Prospectus. However, it should be noted
that Price Waterhouse LLP has not
prepared or certified such "Summary
Historical Financial Data" or "Selected
Historical Financial Data."
Boston, MA
November 12, 1996
[LETTERHEAD OF BERRY, DUNN, MCNEIL &
PARKER]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the
Prospectus constituting part of this
Registration Statement on Form S-4 of
American Skiing Company of our report
dated December 22, 1995 relating to
the financial statements of American
Skiing Company, which appears in such
Prospectus. We also consent to the
references to us under the headings
"Experts," "Summary Historical
Financial Data" and "Selected
Historical Financial Data" in such
Prospectus. However, it should be
noted that Berry, Dunn, McNeil &
Parker has not prepared or certified
such "Summary Historical Financial
Data" or "Selected Historical
Financial Data."
BERRY, DUNN, MCNEIL & PARKER
Portland, Maine
November 7, 1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
AMERICAN SKIING COMPANY
(and the other obligors named in the attached schedule)
Maine 01-0503382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Sunday River Access Road
Bethel, Maine 04217
(207) 824-3000
(Address of principal executive offices)
12% Series B Senior Subordinated Notes Due 2006
13-3/4% Series B Subordinated Discount Notes Due 2007
<PAGE>
GENERAL
1. General Information
Furnish the following information
as to the trustee:
(a) Name and address of each
examining or supervising
authority to which it is
subject.
Federal Reserve Bank of New
York (2nd District), New
York, New York (Board of
Governors of the Federal
Reserve System).
Federal Deposit Insurance
Corporation, Washington,
D. C. New York State Banking
Department, Albany, New York
(b) Whether it is authorized to
exercise corporate trust
powers.
The trustee is authorized to
exercise corporate trust
powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of
the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
2,999,020 shares of Common Stock
- - par value $5 per share
4. Trusteeships under Other
Indentures
Not applicable.
5. Interlocking Directorates and
Similar Relationships with the
Obligor or Underwriters
Not applicable.
6. Voting Securities of the Trustee
Owned by the Obligor or its Officials
Not applicable.
7. Voting Securities of the Trustee
Owned by Underwriters or their
Officials
Not applicable.
8. Securities of the Obligor Owned
or Held by the Trustee
Not applicable.
9. Securities of Underwriters Owned
or Held by the Trustee
Not applicable.
10. Ownership or Holdings by the
Trustee of Voting Securities of
Certain Affiliates or Securities
Holders of the Obligor
Not applicable.
11. Ownership or Holdings by the
Trustee of any Securities of a Person
Owning 50 Percent or More of the
Voting Securities of the Obligor
Not applicable.
12. Indebtedness of the Obligor to
the Trustee
Not applicable.
13. Defaults by the Obligor
Not applicable.
14. Affiliations with the
Underwriters
Not applicable.
15. Foreign Trustee
Not applicable.
16. List of Exhibits
T-1.1 --
Organization
Certificate, as
amended, issued by the
State of New York
Banking Department to
transact business as a
Trust Company, is
incorporated by
reference to Exhibit T-
1.1 to Form T-1 filed
on October 6, 1995 with
the Commission pursuant
to the Trust Indenture
Act of 1939, as amended
by the Trust Indenture
Reform Act of 1990 in
an amended filing to an
original Registration
Statement filed on
August 28, 1995
(Registration No. 33-
96262).
T-1.2 - Included
in Exhibit T-1.1.
T-1.3 -- Included
in Exhibit T-1.1.
T-1.4 -- The By-
Laws of United States
Trust Company of New
York, as amended, is
incorporated by
reference to Exhibit T-
1.4 to Form T-1 filed
on October 6, 1995 with
the Commission pursuant
to the Trust Indenture
Act of 1939, as amended
by the Trust Indenture
Reform Act of 1990 in
an amended filing to an
original Registration
Statement filed on
August 28, 1995
(Registration No. 33-
96262).
T-1.6 -- The
consent of the trustee
required by Section
321(b) of the Trust
Indenture Act of 1939,
as amended by the Trust
Indenture Reform Act of
1990.
T-1.7 -- A copy
of the latest report of
condition of the
trustee pursuant to law
or the requirements of
its supervising or
examining authority.
NOTE
As of August 9, 1996, the trustee
had 2,999,020 shares of Common
Stock outstanding, all of which
are owned by its parent company,
U. S. Trust Corporation. The
term "trustee" in Item 2, refers
to each of United States Trust
Company of New York and its
parent company, U. S. Trust
Corporation.
In answering Item 2 in this
statement of eligibility, as to
matters peculiarly within the
knowledge of the obligor or its
directors, the trustee has relied
upon information furnished to it
by the obligor and will rely on
information to be furnished by
the obligor and the trustee
disclaims responsibility for the
accuracy or completeness of such
information.
Pursuant to the requirements of
the Trust Indenture Act of 1939,
the trustee, United States Trust
Company of New York, a
corporation organized and
existing under the laws of the
State of New York, has duly
caused this statement of
eligibility to be signed on its
behalf by the undersigned,
thereunto duly authorized, all in
the City of New York, and State
of New York, on the 9th day of
August, 1996.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By:
John Guiliano
Vice President
JG/pg
<PAGE>
Exhibit T-1.6
The consent of the trustee required by
Section 321(b) of the Act.
United States Trust Company of New
York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section
321(b) of the Trust Indenture Act of
1939, as amended by the Trust
Indenture Reform Act of 1990, and
subject to the limitations set forth
therein, United States Trust Company
of New York ("U.S. Trust") hereby
consents that reports of examinations
of U.S. Trust by Federal, State,
Territorial or District authorities
may be furnished by such authorities
to the Securities and Exchange
Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1996
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 47,046
Short-Term Investments 50
Securities, Available for Sale758,118
Loans 1,221,210
Less: Allowance for Credit Losses 13,113
Net Loans 1,208,097
Premises and Equipment 58,360
Other Assets 125,979
Total Assets $2,197,650
LIABILITIES
Deposits:
Non-Interest Bearing $ 387,509
Interest Bearing 1,446,148
Total Deposits 1,833,657
Short-Term Credit Facilities 82,285
Accounts Payable and Accrued Liabilities 128,745
Total Liabilities $2,044,687
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 96,511
Unrealized Gains on Securities Available
for Sale (Net of Taxes) (937)
Total Stockholder's Equity 152,963
Total Liabilities and
Stockholder's Equity $2,197,650
I, Richard E. Brinkman, Senior Vice
President & Comptroller of the named
bank do hereby declare that this
Statement of Condition has been
prepared in conformance with the
instructions issued by the appropriate
regulatory authority and is true to
the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
June 7, 1996
<PAGE>
<TABLE>
Schedule of Obligors
<C> <S> <S> <S>
Name of Jurisdict IRS Address,
Corporation ion of Employer Including Zip
Incorpora Identificat Code and
tion ion # Telephone Number
Including Area
Code, of
Principal
Executive
Offices
Sunday River Maine 01-0261489 Sunday River
Skiway Access Road
Corporation P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sunday River Maine 01-0456264 Sunday River
Ltd. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Perfect Maine 01-458495 Sunday River
Turn, Inc. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
LBO Holding, Maine 01-0488967 Sunday River
Inc. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sunday River Maine 01-0261489 Sunday River
Transportati Access Road
on, Inc. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sugarbush Vermont 03-034431 Sunday River
Resort Access Road
Holdings, P.O. Box 450
Inc. Bethel, ME 04217
(207) 824-3000
Sugarbush Vermont 03-034432 Sunday River
Leasing Access Road
Company P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sugarbush Vermont 03-0344820 Sunday River
Restaurants, Access Road
Inc. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Cranmore, Maine 02-0481418 Sunday River
Inc. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Mountain Vermont 03-0313610 Sunday River
Wastewater Access Road
Treatment, P.O. Box 450
Inc. Bethel, ME 04217
(207) 824-3000
LBO Hotel Maine 01-0508236 Sunday River
Co. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
S-K-I Delaware 03-0294233 Sunday River
Limited Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Killington Vermont 03-0195484 Sunday River
Ltd. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Mount Snow Vermont 03-0265116 Sunday River
Ltd. Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Waterville New 02-0475701 Sunday River
Valley Ski Hampshire Access Road
Area, Ltd. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sugarloaf Maine 01-0232195 Sunday River
Mountain Access Road
Corporation P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Killington Vermont 03-0218459 Sunday River
Restaurants, Access Road
Inc. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Dover Vermont 03-0264550 Sunday River
Restaurants, Access Road
Inc. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Resort Vermont 99-0046530 Sunday River
Technologies Access Road
, Inc. P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Resort Vermont 03-0320098 Sunday River
Software Access Road
Services, P.O. Box 450
Inc. Bethel, ME 04217
(207) 824-3000
Mountainside Maine 01-0288053 Sunday River
Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Sugartech Maine 01-0390763 Sunday River
Access Road
P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Deerfield Vermont 03-0332575 Sunday River
Operating Access Road
Company P.O. Box 450
Bethel, ME 04217
(207) 824-3000
Pico Ski Vermont 03-0322667 Sunday River
Area Access Road
Management P.O. Box 450
Company Bethel, ME 04217
(207) 824-3000
</TABLE>
LETTER OF TRANSMITTAL
AMERICAN SKIING COMPANY
Offer for all Outstanding
12% Series A Senior Subordinated Notes
Due 2006
in Exchange for
12% Series B Senior Subordinated Notes
Due 2006
which Have Been Registered Under
the Securities Act of 1933, As Amended,
Pursuant to the Prospectus, dated
November 12, 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M. NEW YORK CITY TIME, ON JANUARY 15,
1997, UNLESS EXTENDED (THE "EXPIRATION
DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
Delivery To: United States Trust
Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Peter Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10005
By Overnight Courier:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services Window
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an
address other than as set forth above,
or transmission of instructions via
facsimile 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 November 12, 1996 (the
"Prospectus"), of American Skiing
Company, a Maine corporation (the
"Company"), and this Letter of
Transmittal (the "Letter"), which
together constitute the Company's offer
(the "Exchange Offer") to exchange an
aggregate principal amount of up to
$120,000,000 of its 12% Series B Senior
Subordinated Notes Due 2006, which have
been registered under the Securities Act
of 1933, as amended (the "New Notes"),
of the Company for a like principal
amount of the issued and outstanding 12%
Series A Senior Subordinated Notes Due
2006 (the "Old Notes") of the Company
from the holders (the "Holders")
thereof.
