United States
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JANUARY 24, 1999
-----------------------------
Commission File Number 333-9763
-----------------------------
ASC East, Inc.
(Exact name of registrant as specified in its charter)
Maine 01-0503382
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 450
Bethel, Maine 04217
(Address of principal executive office) (Zip Code)
(207) 824-5196
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
The registrant meets the conditions set forth in General Instruction (H)
(1) (a) and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format provided therein.
Indicated by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of
common stock was 978,300 shares of common stock, $.01 par value, outstanding as
of March 10, 1999.
<PAGE>
Table of Contents
Part I - Financial Information ................................................1
Item 1. Financial Statements
Condensed Consolidated Statement of Operations (Unaudited)
for the three months ended January 24, 1999 and January 25, 1998......2
Condensed Consolidated Statement of Operations (Unaudited)
for the six months ended January 24, 1999 and January 25, 1998........3
Condensed Consolidated Balance Sheet
as of January 24, 1999 (Unaudited) and July 26, 1998..................4
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the six months ended January 24, 1999 and January 25, 1998........5
Notes to (Unaudited) Condensed Consolidated Financial Statements......6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General..............................................................19
Liquidity and Capital Resources......................................19
Changes in Results of Operations.....................................25
Year 2000 Disclosure.................................................29
Forward-Looking Statements...........................................31
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.............................32
<PAGE>
ASC East, Inc. and Subsidiaries
Part I - Financial Information
Item 1
Financial Statements
This Form 10-Q is filed by ASC East, Inc. ("ASC East"), a wholly-owned
subsidiary of American Skiing Company (the "Parent"), for itself and its
following wholly-owned subsidiaries to fulfill its periodic reporting
obligations resulting from ASC East's publicly-traded 12% Senior Subordinated
Notes due 2006 (the "Notes"):
Sunday River Skiway Corporation
Sunday River, Ltd.
Sunday River Transportation
Perfect Turn, Inc.
LBO Holding, Inc.
Sugarbush Resort Holdings, Inc.
Mountain Wastewater Treatment, Inc.
Sugarbush Leasing Company
Sugarbush Restaurants, Inc.
AJT, Inc. (f/k/a Cranmore, Inc.)
Grand Summit Resort Properties, Inc.
S-K-I Limited
Killington, Ltd.
Mount Snow, Ltd.
WVSAL, Inc. (f/k/a Waterville Valley Ski Area, Ltd.)
Sugarloaf Mountain Corporation
Killington Restaurants, Inc.
Dover Restaurants, Inc.
Resort Technologies, Inc.
Resort Software Services, Inc.
Mountainside
Sugartech
Deerfield Operating Company
Pico Ski Area Management Company
SKI Insurance
Mountain Water Company
Killington West, Ltd.
Club Sugarbush, Inc.
Uplands Water Company
American Skiing Company Resort Properties, Inc.
Attitash Resort Properties, Inc.
Sunday River Resort Properties, Inc.
Sugarloaf Resort Properties, Inc.
Killington Resort Properties, Inc.
Mount Snow Resort Properties, Inc.
Sugarbush Resort Properties, Inc.
The Canyons Resort Properties, Inc.
Steamboat Resort Properties, Inc.
Heavenly Resort Properties, Inc.
Grand Summit Resort Hotel Sales, Inc.
As used herein the term the "Company" means and refers to ASC East and
the subsidiary registrants listed above on a consolidated basis.
The Notes are fully and unconditionally guaranteed by the Company and all
of its subsidiaries with the exception of SKI Insurance, Killington West, Ltd.,
Mountain Water Company, Uplands Water Company and Club Sugarbush, Inc.
(the"Non-Guarantors"). See Note 10.
1
<PAGE>
<TABLE>
Part I - Financial Information
Item 1
Financial Statements
Condensed Consolidated Statement of Operations
(in thousands, except share and per share amounts)
For the three months ended
<CAPTION>
January 24, 1999 January 25,
1998
(unaudited) (unaudited)
<S> <C> <C>
Net revenues:
Resort $ 63,577 $ 70,125
Real estate 6,271 7,890
----------------- -----------------
Total net revenues 69,848 78,015
Operating expenses
Resort 43,822 43,478
Real estate 7,837 5,223
Marketing, general and administrative 9,210 7,256
Depreciation and amortization 9,954 8,151
----------------- -----------------
Total operating expenses 70,823 64,108
----------------- -----------------
Income (loss) from operations (975) 13,907
Interest expense 7,440 6,534
----------------- -----------------
Income (loss) before provision (benefit) for income taxes (8,415) 7,373
Provision (benefit) for income taxes (3,285) 2,876
----------------- -----------------
Income (loss) from continuing operations (5,130) 4,497
Extraordinary loss, net of income tax benefit of $2,854 - 4,464
----------------- -----------------
Net income (loss) $ (5,130) $ 33
================= =================
Accumulated deficit, beginning of period $ (1,282) $ (1,176)
Net income (loss) (5,130) 33
----------------- -----------------
Accumulated deficit, end of period $ (6,412) $ (1,143)
================= =================
Net income (loss) per share-basic and diluted (Note 6)
Income (loss) from continuing operations $ (5.24) $ 4.59
Extraordinary loss - (4.56)
Net income (loss) $ (5.24) $ 0.03
================= =================
Weighted average shares outstanding 978,300 978,300
================= =================
</TABLE>
See accompanying notes to (Unaudited) Condensed Consolidated Financial
Statements.
2
<PAGE>
<TABLE>
Condensed Consolidated Statement of Operations
(in thousands, except share and per share amounts)
<CAPTION>
For the six months ended
January 24, 1999 January 25,
1998
(unaudited) (unaudited)
<S> <C> <C>
Net revenues:
Resort $ 79,253 $ 83,583
Real estate 10,594 8,700
----------------- -----------------
Total net revenues 89,847 92,283
Operating expenses
Resort 63,345 60,814
Real estate 11,774 6,148
Marketing, general and administrative 14,302 13,796
Stock compensation charge - 3,271
Depreciation and amortization 11,781 9,601
----------------- -----------------
Total operating expenses 101,202 93,630
----------------- -----------------
Loss from operations (11,355) (1,347)
Interest expense 14,340 13,241
----------------- -----------------
Loss before benefit for income taxes (25,695) (14,588)
Benefit for income taxes (10,015) (5,557)
----------------- -----------------
Loss from continuing operations (15,680) (9,031)
Extraordinary loss, net of income tax benefit of $2,854 - 4,464
----------------- -----------------
Net loss $ (15,680) $ (13,495)
================= =================
Retained earnings, beginning of period $ 9,268 $ 12,352
Net loss (15,680) (13,495)
----------------- -----------------
Accumulated deficit, end of period $ (6,412) $ (1,143)
================= =================
Net loss per share-basic and diluted (Note 6)
Loss from continuing operations $ (16.03) $ (9.24)
Extraordinary loss - (4.56)
----------------- -----------------
Net loss $ (16.03) $ (13.80)
================= =================
Weighted average shares outstanding 978,300 978,300
================= =================
</TABLE>
See accompanying notes to (Unaudited) Condensed Consolidated Financial
Statements.
3
<PAGE>
<TABLE>
Condensed Consolidated Balance Sheet
(in thousands, except share and per share amounts)
<CAPTION>
January 24, July 26, 1998
1999
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 9,929 $ 4,157
Restricted cash 6,858 1,769
Accounts receivable 6,458 7,138
Inventory 14,779 10,226
Prepaid expenses 2,211 1,705
Deferred income taxes 638 1,289
---------------- -----------------
Total current assets 40,873 26,284
Property and equipment, net 303,586 296,756
Real estate developed for sale 125,588 38,023
Goodwill 19,650 19,702
Intangible assets 2,017 2,050
Deferred financing costs 6,429 6,643
Long-term investments 1,520 2,202
Other assets 4,827 4,691
================ =================
Total assets $ 504,490 $ 396,351
================ =================
Liabilities and Shareholder's Equity
Current liabilities
Current portion of long-term debt $ 12,542 $ 28,100
Accounts payable and other current liabilities 46,941 26,557
Deposits and deferred revenue 28,716 3,574
Demand note, Principal Shareholder 1,846 1,846
Due to affiliates (Note 9) 66,029 17,132
---------------- -----------------
Total current liabilities 156,074 77,209
Long-term debt, excluding current portion 128,320 85,045
Subordinated notes and debentures, excluding current portion 127,613 127,497
Other long-term liabilities 8,817 7,313
Deferred income taxes 16,182 26,873
---------------- -----------------
Total liabilities 437,006
Shareholder's Equity
Common stock, par value of $.01 per share; 1,000,000 shares
authorized; 978,300 issued and outstanding at January 24, 1999 10 10
Additional paid-in capital 73,886 63,136
Retained earnings (deficit) (6,412) 9,268
---------------- -----------------
Total shareholder's equity 67,484 72,414
================ =================
Total liabilities and shareholder's equity $ 504,490 $ 396,351
================ =================
</TABLE>
See accompanying notes to (Unaudited) Condensed Consolidated Financial
Statements.
4
<PAGE>
<TABLE>
Condensed Consolidated Statement of Cash Flows
(in thousands)
<CAPTION>
For the six months ended
January 24, 1999 January 25,
1998
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities
Net loss $ (15,680) $ (13,495)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 11,781 9,601
Amortization of discount on subordinated notes and other liabilities 164 145
Deferred income taxes (10,015) (8,551)
Loss on sale of assets 23 -
Extraordinary loss - 7,318
Stock compensation charge - 3,271
Decrease (increase) in assets:
Restricted cash (598) (693)
Accounts receivable 680 (5,595)
Inventory (4,553) (6,464)
Prepaid expenses 563 (810)
Real estate developed for sale (59,043) (41,848)
Other assets (135) 376
Increase (decrease) in liabilities:
Accounts payable and other current liabilities 20,381 12,126
Deposits and deferred revenue 19,045 14,631
Other long-term liabilities 1,503 473
Due to/from affiliates 33,045 15,917
------------------ -----------------
Net cash used in operating activities (2,839) (13,598)
------------------ -----------------
Cash flows from investing activities
Capital expenditures (17,231) (32,166)
Long-term investments 682 1,075
Proceeds from sale of assets 1,248
Other, net (26) -
------------------ -----------------
Net cash used in investing activities (15,327) (31,091)
------------------ -----------------
Cash flows from financing activities
Net borrowings under New Credit Facility (17,831) 53,444
Repayment of Old Credit Facility - (59,623)
Proceeds from capital contribution from parent 1,600 36,650
Repayment of subordinated debt - (21,882)
Proceeds from long-term debt 47,145 50,287
Repayment of long-term debt (6,742) (3,513)
Deferred financing costs (234) -
Cash payment in connection with early retirement of debt - (5,086)
------------------ -----------------
Net cash provided from financing activities 23,938 50,277
------------------ -----------------
Net increase in cash and cash equivalents 5,772 5,588
Cash and cash equivalents, beginning of period 4,157 2,634
------------------ -----------------
Cash and cash equivalents, end of period $ 9,929 $ 8,222
================== =================
</TABLE>
See accompanying notes to (Unaudited) Condensed Consolidated Financial
Statements.
5
<PAGE>
Notes to (Unaudited) Condensed Consolidated Financial Statements
1. Change in Accounting Estimate. Effective July 27, 1998, the Company
extended the estimated useful lives of some of their ski lifts. As a result of
this change in estimate, the Company expects to realize a decrease in
depreciation expense of approximately $0.7 million in Fiscal 1999, $0.3 million
of which has been realized in the current quarter as the Company records a full
year of depreciation on its ski-related assets evenly over the second and third
quarters of its fiscal year. This reduction of depreciation expense has resulted
in an increase in net earnings per common share of $0.31 for the three and six
months ended January 24, 1999. The Company continues to evaluate the current
depreciable lives of various other assets to ensure they appropriately reflect
their actual useful lives.
2. General. In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of January 24, 1999, the
results of operations for the three and six months ended January 24, 1999 and
January 25, 1998, and the statement of cash flows for the six months ended
January 24, 1999 and January 25, 1998. All adjustments are of a normal recurring
nature. The unaudited condensed consolidated financial statements should be read
in conjunction with the following notes and the consolidated financial
statements in the Form 10-K which was filed with the Securities and Exchange
Commission on November 9, 1998.
3. 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 operating supplies.
4. Income Taxes. The expense (benefit) for income taxes is based on a
projected annual effective tax rate of 39%. Deferred income taxes include the
cumulative reduction in current income taxes payable resulting principally from
the excess of depreciation reported for income tax purposes over that reported
for financial reporting purposes.
5. Seasonal Business. Results for interim periods are not indicative of
the results expected for the year due to the seasonal nature of the Company's
business which is the operation and development of ski resorts.
6. Net Loss per Share. Effective January 25, 1998, the Company adopted
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS
128 specifies the computation, presentation, and disclosure requirements for
earnings per share for public entities. Net loss per share figures are based on
the weighted average shares of common stock outstanding during the second
quarter and first six months of fiscal 1999 and 1998 of 978,300.
7. Adjustments and Reclassifications. Certain amounts in the prior year's
unaudited condensed consolidated financial statements and the audited financial
statements as filed with the Securities and Exchange Commission on November 9,
1998 have been reclassified to conform to the current presentation.
8. Stock option plan. In the first quarter of fiscal 1998 the Company's
parent incurred a stock compensation charge associated with the grant of
non-qualified stock options to certain key members of senior management. A
6
<PAGE>
portion of the parent's stock compensation charge ($3.3 million) was allocated
to ASC East based on an approximation of the actual time management employees
comprising the stock compensation charge spent on ASC East related activities
during the year ended July 26, 1998.
9. Related party transactions. The Company's parent incurs certain common
expenses that are allocable to ASC East, including marketing and other overhead
related costs. The total allocation of these costs charged to the Company of
$568,000 and $988,000 for the three months and six months ended January 24,
1999, respectively, is included in the marketing, general and administrative
component in the accompanying condensed consolidated statement of operations.
The marketing and other overhead costs were allocated to the Company based on
the estimate of amounts benefiting ASC East. It is management's opinion that the
methods used to allocate other common costs are reasonable.
In the accompanying condensed consolidated balance sheet the line item
"Due to affiliates" includes the intercompany liability generated by the
transfer of various undeveloped real estate parcels to the Company from its
Parent, ASC West, and ASC Utah and the payment by the Parent and subsidiaries of
the Parent of certain operating and capital expenditures on behalf of the
Company.