For each Old Note accepted for
exchange, the Holder of such Old Note
will receive a New Note having a
principal amount equal to that of the
surrendered Old Note. The New Notes
will bear interest from the most recent
date to which interest has been paid on
the Old Notes or, if no interest has
been paid on the Old Notes, from
June 28, 1996. Accordingly, registered
holders of New 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 June
28, 1996. Old Notes accepted for
exchange will cease to accrue interest
from and after the date of consummation
of the Exchange Offer. Holders whose
Old Notes are accepted for exchange will
not receive any payment in respect of
interest on such Old Notes otherwise
payable on any interest payment date the
record date for which occurs on or after
consummation of the Exchange Offer.
This Letter is to be completed by a
Holder of Old Notes either if
certificates are to be forwarded
herewith or if a tender of certificates
for Old Notes, if available, is to be
made 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 Offers -- Book-Entry Transfer"
section of the Prospectus. Holders of
Old Notes whose certificates are not
immediately available, or who are unable
to deliver their certificates or
confirmation of the book-entry tender of
their Old 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 to the Exchange
Agent on or prior to the Expiration
Date, must tender their Old Notes
according to the guaranteed delivery
procedures set forth in "The Exchange
Offers -- Guaranteed Delivery" 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 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 Old Notes indicated above. Subject
to, and effective upon, the acceptance
for exchange of the Old 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 Old 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 Old 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 New Notes acquired
in exchange for Old Notes tendered
hereby will have been acquired in the
ordinary course of business of the
person receiving such New Notes, whether
or not such person is the undersigned,
that neither the Holder of such Old
Notes nor any such other person has an
arrangement or understanding with any
person to participate in the
distribution of such New Notes and that
neither the Holder of such Old Notes nor
any such other person is an "affiliate,"
as defined in Rule 405 under the
Securities Act of 1933, as amended (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 New Notes issued in
exchange for the Old Notes pursuant to
the Exchange Offer may be offered for
resale, resold and otherwise transferred
by holders thereof (other than any such
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 New
Notes are acquired in the ordinary
course of such Holders' business and
such Holders have no arrangement with
any person to participate in the
distribution of such New 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 New Notes and has no
arrangement or understanding to
participate in a distribution of New
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 respect to the
distribution of the New Notes to be
acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the
applicable interpretations of the staff
of the SEC and (ii) 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 New Notes for its own
account in exchange for Old Notes, it
represents that the Old Notes to be
exchanged for the New Notes were
acquired by it as a result of market-
making activities or other trading
activities and acknowledges that it will
deliver a prospectus in connection with
any resale of such New 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 Old
Notes tendered hereby. All authority
conferred or agreed to be conferred in
this Letter 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 Offers - Withdrawal
Rights" section of the Prospectus.
Unless otherwise indicated herein
in the box entitled "Special Issuance
Instructions" below, please deliver the
New Notes (and, if applicable,
substitute certificates representing Old
Notes for any Old Notes not exchanged)
in the name of the undersigned, or in
the case of a book-entry delivery of Old
Notes, please credit the account
indicated above maintained at the Book-
Entry Transfer Facility. Similarly,
unless otherwise indicated under the box
entitled "Special Delivery Instructions"
below, please send the New Notes (and,
if applicable, substitute certificates
representing Old Notes for any Old Notes
not exchanged) to the undersigned at the
address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE
BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
List below the Old Notes to which
this Letter relates. If the space
provided below is inadequate, the
certificate numbers and principal amount
of Old Notes should be listed on a
separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DESCRIPTION OF 1 2 3
OLD NOTES
Names(s) and Certificate Aggreg Principal
Address(es) of Number(s)* ate Amount
Registered Princi Tendered*
Holders(s) pal *
(Please fill in, Amount
if blank) of Old
Note(s
)
Total
* Need not be completed if Old 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 Old Notes represented by the Old Notes
indicated in column 2. See Instruction 2.
Old Notes tendered hereby must be in
denominations of principal amount of $1,000
and any integral multiple thereof. See
Instruction 1.
</TABLE>
__ CHECK HERE IF TENDERED OLD 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 OLD NOTES
ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered
Holder(s)___________________
Window Ticket Number (if
any)_______________________________
_____________
Date of Execution of Notice of
Guaranteed
Delivery___________________________
_____________
Date of Institution which
guaranteed
delivery___________________________
_____________
If Delivery by Book-Entry Transfer,
Complete the Following:
Account
Number_______________________
Transaction Code Number_________
__ CHECK HERE IF YOU ARE A BROKER-
DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS
AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
___________________________________
______
Address:___________________________
_____________
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
New Notes. If the undersigned is a
broker-dealer that will receive New
Notes for its own account in exchange
for Old Notes that were acquired as a
result of market-making activities or
other trading activities, it
acknowledges that it will deliver a
prospectus in connection with any resale
of such New 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 of 1933, as amended.
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if
certificates for Old Notes not exchanged
and/or New Notes are to be issued in the
name of and sent to someone other than
the person or persons whose signature(s)
appear(s) on this Letter above, or if
Old Notes delivered by book-entry
transfer which are not accepted for
exchange are to be returned by credit to
an account maintained at the Book-Entry
Transfer Facility other than the account
indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)_________________________________
____
(Please Type or Print)
________________________________________
____
(Please Type or Print)
Address_________________________________
____
________________________________________
____
(Zip Code)
(Complete Substitute Form W-9)
__ Credit unexchanged Old Notes
delivered by book-entry transfer to the
Book-Entry Transfer Facility account set
forth below.
_______________________
(Book-Entry Transfer Facility)
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if
certificates for Old Notes not exchanged
and/or New Notes are to be sent to
someone other than the person or persons
whose signature(s) appear(s) on this
Letter above or to such person or
persons at an address other than shown
in the box entitled "Description of Old
Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)_________________________________
___
(Please Type or Print)
________________________________________
__
(Please Type or Print)
Address_________________________________
___
________________________________
(Zip Code)
IMPORTANT: THIS LETTER OR A FACSIMILE
HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD 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 THIS ENTIRE LETTER OF
TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX
ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING
HOLDERS)
Dated:__________ ____, 1996
x_____________________, 1996
x____________________, 1996
Signature(s) of Owners
Date
Area Code and Telephone Number
________________________
If a holder is tendering any Old
Notes, this letter must be signed by the
registered holder(s) as the name(s)
appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized
to become registered 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(s):________________________________
__________
________________________________________
_________
(Please Type or Print)
Capacity:_______________________________
___________
Address:________________________________
__________
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible
Institution:____________________________
___
(Authorized Signature)
________________________________________
_________
(Title)
________________________________________
_________
(Name and Firm)
Dated: ____________________, 1996
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer for the
12% Series A Senior Subordinated Notes
due 2006 to Exchange for the
12% Series B Senior Subordinated Notes
Due 2006 of American Skiing Company
which Have Been Registered Under the Act
of 1933, As Amended
1. Delivery of this Letter and Notes;
Guaranteed Delivery Procedures.
This Letter is to be completed by
holders of Old 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 Offers -- Book-Entry Transfer"
section of the Prospectus. Certificates
for all physically tendered Old Notes,
or Book-Entry Confirmation, as the case
may be, as well as a properly completed
and duly executed Letter (or manually
signed facsimile hereof) and any other
documents required by this Letter, 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.
Old Notes tendered hereby must be in
denominations of principal amount of
$1,000 and any integral multiple
thereof.
Holders whose certificates for Old
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 Old
Notes pursuant to the guaranteed
delivery procedures set forth in "The
Exchange Offers -- Guaranteed Delivery"
section of the Prospectus. Pursuant to
such procedures, (i) such tender must be
made through an Eligible Institution,
(ii) prior to the Expiration Date, the
Exchange Agent must receive from such
Eligible Institution a properly
completed and duly executed Letter (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
Old Notes and the amount of Old Notes
tendered stating that the tender is
being made thereby and guaranteeing that
within five New York Stock Exchange
("NYSE") trading days after the date of
execution of the Notice of Guaranteed
Delivery, the certificates for all
physically tendered Old Notes, or a Book-
Entry Confirmation, and any other
documents required by the Letter will be
deposited by the Eligible Institution
with the Exchange Agent, and (iii) the
certificates for all physically tendered
Old Notes, in proper form for transfer,
or Book-Entry Confirmation, as the case
may be, and all other documents required
by this Letter, are received by the
Exchange Agent within five NYSE trading
days after the date of execution of the
Notice of Guaranteed Delivery.
The method of delivery of this
Letter, the Old Notes and all other
required documents is at the election
and risk of the tendering holders, but
the delivery will be deemed made only
when actually received or confirmed by
the Exchange Agent. If Old Notes are
sent by mail, it is suggested that the
mailing be 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 Offers" section
of the Prospectus.
2. Partial Tenders (not applicable to
noteholders who tender by book-entry
transfer).
If less than all of the Old Notes
evidenced by a submitted certificate are
to be tendered, the tendering holder(s)
should fill in the aggregate principal
amount of Old Notes to be tendered in
the box above entitled "Description of
Old Notes -- Principal Amount Tendered."
A reissued certificate representing the
balance of nontendered Old Notes will be
sent to such tendering holder, unless
otherwise provided in the appropriate
box on this Letter, promptly after the
Expiration Date. All of the Old Notes
delivered to the Exchange Agent will be
deemed to have been tendered unless
otherwise indicated.
3. Signatures on this Letter, Bond
Powers and Endorsements, Guarantee of
Signatures.
If this Letter is signed by the
registered holder of the Old 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 Old Notes are owned
of record by two or more joint owners,
all of such owners must sign this
Letter.
If any tendered Old Notes are
registered in different names on several
certificates, it will be necessary to
complete, sign and submit as may
separate copies of this Letter as there
are different registrations of
certificates.
When this Letter is signed by the
registered holder or holders of the Old
Notes specified herein and tendered
hereby, no endorsements of certificates
or separate bond powers are required.
If, however, the New Notes are to be
issued, or any untendered Old Notes are
to be reissued, to a person other than
the registered holder, then endorsements
of any certificates transmitted hereby
or separate bond powers are required.
Signatures on such certificate(s) must
be guaranteed by an Eligible
Institution.
If this Letter is signed by a
person other than the registered 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 registered 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 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
Old Notes or signatures on bond powers
required by this Instruction 3 must be
guaranteed by a firm which is a member
of a registered national securities
exchange or a member of the National
Association of Securities Dealers, Inc.
or by a commercial bank or trust company
having an office or correspondent in the
United States (an "Eligible
Institution").
Signatures on this Letter need not
be guaranteed by an Eligible
Institution, provided the Old Notes are
tendered: (i) by a registered holder of
the Old Notes ( which term, for purposes
of the Exchange Offer, includes any
participant in the Book-Entry Tender
Facility system whose name appears on a
security position listing as the holder
of such Old 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 Old Notes
should indicate in the applicable box
the name and address to which New Notes
issued pursuant to the Exchange Offer
and/or substitute certificates
evidencing Old Notes not exchanged are
to be issued or sent, if different from
the name or address of the person
signing this Letter. In the case of
issuance in a different name, the
employer identification or social
security number of the person named must
also be indicated. Noteholders
tendering Old Notes by book-entry
transfer may request that Old Notes not
exchanged be credited to such account
maintained at the Book-Entry Transfer
Facility as such noteholder may
designate hereon. If no such
instructions are given, such Old Notes
not exchanged will be returned to the
name or address of the person signing
this Letter.
5. Tax Identification Number.
Federal income tax law generally
requires that a tendering holder whose
Old Notes are accepted for exchange must
provide the Company (as payor) with such
holder's correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering
holder who is an individual, is his or
her social security number. If the
Company is not provided with the current
TIN or an adequate basis for an
exemption, such tendering holder may be
subject to a $50 penalty imposed by the
Internal Revenue Service. In addition,
delivery to such tendering holder of New
Notes may be subject to backup
withholding in an amount equal to 31% of
all reportable payments made after the
exchange. If withholding results in an
overpayment of taxes, a refund may be
obtained.
Exempt holders of Old Notes
(including, among others, all
corporations and certain foreign
individuals) are not subject to those
backup withholding and reporting
requirements. See the enclosed
Guidelines of Certificate of Taxpayer
Identification Number on Substitute Form
W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each
tendering holder of Old Notes must
provide its correct TIN by completing
the Substitute Form W-9 set forth below,
certifying that the TIN provided is
correct (or that such holder is
awaiting a TIN) and that (i) the holder
is exempt from backup withholding, or
(ii) the holder has not been notified by
the Internal Revenue Service that such
holder is subject to backup withholding
as a result of a failure to report all
interest or dividends, or (iii) the
Internal Revenue Service has notified
the holder that such holder is no longer
subject to backup withholding. If the
tendering holder of Old Notes is a
nonresident alien or foreign entity not
subject to backup withholding, such
holder must give the Company a completed
Form W-8, Certificate of Foreign Status.
These forms may be obtained from the
Exchange Agent. If the Old Notes are in
more than one name or are not in the
name of the actual owner, such holder
should consult the W-9 Guidelines for
information on which TIN to report. If
such holder does not have a TIN, such
holder should consult the W-9 Guidelines
on applying for a TIN, check the box in
Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN.
Note: Checking this box and writing
"applied for" on the form means that
such holder has already applied for a
TIN or that such holder intends to apply
for one in the near future. If such
holder does not provide its TIN to the
Company within 60 days, backup
withholding will begin and continue
until such holder furnishes its TIN to
the Company.
6. Transfer Taxes.
The Company will pay all transfer
taxes, if any, applicable to the
transfer of Old Notes to it or its order
pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Old
Notes not exchanged are to be delivered
to, or are to be registered or issued in
the name of, any person other than the
registered holder of the Old Notes
tendered hereby, or if tendered Old
Notes are registered in the name of any
person other than the person signing
this Letter, or if a transfer tax is
imposed for any reason other than the
transfer of Old 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 directly
to such tendering holder.
Except as provided in this
Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to
the Old Notes specified in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute
right to waive satisfaction of any or
all conditions enumerated in the
Prospectus.
8. No Conditional Tenders.
No alternative, conditional,
irregular or contingent tenders will be
accepted. All tendering holders of Old
Notes, by execution of this Letter,
shall waive any right to receive notice
of the acceptance of their Old Notes for
exchange.
Neither the Company, the Exchange
Agent nor any person is obligated to
give notice of any defect or
irregularity with respect to any tender
of Old Notes nor shall any of them incur
any liability for failure to give any
such notice.