10. Guarantors of Debt. The Notes, which had a carrying value of $117.2
million as of January 24, 1999 and were included in subordinated notes and
debentures, excluding current portion in the accompanying condensed consolidated
balance sheet, are fully and unconditionally guaranteed by the Company and all
of its subsidiaries with the exception of SKI Insurance Company, Killington
West, Ltd., Mountain Water Company, Uplands Water Company, and Club Sugarbush,
Inc., (the "Non-Guarantors"). Prior to the S-K-I Acquisition and issuance of the
Notes on June 28, 1996, the bank loan agreements were collateralized by
virtually all of the assets of the companies comprising the Company. The
guarantor subsidiaries are wholly-owned subsidiaries of the Company and the
guarantees are fully, unconditional, and joint and several.
Real estate development and real estate working capital is funded primarily
through construction financing facilities established for major real estate
development projects and through a term loan facility established through the
Company's real estate development holding company, American Skiing Company
Resort Properties, Inc. ("Resort Properties"). The construction financing
facilities and Resort Properties term loan facility (collectively, the "Real
Estate Facilities") are without recourse to ASC East, Inc. and its resort
operating subsidiaries, however, the Real Estate Facilities represent material
amounts of debt for Resort Properties and its affiliates, including GSRP, each
of which are guarantor subsidiaries under the Notes. The Real Estate Facilities
are collateralized by significant real estate assets of Resort Properties and
its subsidiaries, including, without limitation, the assets and stock of Grand
Summit Resort Properties, Inc. ("GSRP"), the Company's primary hotel development
subsidiary.
Separate financial statements of the guarantor subsidiaries are not
presented because management has determined that they would not be material to
investors. The guarantor information for the three and six months ended January
24, 1999 and January 25, 1998, is as follows:
7
<PAGE>
<TABLE>
Balance Sheet as of January 24, 1999
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Guarantor Elimination Consolidated
Subsidiaries Subsidiaries Entries ASC East
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ - $ 8,260 $ 1,669 $ - $ 9,929
Restricted cash - 6,837 21 - 6,858
Accounts receivable 18 9,810 967 (4,337) 6,458
Inventory 1,487 13,292 - - 14,779
Prepaid expenses (18) 2,229 - - 2,211
Deferred income taxes - 638 - - 638
Investment in subsidiaries 174,312 151,082 - (325,394) -
-------------- --------------- --------------- ------------- ---------------
Total current assets 175,799 192,148 2,657 (329,731) 40,873
Property and equipment, net 75 302,825 686 - 303,586
Real estate developed for sale - 125,588 - - 125,588
Goodwill 17,262 2,388 - - 19,650
Intangible assets - 2,017 - - 2,017
Deferred financing costs 6,288 141 - - 6,429
Long-term investments - - 1,520 - 1,520
Other assets - 4,827 - - 4,827
============== =============== =============== ============= ===============
Total assets $ 199,424 $ 629,934 $ 4,863 $ (329,731) $ 504,490
============== =============== =============== ============= ===============
Liabilities and Shareholder's Equity
Current liabilities
Current portion of long-term debt $ 3,186 $ 10,665 $ - $ (1,309) $ 12,542
Accounts payable and other current liabilities 5,196 42,182 431 (868) 46,941
Deposits and deferred revenue 300 28,422 (6) - 28,716
Demand note, Principal Shareholder - 1,846 - - 1,846
Due to affiliates (Note 9) (35,269) 101,729 (431) - 66,029
-------------- --------------- --------------- ------------- ---------------
Total current liabilities (26,587) 184,844 (6) (2,177) 156,074
Long-term debt, excluding current portion 39,744 90,700 37 (2,161) 128,320
Subordinated notes and debentures, excluding
current portion 117,118 10,495 - - 127,613
Other long-term liabilities 3,510 2,443 2,864 - 8,817
Deferred income taxes (11,716) 28,433 (535) - 16,182
-------------- --------------- --------------- ------------- ---------------
Total liabilities 122,069 316,915 2,360 (4,338) 437,006
Shareholder's Equity
Common stock, par value of $.01 per share;
1,000,000 shares authorized; 978,300 issued
and outstanding at January 24, 1999 10 181 101 (282) 10
Additional paid-in capital 73,886 254,807 1,552 (256,359) 73,886
Retained earnings (deficit) 3,459 58,031 850 (68,752) (6,412)
-------------- --------------- --------------- ------------- ---------------
Total shareholder's equity 77,355 313,019 2,503 (325,393) 67,484
-------------- --------------- --------------- ------------- ---------------
Total liabilities and shareholder's equity $ 199,424 $ 629,934 $ 4,863 $ (329,731) $ 504,490
============== =============== =============== ============= ===============
</TABLE>
8
<PAGE>
<TABLE>
Statement of Operations for the three months ended January 24, 1999
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Elimination Consolidated
Subsidiaries Guarantor Entries ASC East
Subsidiaries
<S> <C> <C> <C> <C> <C>
Net revenues:
Resort $ 609 $ 62,931 $ (74) $ 111 $ 63,577
Real estate - 6,271 - - 6,271
----------- ---------------- --------------- ---------------- -----------------
Total net revenues 609 69,202 (74) 111 69,848
----------- ---------------- --------------- ---------------- -----------------
Operating expenses:
Resort 604 43,188 (81) 111 43,822
Real estate - 7,837 - - 7,837
Marketing, general and administrative 726 8,484 - - 9,210
Depreciation and amortization 373 9,569 12 - 9,954
----------- ---------------- --------------- ---------------- -----------------
Total operating expenses 1,703 69,078 (69) 111 70,823
----------- ---------------- --------------- ---------------- -----------------
Income (loss) from operations (1,094) 124 (5) - (975)
Interest expense 3,703 3,746 (9) - 7,440
----------- ---------------- --------------- ---------------- -----------------
Income (loss) before provision (benefit) for
income taxes (4,797) (3,622) 4 - (8,415)
Provision (benefit) for income taxes (1,929) (1,358) 2 - (3,285)
----------- ---------------- --------------- ---------------- -----------------
Net income (loss) $ (2,868) $ (2,264) $ 2 $ - $ (5,130)
=========== ================ =============== ================ =================
</TABLE>
9
<PAGE>
<TABLE>
Statement of Operations for the six months ended January 24, 1999
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Guarantor Elimination Consolidated
Subsidiaries Subsidiaries Entries ASC East
<S> <C> <C> <C> <C> <C>
Net revenues:
Resort $ 1,124 $ 78,055 $ 194 $ (120) $ 79,253
Real estate - 10,594 - - 10,594
------------ --------------- -------------- ------------- ---------------
Total net revenues 1,124 88,649 194 (120) 89,847
------------ --------------- -------------- ------------- ---------------
Operating expenses:
Resort 1,178 62,139 148 (120) 63,345
Real estate - 11,774 - - 11,774
Marketing, general and administrative 1,166 13,136 - - 14,302
Depreciation and amortization 717 11,038 26 - 11,781
------------ --------------- -------------- ------------- ---------------
Total operating expenses 3,061 98,087 174 (120) 101,202
------------ --------------- -------------- ------------- ---------------
Income (loss) from operations (1,937) (9,438) 20 - (11,355)
Interest expense (income) 7,409 6,969 (38) - 14,340
------------ --------------- -------------- ------------- ---------------
Income (loss) before provision (benefit) for
income taxes (9,346) (16,407) 58 - (25,695)
Provision (benefit) for income taxes (3,529) (6,507) 21 - (10,015)
------------ --------------- -------------- ------------- ---------------
Net income (loss) $ (5,817) $ (9,900) $ 37 $ - $ (15,680)
============ =============== ============== ============= ===============
</TABLE>
10
<PAGE>
<TABLE>
Statement of Cash Flows for the six months ended January 24, 1999
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Elimination Consolidated
Subsidiaries Guarantor Entries ASC East
Subsidiaries
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (5,817) $ (9,900) $ 37 $ - $ (15,680)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 717 11,038 26 - 11,781
Amortization of discount on subordinated notes and
debentures and other liabilities 116 48 - - 164
Deferred income taxes (3,529) (6,507) 21 - (10,015)
Loss on sale of assets - 23 - - 23
Decrease (increase) in assets:
Restricted cash - (601) 3 - (598)
Accounts receivable 671 717 722 (1,430) 680
Inventory 75 (4,628) - - (4,553)
Prepaid expenses 19 544 - - 563
Real estate developed for sale - (59,043) - - (59,043)
Other assets - (157) - 22 (135)
Increase (decrease) in liabilities:
Accounts payable and other current liabilities 3,694 16,381 (84) 390 20,381
Deposits and deferred revenue (221) 19,286 (20) - 19,045
Other long-term liabilities 1,794 77 (368) - 1,503
Due to/from affiliate 20,271 13,096 (324) 2 33,045
------------ -------------- -------------- ------------- --------------
Net cash provided by (used in) operating activities 17,790 (19,626) 13 (1,016) (2,839)
------------ -------------- -------------- ------------- --------------
Cash flows from investing activities
Capital expenditures (45) (17,186) - - (17,231)
Long-term investments - - 682 - 682
Proceeds from sale of assets - 1,248 - - 1,248
Other, net (1) (3) - (22) (26)
------------ -------------- -------------- ------------- --------------
Net cash provided by (used in) investing activities (46) (15,941) 682 (22) (15,327)
------------ -------------- -------------- ------------- --------------
Cash flows from financing activities
Net borrowings under New Credit Facility (17,831) - - - (17,831)
Proceeds from long-term debt - 47,145 - - 47,145
Proceeds from capital contribution from parent - 1,600 - - 1,600
Repayment of long-term debt - (7,769) (11) 1,038 (6,742)
Deferred financing costs (91) (143) - - (234)
------------ -------------- -------------- ------------- --------------
Net cash provided by (used in) financing activities (17,922) 40,833 (11) 1,038 23,938
------------ -------------- -------------- ------------- --------------
Net increase (decrease) in cash and cash equivalents (178) 5,266 684 - 5,772
Cash and cash equivalents, beginning of period 178 2,994 985 - 4,157
------------ -------------- -------------- ------------- --------------
Cash and cash equivalents, end of period $ - $ 8,260 $ 1,669 $ - $ 9,929
============ ============== ============== ============= ============
</TABLE>
11
<PAGE>
<TABLE>
Balance Sheet as of July 26, 1998
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Guarantor Elimination Consolidated
Subsidiaries Subsidiaries Entries ASC East
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 179 $ 2,994 $ 984 $ - $ 4,157
Restricted cash - 1,745 24 - 1,769
Accounts receivable 689 10,526 1,690 (5,767) 7,138
Inventory 1,562 8,664 - - 10,226
Prepaid expenses - 1,705 - - 1,705
Deferred income taxes - 1,289 - - 1,289
Investment in subsidiaries 146,252 117,698 - (263,950) -
------------- -------------- --------------- -------------- --------------
Total current assets 148,682 144,621 2,698 (269,717) 26,284
Property and equipment, net 50 295,994 712 - 296,756
Real estate developed for sale - 38,023 - - 38,023
Goodwill 17,513 2,189 - - 19,702
Intangible assets - 2,050 - - 2,050
Deferred financing costs 6,643 - - - 6,643
Long-term investments - - 2,202 - 2,202
Other assets - 4,691 - - 4,691
------------- -------------- --------------- -------------- --------------
Total assets $ 172,888 $ 487,568 $ 5,612 $ (269,717) $ 396,351
------------- -------------- --------------- -------------- --------------
Liabilities and Shareholder's Equity
Current liabilities
Current portion of long-term debt $ 21,062 $ 9,001 $ - $ (1,963) $ 28,100
Accounts payable and other current liabilities 1,502 25,800 515 (1,260) 26,557
Deposits and deferred revenue 521 3,039 14 - 3,574
Demand note, Principal Shareholder - 1,846 - - 1,846
Due to affiliates (Note 9) (55,540) 72,779 (107) - 17,132
------------- -------------- --------------- -------------- --------------
Total current liabilities (32,455) 112,465 422 (3,223) 77,209
Long-term debt, excluding current portion 39,700 47,841 48 (2,544) 85,045
Subordinated notes and debentures, excluding current
portion 117,002 10,495 - - 127,497
Other long-term liabilities 1,715 2,366 3,232 - 7,313
Deferred income taxes (8,187) 35,615 (555) - 26,873
------------- -------------- --------------- -------------- -------------
Total liabilities 117,775 208,782 3,147 (5,767) 323,937
Shareholder's Equity
Common stock, par value of $.01 per share;
1,000,000 shares authorized; 978,300 issued and
outstanding at July 26, 1998 10 181 2 (183) 10
Additional paid-in capital 63,136 228,158 1,651 (229,809) 63,136
Retained earnings (deficit) (8,033) 50,447 812 (33,958) 9,268
------------- -------------- --------------- -------------- --------------
Total shareholder's equity 55,113 278,786 2,465 (263,950) 72,414
------------- -------------- --------------- -------------- --------------
Total liabilities and shareholder's equity $ 172,888 $ 487,568 $ 5,612 $ (269,717) $ 396,351
============= ============== =============== ============== ==============
</TABLE>
12
<PAGE>
<TABLE>
Statement of Operations for the three months ended January 25, 1998
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Elimination Consolidated
Subsidiaries Guarantor Entries ASC East
Subsidiaries
<S> <C> <C> <C> <C> <C>
Net revenues:
Resort $ 2,056 $ 68,099 $ 339 $ (369) $ 70,125
Real estate - 7,890 - - 7,890
----------- ---------------- --------------- ---------------- -----------------
Total net revenues 2,056 75,989 339 (369) 78,015
----------- ---------------- --------------- ---------------- -----------------
Operating expenses:
Resort 772 42,645 430 (369) 43,478
Real estate - 5,223 - - 5,223
Marketing, general and administrative - 7,247 9 - 7,256
Stock compensation charge - - - - -
Depreciation and amortization 381 7,768 2 - 8,151
----------- ---------------- --------------- ---------------- -----------------
Total operating expenses 1,153 62,883 441 (369) 64,108
----------- ---------------- --------------- ---------------- -----------------
Income (loss) from operations 903 13,106 (102) - 13,907
Interest expense 3,707 4,054 (1,227) - 6,534
----------- ---------------- --------------- ---------------- -----------------
Income (loss) before provision (benefit) for
income taxes (2,804) 9,052 1,125 - 7,373
Provision (benefit) for income taxes (623) 3,509 (10) - 2,876
----------- ---------------- --------------- ---------------- -----------------
Income (loss) from continuing operations (2,181) 5,543 1,135 - 4,497
Extraordinary loss, net of income tax benefit 4,266 198 - - 4,464
----------- ---------------- --------------- ---------------- -----------------
Net income (loss) $ (6,447) $ 5,345 $ 1,135 $ - $ 33
=========== ================ =============== ================ =================
</TABLE>
13
<PAGE>
<TABLE>
Statement of Operations for the six months ended January 25, 1998
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Guarantor Elimination Consolidated
Subsidiaries Subsidiaries Entries ASC East
<S> <C> <C> <C> <C> <C>
Net revenues:
Resort $ 2,815 $ 80,709 $ 761 $ (702) $ 83,583
Real estate - 8,700 - - 8,700
------------ --------------- -------------- ------------- ---------------
Total net revenues 2,815 89,409 761 (702) 92,283
------------ --------------- -------------- ------------- ---------------
Operating expenses:
Resort 1,127 59,569 820 (702) 60,814
Real estate - 6,148 - - 6,148
Marketing, general and administrative 1,932 11,853 11 - 13,796
Stock compensation charge 3,271 - - - 3,271
Depreciation and amortization 828 8,769 4 - 9,601
------------ --------------- -------------- ------------- ---------------
Total operating expenses 7,158 86,339 835 (702) 93,630
------------ --------------- -------------- ------------- ---------------
Income (loss) from operations (4,343) 3,070 (74) - (1,347)
Interest expense (income) 9,604 4,862 (1,225) - 13,241
------------ --------------- -------------- ------------- ---------------
Income (loss) before provision (benefit) for
income taxes (13,947) (1,792) 1,151 - (14,588)
Provision (benefit) for income taxes (4,732) (825) (0) - (5,557)
------------ --------------- -------------- ------------- ---------------
Income (loss) from continuing operations (9,215) (967) 1,151 - (9,031)
Extraordinary loss, net of income tax benefit 4,266 198 - - 4,464
============ =============== ============== ============= ===============
Net loss $ (13,481) $ (1,165) $ 1,151 $ - $ (13,495)
============ =============== ============== ============= ===============
</TABLE>
14
<PAGE>
<TABLE>
Statement of Cash Flows for the six months ended January 25, 1998
(in thousands) (unaudited)
<CAPTION>
ASC East Guarantor Non- Elimination Consolidated
Subsidiaries Guarantor Entries ASC East
Subsidiaries
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (13,481) $ (1,165) $ 1,151 $ - $ (13,495)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 828 8,769 4 - 9,601
Amortization of discount on subordinated notes and
other liabilities 97 48 - - 145
Deferred income taxes (7,460) (659) (432) - (8,551)
Extraordinary loss 7,318 - - - 7,318
Stock compensation charge 3,271 - - - 3,271
Decrease (increase) in assets:
Restricted cash - (699) 6 - (693)
Accounts receivable (848) (3,559) (237) (951) (5,595)
Inventory 80 (6,544) - - (6,464)
Prepaid expenses (133) 249 (926) - (810)
Real estate developed for sale - (42,386) 538 - (41,848)
Other assets 349 27 - - 376
Increase (decrease) in liabilities:
Accounts payable and other current liabilities 1,466 10,571 111 (22) 12,126
Deposits and deferred revenue 378 14,292 (39) - 14,631
Other long-term liabilities (194) 1,059 (392) - 473
Due to/from affiliate 3,129 13,133 (182) (163) 15,917
------------- ------------- -------------- ------------- ---------------
Net cash provided by (used in) operating activities (5,200) (6,864) (398) (1,136) (13,598)
------------- ------------- -------------- ------------- ---------------
Cash flows from investing activities
Capital expenditures (1,987) (30,178) (1) - (32,166)
Long-term investments - - 1,075 - 1,075
------------- ------------- -------------- ------------- ---------------
Net cash provided by (used in) investing activities (1,987) (30,178) 1,074 - (31,091)
------------- ------------- -------------- ------------- ---------------
Cash flows from financing activities
Net borrowings under New Credit Facility 53,444 - - - 53,444
Repayment of Old Credit Facility (59,623) - - - (59,623)
Proceeds from capital contribution from parent 36,004 - - 646 36,650
Repayment of subordinated debt (21,882) - - - (21,882)
Proceeds from long-term debt 4,330 45,957 - - 50,287
Repayment of long-term debt - (3,881) (122) 490 (3,513)
Cash payment in connection with
the early retirement of debt (5,086) - - - (5,086)
------------- ------------- -------------- ------------- ---------------
Net cash provided by (used in) financing activities 7,187 42,076 (122) 1,136 50,277
------------- ------------- -------------- ------------- ---------------
Net increase (decrease) in cash and cash
equivalents - 5,034 554 - 5,588
Cash and cash equivalents, beginning of period 18 2,182 434 - 2,634
============= ============= ============== ============= ===============
Cash and cash equivalents, end of period $ 18 $ 7,216 $ 988 $ - $ 8,222
============= ============= ============== ============= ===============
</TABLE>
15
<PAGE>
11. Long Term Debt. The Company and the Company's Parent has negotiated an
amendment to the Senior Credit Facility on March 3, 1999 (the "Credit Facility
Amendment") which significantly modifies the covenant requirements for the
current quarter and on a prospective basis. The Credit Facility Amendment
requires minimum quarterly EBITDA (as defined within the credit agreement)
levels starting with the Company's third quarter of fiscal 1999 and places a
maximum level of non-real estate capital expenditures for fiscal 2000 of between
$15 and $20 million, with maximum levels depending on the Company's, and
subsidiaries of the Company's Parent's, ability to consummate sales of certain
non-strategic assets, as defined in the Credit Facility Amendment. Following
fiscal 2000, annual resort capital expenditures (exclusive of real estate
capital expenditures) are capped at the lesser of (i) $35 million or (ii) the
total of consolidated EBITDA for the four fiscal quarters ended April of the
previous fiscal year less consolidated debt service for the same period.
On September 25, 1998 one of the Company's Subsidiaries, Grand Summit
Resort Properties, Inc., ("GSRP", the Company's Grand Summit development
subsidiary) closed on a construction loan facility (the "Textron Facility") with
TFC Textron Financial. A project at the Canyons and a project at Steamboat were
initially planned to be financed through the Textron Facility. In early March,
1999, Textron advised GSRP that it was having difficulties syndicating the
Steamboat portion of the Textron Facility. On March 8, 1999, GSRP released
Textron from its obligation to syndicate the Steamboat portion of the Textron
Facility.
The construction of the Canyons project is being financed by the
Textron Facility. When fully syndicated, the Textron Facility will have a
maximum principal amount of $95 million, bears interest at the rate of prime
plus 1.5% per annum (payable monthly in arrears), is subject to a 9.25% floor
and matures on September 24, 2002. The principal of the Textron Facility is
payable incrementally as quartershare sales are closed at the rate of 80% of the
net proceeds of each closing. The Textron Facility is collateralized by
mortgages against the project sites (including the completed Grand Summit Hotels
at Killington, Mt. Snow, Sunday River and Attitash Bear Peak), and is subject to
customary covenants, representations and warranties for this type of
construction facility. The Textron Facility is non-recourse to the Company and
its resort operating subsidiaries (although it is collateralized by substantial
assets of GSRP, which comprise substantial assets of the Company). As of January
24, 1999, the total assets that collateralized the Real Estate Facilities, and
are included in the accompanying condensed consolidated balance sheet, was
approximately $164.5 million.
The Company currently expects that the Steamboat project will be
financed through a construction loan syndicated by BankBoston, N.A.
On December 19, 1998 another of the Company's subsidiaries closed on a
construction loan facility between Canyons Resort Properties, Inc., (a wholly
owned subsidiary of Resort Properties) and KeyBank, N.A. (the "Key Facility").
The Key Facility will have a maximum principal amount of $29 million, will bear
an interest rate of prime plus 1/4% per annum (payable monthly in arrears), and
matures on June 30, 2000. The Company expects to begin drawing under the Key
Facility in March or April of 1999, following completion of the required equity
contribution of the Company. The Key Facility is collateralized by a mortgage
and security interest in the Sundial Lodge project, a $5 million payment
guaranty of Resort Properties, and a full completion guaranty of Resort
Properties. The Key Facility is non-recourse to the Company and its resort
operating subsidiaries (although it is collateralized by substantial assets of
Resort Properties and its subsidiaries).
16
<PAGE>
On January 8, 1999, one of the Company's Subsidiaries American Skiing
Company Resort Properties ("Resort Properties") closed on a term loan facility
(the "Resort Properties Term Facility") with BankBoston. The Resort Properties
Term Facility has a maximum principal amount of $58 million, currently bears
interest at a rate of 16% per annum (payable monthly in arrears) and matures on
June 30, 2001. The terms of the Resort Properties Term Facility are subject to
change as the arrangement becomes fully syndicated. The Resorts Property Term
Facility is currently fully underwritten by Bank Boston. The Resort Properties
Term Facility is collateralized by security interests in, and mortgages on,
substantially all of Resort Properties' assets, which primarily consist of
undeveloped real property and the stock of its real estate development
subsidiaries (including Grand Summit Resort Properties, the Company's hotel
development subsidiary). As of January 24, 1999, the total assets that
collateralized the Resort Properties Term Facility and are included in the
accompanying condensed consolidated balance sheet was approximately $164.5
million. The Resort Properties Term Facility is non-recourse to American Skiing
Company and its resort operating subsidiaries, however, alterations in the
Resort Properties Term Facility resulting from syndication requirements could
also modify the non-recourse nature of that facility to the Company and its
resort operating subsidiaries.
12. Recently Issued Accounting Standards. In June 1997, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 is
effective for all fiscal quarters of all fiscal years beginning after December
15, 1997 (the fiscal year ending July 25, 1999 for the Company). This
pronouncement requires disclosure of comprehensive income and its components in
interim and annual reports. Total comprehensive income components included in
stockholders' equity include any changes in equity during a period that are not
the result of transactions with owners, including cumulative translation
adjustments, unrealized gains and losses on available-for-sale securities and
minimum pension liabilities. As of January 24, 1999, the Company has no such
items of comprehensive income. As such, the Company's adoption of SFAS 130 had
no effect on the accompanying condensed consolidated financial statements for
the three and six months ended January 24, 1999.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). This statement established standards for reporting information on
operating segments in interim and annual financial statements. SFAS 131 is
effective for fiscal years beginning after December 15, 1997 (the fiscal year
ending July 25, 1999 for the Company) and does not require application to
interim financial statements in the initial year of application. As the company
already discloses segment information under SFAS 14, "Financial Reporting for
Segments of a Business Enterprise", management does not believe the adoption of
SFAS 131 will result in a change in the composition of the Company's operating
segments, or in the previously reported net income for each segment. Additional
disclosure to comply with SFAS 131 will be required in the Company's audited
financial statements for the current fiscal year ending July 25, 1999.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133 is effective for fiscal quarters of all fiscal years beginning
after June 15, 1999 (the fiscal year ending July 30, 2000 for the Company). This
pronouncement requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
17
<PAGE>
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. Management of the Company is
currently reviewing the impact of SFAS 133 on its consolidated financial
statements.
12. Commitments and Contingencies. The Parent's President, Chief Executive
Officer and majority shareholder (the "Majority Shareholder") is the obligor
under a margin loan (the "Margin Loan") with ING (U.S.) Capital Corporation. The
Margin Loan has two different maintenance bases: (i) one which requires that the
aggregate market value of the collateral be at a certain level in order to take
additional advances under the arrangement to make interest payments (the
"Advance Base") and (ii) one which requires that the aggregate market value of
the collateral be at a certain level in order to avoid a default under the terms
of the Margin Loan (the "Minimum Base"). The Margin Loan is collateralized by
the Majority Shareholder's 833,333 shares of the Parent's Common Stock and
14,760,530 shares of the Parent's Class A Common Stock. At any time that the
aggregate market value of the collateral is below the Minimum Base, the Majority
Shareholder is required to either pay down the balance of the Margin Loan or to
pledge additional collateral. The Company is not liable for, nor do any of its
assets collateralize, the Margin Loan. However, a default under the Margin Loan
that is not cured within the applicable grace period could result in a
realization by ING of some or all of the Majority Shareholder's shares of the
Parent's Common and Class A Common Stock which could result in a change in
control of the Parent. A change in control of the Parent could cause a default
under one or more of the Parent's and the Company's major credit facilities
(including the Notes), which would likely be material and adverse to the Parent
and the Company, and could also limit the annual utilization of the Company's
current net operating losses for income taxes under section 382 of the Internal
Revenue Code. At no time during the six month period ended January 24, 1999 has
the aggregate market value of the collateral been below the Advance Base or the
Minimum Base. From January 25, 1999 through March 9, 1999, the aggregate market
value of the collateral for the Margin Loan has been, at times, below the
Advance Base. However, at no time from January 25, 1999 through March 9, 1999
has the aggregate market value of the collateral been below the Minimum Base.
18
<PAGE>
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The following is management's discussion and analysis of financial
condition and results of operations for the three and six months ended January
24, 1999. As you read the material below, we urge you to carefully consider our
condensed, consolidated financial statements and related notes contained
elsewhere in this report and the audited financial statements and related notes
contained in our Form 10-K for the fiscal year ended July 26, 1998, filed with
the Securities and Exchange Commission on November 9, 1998. Portions of this
presentation have been reduced in scope pursuant to General Instruction (H) of
Form 10-Q.
Liquidity and Capital Resources
Short-Term. The Company's primary short-term liquidity needs are
funding seasonal working capital requirements, continuing and completing real
estate development projects, funding its summer 1999 capital improvement program
and servicing indebtedness. Cash requirements for ski-related and real estate
development activities are provided by separate sources. The Company's primary
sources of liquidity for ski-related working capital and ski-related capital
improvements are cash flow from operations of its non-real estate subsidiaries
and borrowings under the Senior Credit Facility (as hereinafter defined). Real
estate development and real estate working capital is funded primarily through
construction financing facilities established for major real estate development
projects and through a term loan facility established through the Company's real
estate development holding company, American Skiing Company Resort Properties,
Inc. ("Resort Properties"). The construction financing facilities and Resort
Properties term loan facility (collectively, the "Real Estate Facilities") are
without recourse to ASC East, Inc. and its resort operating subsidiaries. The
Real Estate Facilities are collateralized by significant real estate assets of
Resort Properties and its subsidiaries, including, without limitation, the
assets and stock of Grand Summit Resort Properties, Inc., the Company's primary
hotel development subsidiary. As of January 24, 1999, the total assets that
collateralized the Real Estate Facilities, and are included in the accompanying
condensed consolidated balance sheet, was approximately $164.5 million.
The Company established a senior credit facility on November 12, 1997
(as amended to date, the "Senior Credit Facility"). The Senior Credit Facility
is divided into two sub-facilities, $65 million of which ($19.2 million of which
was available at March 1, 1999) is available for borrowings by the Company and
its resort operating subsidiaries (the "East Facility") and the remainder of
which is available for borrowings only by subsidiaries of the Company's parent,
American Skiing Company (the "Parent") other than the Company and its
subsidiaries (the "West Facility"). The East Facility consists of a six-year
revolving credit facility in the amount of $35 million and an eight-year term
facility in the amount of $30 million.