9. Mutilated, Lost, Stolen or
Destroyed Old Notes.
Any holder whose Old Notes have
been mutilated, lost, stolen or
destroyed should contact the Exchange
Agent at the address indicated above for
further instructions.
10. Requests for Assistance or
Additional Copies.
Questions relating to the procedure
for tendering, as well as requests for
additional copies of the Prospectus and
this Letter, may be directed to the
Exchange Agent, at the address and
telephone number indicated above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: AMERICAN SKIING COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE
Part 1 - PLEASE TIN:___________
Form W-9 PROVIDE YOUR TIN __________
IN THE BOX AT Social Security
RIGHT AND CERTIFY Number or
BY SIGNING AND Employer
DATING BELOW. Identification
Number
Department of
the Treasury
Internal Part 2 - TIN Applied for __
Revenue
Service
Payer's
Request for
Taxpayer
Identification
Number ("TIN")
and
Certification
CERTIFICATION - UNDER PENALTIES OF
PERJURY, I CERTIFY THAT:
(1) The number shown on this
form is my correct Taxpayer
Identification Number (or I am
waiting for a number to be issued
to me.)
(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 backup withholding as a
result of failure to report all
interest or dividends, or (c) the
IRS has notified me that I am no
longer 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 or your
tax return and you have not been notified by the
IRS that you are no longer subject to backup
withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 2 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, 31 percent of all
reportable payments made to me thereafter will be withheld until I
provide a number.
_______________________________________________
Signature Date
<PAGE>
AMERICAN SKIING COMPANY
Offer for all Outstanding
12% Series A Senior Subordinated Notes
Due 2006
in Exchange for
12% Series B Senior Subordinated Notes
Due 2006
which Have Been Registered Under
the Securities Act of 1933,
As Amended
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
American Skiing Company (the
"Company") is offering, upon and subject
to the terms and conditions set forth in
the Prospectus, dated November 12, 1996
(the "Prospectus"), and the enclosed
Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the
"Exchange Offer") its 12% Series B
Senior Subordinated Notes Due 2006,
which have been registered under the
Securities Act of 1933, as amended, for
its outstanding 12% Series A Senior
Subordinated Notes Due 2006 (the "Old
Notes"). The Exchange Offer is being
made in order to satisfy certain
obligations of the Company contained in
the Registration Rights Agreement dated
June 28, 1996, by and among the Company,
the Guarantors named therein and the
initial purchasers referred to therein.
We are requesting that you contact
your clients for whom you hold Old Notes
regarding the Exchange Offer. For your
information and for forwarding to your
clients for whom you hold Old Notes
registered in your name or in the name
of your nominee, or who hold Old Notes
registered in their own names, we are
enclosing the following documents:
1. Prospectus dated November 12,
1996;
2. The Letter of Transmittal for
your use and for the information of your
clients;
3. A Notice of Guaranteed
Delivery to be used to accept the
Exchange Offer if certificates for Old
Notes are not immediately available or
time will not permit all required
documents to reach the Exchange Agent
prior to the Expiration Date (as defined
below) or if the procedure for book-
entry transfer cannot be completed on a
timely basis;
4. A form of letter which may be
sent to your clients for whose account
you hold Old Notes registered in your
name or the name of your nominee, with
space provided for obtaining such
clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification
of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to
U.S. Trust Company of New York, the
Exchange Agent for the Old Notes.
Your prompt action is requested.
The Exchange Offer will expire at 5:00
p.m., New York City time, on January 15,
1997, unless extended by the Company
(the "Expiration Date"). Old Notes not
tendered pursuant to the Exchange Offer
may be withdrawn at any time before the
Expiration Date.
To participate in the Exchange
Offer, a duly executed and properly
completed Letter of Transmittal (or
facsimile thereof), with any required
signature guarantees and any other
required documents, should be sent to
the Exchange Agent and certificates
representing the Old Notes should be
delivered to the Exchange Agent, all in
accordance with the instructions set
forth in the Letter of Transmittal and
the Prospectus.
If holders of Old Notes wish to
tender, but it is impracticable for them
to forward their certificates for Old
Notes prior to the expiration of the
Exchange Offer or to comply with the
book-entry transfer procedures on a
timely basis, a tender may be effected
by following the guaranteed delivery
procedures described in the Prospectus
under "The Exchange Offers -- Guaranteed
Delivery."
The Company will, upon request,
reimburse brokers, dealers, commercial
banks and trust companies for reasonable
and necessary costs and expenses
incurred by them in forwarding the
Prospectus and the related documents to
the beneficial owners of Old Notes held
by them as nominee or in a fiduciary
capacity. The Company will pay or cause
to be paid all stock transfer taxes
applicable to the exchange of Old Notes
pursuant to the Exchange Offer, except
as set forth in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with
respect to the Exchange Offer, or
requests for additional copies of the
enclosed materials, should be directed
to United States Trust Company of New
York, the Exchange Agent for the Old
Notes, at its address and telephone
number set forth on the front of the
Letter of Transmittal.
Very truly yours,
American Skiing Company
NOTHING HEREIN OR IN THE ENCLOSED
DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE
EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER,
EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF
TRANSMITTAL.
Enclosures
<PAGE>
AMERICAN SKIING COMPANY
Offer for all Outstanding
12% Series A Senior Subordinated Notes
Due 2006
in Exchange for
12% Series B Senior Subordinated Notes
Due 2006
which Have Been Registered Under
the Securities Act of 1933,
As Amended
To Our Clients:
Enclosed for your consideration is
a Prospectus, dated November 12, 1996
(the "Prospectus"), and the related
Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer
(the "Exchange Offer") of American
Skiing Company (the "Company") to
exchange its 12% Series B Senior
Subordinated Notes Due 2006, which have
been registered under the Securities Act
of 1933, as amended (the "New Notes"),
for its outstanding 12% Series A Senior
Subordinated Notes Due 2006 (the "Old
Notes"), upon the terms and subject to
the conditions described in the
Prospectus and the Letter of
Transmittal. The Exchange Offer is
being made in order to satisfy certain
obligations of the Company contained in
the Registration Rights Agreement dated
June 28, 1996, by and among the Company,
the Guarantors named therein and the
initial purchasers referred to therein.
This material is being forwarded to
you as the beneficial owner of the Old
Notes carried by us in your account but
not registered in your name. A tender
of such Old Notes may only be made by us
as the holder of record and pursuant to
your instructions.
Accordingly, we request
instructions as to whether you wish us
to tender on your behalf the Old Notes
held by us for your account, pursuant to
the terms and conditions set forth in
the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be
forwarded to us as promptly as possible
in order to permit us to tender the Old
Notes on your behalf in accordance with
the provisions of the Exchange Offer.
The Exchange Offer will expire at 5:00
p.m., New York City time, on January 15,
1997, unless extended by the Company.
Any Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any
time before the Expiration Date.
Your attention is directed to the
following:
1. The Exchange Offer is for any
and all Old Notes.
2. The Exchange Offer is subject
to certain conditions set forth in the
Prospectus in the section captioned "The
Exchange Offers -- Certain Conditions to
the Exchange Offers."
3. Any transfer taxes incident to
the transfer of Old Notes from the
holder to the Company will be paid by
the Company, except as otherwise
provided in the Instructions in the
Letter of Transmittal.
4. The Exchange Offer expires at
5:00 p.m., New York City time, on
January 15, 1997, unless extended by the
Company.
If you wish to have us tender your
Old Notes, please so instruct us by
completing, executing and returning to
us the instruction form on the back of
this letter. The Letter of Transmittal
is furnished to you for information only
and may not be used directly by you to
tender Old Notes.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s)
receipt of your letter and the enclosed
material referred to therein relating to
the Exchange Offer made by American
Skiing Company with respect to its Old
Notes.
This will instruct you to tender
the Old Notes held by you for the
account of the undersigned, upon and
subject to the terms and conditions set
forth in the Prospectus and the related
Letter of Transmittal.
Please tender the Old Notes held by
you for my account as indicated below.
Aggregate Principal Amount of Old Notes
12% Series A Senior Subordinated Notes
Due 2006
___________________________________
__ Please do not tender any Old Notes
held by you
for my account.