The maximum availability under the revolving facility will reduce over
the term of the East Facility by certain prescribed amounts. The term facility
amortizes at an annual rate of approximately 1.0% of the principal amount for
19
<PAGE>
the first six years with the remaining portion of the principal due in two
substantially equal installments in years seven and eight. Beginning in July
1999, the East Facility requires mandatory prepayment of 50% of the Company's
excess cash flows during any period in which the ratio of the Company's total
senior debt to EBITDA (as defined within the credit agreement) exceeds 3.50 to
1. In no event, however, will such mandatory prepayments reduce the revolving
facility commitment below $35 million. The East Facility contains affirmative,
negative and financial covenants customary for this type of credit facility,
including maintenance of certain financial ratios. Except for a leverage test,
compliance with financial covenants is determined on a consolidated basis with
remaining subsidiaries of the Parent notwithstanding the bifurcation of the
Senior Credit Facility into sub-facilities. The East Facility is collateralized
by substantially all the assets of ASC East, Inc. and its subsidiaries, except
its real estate development subsidiaries (consisting of Resort Properties and
its subsidiaries), which are not borrowers under the Senior Credit Facility.
The revolving facility is subject to an annual 30-day clean down
requirement to an outstanding balance of not more than $10 million, which clean
down period must include April 30 of each fiscal year. The Company anticipates
that its most immediate capital need is meeting this mandatory 30 day clean down
period in 1999. Due to the adverse weather conditions experienced by the Company
during its second fiscal quarter of 1999 and their resulting impact on the
Company's cash flows, the Company expects to take one or more of the following
steps in order to meet the clean down requirements and improve cash flows for
the remainder of fiscal 1999 and fiscal 2000: (a) the sale of some of the
Company's non-strategic assets (assets deemed by management not to be
significant to its skiing and other resort activities), (b) a reduction of
capital expenditures for the remainder of fiscal 1999 and fiscal 2000, and (c) a
reduction of the operating expenditures of the Company and its subsidiaries.
During the clean down period, the Company expects to have little, if any,
borrowing availability under the East Facility and will have limited ability to
fund unusual and/or infrequent expenses. The failure to meet the clean down
requirements under the East Facility or the West Facility would result in an
event of default under the Senior Credit Facility, which, if unremedied and not
waived by the lenders under the Senior Credit Facility, would also constitute an
event of default under the Resort Properties Term Loan, the Textron Facility,
the Key Facility (each as defined below) and the Notes. In the event of such
defaults, the Company would be forced to renegotiate the terms of such
facilities with its respective lenders and/or raise sufficient capital to
refinance one or more of such facilities. There can be no assurance that the
Company will generate sufficient cash from operations (including reductions of
expenses) or asset sales to meet the clean down requirements or, if it fails to
do so, that the Company would be successful in its efforts to renegotiate such
terms or obtain such additional capital, and the consequences of such failure
would likely be material and adverse to the Company.
Due to the adverse weather conditions in the eastern United States
during the Company's second fiscal quarter of 1999 and their effect on the
Company's second quarter revenue, EBITDA and net income, the Company entered
into an amendment to the East Facility on March 3, 1999 (the "Credit Facility
Amendment") which significantly modifies the covenant requirements of the Senior
Credit Facility for the current quarter and on a prospective basis. Based upon
historical operations, management presently anticipates that the Company will be
able to meet the financial covenants of the East Facility as amended by the
20
<PAGE>
Credit Facility Amendment. Failure to meet one or more of these covenants could
result in an event of default under the East Facility. In the event that such
default was not waived by the lenders holding a majority of the debt under the
East Facility, such default would also constitute defaults under one or more of
the Textron Facility, the Key Facility, the Resort Properties Term Loan (each
hereinafter defined) and the Notes, the consequence of which would likely be
material and adverse to the Company.
The Credit Facility Amendment also places a maximum level of non-real
estate capital expenditures for fiscal 2000 of between $15 million and $20
million by the Company, the Parent, and their respective direct and indirect
subsidiaries (other than Resort Properties and its subsidiaries), with maximum
levels depending on the Parent and its subsidiaries' ability to consummate sales
of certain non-strategic assets. Following fiscal 2000, annual resort capital
expenditures for the parent and its subsidiaries (exclusive of real estate
capital expenditures) are capped at the lesser of (i) $35 million or (ii) the
total of (a) consolidated EBITDA for the four fiscal quarters ended in April of
the previous fiscal year less (b) consolidated debt service for the same period.
Summer 1998 capital improvements were funded through the East Facility
and a $2 million leasing facility arranged by BancBoston Leasing, Inc.. The
Company's summer 1999 resort capital improvement program is expected to be
funded through the East Facility.
Interim funding of working capital for Resort Properties and its 1998
real estate development program was obtained through a loan from BankBoston,
N.A. in the maximum amount of $30 million, which closed on September 4, 1998 and
had an interest rate of 14% (the "Bridge Loan"). On January 8, 1999, the Bridge
Loan was paid with proceeds from a term loan facility between BankBoston and
Resort Properties in the maximum principal amount of $58 million (the "Resort
Properties Term Facility"). The Resort Properties Term Facility currently bears
interest at a rate of 16% per annum (payable monthly in arrears) and matures on
June 30, 2001. As of March 1, 1999, $39.9 million was outstanding under the
Resort Properties Term Facility. Although the Company expects that the terms of
the Resort Properties Term Facility will remain substantially similar to current
terms, one or more of those terms (excepting certain terms such as the maturity
date and commitment fee) may be altered depending on the requirements for
syndication of the Resort Properties Term Facility, and such alterations could
be material and adverse to the Company. The possibility exists that the
Company's second quarter financial results could adversely affect the
syndication of the Resort Properties Term Facility and result in alteration of
the terms of such facility to facilitate syndication, which alterations could be
material and adverse to the Company. The Resort Properties Term Facility is
collateralized by security interests in, and mortgages on, substantially all of
Resort Properties' assets, which primarily consist of undeveloped real property
and the stock of its real estate development subsidiaries (including Grand
Summit Resort Properties, the Company's hotel development subsidiary). As of
January 24, 1999, the total assets that collateralized the Resort Properties
Term Facility and are included in the Company's consolidated balance sheet was
approximately $164.5 million. The Resort Properties Term Facility is
non-recourse to the Company and its resort operating subsidiaries.
The Company runs substantially all of its real estate development through
single purpose subsidiaries, each of which is a wholly-owned subsidiary of
Resort Properties. In its fourth fiscal quarter of 1998, the Company commenced
construction on three new hotel projects (two at The Canyons in Utah and one at
Steamboat in Colorado). Two of these new hotel projects are Grand Summit Hotels
which are being constructed by Grand Summit Resort Properties, Inc., ("GSRP",
the Company's Grand Summit development subsidiary). The Grand Summit Hotel at
The Canyons is being financed through a construction loan facility
21
<PAGE>
among GSRP and various lenders, including TFC Textron Financial, the syndication
agent and administrative agent, which closed on September 25, 1998 (the "Textron
Facility"). The Company's other Grand Summit Hotel is being constructed at the
Company's Steamboat resort in Colorado. The project was initially planned to be
financed through the Textron Facility. In early March, 1999, Textron advised
GSRP that it was having difficulties syndicating the Steamboat portion of the
Textron Facility. On March 8, 1999, GSRP released Textron from its obligation to
syndicate the Steamboat portion of the Textron Facility.
When fully syndicated, the Textron Facility will have a maximum
principal amount of $95 million. As of March 1, 1999, the amount outstanding
under this loan was $25.2 million. A portion of the proceeds of the Textron
Facility (approximately $31 million) were used to repay an existing facility
with TFC Textron which had been applied to finance construction of Grand Summit
Hotels at Killington, Mt. Snow, Sunday River and Attitash Bear Peak. The Textron
Facility bears interest at the rate of prime plus 1.5% per annum (payable
monthly in arrears), is subject to a 9.25% floor and matures on September 24,
2002. The principal of the Textron Facility is payable incrementally as
quartershare sales are closed at the rate of 80% of the net proceeds of each
closing. The Textron Facility is collateralized by mortgages against the project
site (including the completed Grand Summit Hotels at Killington, Mt. Snow,
Sunday River and Attitash Bear Peak), and is subject to customary covenants,
representations and warranties for this type of construction facility. The
Textron Facility is non-recourse to the Company and its resort operating
subsidiaries (although it is collateralized by substantial assets of GSRP, which
comprise substantial assets of the Company). The Textron Facility, together with
funds invested by the Company, is expected to be sufficient to fund the
Company's Grand Summit Hotel project at The Canyons. The Textron Facility is
currently being syndicated for participants for the full amount of the facility,
and, as of March 1, 1999, Textron has committed to, or secured commitments for,
approximately $70 million of the facility on currently existing terms. The
Company expects that the Textron Facility will be fully syndicated on terms
identical or substantially similar to those currently in place. There can be no
assurance, however, that the Textron Facility will be fully syndicated or will
be fully syndicated on terms acceptable to the Company. Failure to fully
syndicate the Textron Facility on terms acceptable to the Company would require
Resort Properties and GSRP to seek alternative or additional financing sources
for the Grand Summit Hotels currently under construction at the Canyons or to
curtail further construction activities. The possibility exists that the
Company's second quarter financial results could adversely affect the
syndication of the Textron Facility and result in alteration of the terms of
such facility to facilitate syndication, which alterations could be material and
adverse to the Company and could change the non-recourse nature of the Textron
Facility to the Company and its resort operating subsidiaries (other than ASC
East and its resort operating subsidiaries).
The Company currently expects that the Steamboat Grand Summit Hotel
will be financed through a construction loan syndicated by BankBoston, N.A..
There can be no assurance, however, that this loan will be fully syndicated or
will be fully syndicated on terms acceptable to the Company. Failure to fully
syndicate the Steamboat construction loan on terms acceptable to the Company
would require Resort Properties and GSRP to seek alternative or additional
funding sources for the Grand Summit Hotel currently under construction at
Steamboat or to curtail further construction activities.
The remaining hotel project commenced by the Company in 1998, the
Sundial Lodge project at The Canyons, is being financed through a construction
loan facility between Canyons Resort Properties, Inc., (a wholly-owned
subsidiary of Resort Properties) and KeyBank, N.A. (the "Key Facility"). The Key
Facility will have a maximum principal amount of $29 million, will bear an
interest rate of prime plus 1/4% per annum (payable monthly in arrears), and
22
<PAGE>
matures on June 30, 2000. Additional costs (approximately $8 million) for the
Sundial Lodge project have been financed through proceeds of the Resort
Properties Term Facility, which have been loaned on an intercompany basis by
Resort Properties to Canyons Resort Properties, Inc.. The Key Facility closed on
December 19, 1998. The Company expects to begin drawing under the Key Facility
in March or April of 1999, following completion of the required equity
contribution (approximately $8 million) of the Company in the Sundial Lodge
project. The Key Facility is collateralized by a mortgage and security interest
in the Sundial Lodge project, a $5 million payment guaranty of Resort
Properties, and a full completion guaranty of Resort Properties. The Key
Facility is non-recourse to the Company and its resort operating subsidiaries
(although it is collateralized by substantial assets of Resort Properties and
its subsidiaries).
As of January 24, 1999, the total assets that collateralized the Real
Estate Facilities, and are included in the accompanying condensed consolidated
balance sheet, was approximately $164.5 million.
The Parent's President, Chief Executive Officer and majority shareholder
(the "Majority Shareholder") is the obligor under a margin loan (the "Margin
Loan") with ING (U.S.) Capital Corporation. The Margin Loan has two different
maintenance bases: (i) one which requires that the aggregate market value of the
collateral be at a certain level in order to take additional advances under the
arrangement to make interest payments (the "Advance Base") and (ii) one which
requires that the aggregate market value of the collateral be at a certain level
in order to avoid a default under the terms of the Margin Loan (the "Minimum
Base"). The Margin Loan is collateralized by the Majority Shareholder's 833,333
shares of the Parent's Common Stock and 14,760,530 shares of the Parent's Class
A Common Stock. At any time that the aggregate market value of the collateral is
below the Minimum Base, the Majority Shareholder is required to either pay down
the balance of the Margin Loan or to pledge additional collateral. The Company
is not liable for, nor do any of its assets collateralize, the Margin Loan.
However, a default under the Margin Loan that is not cured within the applicable
grace period could result in a realization by ING of some or all of the Majority
Shareholder's shares of the Parent's Common and Class A Common Stock which could
result in a change in control of the Parent. A change in control of the Parent
could cause a default under one or more of the Parent's and the Company's major
credit facilities (including the Notes), which would likely be material and
adverse to the Parent and the Company, and could also limit the annual
utilization of the Company's current net operating losses for income taxes under
section 382 of the Internal Revenue Code. At no time during the six month period
ended January 24, 1999 has the aggregate market value of the collateral been
below the Advance Base or the Minimum Base. From January 25, 1999 through March
9, 1999, the aggregate market value of the collateral for the Margin Loan has
been, at times, below the Advance Base. However, at no time from January 25,
1999 through March 9, 1999 has the aggregate market value of the collateral been
below the Minimum Base. The Majority Shareholder has indicated to management of
the Company's Parent that he has both the means and the intent to pay down
and/or further collateralize the Margin Loan as necessary to prevent a default
under such loan. The Company can provide no assurances that the Majority
Shareholder will prevent a default.
Long-Term. The Company's primary long-term liquidity needs are to fund
skiing related capital improvements at certain of its resorts and development of
its slopeside real estate. The Company has invested over $85 million in skiing
related facilities in fiscal years 1997 and 1998 combined. As a result, the
Company expects its resort capital programs for the next several fiscal years to
be more limited in size. The fiscal 1999 resort capital program is expected to
23
<PAGE>
total approximately $30 million, substantially all of which was expended or
fully committed prior to January 24, 1999. The fiscal 2000 resort capital
program is estimated at between $7 million and $11 million.
The Company's largest long-term capital needs relate to certain resort
capital expenditure projects and the Company's real estate development program.
For the next two fiscal years, the Company anticipates its annual maintenance
capital needs to be approximately $7 million. There is a considerable degree of
flexibility in the timing and, to a lesser degree, scope of the Company's growth
capital program. Although specific capital expenditures can be deferred for
extended periods, continued growth of skier visits, revenues and profitability
will require continued capital investment in on-mountain improvements. The
Company's practice is to finance on-mountain capital improvements through resort
cash flow and the East Facility. The size and scope of the capital improvement
program will generally be determined annually depending upon future availability
of cash flow from each season's resort operations and future borrowing
availability and covenant restrictions under the East Facility. The Credit
Facility Amendment places a maximum level of non-real estate capital
expenditures by the Company, its Parent, and their respective subsidiaries for
fiscal 2001 and beyond at the lesser of (i) $35 million or (ii) the total of (a)
consolidated EBITDA (as defined therein) for the four fiscal quarters ended in
April of the previous fiscal year less (b) consolidated debt service for the
same period. Management believes that these capital expenditure amounts will be
sufficient to meet the Company's needs for non-real estate capital expenditures
for the near future.
The Company's business plan anticipates the development of both Grand
Summit hotels and condominium hotels at several resorts, and resort villages at
Sunday River, Killington, The Canyons, Steamboat and Heavenly. The timing and
extent of these projects is subject to local and state permitting requirements
which may be beyond the Company's control, as well as to the Company's cash flow
requirements and availability of external capital. Substantially all of the
Company's real estate development is undertaken through the Company's real
estate development subsidiary, Resort Properties. Recourse on indebtedness
incurred to finance this real estate development is limited to Resort Properties
and/or its subsidiaries (including GSRP). Such indebtedness is generally
collateralized by the projects financed under the particular indebtedness which,
in some cases, constitutes a significant portion of the assets of the Company.
As of January 24, 1999, the total assets that collateralized this debt, and are
included in the condensed consolidated balance sheet, totaled approximately
$164.5 million. Resort Properties' seven existing development projects are
currently being funded by the Resort Properties Term Facility, the Textron
Facility and the Key Facility.
The Company expects to undertake future real estate development
projects through special purpose subsidiaries with financing provided
principally on a non-recourse basis to the Company and its resort operating
subsidiaries. Although this financing is expected to be non-recourse to the
Company and its resort subsidiaries, it will likely be collateralized by
existing and future real estate projects of the Company which may constitute
significant assets of the Company. Required equity contributions for these
projects must be generated before those projects can be undertaken. Potential
sources of equity contributions include sales proceeds from existing real estate
projects and assets, and potential sales of equity interests in Resort
Properties and/or its real estate development subsidiaries. Financing
commitments for future real estate development do not currently exist, and no
assurance can be given that they will be available or established. The Company
will be required to establish both equity sources and construction facilities or
other financing arrangements for these projects before undertaking each
development.
24
<PAGE>
Changes in Results of Operations
Second Quarter of Fiscal 1999 compared to the Second Quarter of Fiscal 1998.
1. Resort revenues. Resort revenues decreased $6.5 million, or 9.3%, from
$70.1 million for the three months ended January 25, 1998 to $63.6 million for
the three months ended January 24, 1999. The decrease is primarily attributable
to unseasonably warm weather and a lack of natural snowfall in New England,
which resulted in a decline in paid skier visits at many of the Company's
resorts. The majority of this decrease is from lift ticket revenues, retail
sales and skier development revenues, all of which are directly related to the
decrease in paid skier visits.
2. Real estate revenues. Real estate revenue decreased $1.6 million, or
20.3%, from $7.9 million for the three months ended January 25, 1998 to $6.3
million for the three months ended January 24, 1999. The majority of this
decrease is attributable to the substantial levels of revenues in fiscal 1998
resulting from closing of pre-sold quartershare units at the Jordan Grand Hotel
at Sunday River. This hotel was completed during the second fiscal quarter of
1998, at which time the Company recorded $6.3 million in sales revenue, most of
which represented closings of units pre-sold over the previous 14 months. During
the second fiscal quarter of 1999, the Company realized $1.6 million in on-going
sales at the Jordan Grand Hotel. This $4.8 million decrease in sales at the
Jordan Grand Hotel was offset by increases in quartershare unit sales of $1.2
million each at the Company's Grand Summit Hotels at Killington and Mt. Snow,
both of which were completed during the second fiscal quarter of 1998.
Accordingly no sales revenue was realized for these projects during the second
fiscal quarter of 1998. The Company also realized $0.9 million of revenue from
the sale of Locke Mountain Townhouses at Sunday River in the second fiscal
quarter of 1999.
3. Cost of resort operations. Cost of resort operations increased $0.3
million, or 0.7%, from $43.5 million for the three months ended January 25, 1998
to $43.8 million for the three months ended January 24, 1999. The Company
experienced an increase in costs associated with four new hotels and four new
Perfect Turn Discovery Centers which were slightly offset by decreased mountain
operating costs due to the slow start to the ski season.
4. Cost of real estate operations. Cost of real estate operations increased
$2.6 million, or 50.0% from $5.2 million for the three months ended January 25,
1998 to $7.8 million for the three months ended January 24, 1999. The increase
is attributable to a) the write-off of $0.7 million in prepaid advertising and
commission charges incurred in generating pre-sale contracts, some of which have
subsequently expired, for a Grand Summit Hotel at the Company's Sugarbush
resort, of which the timing of development is currently being re-evaluated by
the Company, b) $0.8 million of expenses incurred relating to the Company's
unsuccessful $300 million bond offering which was undertaken principally to
provide additional financing for the Company's real estate projects, c) cost of
unit sales of Locke Mountain Townhouses at Sunday River of $0.9 million and d)
an increase of $1.2 million in selling and administrative costs associated with
25
<PAGE>
increased activity relating to the company's existing and planned real estate
projects. These increases were slightly offset by an overall decrease in cost of
sales of quartershare units of $0.9 million at the existing Grand Summit Hotels
($2.8 million decrease at the Jordan Grand Hotel due to a decrease in sales, and
increases at the Killington and Mt. Snow hotels of $1.0 million and $0.9
million, respectively due to increases in sales at those hotels). These costs of
unit sales also include $0.5 million in expenses related to unit upgrades at
these hotels.
5. Marketing, general and administrative. Marketing, general and
administrative expenses increased $1.9 million, or 26.0%, from $7.3 million for
the three months ended January 25, 1998 to $9.2 million for the three months
ended January 24, 1999. Of this increase, $0.6 million is attributable to
corporate overhead costs allocated from the Company's parent (See Note 9
- -Related Party Transactions). The remaining increase can be attributable to
marketing charges related to the Company's four new hotels and increased
marketing campaigns at all of the resorts.
6. Depreciation and amortization. Depreciation and amortization increased
$1.8 million or 22.0%, from $8.2 million for the three months ended January 25,
1998 to $10.0 million for the three months ended January 24, 1999. Additional
depreciation expense related to the Company's recent capital improvements
accounts for approximately $2.0 million of this increase. The change in the
estimated useful lives of certain of the Company's ski-related assets decreased
depreciation expense by $0.3 million compared to the second fiscal quarter of
1998. See Note 1-Change in Accounting Estimate.
7. Interest expense. Interest expense increased $0.9 million, or 13.8%,
from $6.5 million for the three months ended January 25, 1998 to $7.4 million
for the three months ended January 24, 1999 mainly due to increased debt levels
associated with financing the Company's recent capital improvements.
8. Provision for income taxes. Provision for income taxes decreased $6.2
million, from a provision $2.9 million for the three months ended January 25,
1998 to a benefit of $3.3 million for the three months ended January 24, 1999.
The increase is attributable to the increase in the Company's net loss for the
three months ended January 24, 1999 as compared to the three months ended
January 25, 1998.
First Six Months of Fiscal 1999 compared to the First Six Months of Fiscal 1998.
1. Resort revenues. Resort revenues decreased $4.3 million, or 5.1%, from
$83.6 million for the six months ended January 25, 1998 to $79.3 million for the
six months ended January 24, 1999. The majority of this decrease ($5.4 million)
is from lift ticket and skier development revenues, both of which are directly
related to the decrease in paid skier visits due to the unseasonably warm
weather and the lack of natural snowfall experienced in New England during the
period. There was also a $1.9 million decrease in revenues from existing food
and beverage and lodging outlets directly related to the decrease in skier days.
Offsetting these decreases was a $2.6 million increase in food and beverage and
lodging revenues related to the Company's four new hotels.
2. Real estate revenues. Real estate revenue increased $1.9 million, or
21.8%, from $8.7 million for the six months ended January 25, 1998 to $10.6
million for the six months ended January 24, 1999. The increase is primarily
attributable to $4.5 million in quartershare unit sales at Grand Summit Resort
Hotels at the Company's Killington ($2.0 million) and Mount Snow ($2.5 million)
resorts, and $2.0 million from the sale of Locke Mountain townhouses at the
Company's Sunday River resort during the six months ended January 24, 1999. All
26
<PAGE>
three of the above projects commenced sales during the third fiscal quarter of
1998. Accordingly, no sales revenues were realized for these projects for the
six months ended January 25, 1998. These increases in sales were partially
offset by decreased revenues from sales of quartershare units at the Jordan
Grand Hotel at Sunday River. This hotel was completed during the second fiscal
quarter of 1998, at which time the Company recorded $6.3 million in sales
revenue, most of which represented closings of units pre-sold over the previous
14 months. The Company realized $1.9 million in ongoing sales at the Jordan
Grand Hotel during the first six months of 1999.
3. Cost of resort operations. Cost of resort operations increased $2.5
million, or 4.1%, from $60.8 million for the six months ended January 25, 1998
to $63.3 million for the six months ended January 24, 1999. The increase is
mainly due to increased costs associated with four new hotels and four new
Perfect Turn Discovery Centers. These increases were slightly offset by
decreased mountain operating costs due to the slow start to the ski season in
the east.
4. Cost of real estate operations. Cost of real estate operations increased
$5.7 million, or 93.4% from $6.1 million for the six months ended January 25,
1998 to $11.8 million for the six months ended January 24, 1999. This increase
is attributable to a) the write-off of $0.7 million in prepaid advertising and
commission charges incurred in generating pre-sale contracts, some of which have
subsequently expired, for a Grand Summit Hotel at the Company's Sugarbush
resort, of which the timing of development is currently being re-evaluated by
the Company, b) $0.8 million of expenses incurred relating to the Company's
unsuccessful $300 million bond offering which was undertaken principally to
provide additional financing for the Company's real estate projects, c) cost of
unit sales of Locke Mountain Townhouses at Sunday River of $1.7 million, d) an
increase of $2.0 million in selling and administrative costs associated with
increased activity relating to the Company's existing real estate projects, and
e) an increase in cost of sales of quartershare units of $0.5 million at the
existing Grand Summit Hotels ($1.6 million and $1.5 million increases,
respectively, at the Killington and Mt. Snow hotels due to increases in sales,
offset by a $2.6 million decrease at the Jordan Grand Hotel due to a decrease in
sales). These costs of unit sales also include $0.5 million in expenses related
to unit upgrades at these hotels.
5. Marketing, general and administrative. Marketing, general and
administrative expenses increased $0.5 million, or 3.6%, from $13.8 million for
the six months ended January 25, 1998 to $14.3 million for the six months ended
January 24, 1999. The increase can mainly be attributed to marketing charges
related to the Company's four new hotels.
6. Stock compensation charge. Stock compensation charge decreased $3.3
million, or 100%. This charge was recognized during the six months ended January
25, 1998 to reflect stock options granted to certain members of senior
management in relation to the Company's parents initial public offering.
7. Depreciation and amortization. Depreciation and amortization increased
$2.2 million, or 22.9%, from $9.6 million for the six months ended January 25,
1998 to $11.8 for the six months ended January 24, 1999. The increase is
primarily due to additional depreciation related to the Company's recent capital
improvements. The change in the estimated useful lives of certain of the
27
<PAGE>
Company's ski-related assets decreased depreciation expense by $0.3 million
compared to the first six months of 1998. See Note 1 - Change in Accounting
Estimate.
8. Interest expense. Interest expense increased $1.1 million, or 8.3%, from
$13.2 million for the six months ended January 25, 1998 to $14.3 million for the
six months ended January 24, 1999 mainly due to increased debt levels associated
with financing the Company's recent capital improvements.
9. Benefit for income taxes. Benefit for income taxes increased $4.4
million, or 78.6%, from $5.6 million for the six months ended January 25, 1998
to $10.0 million for the six months ended January 24, 1999. The increase is
attributable to the increase in the Company's net loss for the six months ended
January 24, 1999 as compared to the six months ended January 25, 1998.
28
<PAGE>
Year 2000 disclosure
Background
The "Year 2000 Problem" is the result of many existing computer
programs and embedded chip technologies containing programming code in which
calendar year data is abbreviated by using only two digits rather than four to
refer to a year. As a result of this, some of these programs fail to operate or
may not properly recognize a year that begins with "20" instead of "19". This
may cause such software to recognize a date using "00" as the year 1900 rather
than the year 2000. Even systems and equipment that are not typically thought of
as computer-related often contain embedded hardware or software that may
improperly understand dates beginning with the year 2000.
The Company has developed a task force with representation throughout
the organization. The task force has developed a comprehensive strategy to
systematically evaluate and update systems as appropriate. In some cases, no
system changes are necessary or the changes have already been made. In all other
cases, modifications are planned to prepare the Company's systems to be Year
2000 compliant by September 1999. The disclosure below addresses the Company's
Year 2000 Project.
Company's state of readiness
The Year 2000 Project is divided into three initiatives: (i)
Information Technology ("IT") Systems, (ii) Non-IT Systems and (iii) related
third party providers. The Company has identified the following phases with
actual or estimated dates of completion: 1) identify an inventory of systems
(expected to be complete by April 1, 1999), 2) gather certificates and
warranties from providers (expected to be complete by April 1, 1999), 3)
determine required actions and budgets (expected to be completed by April 1,
1999), 4) perform remediation and tests (expected to be completed by September
1, 1999) and 5) designing contingency and business continuation plans for each
Company location (expected to be completed by May 31, 1999).
The following is a summary of the different phases and progress to date
for each initiative identified above:
IT Systems: The Company has continuously updated or replaced older
technology with more current technology. As the Company has acquired ski
resorts, it updated certain technology at these resorts. The Company's main IT
systems include an enterprise wide client server financial system, a mid-range
enterprise wide payroll system, various point of sale and property management
systems, upgraded personal computers, wide area networking and local area
networking. Phases 1 and 2, as noted above, are complete (except for personal
computer inventory and warranties) and the remaining phases are currently on
schedule. During phase 1 and 2, the Company noted that Sugarloaf and Sugarbush
have not yet converted to Year 2000 compliant lodging systems. The Company
expects to convert these two resorts to Year 2000 compliant systems by August 1,
1999. Also, the Company estimates that approximately 20% of personal computers
for employees are not Year 2000 compliant. The Company has estimated that these
deficiencies will be remedied by September 1, 1999, which is in accordance with
the original timetable.