Dated:_______________________________,
1996
________________________________________
______
Signature(s)
________________________________________
_______
Please print name(s) here
________________________________________
_______
Address(es)
________________________________________
_______
Area Code and Telephone Number
________________________________________
_______
Tax Identification or Social Security
No(s).
None of the Old Notes held by us
for your account will be tendered unless
we receive written instructions from you
to do so. Unless a specific contrary
instruction is given in the space
provided, your signature(s) hereon shall
constitute an instruction to us to
tender all the Old Notes held by us for
your account.
<PAGE>
LETTER OF TRANSMITTAL
AMERICAN SKIING COMPANY
Offer for all Outstanding
13-3/4% Series A Subordinated Discount
Notes Due 2007
in Exchange for
13-3/4% Series B Subordinated Discount
Notes Due 2007
which Have Been Registered Under
the Securities Act of 1933, As Amended,
Pursuant to the Prospectus, dated
November 12, 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M. NEW YORK CITY TIME, ON JANUARY 15,
1997, UNLESS EXTENDED (THE "EXPIRATION
DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
Delivery To: United States Trust
Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Peter Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10005
By Overnight Courier:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services Window
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an
address other than as set forth above,
or transmission of instructions via
facsimile 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 November 12, 1996 (the
"Prospectus"), of American Skiing
Company, a Maine corporation (the
"Company"), and this Letter of
Transmittal (the "Letter"), which
together constitute the Company's offer
(the "Exchange Offer") to exchange an
aggregate principal amount of up to
$39,132,000 of its 13-3/4% Series B
Subordinated Discount Notes Due 2007,
which have been registered under the
Securities Act of 1933, as amended (the
"New Notes"), of the Company for a like
principal amount of the issued and
outstanding 13-3/4% Series A
Subordinated Discount Notes Due 2007
(the "Old Notes") of the Company from
the holders (the "Holders") thereof.
For each Old Note accepted for
exchange, the Holder of such Old Note
will receive a New Note having a
principal amount equal to that of the
surrendered Old Note. Neither the Old
Notes nor the New Notes will accrue
interest prior to July 15, 2001, but
such Notes do gain in Accreted Value (as
defined in the Prospectus) from the date
of issuance to July 15, 2001. Old Notes
accepted for exchange will cease to
experience any increase in Accreted
Value from and after the date of
consummation of the Exchange Offer.
Holders whose Old Notes are accepted for
exchange will not receive any payment in
connection with the Exchange Offer in
respect of any increase in the Accreted
Value thereof which may be deemed to
have occurred prior to the consummation
of the Exchange Offer.
This Letter is to be completed by a
Holder of Old Notes either if
certificates are to be forwarded
herewith or if a tender of certificates
for Old Notes, if available, is to be
made 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 Offers -- Book-Entry Transfer"
section of the Prospectus. Holders of
Old Notes whose certificates are not
immediately available, or who are unable
to deliver their certificates or
confirmation of the book-entry tender of
their Old 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 to the Exchange
Agent on or prior to the Expiration
Date, must tender their Old Notes
according to the guaranteed delivery
procedures set forth in "The Exchange
Offers -- Guaranteed Delivery" 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 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 Old Notes indicated above. Subject
to, and effective upon, the acceptance
for exchange of the Old 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 Old 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 Old 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 New Notes acquired
in exchange for Old Notes tendered
hereby will have been acquired in the
ordinary course of business of the
person receiving such New Notes, whether
or not such person is the undersigned,
that neither the Holder of such Old
Notes nor any such other person has an
arrangement or understanding with any
person to participate in the
distribution of such New Notes and that
neither the Holder of such Old Notes nor
any such other person is an "affiliate,"
as defined in Rule 405 under the
Securities Act of 1933, as amended (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 New Notes issued in
exchange for the Old Notes pursuant to
the Exchange Offer may be offered for
resale, resold and otherwise transferred
by holders thereof (other than any such
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 New
Notes are acquired in the ordinary
course of such Holders' business and
such Holders have no arrangement with
any person to participate in the
distribution of such New 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 New Notes and has no
arrangement or understanding to
participate in a distribution of New
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 respect to the
distribution of the New Notes to be
acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the
applicable interpretations of the staff
of the SEC and (ii) 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 New Notes for its own
account in exchange for Old Notes, it
represents that the Old Notes to be
exchanged for the New Notes were
acquired by it as a result of market-
making activities or other trading
activities and acknowledges that it will
deliver a prospectus in connection with
any resale of such New 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 Old
Notes tendered hereby. All authority
conferred or agreed to be conferred in
this Letter 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 Offers - Withdrawal
Rights" section of the Prospectus.
Unless otherwise indicated herein
in the box entitled "Special Issuance
Instructions" below, please deliver the
New Notes (and, if applicable,
substitute certificates representing Old
Notes for any Old Notes not exchanged)
in the name of the undersigned, or in
the case of a book-entry delivery of Old
Notes, please credit the account
indicated above maintained at the Book-
Entry Transfer Facility. Similarly,
unless otherwise indicated under the box
entitled "Special Delivery Instructions"
below, please send the New Notes (and,
if applicable, substitute certificates
representing Old Notes for any Old Notes
not exchanged) to the undersigned at the
address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE
BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
List below the Old Notes to which
this Letter relates. If the space
provided below is inadequate, the
certificate numbers and principal amount
of Old Notes should be listed on a
separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DESCRIPTION OF 1 2 3
OLD NOTES
Names(s) and Certificate Aggreg Principal
Address(es) of Number(s)* ate Amount
Registered Princi Tendered*
Holders(s) pal *
(Please fill in, Amount
if blank) of Old
Note(s
)
Total
* Need not be completed if Old 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 Old Notes represented by the Old Notes
indicated in column 2. See Instruction 2.
Old Notes tendered hereby must be in
denominations of principal amount of $1,000
and any integral multiple thereof. See
Instruction 1.
</TABLE>
__ CHECK HERE IF TENDERED OLD 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 OLD NOTES
ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered
Holder(s)__________________________
_____________
Window Ticket Number (if
any)_______________________________
_____________
Date of Execution of Notice of
Guaranteed
Delivery___________________________
_____________
Date of Institution which
guaranteed
delivery___________________________
_____________
If Delivery by Book-Entry Transfer,
Complete the Following:
Account
Number_______________________
Transaction Code
Number_____________________________
_
__ CHECK HERE IF YOU ARE A BROKER-
DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS
AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
___________________________________
______
Address:___________________________
_____________
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
New Notes. If the undersigned is a
broker-dealer that will receive New
Notes for its own account in exchange
for Old Notes that were acquired as a
result of market-making activities or
other trading activities, it
acknowledges that it will deliver a
prospectus in connection with any resale
of such New 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 of 1933, as amended.
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if
certificates for Old Notes not exchanged
and/or New Notes are to be issued in the
name of and sent to someone other than
the person or persons whose signature(s)
appear(s) on this Letter above, or if
Old Notes delivered by book-entry
transfer which are not accepted for
exchange are to be returned by credit to
an account maintained at the Book-Entry
Transfer Facility other than the account
indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)_________________________________
____
(Please Type or Print)
________________________________________
____
(Please Type or Print)
Address_________________________________
____
________________________________________
____
(Zip Code)
(Complete Substitute Form W-9)
__ Credit unexchanged Old Notes
delivered by book-entry transfer to the
Book-Entry Transfer Facility account set
forth below.
_______________________
(Book-Entry Transfer Facility)
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if
certificates for Old Notes not exchanged
and/or New Notes are to be sent to
someone other than the person or persons
whose signature(s) appear(s) on this
Letter above or to such person or
persons at an address other than shown
in the box entitled "Description of Old
Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)_________________________________
___
(Please Type or Print)
________________________________________
__
(Please Type or Print)
Address_________________________________
___
________________________________
(Zip Code)
IMPORTANT: THIS LETTER OR A FACSIMILE
HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD 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 THIS ENTIRE LETTER OF
TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX
ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING
HOLDERS)
Dated:__________ ____, 1996
x_____________________, 1996
x____________________, 1996
Signature(s) of Owners
Date
Area Code and Telephone Number
________________________
If a holder is tendering any Old
Notes, this letter must be signed by the
registered holder(s) as the name(s)
appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized
to become registered 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(s):________________________________
__________
________________________________________
_________
(Please Type or Print)
Capacity:_______________________________
___________
Address:________________________________
__________
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible
Institution:____________________________
___
(Authorized Signature)
________________________________________
_________
(Title)
________________________________________
_________
(Name and Firm)
Dated: ____________________, 1996
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer for the
13 3/4% Series A Subordinated Discount
Notes due 2007 to Exchange for the
13 3/4% Series B Subordinated Discount
Notes Due 2007 of American Skiing
Company
which Have Been Registered Under the Act
of 1933, As Amended
1. Delivery of this Letter and Notes;
Guaranteed Delivery Procedures.