Non-IT Systems: Internal non-IT systems are comprised of faxes,
copiers, printers, postal systems, security systems, ski lifts, elevators and
telecommunication systems. Phases 1 through 4 are scheduled for completion by
March 31, 1999 which is 105 days behind schedule. The Company has estimated that
29
<PAGE>
remediation is scheduled for completion by September 1, 1999, which is in
accordance with the original timetable.
Related third party providers: The company has identified its major
related third party providers as certain utility providers, employee benefit
administrators and supply vendors. Phases 1 through 4 are scheduled for
completion by March 31, 1999, which is 105 days behind schedule. The Company has
estimated that remediation is scheduled for completion by September 1, 1999,
which is in accordance with the original timetable.
Actual and anticipated costs
The total cost associated with required modifications to become Year
2000 compliant is not expected to be material to the Company's financial
position. The estimated total cost of the Year 2000 Project is approximately
$450,000. This estimate includes Information System conversions for Year 2000
compliant lodging systems at Sugarloaf and Sugarbush. The Company is updating
those systems to standardize systems within American Skiing Company resorts. The
total amount expended on the Year 2000 Project through January 24, 1999 was $0.
As of January 24, 1999, the estimated future costs of the Year 2000 Project were
$450,000, of which approximately (1) $0 related to cost to modify software, hire
internal personnel and hire outsourced Year 2000 solution providers and (2)
$450,000 and related to replacement costs of non-compliant IT systems. The
anticipated costs related to non-IT systems is deemed by management to be
immaterial.
Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 Project is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem. The company believes that, with the implementation of new business
systems and completion of the Year 2000 Project as scheduled, the possibility of
significant interruptions of normal operations should be reduced. Readers are
cautioned that forward-looking statements contained in the Year 2000 Update
should be read in conjunction with the Company's disclosures under the heading:
"Forward Looking Statements".
Contingency plans
As of January 24, 1999, the Company has not developed a contingency
plan related to Year 2000. The Company expects to have a contingency plan by May
31, 1999.
30
<PAGE>
Forward-Looking Statements
The above information includes forward-looking statements, the
realization of which may be impacted by the factors discussed below. The
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 (the "Act"). This report
contains forward looking statements that are subject to risks and uncertainties,
including, but not limited to, uncertainty as to future financial results,
substantial leverage of the Company, the capital intensive nature of development
of the Company's ski resorts; rapid and substantial growth that could place a
significant strain on the Company's management, employees and operations;
uncertainties associated with fully syndicating the Resort Properties Term
Facility, the Textron Facility, the Steamboat construction loan and various
capital leases; uncertainties associated with obtaining additional financing for
future real estate projects and to undertake future capital improvements; demand
for and costs associated with real estate development; change in market
conditions affecting the interval ownership industry; regulation of marketing
and sales of the Company's quartershare interests; seasonality of resort
revenues; fluctuations in operating results; dependence on favorable weather
conditions; the discretionary nature of consumers' spending for skiing and
resort real estate; competition; regional and national economic conditions; laws
and regulations relating to the Company's land use, development, environmental
compliance and permitting obligations; renewal or extension terms of the
Company's leases and permits; the adequacy of water supply; and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission. These risks could cause the Company's actual results for
fiscal year 1999 and beyond to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company. The foregoing
list of factors should not be construed as exhaustive or as any admission
regarding the adequacy of disclosures made by the Company prior to the date
hereof or the effectiveness of said Act.
31
<PAGE>
Part II - Other Information
Exhibits and Reports on Form 8-K
Item 6
a) Exhibits
Included herewith is the Financial Data Schedule submitted as Exhibit
27 in accordance with Item 601(c) of Regulation S-K. Also included are the
following material agreements entered into in the Company's second fiscal
quarter of 1999.
Exhibit No. Description
- ----------- -----------
1) Credit Agreement among American Skiing Company Resort Properties,
Inc., certain lenders and BankBoston, N.A. as agent dated as of
January 8, 1999.
2) Third Amendment to Credit Agreement among the Company, its
subsidiaries party thereto, BankBoston, N.A. as Agent, and the lenders
party thereto dated as of March 3, 1999.
b) Reports on Form 8-K
The Company did not file a Form 8-K during the second fiscal quarter of 1999.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 10, 1999 /s/ Christopher E. Howard
- ------------------------- --------------------------------
Christopher E. Howard
Executive Vice President
(Duly Authorized Officer)
Date: March 10, 1999 /s/ Mark J. Miller
- ----------------------------- -------------------------------
Mark J. Miller
Senior Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
33
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-26-1998
<PERIOD-END> JAN-24-1999
<CASH> 9,929,000
<SECURITIES> 0
<RECEIVABLES> 6,458,000
<ALLOWANCES> 0
<INVENTORY> 14,779,000
<CURRENT-ASSETS> 40,873,000
<PP&E> 303,586,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 504,490,000
<CURRENT-LIABILITIES> 156,074,000
<BONDS> 127,613,000
0
0
<COMMON> 10,000
<OTHER-SE> 67,474,000
<TOTAL-LIABILITY-AND-EQUITY> 504,490,000
<SALES> 10,594,000
<TOTAL-REVENUES> 89,847,000
<CGS> 11,774,000
<TOTAL-COSTS> 75,119,000
<OTHER-EXPENSES> 11,781,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,340,000
<INCOME-PRETAX> (25,695,000)
<INCOME-TAX> (10,015,000)
<INCOME-CONTINUING> (15,680,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,680,000)
<EPS-PRIMARY> (16.03)
<EPS-DILUTED> (16.03)
</TABLE>
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of January 8, 1999
Among
AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
as Borrower,
THE LENDERS PARTY HERETO,
and
BANKBOSTON, N.A.
as Agent for the Lenders
<PAGE>
-iv-
ATL/591251.2
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS 1
Section 1.1 DEFINITIONS. 1
Section 1.2 ACCOUNTING TERMS 16
ARTICLE 2. THE CREDIT 16
Section 2.1 THE TERM LOANS 16
Section 2.2 PRINCIPAL INSTALLMENTS AND INTEREST ON THE
TERM LOANS 16
Section 2.3 INTEREST RESERVES 16
Section 2.4 GENERAL CASH COLLATERAL ACCOUNT 17
Section 2.5 PROCEDURE FOR RESERVES 17
Section 2.6 ADDITIONAL PAYMENTS 17
Section 2.7 COMPUTATION OF INTEREST, ETC 17
Section 2.8 FEES 18
Section 2.9 SET-OFF 18
Section 2.10 INCREASED COSTS, ETC 18
Section 2.11 USE OF PROCEEDS 20
ARTICLE 3. CONDITIONS TO LOANS AND ADVANCES 20
Section 3.1 CONDITIONS TO THE TERM LOANS AND
ALL ADVANCES 20
Section 3.2 CONDITIONS TO ADVANCES 24
Section 3.3 BUDGET COMPLIANCE 25
Section 3.4 PROCEDURES FOR ADVANCES 25
ARTICLE 4. PAYMENT AND REPAYMENT 27
Section 4.1 MANDATORY REPAYMENTS AND PREPAYMENTS 27
Section 4.2 VOLUNTARY PREPAYMENTS 27
Section 4.3 PAYMENT OR OTHER ACTIONS ON
NON-BUSINESS DAYS 27
Section 4.4 METHOD AND TIMING OF PAYMENTS 27
Section 4.5 CURRENCY 28
Section 4.6 FOREIGN LENDERS 28
ARTICLE 5. REPRESENTATIONS AND WARRANTIES 28
Section 5.1 EXISTENCE, CHARTER AND FORMATION
DOCUMENTS, ETC 29
Section 5.2 PRINCIPAL PLACE OF BUSINESS; LOCATION
OF RECORDS 29
Section 5.3 QUALIFICATION 29
Section 5.4 SUBSIDIARIES 29
Section 5.5 POWER 29
Section 5.6 VALID AND BINDING OBLIGATIONS 30
Section 5.7 OTHER AGREEMENTS 30
Section 5.8 PAYMENT OF TAXES 30
Section 5.9 FINANCIAL STATEMENTS 31
Section 5.10 OTHER MATERIALS FURNISHED 31
Section 5.11 STOCK 31
Section 5.12 CHANGES IN CONDITION 31
Section 5.13 ASSETS, LICENSES, PATENTS, TRADEMARKS, ETC 31
Section 5.14 LITIGATION 32
Section 5.15 PENSION PLANS 32
Section 5.16 OUTSTANDING INDEBTEDNESS 32
Section 5.17 ENVIRONMENTAL MATTERS 33
Section 5.18 FOREIGN TRADE REGULATIONS 34
Section 5.19 GOVERNMENTAL REGULATIONS 34
Section 5.20 MARGIN STOCK 34
Section 5.21 SOLVENCY 34
Section 5.22 COMPLIANCE WITH OTHER INSTRUMENTS,
LAWS, ETC 35
Section 5.23 ABSENCE OF FINANCING STATEMENTS, ETC 35
Section 5.24 FISCAL YEAR 35
Section 5.25 TAX STATUS 35
Section 5.26 PURCHASE OPTION 35
Section 5.27 LEASES 35
Section 5.28 PERMITTED CONSTRUCTION LOANS 35
Section 5.29 STATUS MEMORANDUM 36
Section 5.30 SECURITY AGREEMENTS 36
Section 5.31 COMPREHENSIVE EFFECT OF MASTER EASEMENT 36
ARTICLE 6. REPORTS AND INFORMATION 36
Section 6.1 FINANCIAL STATEMENTS AND OTHER REPORTS 36
Section 6.2 NOTICE OF DEFAULTS 38
Section 6.3 NOTICE OF LITIGATION 38
Section 6.4 REPORTABLE EVENTS 39
Section 6.5 COMMUNICATIONS WITH INDEPENDENT
PUBLIC ACCOUNTANTS 39
Section 6.6 ENVIRONMENTAL REPORTS 39
Section 6.7 MISCELLANEOUS 40
Section 6.8 PURCHASE OPTION AND LEASES 40
Section 6.9 PERMITS, ZONING AND OTHER
DEVELOPMENT RIGHTS 40
Section 6.10 MARRIOTT JOINT VENTURE 40
Section 6.11 PERMITTED CONSTRUCTION LOANS 40
Section 6.12 BUDGET COMPLIANCE 40
ARTICLE 7. FINANCIAL COVENANTS 41
Section 7.1 MINIMUM TANGIBLE NET WORTH 41
Section 7.2 LOAN TO VALUE RATIO 41
ARTICLE 8. AFFIRMATIVE COVENANTS 41
Section 8.1 REPRESENTATIONS AND WARRANTIES 41
Section 8.2 TAXES AND OTHER OBLIGATIONS 41
Section 8.3 MAINTENANCE OF PROPERTIES AND LEASES 42
Section 8.4 INSURANCE 42
Section 8.5 RECORDS, ACCOUNTS AND PLACES OF BUSINESS 43
Section 8.6 INSPECTION 43
Section 8.7 MAINTENANCE OF ACCOUNTS 43
Section 8.8 OWNERSHIP OF SUBSIDIARIES 43
Section 8.9 DUE DILIGENCE MATTERS 43
Section 8.10 REQUIRED DUE DILIGENCE 44
Section 8.11 PLEDGE OF COLLATERAL 45
Section 8.12 DISTRIBUTION OF CASH AND CASH EQUIVALENTS
BY BORROWER SUBSIDIARIES 45
Section 8.13 ADDITIONAL DOCUMENTS AND COLLATERAL 45
ARTICLE 9. NEGATIVE COVENANTS 45
Section 9.1 RESTRICTIONS ON INDEBTEDNESS 46
Section 9.2 RESTRICTION ON LIENS 47
Section 9.3 INVESTMENTS 48
Section 9.4 MERGERS, ACQUISITIONS, CREATION OF
SUBSIDIARIES 49
Section 9.5 TRANSACTIONS WITH AFFILIATES 49
Section 9.6 DISTRIBUTIONS 49
Section 9.7 CAPITAL EXPENDITURES 49
Section 9.8 DISPOSITIONS OF ASSETS 50
Section 9.9 ASSUMPTIONS, GUARANTIES, ETC. OF
INDEBTEDNESS OF OTHER PERSONS 50
Section 9.10 ERISA 50
Section 9.11 SALE AND LEASEBACK 50
Section 9.12 RESTRICTIVE OR INCONSISTENT AGREEMENTS 50
Section 9.13 NO AMENDMENT OF MARRIOTT JOINT VENTURE,
INTER COMPANY DEBT, PURCHASE OPTION
AND LEASES 51
Section 9.14 LIMITATION ON ISSUANCE OF CAPITAL STOCK 51
Section 9.15 PURCHASE MONEY MORTGAGES 51
Section 9.16 PERMITTED FINANCIAL FACILITIES 51
Section 9.17 CHANGE OF CONTROL51
Section 9.18 PROPERTY ACQUISITIONS 51
Section 9.19 COMMENCEMENT OF PROJECTS 51
ARTICLE 10. RELEASE OF COLLATERAL AND ADDITIONAL CONSTRUCTION AND
CAPITAL IMPROVEMENTS 52
Section 10.1 RELEASE PROVISIONS 52
Section 10.2 PRESALE REQUIREMENTS 53
ARTICLE 11. DESIGNATED PROPERTIES AND FURTHER ASSURANCES 53
Section 11.1 SELECTION OF MORTGAGED PROPERTIES 53
Section 11.2 FURTHER ASSURANCES 53
ARTICLE 12. EVENTS OF DEFAULT AND REMEDIES 54
Section 12.1 EVENTS OF DEFAULT 54
Section 12.2 REMEDIES 56
Section 12.3 DISTRIBUTION OF PROCEEDS 57
ARTICLE 13. CONSENTS; AMENDMENTS; WAIVERS; REMEDIES 58
Section 13.1 ACTIONS BY LENDERS 58
Section 13.2 ACTIONS BY BORROWER 59
ARTICLE 14. SUCCESSORS AND ASSIGNS 60
Section 14.1 GENERAL 60
Section 14.2 ASSIGNMENTS 60
Section 14.3 BANKBOSTON AS AGENT UNDER SENIOR FACILITY
AND ROLE OF BRS 66
ARTICLE 15. THE AGENT 66
Section 15.1 AUTHORIZATION AND ACTION 66
Section 15.2 AGENT'S RELIANCE, ETC 67
Section 15.3 AGENT AS A LENDER AND AGENT UNDER
SENIOR FACILITY 67
Section 15.4 LENDER CREDIT DECISION 68
Section 15.5 INDEMNIFICATION OF AGENT 68
Section 15.6 SUCCESSOR AGENT 68
Section 15.7 AMENDMENT OF ARTICLE 15 69
ARTICLE 16. MISCELLANEOUS 69
Section 16.1 NOTICES 69
Section 16.2 MERGER 70
Section 16.3 GOVERNING LAW; CONSENT TO JURISDICTION 70
Section 16.4 COUNTERPARTS 70
Section 16.5 EXPENSES AND INDEMNIFICATION 70
Section 16.6 CONFIDENTIALITY 72
Section 16.7 JOINT AND SEVERAL OBLIGATIONS 72
Section 16.8 WAIVER OF JURY TRIAL 72
Section 16.9 AMENDMENT AND RESTATEMENT 73
Section 16.10 NONRECOURSE OBLIGATION 73
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of the
Closing Date by and among AMERICAN SKIING COMPANY RESORT PROPERTIES, INC., a
Maine corporation ("Borrower"), the lenders from time to time party hereto, and
BANKBOSTON, N.A., a national banking association, as Agent for the lenders from
time to time party hereto ("Agent").
RECITALS
Borrower and the Lenders entered into Credit Agreement dated as of
September 4, 1998 which was subsequently modified by that certain First
Modification of Credit Agreement dated December 4, 1998 (the original Credit
Agreement, as modified, being referred to herein as "Original Credit
Agreement"). The Lenders agreed to advance and did advance the sum of
$28,950,000.00 which was secured by certain Security Agreements and which were
filed of record from and after December 4, 1998.
Borrower and Lenders desire to amend and restate the Original Credit
Agreement in order to allow for the increase of the Term Loans (as defined
therein) to a maximum principal amount of $58,000,000.00 to reflect the payment
of the Term Loans on the Closing Date to an outstanding principal balance of
$1.00, and to allow for the disbursement of the additional amount available for
advance in the amount of up to $58,000,000.00 for the following purposes: (a) to
fund certain capital expenditures for Projects (b) to provide for on-going
working capital and other specified needs in the Budget, and (c) to fund an
interest reserve, all in accordance with the terms of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Agent and the
Lenders agree hereby as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINITIONS. In addition to the terms defined elsewhere in
this Agreement, unless otherwise specifically provided herein, the following
terms shall have the following meanings for all purposes when used in this
Agreement, and in any note, agreement, certificate, report or other document
made or delivered in connection with this Agreement:
"AFFILIATE" shall mean (a) any director or executive officer of
American Ski or any of its Subsidiaries or any Person owning more than 10% of
the outstanding common stock of American Ski or any of its Subsidiaries and (b)
any Person that controls, is controlled by or is under common control with such
a Person or any Affiliate of such Person. For purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"AGENT" shall mean BankBoston, N.A., in its capacity as agent for the
Lenders, and its successors in that capacity.
"AGREEMENT" shall mean this Credit Agreement, as amended or
supplemented from time to time.
"AMERICAN SKI" shall mean American Skiing Company, a Maine corporation.
"AMORTIZATION SCHEDULE" shall mean the mandatory principal payments
required herein as set forth on Schedule 1.1.
"APPRAISAL" shall mean an appraisal of the fair market value of
property and business, accepted and approved by the Agent, performed by an
independent appraiser selected by the Agent who is not employed by American Ski,
any of its Subsidiaries or the Agent, the form of such appraisal and the
identity of the appraiser to be reasonably acceptable to the Agent.
"APPRAISED VALUE" shall mean the fair market value of the subject
property determined by the most recent Appraisal.
"APPROVED FUND" means, with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed by the same investment advisor as such Lender or by an affiliate of
such investment advisor.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" See Section 14.2 hereof.
"BALANCE" shall mean that funds remain in: (i) that portion of the Term
Loan allocated on the Budget for each Permitted Construction Project and purpose
therefore; (ii) the Permitted Construction Loans; and (iii) amounts of presale
deposits available for use in the construction of improvements under applicable
law, are sufficient at the time of reference to complete all improvements
constituting each Permitted Construction Project contemplated by the Budget
pursuant to plans and specifications approved by the applicable Permitted
Construction Loan Lender and as required under contract with the purchasers of
the portion of the improvements set forth in the Budget in each case with
respect to the Projects relating to the Permitted Construction Loans.
"BASE PROPERTY" shall mean that portion of the real property affected
by the Purchase Option set forth on Exhibit H hereto.
"BASE RATE" means, the higher of (a) the annual rate of interest
announced from time to time by BKB at its head office in Boston, Massachusetts
as its "base rate" or (b) one-half percent (.5%) plus the overnight federal
funds effective rate, as published by the Board of Governors of the Federal
Reserve System, as in effect from time to time. Each adjustment to the Base Rate
shall be effective as of the opening of business on the date of announcement of
a change in the Base Rate.
"BASE RATE MARGIN" means 825 basis points.
"BKB" BankBoston, N.A.
"BORROWER" shall mean American Skiing Company Resort Properties, Inc.,
a Maine corporation.
"BORROWER AVAILABLE CASH" shall mean, on a monthly basis, the amount of
cash and cash equivalents held by the Borrower on the last day of any month,
including any Subsidiary Available Cash subject to the maintenance of a
cumulative cash reserve for obligations of the Borrower to be paid within a
rolling three month period as provided in the Budget.
"BORROWER SUBSIDIARIES" shall mean Canyons Resort, Grand Summit, and
Heavenly Resort and those subsidiaries listed on Schedule 1.2, together with all
subsidiaries created in the future.
"BRS" shall mean BancBoston Robertson Stephens Securities, Inc.
"BUDGET" shall mean the budget of the Borrower and the Borrower
Subsidiaries in form and substance acceptable to and approved by the Agent as
amended by Borrower and approved by Agent from time to time hereunder, except
for the modification of the Budget for Capital Expenditures, substitution or
commencement of a Project other than a Permitted Construction Project which
shall require the approval of the Lenders. The initial Budget is attached hereto
as Exhibit C.
"BUSINESS DAY" shall mean for all purposes, any day other than a
Saturday, Sunday or legal holiday on which banks in Boston, Massachusetts are
open for the conduct of a substantial part of their commercial banking business.
"CANYONS" shall mean the recreational and resort facilities operated by
American Ski or a Subsidiary located in Summit County, Utah.
"CANYONS RESORT" shall mean Canyons Resort Properties, Inc., a Maine
corporation.
"CAPITAL ASSETS" shall mean fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and goodwill); PROVIDED, HOWEVER, that
Capital Assets shall not include any item customarily charged directly as an
expense or depreciated over a useful life of twelve (12) months or less in
accordance with generally accepted accounting principles.
"CAPITAL EXPENDITURES" shall mean amounts paid or incurred, including
indebtedness incurred, by Borrower or any of its Subsidiaries in connection with
the purchase or lease by Borrower or any of its Subsidiaries of Capital Assets
that would be required to be or are capitalized and shown on the balance sheet
of Borrower and its Subsidiaries in accordance with generally accepted
accounting principles.
"CAPITALIZED LEASE" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with generally
accepted accounting principles and Statement of Financial Accounting Standards
No. 13.
"CAPITALIZED LEASE OBLIGATIONS" shall mean the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with generally accepted accounting
principles and Statement of Financial Accounting Standards No. 13.
"CASH FLOW PROJECTION" shall mean a 36 month projection of cash flow of
the Borrower as approved from time to time by the Agent. The initial Cash Flow
Projection is attached hereto as Exhibit I and made a part hereof.
"CASH INSURANCE PROCEEDS" shall mean the proceeds received by Borrower
and its Subsidiaries under any key man life insurance or property and casualty
insurance policy carried by Borrower and it Subsidiaries.
"CASH PROCEEDS" shall mean, with respect to any disposition, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such disposition, but
only as and when received) received by Borrower or any of its Subsidiaries from
such disposition.
"CHANGE OF CONTROL" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Borrower or any Borrower Subsidiary or of American Ski, as an entirety or
substantially as an entirety to any Person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) in one or a series of transactions; (ii)
(a) the acquisition of fifty percent (50%) or more of the aggregate voting power
of all classes of Common Equity of the Borrower or any Borrower Subsidiary in
one transaction or a series of related transactions; (iii) the liquidation or
dissolution of the Borrower any Borrower Subsidiary or American Ski, (b) the
acquisition of sufficient shares of Common Equity of American Ski in any one or
series of transactions so that Leslie B. Otten no longer controls the Board of
Directors of American Ski or no longer is the principal executive in charge of
American Ski; or (iv) a majority of the Board of Directors of the Borrower, or
Borrower Subsidiary or American Ski not being comprised of persons who (a) were
members of the Board of Directors of such entity as of the date of this
Agreement ("Original Directors") or (b) were nominated for election or elected
to the Board of Directors of such entity with the affirmative vote of at least a
majority of the directors who themselves were Original Directors or who were
similarly nominated for election or elected.
"CLOSING DATE" shall mean January 8, 1999.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and in
effect from time to time.
"COLLATERAL" shall mean all of the property, rights and interests of
Borrower and its Subsidiaries that are subject to the security interests,
pledges, and mortgages created by the Security Agreements.
"COMMENCEMENT RELEASE PROVISIONS" See Section 9.19.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMITMENT PERCENTAGE" shall mean as to each Lender, the sum of its
Term Loan Commitment Percentage as set forth on Schedule l hereto.
"COMPLIANCE CERTIFICATE" shall mean a certificate in a form acceptable
to Agent.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to any
term, mean that term (or the terms "combined" and "combining," as the case may
be, in the case of partnerships, joint ventures and Affiliates that are not
Subsidiaries) as applied to the accounts of American Ski (or other specified
Person) and all of its Subsidiaries (or other specified Persons), or such of its
Subsidiaries as may be specified, consolidated (or combined) in accordance with
generally accepted accounting principles and with appropriate deductions for
minority interests in Subsidiaries, as required by generally accepted accounting
principles.
"CONTEMPLATED IMPROVEMENTS" shall mean the proposed improvements to be
located on the Mortgaged Property as described in the Status Memorandum.
"DEFAULT" shall mean an event or condition which with the passage of
time or giving of notice, or both, would become an Event of Default.
"DEFAULT RATE" shall mean the Base Rate plus the applicable Base Rate
Margin plus 400 basis points.
"DESIGNATED PROPERTIES" shall mean the real properties and interests
therein owned by Borrower and described on Exhibit B or replacement properties
designated pursuant to Article 11.
"DISTRIBUTION" shall mean: (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of
Borrower, (b) the purchase, redemption, or other acquisition or retirement of
any shares of any class of capital stock of Borrower, (c) any other distribution
on or in respect of any shares of any class of capital stock of Borrower, (d)
any setting apart or allocating any sum for the payment of any dividend or
distribution or for the purchase, redemption or retirement of any shares of
capital stock of Borrower and (e) any payment of principal on or any retirement
or defeasance of Subordinated Indebtedness other than payments required to be
paid by the Borrower under the Senior Note Guaranty.
"ELIGIBLE ASSIGNEE(S)" shall mean any of (a) a commercial bank
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000.00;
(b) a savings and loan association or savings bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
a net worth of at least $100,000,000.00, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000.00, provided that
such bank has a branch or agency in the United States and is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD (e) an investment fund sponsored by a commercial
investment advisor having total assets of at least $500,000,000, all with the
prior approval of the Agent; and (f) such other investor as may be approved by
the Agent and Borrower.
"ENVIRONMENT" means soil, surface waters, groundwaters, land, stream
sediments, surface or subsurface strata, ambient air, and any environmental
medium.
"ENVIRONMENTAL LAW" means any judgment, decree, order, common law rule,
statute, act, law, code, ordinance, permit, license, rule or regulation
pertaining to environmental matters, or any federal, state, county or local
statute, regulation, code, ordinance, order or decree relating to public health,
welfare, the Environment, or to the storage, handling, treatment,
transportation, use or generation of Hazardous Materials in or at the workplace,
or to worker health or safety, whether now existing or hereafter enacted
including the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Toxic Substances Control Act, the Federal Clean
Air Act, the Safe Drinking Water Act, the Flood Disaster Protection Act of 1973
and all amendments thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EVENT OF DEFAULT" See Section 12.1 hereof.
"FAIR MARKET VALUE" shall mean the price a willing buyer would pay to a
willing seller in an arm's length transaction with neither party being under a
compulsion to act.
"FEE LETTER" See Section 2.5 hereof.
"FEES" shall mean all fees and amounts payable in connection with the
Fee Letter and such other fees as may from time to time be charged by the Agent
in connection with the Term Loan.
"FINANCIAL COVENANTS" shall mean the covenants set forth at Article 7
as of the Closing Date and as may be added from time to time.
"FULLY FUNDED PROJECT" shall mean any Project other than a Permitted
Construction Project on the Closing Date where: (i) 85% of the units are presold
and (ii) the Project Equity is provided by a source other than the Borrower or a
Borrower Subsidiary.
"GENERAL CASH COLLATERAL ACCOUNT" shall mean the account established by
the Borrower pursuant to the provisions of Section 2.4.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean generally
accepted accounting principles as defined by controlling pronouncements of the
Financial Accounting Standards Board, as from time to time supplemented and
amended.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GRAND SUMMIT" shall mean Grand Summit Resort Properties, Inc., a Maine
corporation.
"GUARANTY" or "GUARANTEE" or "GUARANTIES" shall include any arrangement
whereby a Person is or becomes liable in respect of any Indebtedness or other
obligation of another and any other arrangement whereby credit is extended to
another obligor on the basis of any promise of a guarantor, whether that promise
is expressed in terms of an obligation to pay the Indebtedness of such obligor,
or to purchase or lease assets under circumstances that would enable such
obligor to discharge one or more of its obligations, or to maintain the capital,
the working capital, solvency or general financial condition of such obligor,
whether or not such arrangement is listed in the balance sheet of the guarantor
or referred to in a footnote thereto.
"HAZARDOUS MATERIAL" means any pollutant, contaminant, toxic substance,
chemical substance or mixture, hazardous waste, hazardous material, or hazardous
substance, or any oil, petroleum, or petroleum product, as defined in or
pursuant to the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, the Superfund Amendment and Reauthorization Act, as amended, the
Federal Clean Water Act, as amended, the Hazardous Materials Transportation Act,
as amended, the Toxic Substances Control Act, as amended, any regulations
promulgated under these Acts, or any other Environmental Law.
"HEAD OFFICE" shall mean the office of the Agent located at 100 Federal
Street, Boston, Massachusetts or such other office as the Agent may from time to
time designate as its Head Office.
"HEAVENLY RESORT" shall mean Heavenly Resort Properties, LLC, a Nevada
limited liability company.