This Letter is to be completed by
holders of Old 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 Offers -- Book-Entry Transfer"
section of the Prospectus. Certificates
for all physically tendered Old Notes,
or Book-Entry Confirmation, as the case
may be, as well as a properly completed
and duly executed Letter (or manually
signed facsimile hereof) and any other
documents required by this Letter, 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.
Old Notes tendered hereby must be in
denominations of principal amount of
$1,000 and any integral multiple
thereof.
Holders whose certificates for Old
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 Old
Notes pursuant to the guaranteed
delivery procedures set forth in "The
Exchange Offers -- Guaranteed Delivery"
section of the Prospectus. Pursuant to
such procedures, (i) such tender must be
made through an Eligible Institution,
(ii) prior to the Expiration Date, the
Exchange Agent must receive from such
Eligible Institution a properly
completed and duly executed Letter (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
Old Notes and the amount of Old Notes
tendered stating that the tender is
being made thereby and guaranteeing that
within five New York Stock Exchange
("NYSE") trading days after the date of
execution of the Notice of Guaranteed
Delivery, the certificates for all
physically tendered Old Notes, or a Book-
Entry Confirmation, and any other
documents required by the Letter will be
deposited by the Eligible Institution
with the Exchange Agent, and (iii) the
certificates for all physically tendered
Old Notes, in proper form for transfer,
or Book-Entry Confirmation, as the case
may be, and all other documents required
by this Letter, are received by the
Exchange Agent within five NYSE trading
days after the date of execution of the
Notice of Guaranteed Delivery.
The method of delivery of this
Letter, the Old Notes and all other
required documents is at the election
and risk of the tendering holders, but
the delivery will be deemed made only
when actually received or confirmed by
the Exchange Agent. If Old Notes are
sent by mail, it is suggested that the
mailing be 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 Offers" section
of the Prospectus.
2. Partial Tenders (not applicable to
noteholders who tender by book-entry
transfer).
If less than all of the Old Notes
evidenced by a submitted certificate are
to be tendered, the tendering holder(s)
should fill in the aggregate principal
amount of Old Notes to be tendered in
the box above entitled "Description of
Old Notes -- Principal Amount Tendered."
A reissued certificate representing the
balance of nontendered Old Notes will be
sent to such tendering holder, unless
otherwise provided in the appropriate
box on this Letter, promptly after the
Expiration Date. All of the Old Notes
delivered to the Exchange Agent will be
deemed to have been tendered unless
otherwise indicated.
3. Signatures on this Letter, Bond
Powers and Endorsements, Guarantee of
Signatures.
If this Letter is signed by the
registered holder of the Old 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 Old Notes are owned
of record by two or more joint owners,
all of such owners must sign this
Letter.
If any tendered Old Notes are
registered in different names on several
certificates, it will be necessary to
complete, sign and submit as may
separate copies of this Letter as there
are different registrations of
certificates.
When this Letter is signed by the
registered holder or holders of the Old
Notes specified herein and tendered
hereby, no endorsements of certificates
or separate bond powers are required.
If, however, the New Notes are to be
issued, or any untendered Old Notes are
to be reissued, to a person other than
the registered holder, then endorsements
of any certificates transmitted hereby
or separate bond powers are required.
Signatures on such certificate(s) must
be guaranteed by an Eligible
Institution.
If this Letter is signed by a
person other than the registered 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 registered 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 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
Old Notes or signatures on bond powers
required by this Instruction 3 must be
guaranteed by a firm which is a member
of a registered national securities
exchange or a member of the National
Association of Securities Dealers, Inc.
or by a commercial bank or trust company
having an office or correspondent in the
United States (an "Eligible
Institution").
Signatures on this Letter need not
be guaranteed by an Eligible
Institution, provided the Old Notes are
tendered: (i) by a registered holder of
the Old Notes ( which term, for purposes
of the Exchange Offer, includes any
participant in the Book-Entry Tender
Facility system whose name appears on a
security position listing as the holder
of such Old 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 Old Notes
should indicate in the applicable box
the name and address to which New Notes
issued pursuant to the Exchange Offer
and/or substitute certificates
evidencing Old Notes not exchanged are
to be issued or sent, if different from
the name or address of the person
signing this Letter. In the case of
issuance in a different name, the
employer identification or social
security number of the person named must
also be indicated. Noteholders
tendering Old Notes by book-entry
transfer may request that Old Notes not
exchanged be credited to such account
maintained at the Book-Entry Transfer
Facility as such noteholder may
designate hereon. If no such
instructions are given, such Old Notes
not exchanged will be returned to the
name or address of the person signing
this Letter.
5. Tax Identification Number.
Federal income tax law generally
requires that a tendering holder whose
Old Notes are accepted for exchange must
provide the Company (as payor) with such
holder's correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering
holder who is an individual, is his or
her social security number. If the
Company is not provided with the current
TIN or an adequate basis for an
exemption, such tendering holder may be
subject to a $50 penalty imposed by the
Internal Revenue Service. In addition,
delivery to such tendering holder of New
Notes may be subject to backup
withholding in an amount equal to 31% of
all reportable payments made after the
exchange. If withholding results in an
overpayment of taxes, a refund may be
obtained.
Exempt holders of Old Notes
(including, among others, all
corporations and certain foreign
individuals) are not subject to those
backup withholding and reporting
requirements. See the enclosed
Guidelines of Certificate of Taxpayer
Identification Number on Substitute Form
W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each
tendering holder of Old Notes must
provide its correct TIN by completing
the Substitute Form W-9 set forth below,
certifying that the TIN provided is
correct (or that such holder is
awaiting a TIN) and that (i) the holder
is exempt from backup withholding, or
(ii) the holder has not been notified by
the Internal Revenue Service that such
holder is subject to backup withholding
as a result of a failure to report all
interest or dividends, or (iii) the
Internal Revenue Service has notified
the holder that such holder is no longer
subject to backup withholding. If the
tendering holder of Old Notes is a
nonresident alien or foreign entity not
subject to backup withholding, such
holder must give the Company a completed
Form W-8, Certificate of Foreign Status.
These forms may be obtained from the
Exchange Agent. If the Old Notes are in
more than one name or are not in the
name of the actual owner, such holder
should consult the W-9 Guidelines for
information on which TIN to report. If
such holder does not have a TIN, such
holder should consult the W-9 Guidelines
on applying for a TIN, check the box in
Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN.
Note: Checking this box and writing
"applied for" on the form means that
such holder has already applied for a
TIN or that such holder intends to apply
for one in the near future. If such
holder does not provide its TIN to the
Company within 60 days, backup
withholding will begin and continue
until such holder furnishes its TIN to
the Company.
6. Transfer Taxes.
The Company will pay all transfer
taxes, if any, applicable to the
transfer of Old Notes to it or its order
pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Old
Notes not exchanged are to be delivered
to, or are to be registered or issued in
the name of, any person other than the
registered holder of the Old Notes
tendered hereby, or if tendered Old
Notes are registered in the name of any
person other than the person signing
this Letter, or if a transfer tax is
imposed for any reason other than the
transfer of Old 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 directly
to such tendering holder.
Except as provided in this
Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to
the Old Notes specified in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute
right to waive satisfaction of any or
all conditions enumerated in the
Prospectus.
8. No Conditional Tenders.
No alternative, conditional,
irregular or contingent tenders will be
accepted. All tendering holders of Old
Notes, by execution of this Letter,
shall waive any right to receive notice
of the acceptance of their Old Notes for
exchange.
Neither the Company, the Exchange
Agent nor any person is obligated to
give notice of any defect or
irregularity with respect to any tender
of Old Notes nor shall any of them incur
any liability for failure to give any
such notice.
9. Mutilated, Lost, Stolen or
Destroyed Old Notes.
Any holder whose Old Notes have
been mutilated, lost, stolen or
destroyed should contact the Exchange
Agent at the address indicated above for
further instructions.
10. Requests for Assistance or
Additional Copies.