"INDEBTEDNESS" shall mean, as to any Person, without duplication: (a)
all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or similar instruments); (b) all obligations of such Person
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 90 days or which are being contested in good faith by
appropriate proceedings; (c) all capital lease obligations of such Person; (d)
all Indebtedness of others secured by a lien on any properties, assets or
revenues of such person; (e) all Indebtedness of others guaranteed by such
Person (except completion Guaranties under which such person has not yet been
required to perform); (f) all net obligations of such Person under interest
rate, commodity, foreign currency and financial markets swaps, options, futures
and other hedging obligations); and (g) all obligations of such Person,
contingent or otherwise, in respect of letters of credit or bankers' acceptances
or similar instruments.
"INDEMNITY AGREEMENTS" shall mean the Hazardous Materials
Indemnification Agreements dated September 4, 1998 as amended on even date from
Borrower to the Agent.
"INTERCOMPANY DEBT" shall mean the indebtedness by Borrower to American
Ski in the maximum principal amount of $20,289,000.00.
"INTEREST RESERVE" - See Section 2.3.
"INVESTMENT" shall mean (a) any stock, evidence of Indebtedness or
other security of another Person, (b) any loan, advance, contribution to
capital, extension of credit (except for current trade and customer accounts
receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms) to another
Person, (c) any purchase of (i) stock or other securities of another Person or
(ii) any business or undertaking of another Person (whether by purchase of
assets or securities), any commitment or option to make any such purchase if, in
the case of an option, the aggregate consideration paid for such option was in
excess of $100, (d) any other investment, in all cases whether existing on the
date of this Agreement or thereafter made, or (e) any contract to accomplish any
of the foregoing.
"KEY BANK FACILITY" shall mean the existing construction loan by Key
Bank, N.A. in favor of Canyons Resort dated December, 1998 in the original
principal amount of $29,000,000.00.
"LEASES" shall mean all leases and other agreements under which the
Borrower have rights to use or occupy any real property.
"LENDER AGREEMENTS" shall mean this Agreement, the Term Notes, the
Indemnity Agreements, the Security Agreements, and any other present or future
agreement from time to time entered into between Borrower or any of its
Subsidiaries and the Agent or any Lender with respect to this Agreement, each as
from time to time amended or supplemented, and all statements, reports and
certificates delivered by Borrower or any of its Subsidiaries to the Agent or
any Lender in connection therewith.
"LENDER OBLIGATIONS" shall mean all present and future obligations and
Indebtedness of Borrower or any of its Subsidiaries owing to the Agent or the
Lenders under this Agreement or any other Lender Agreement, including, without
limitation, the obligations to pay the Indebtedness from time to time evidenced
by the Term Notes, and obligations to pay interest, commitment fees, balance
deficiency fees, charges, expenses and indemnification from time to time owed
under any Lender Agreement, and any modifications or amendments thereto.
"LENDER(S)" shall mean (a) initially, each lender listed on the
signature pages hereof and designated on Schedule 1, (b) any other Person who
becomes a Successor Lender hereunder in accordance with the terms of Section
14.2 hereof and (c) the successors and assigns of the Persons described in
clauses (a) and (b).
"LIEN" -- See Section 9.2 hereof.
"LOAN" shall mean all or a portion of the Loans outstanding hereunder
or made to the Borrower by the Lenders pursuant to Article 2 of this Agreement,
and "Loans" means all of such loans, collectively.
"LOAN DOCUMENTS" This Credit Agreement, the Security Agreements, and
the Term Loan Notes together with such other documents or instruments that now
exist or hereafter exist which evidence or secure the Term Loan Notes.
"LOAN RESERVE ANALYSIS" shall mean the projection of the amounts of the
Reserves prepared by the Borrower and approved by the Agent from time to time
with the initial Loan Reserve Analysis being attached hereto as Exhibit G.
"MAJORITY LENDERS" shall mean, at any time, any two or more Lenders
holding at least 51% of the sum of the outstanding principal amount of the
Loans.
"MARRIOTT JOINT VENTURE" shall mean the Purchase and Development
Agreement among American Ski, Marriott Ownership Resorts, Inc. and Borrower
dated July 22, 1998.
"MASTER EASEMENT" shall mean, collectively, the easement agreements in
form and substance acceptable to the Agent between the Borrower and Agent and
such other necessary parties, including the agent of the Senior Facility, to
provide for an unencumbered easement for utilities, access and density
allocation in sufficient scope to permit the development of the Mortgaged
Properties as resort, hotel, condominium or retail facilities and for the
Contemplated Improvements.
"MATERIAL ADVERSE EFFECT" shall mean any adverse change (or occurrence
or condition reasonably likely to produce an adverse change) in the financial
condition, properties, business, operations or prospects which is material to
Borrower and its subsidiaries taken as a whole.
"MORTGAGED PROPERTIES" shall mean all real properties and interests
therein owned by Borrower or any of its Subsidiaries which are subject to
mortgage liens in favor of the Agent including the Master Easement.
"MORTGAGES" shall mean the various deeds of trust, mortgages and
similar security instruments executed by the Borrower on September 4, 1998 as
modified on even date.
"NET PROCEEDS" shall mean the Cash Proceeds (with respect to any
disposition) or Cash Insurance Proceeds (with respect to any casualty) net of
the sum of (a) the amount of such proceeds required to be applied to repay
Indebtedness (other than the Loans) incurred or secured by a lien on any asset
disposed of; (b) brokerage commissions, legal fees, accounting fees, investment
banking fees, trustee's fees, finder's fees and other similar fees and
commissions, all of which amounts under this clause (b) shall be reasonable and
customary and paid to non Affiliates of the Borrower, American Ski or a Borrower
Subsidiary; (c) transfer and ad valorem taxes payable in connection with or as a
result of such transaction; (d) amounts held in escrow in connection with any
such Permitted Disposition (prior to the release thereof); and (e) other
reasonable and customary out-of-pocket costs incurred in connection therewith.
"NOTES" shall mean the Term Loan Notes.
"OUTSTANDING AMOUNT" shall mean the amount outstanding from time to
time with respect to the Lender Obligations.
"PENSION PLAN" shall mean an employee benefit plan or other plan
maintained for the employees of Borrower or any Subsidiary as described in
Section 4021(a) of ERISA.
"PERMITTED CONSTRUCTION LOANS" shall mean the construction loans for
the Permitted Construction Projects as follows: by Textron in favor of Grand
Summit in the original principal amount of $145,000,000 dated September 30,
1998, and having a maturity date of September 30, 2002; by KeyBank, N.A. in
favor of Canyons Resort in the original principal amount of $29,000,000 dated
December 1998, and having a maturity date of June 30, 2000; and such
construction loans for the financing of the construction of a Project as may be
approved from time to time by the Agent.
"PERMITTED CONSTRUCTION LOAN LENDER" shall mean Key Bank, N.A., Textron
or the lender of any other Permitted Construction Loan.
"PERMITTED CONSTRUCTION PROJECTS" shall mean the following hotel
projects: (i) Grand Summit at the Canyons; (ii) Grand Summit at Steamboat; (iii)
the Sundial Lodge at the Canyons; (iv) Fully Funded Projects approved from time
to time by the Agent, and (v) such other Projects as approved from time to time
by the Lenders.
"PERMITTED EXCEPTIONS" shall mean the title exceptions affecting the
Mortgaged Properties approved by the Agent, and the liens of the Purchase Money
Mortgages and such other exceptions as may be approved from time to time by the
Agent.
"PERMITTED FINANCIAL FACILITIES" See Section 9.1(d).
"PERMITTED LIENS" See Section 9.2 hereof.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, estate, joint stock company, trust, organization,
business, or a government or agency or political subdivision thereof.
"PRESALE REQUIREMENTS" - See Section 10.2.
"PROJECT" shall mean the construction of improvements as contemplated
by and listed on the Budget and located on the Mortgaged Property or on property
owned by a Borrower Subsidiary whose equity interests have been pledged by the
Borrower to the Agent as part of the Collateral, all as approved from time to
time by the Lenders except for Fully Funded Projects which may be approved by
the Agent.
"PROJECT EQUITY" shall mean the difference in the total costs of a
Project minus amounts to be funded from the construction loan for the Project
and any Subordinated Debt attributable to such project approved by Agent.
"PROPOSED CONSTRUCTION PROJECTS" shall mean any Construction Project
identified on the Budget.
"PROPOSED PROJECT CONSTRUCTION LOANS" Construction loans from
institutional lenders for the construction of a Proposed Construction Project.
"PURCHASE MONEY MORTGAGE" shall mean the Purchase Money Mortgages
described in Schedule 2 attached hereto.
"PURCHASE MONEY INDEBTEDNESS" shall mean indebtedness affecting real
property known as Parcel A-2 of the Canyons being more particularly set forth
as:
1. $300,000 mortgage loan from LRJ Enterprises, Inc.;
2. $1,000,000 mortgage loan from Songbird Enterprises; and
3. $1,720,000 mortgage loan from Wolf Mountain Resorts, L.C.
"PURCHASE OPTION" shall mean that portion of the Option to Purchase in
that certain Ground Lease Agreement dated July 3, 1997 between Wolf Mountain
Resorts, L.L.C. and ASC Utah, Inc., as assigned to Borrower pursuant to that
certain Assignment of Purchase Option Interest dated September 4, 1998 between
ASC Utah, Inc. and Borrower with respect to the real property commonly known as
the Canyons located in Utah.
"QUARTERSHARE FACILITIES" shall mean dwellings subject to the
condominium form of ownership sold on the basis of multiple ownership based on
thirteen weeks per year.
"REPORTABLE EVENT" shall mean an event reportable to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of ERISA.
"RESERVE ACCOUNT" shall mean the account for each Reserve at the Head
Office of the Agent where the Reserves are held.
"RESERVES" shall mean the General Cash Collateral Account and the
Interest Reserve and all proceeds thereof including any interest earned thereon.
"SECURITY AGREEMENTS" shall mean the following documents and
instruments now or hereafter existing from the Borrower to the Agent, those
dated September 4, 1998 having been modified on the Closing Date:
(a) The Mortgages;
(b) The Assignment of Trademarks from Borrower to the Agent;
(c) The Collateral Assignment of Agreements; and
(d) Pledge and Security Agreement with respect to all equity interests
in any Borrower Subsidiary.
All other security agreements, pledge agreements, mortgages,
assignments and other instruments by which Borrower grants or pledges to the
Agent a lien on, security interest in, or pledge or mortgage or assignment of
any of its assets.
"SENIOR FACILITY" The senior secured credit facility in favor of
American Ski and related entities by BankBoston, N.A., as Agent set forth in the
Amended and Restated Credit Agreement dated as of November 12, 1997 as modified
on July 20, 1998, and as further modified from time to time.
"SENIOR NOTE GUARANTY" shall mean the Guaranty by the Borrower of the
Series A and Series B 12% Senior Subordinated Notes due 2006 pursuant to the
Indenture dated June 28, 1996.
"SOLVENT" or "SOLVENCY" shall mean, as to any Person, that such Person
(a) has assets having a fair value in excess of its liabilities (other than
contingent liabilities), (b) has assets having a fair value in excess of the
amount required to pay its liabilities on existing debts as such debts become
absolute and matured and (c) has, and expects to continue to have, access to
adequate capital for the conduct of its business and the ability to pay its
debts from time to time incurred in connection with the operation of its
business as such debts mature.
"STATUS MEMORANDUM" shall mean memorandum as to the status of certain
aspects of the Mortgaged Properties set forth on Exhibit D.
"SUBORDINATION AGREEMENT" shall mean the Subordination Agreement
between American Ski, Borrower and Agent dated as of September 4, 1998 as
ratified on even date.
"SUBORDINATED INDEBTEDNESS" shall mean the Senior Note Guaranty and
the Intercompany Debt.
"SUBSIDIARY" or "SUBSIDIARIES" shall mean any Person of which Borrower
shall now or hereafter at the time own, directly or indirectly through one or
more Subsidiaries or otherwise, sufficient voting stock (or other beneficial
interest) to entitle it to elect at least a majority of the board of directors
or trustees or similar managing body.
"SUBSIDIARY AVAILABLE CASH" See Section 8.12.
"TANGIBLE NET WORTH" shall mean the excess of Total Assets over Total
Liabilities.
"TERM LOAN ADVANCE" or "ADVANCE" shall mean on advance of the Term
Loan.
"TERM LOAN COMMITMENT PERCENTAGE" shall mean as to each Term Loan
Lender, its percentage interest in the Term Loans as set forth on Schedule 1
hereto.
"TERM LOAN LENDER(S)" shall mean those Lenders so identified on
Schedule 1 hereto.
"TERM LOAN MATURITY DATE" shall mean June 30, 2001.
"TERM LOAN NOTES" shall mean the Term Loan Notes substantially in the
form of EXHIBIT A hereto executed by Borrower in favor of each Term Loan Lender
to evidence the Term Loans.
"TERM LOAN(S)" shall mean the term loans made by the Term Loan Lenders
to Borrower pursuant to Section 2.1 hereof.
"TEXTRON FACILITY" shall mean the existing Construction Loan Facility
provided to Grand Summit from Textron Financial Corporation, as agent and
co-lender and Green Tree Financial Servicing Corporation, as co-lender.
"TITLE COMPANY" shall mean Land America National Title Services, Inc.,
First American Title Insurance Company, or any other nationally recognized title
insurance company approved by Agent.
"TITLE POLICIES" shall mean the mortgagee title insurance policies
which insure the priority of the liens of the Mortgages.
"TOTAL ASSETS" shall mean all assets of the Borrower excluding
intangible assets such as goodwill, all determined in accordance with generally
accepted accounting principles.
"TOTAL LIABILITIES" shall mean all liabilities of the Borrower which
are properly accounted for as such in accordance with generally accepted
accounting principles, excluding Intercompany Debt and the Senior Note Guaranty
for so long as it is a contingent liability.
"UCC" shall mean the Uniform Commercial Code in effect in the
applicable jurisdiction, as amended from time to time.
"WHOLLY-OWNED SUBSIDIARY" shall mean any Person of which Borrower shall
now or hereafter at the time own, directly or indirectly through one or more
Subsidiaries or otherwise, one hundred percent (100%) of such Person's capital
stock or other beneficial interest.
Section 1.2 ACCOUNTING TERMS. All accounting terms used and not defined
in this Agreement shall be construed in accordance with generally accepted
accounting principles consistently applied, and all financial data required to
be delivered hereunder shall be prepared in accordance with such principles.
ARTICLE 2. THE CREDIT
Section 2.1 THE TERM LOANS. Subject to the terms and conditions of this
Agreement, on the date hereof, the Term Loan Lenders, severally and not jointly,
shall make term loans ("Term Loans") to Borrower in an amount equal to each