Questions relating to the procedure
for tendering, as well as requests for
additional copies of the Prospectus and
this Letter, may be directed to the
Exchange Agent, at the address and
telephone number indicated above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: AMERICAN SKIING COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE
Part 1 - PLEASE TIN:___________
Form W-9 PROVIDE YOUR TIN __________
IN THE BOX AT Social Security
RIGHT AND CERTIFY Number or
BY SIGNING AND Employer
DATING BELOW. Identification
Number
Department of
the Treasury
Internal Part 2 - TIN Applied for __
Revenue
Service
Payer's
Request for
Taxpayer
Identification
Number ("TIN")
and
Certification
CERTIFICATION - UNDER PENALTIES OF
PERJURY, I CERTIFY THAT:
(1) The number shown on this
form is my correct Taxpayer
Identification Number (or I am
waiting for a number to be issued
to me.)
(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 backup withholding as a
result of failure to report all
interest or dividends, or (c) the
IRS has notified me that I am no
longer 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 or your
tax return and you have not been notified by the
IRS that you are no longer subject to backup
withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 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, 31 percent of all
reportable payments made to me
thereafter will be withheld until I
provide a number.
________________________________________
_______
Signature Date
<PAGE>
AMERICAN SKIING COMPANY
Offer for all Outstanding
13-3/4% Series A Subordinated Discount
Notes Due 2007
in Exchange for
13-3/4% Series B Subordinated Discount
Notes Due 2007
which Have Been Registered Under
the Securities Act of 1933,
As Amended
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
American Skiing Company (the
"Company") is offering, upon and subject
to the terms and conditions set forth in
the Prospectus, dated November 12, 1996
(the "Prospectus"), and the enclosed
Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the
"Exchange Offer") its 13-3/4% Series B
Subordinated Discount Notes Due 2007,
which have been registered under the
Securities Act of 1933, as amended, for
its outstanding 13-3/4% Series A
Subordinated Discount Notes Due 2007
(the "Old Notes"). The Exchange Offer
is being made in order to satisfy
certain obligations of the Company
contained in the Registration Rights
Agreement dated June 28, 1996, by and
among the Company, the Guarantors named
therein and Bear, Stearns & Co., Inc.,
as initial purchaser.
We are requesting that you contact
your clients for whom you hold Old Notes
regarding the Exchange Offer. For your
information and for forwarding to your
clients for whom you hold Old Notes
registered in your name or in the name
of your nominee, or who hold Old Notes
registered in their own names, we are
enclosing the following documents:
1. Prospectus dated November 12,
1996;
2. The Letter of Transmittal for
your use and for the information of your
clients;
3. A Notice of Guaranteed
Delivery to be used to accept the
Exchange Offer if certificates for Old
Notes are not immediately available or
time will not permit all required
documents to reach the Exchange Agent
prior to the Expiration Date (as defined
below) or if the procedure for book-
entry transfer cannot be completed on a
timely basis;
4. A form of letter which may be
sent to your clients for whose account
you hold Old Notes registered in your
name or the name of your nominee, with
space provided for obtaining such
clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification
of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to
U.S. Trust Company of New York, the
Exchange Agent for the Old Notes.
Your prompt action is requested.
The Exchange Offer will expire at 5:00
p.m., New York City time, on January 15,
1997, unless extended by the Company
(the "Expiration Date"). Old Notes not
tendered pursuant to the Exchange Offer
may be withdrawn at any time before the
Expiration Date.
To participate in the Exchange
Offer, a duly executed and properly
completed Letter of Transmittal (or
facsimile thereof), with any required
signature guarantees and any other
required documents, should be sent to
the Exchange Agent and certificates
representing the Old Notes should be
delivered to the Exchange Agent, all in
accordance with the instructions set
forth in the Letter of Transmittal and
the Prospectus.
If holders of Old Notes wish to
tender, but it is impracticable for them
to forward their certificates for Old
Notes prior to the expiration of the
Exchange Offer or to comply with the
book-entry transfer procedures on a
timely basis, a tender may be effected
by following the guaranteed delivery
procedures described in the Prospectus
under "The Exchange Offers -- Guaranteed
Delivery."
The Company will, upon request,
reimburse brokers, dealers, commercial
banks and trust companies for reasonable
and necessary costs and expenses
incurred by them in forwarding the
Prospectus and the related documents to
the beneficial owners of Old Notes held
by them as nominee or in a fiduciary
capacity. The Company will pay or cause
to be paid all stock transfer taxes
applicable to the exchange of Old Notes
pursuant to the Exchange Offer, except
as set forth in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with
respect to the Exchange Offer, or
requests for additional copies of the
enclosed materials, should be directed
to United States Trust Company of New
York, the Exchange Agent for the Old
Notes, at its address and telephone
number set forth on the front of the
Letter of Transmittal.
Very truly yours,
American Skiing Company
NOTHING HEREIN OR IN THE ENCLOSED
DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE
EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER,
EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF
TRANSMITTAL.
Enclosures
<PAGE>
AMERICAN SKIING COMPANY
Offer for all Outstanding
13-3/4% Series A Subordinated Discount
Notes Due 2007
in Exchange for
13-3/4% Series B Subordinated Discount
Notes Due 2007
which Have Been Registered Under
the Securities Act of 1933,
As Amended
To Our Clients:
Enclosed for your consideration is
a Prospectus, dated November 12, 1996
(the "Prospectus"), and the related
Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer
(the "Exchange Offer") of American
Skiing Company (the "Company") to
exchange its 13-3/4% Series B
Subordinated Discount Notes Due 2007,
which have been registered under the
Securities Act of 1933, as amended (the
"New Notes"), for its outstanding 13-
3/4% Series A Subordinated Discount
Notes Due 2007 (the "Old Notes"), upon
the terms and subject to the conditions
described in the Prospectus and the
Letter of Transmittal. The Exchange
Offer is being made in order to satisfy
certain obligations of the Company
contained in the Registration Rights
Agreement dated June 28, 1996, by and
among the Company, the Guarantors named
therein and Bear, Stearns & Co., Inc.,
as initial purchaser.
This material is being forwarded to
you as the beneficial owner of the Old
Notes carried by us in your account but
not registered in your name. A tender
of such Old Notes may only be made by us
as the holder of record and pursuant to
your instructions.
Accordingly, we request
instructions as to whether you wish us
to tender on your behalf the Old Notes
held by us for your account, pursuant to
the terms and conditions set forth in
the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be
forwarded to us as promptly as possible
in order to permit us to tender the Old
Notes on your behalf in accordance with
the provisions of the Exchange Offer.
The Exchange Offer will expire at 5:00
p.m., New York City time, on January 15,
1997, unless extended by the Company.
Any Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any
time before the Expiration Date.
Your attention is directed to the
following:
1. The Exchange Offer is for any
and all Old Notes.
2. The Exchange Offer is subject
to certain conditions set forth in the
Prospectus in the section captioned "The
Exchange Offers -- Certain Conditions to
the Exchange Offers."
3. Any transfer taxes incident to
the transfer of Old Notes from the
holder to the Company will be paid by
the Company, except as otherwise
provided in the Instructions in the
Letter of Transmittal.
4. The Exchange Offer expires at
5:00 p.m., New York City time, on
January 15, 1997, unless extended by the
Company.
If you wish to have us tender your
Old Notes, please so instruct us by
completing, executing and returning to
us the instruction form on the back of
this letter. The Letter of Transmittal
is furnished to you for information only
and may not be used directly by you to
tender Old Notes.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s)
receipt of your letter and the enclosed
material referred to therein relating to
the Exchange Offer made by American
Skiing Company with respect to its Old
Notes.
This will instruct you to tender
the Old Notes held by you for the
account of the undersigned, upon and
subject to the terms and conditions set
forth in the Prospectus and the related
Letter of Transmittal.
Please tender the Old Notes held by
you for my account as indicated below.
Aggregate Principal Amount of Old Notes
13-3/4% Series A Subordinated Discount
Notes Due 2007
__ Please do not tender any Old Notes
held by you
for my account.
Dated:_______________________________,
1996
________________________________________
_______
Signature(s)
________________________________________
_______
Please print name(s) here
________________________________________
_______
Address(es)
________________________________________
_______
Area Code and Telephone Number
________________________________________
_______
Tax Identification or Social Security
No(s).
None of the Old Notes held by us
for your account will be tendered unless
we receive written instructions from you
to do so. Unless a specific contrary
instruction is given in the space
provided, your signature(s) hereon shall
constitute an instruction to us to
tender all the Old Notes held by us for
your account.
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR
AMERICAN SKIING COMPANY
12% SENIOR SUBORDINATED NOTES DUE 2006
This form or one substantially
equivalent hereto must be used to accept
the Exchange Offer of American Skiing
Company (the "Company") made pursuant to
the Prospectus, dated November 12, 1996
(the "Prospectus"), if certificates for
the outstanding 12% Series A Senior
Subordinated Notes Due 2006 of the
Company (the "Old Notes") are not
immediately available or if the
procedure for book-entry transfer cannot
be completed on a timely basis or time
will not permit all required documents
to reach the Company prior to 5:00 p.m.,
New York City time, on the Expiration
Date of the Exchange Offer. Such form
may be delivered or transmitted by
telegram, telex, facsimile transmission,
mail or hand delivery to United States
Trust Company of New York (the "Exchange
Agent") as set forth below. In
addition, in order to utilize the
guaranteed delivery procedure to tender
Old Notes pursuant to the Exchange
Offer, a completed, signed and dated
Letter of Transmittal (or facsimile
thereof) must also be received by the
Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date.
Capitalized terms not defined herein are
defined in the Prospectus.
Delivery To: United States Trust
Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Peter Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10005
By Overnight Courier:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services Window
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an
address other than as set forth above,
or transmission of instructions via
facsimile other than as set forth above,
will not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set
forth in the Prospectus and the
accompanying Letter of Transmittal, the
undersigned hereby tenders to the
Company the principal amount of Old
Notes set forth below, pursuant to the
guaranteed delivery procedure described
in "The Exchange Offers -- Guaranteed
Delivery" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
$_______________________________________
_
Certificate Nos. (if available):
If Old Notes will be delivered by
book-entry transfer to The Depository
Trust Company, provide account number.
________________________________________
_
Total Principal Amount Represented by
Old Notes Certificate(s):
$_______________________________________
_
Account Number
_______________________________________
* Must be in denominations of principal
amount of $1,000 and any integral
multiple thereof.
________________________________________
______________
All authority herein conferred or
agreed to be conferred shall survive the
death or incapacity of the undersigned
and every obligation of the undersigned
hereunder shall be binding upon the
heirs, personal representatives,
successors and assigns of the
undersigned.
________________________________________
______________
PLEASE SIGN HERE
X_______________________________________
________
X_______________________________________
________
Signature(s) of Owner(s) as Authorized
Signatory
_______________________________
Date
Area Code and Telephone
Number:____________________
Must be signed by the holder(s) of
Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a
security position listing, or by
person(s) authorized to become
registered holder(s) by endorsement and
documents transmitted with this Notice
of Guaranteed Delivery. If signature is
by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or
other person acting in a fiduciary or
representative capacity, such person
must set forth his or her full title
below.
Please print name(s) and address(es)
Name(s):
________________________________________
Capacity:
_______________________________________
Address(es):
______________________________________
<PAGE>
GUARANTEE
The undersigned, a member of a
registered national securities exchange,
or a member of the National Association
of Securities Dealers, Inc., or a
commercial bank or trust company having
an office or correspondent in the United
States, hereby guarantees that the
certificates representing the principal
amount of Old Notes tendered hereby in
proper form for transfer, or timely
confirmation of the book-entry transfer
of such Old Notes into the Exchange
Agent's account at The Depository Trust
Company pursuant to the procedures set
forth in "The Exchange Offers --
Guaranteed Delivery" section of the
Prospectus, together with a properly
completed and duly executed Letter of
Transmittal (or a manually signed
facsimile thereof) with any required
signature guarantee and any other
documents required by the Letter of
Transmittal, will be received by the
Exchange Agent at the address set forth
above, no later than five New York Stock
Exchange trading days after the date of
execution hereof.
________________________________
Name of Firm
________________________________
Authorized Signature
________________________________________
____
Address Title
____________________________
Zip Code
Name:___________________________________
_______
(Please Type or Print)
Area Code and Tel.
No._________________________
Dated:__________________________________
________
NOTE: DO NOT SEND CERTIFICATES FOR
OLD NOTES WITH THIS FORM.
CERTIFICATES FOR OLD NOTES
SHOULD ONLY BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR
AMERICAN SKIING COMPANY
13-3/4% SUBORDINATED DISCOUNT NOTES DUE
2007
This form or one substantially
equivalent hereto must be used to accept
the Exchange Offer of American Skiing
Company (the "Company") made pursuant to
the Prospectus, dated November 12, 1996
(the "Prospectus"), if certificates for
the outstanding 13-3/4% Series A
Subordinated Discount Notes Due 2007 of
the Company (the "Old Notes") are not
immediately available or if the
procedure for book-entry transfer cannot
be completed on a timely basis or time
will not permit all required documents
to reach the Company prior to 5:00 p.m.,
New York City time, on the Expiration
Date of the Exchange Offer. Such form
may be delivered or transmitted by
telegram, telex, facsimile transmission,
mail or hand delivery to United States
Trust Company of New York (the "Exchange
Agent") as set forth below. In
addition, in order to utilize the
guaranteed delivery procedure to tender
Old Notes pursuant to the Exchange
Offer, a completed, signed and dated
Letter of Transmittal (or facsimile
thereof) must also be received by the
Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date.
Capitalized terms not defined herein are
defined in the Prospectus.
Delivery To: United States Trust
Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Peter Cooper Station
New York, New York 10276
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10005
By Overnight Courier:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services Window
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an
address other than as set forth above,
or transmission of instructions via
facsimile other than as set forth above,
will not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set
forth in the Prospectus and the
accompanying Letter of Transmittal, the
undersigned hereby tenders to the
Company the principal amount of Old
Notes set forth below, pursuant to the
guaranteed delivery procedure described
in "The Exchange Offers -- Guaranteed
Delivery" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
$_______________________________________
_
Certificate Nos. (if available):
If Old Notes will be delivered by
book-entry transfer to The Depository
Trust Company, provide account number.
________________________________________
_
Total Principal Amount Represented by
Old Notes Certificate(s):
$__________________________________
Account Number
_______________________________________
* Must be in denominations of principal
amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or
agreed to be conferred shall survive the
death or incapacity of the undersigned
and every obligation of the undersigned
hereunder shall be binding upon the
heirs, personal representatives,
successors and assigns of the
undersigned.
PLEASE SIGN HERE
X____________________________
X_______________________________________
________
Signature(s) of Owner(s) as Authorized
Signatory
________________________________________
_______
Date
Area Code and Telephone
Number:____________________
Must be signed by the holder(s) of
Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a
security position listing, or by
person(s) authorized to become
registered holder(s) by endorsement and
documents transmitted with this Notice
of Guaranteed Delivery. If signature is
by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or
other person acting in a fiduciary or
representative capacity, such person
must set forth his or her full title
below.
Please print name(s) and address(es)
Name(s): ____________________
Capacity: ____________________
Address(es): ____________________
<PAGE>
GUARANTEE
The undersigned, a member of a
registered national securities exchange,
or a member of the National Association
of Securities Dealers, Inc., or a
commercial bank or trust company having
an office or correspondent in the United
States, hereby guarantees that the
certificates representing the principal
amount of Old Notes tendered hereby in
proper form for transfer, or timely
confirmation of the book-entry transfer
of such Old Notes into the Exchange
Agent's account at The Depository Trust
Company pursuant to the procedures set
forth in "The Exchange Offers --
Guaranteed Delivery" section of the
Prospectus, together with a properly
completed and duly executed Letter of
Transmittal (or a manually signed
facsimile thereof) with any required
signature guarantee and any other
documents required by the Letter of
Transmittal, will be received by the
Exchange Agent at the address set forth
above, no later than five New York Stock
Exchange trading days after the date of
execution hereof.
________________________________________
____
Name of Firm
________________________________________
____
Authorized Signature
________________________________________
____
Address Title
________________________________________
____
Zip Code
Name:___________________________________
_______
(Please Type or Print)
Area Code and Tel.
No._________________________
Dated:__________________________________
________
NOTE: DO NOT SEND CERTIFICATES FOR
OLD NOTES WITH THIS FORM.
CERTIFICATES FOR OLD NOTES
SHOULD ONLY BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
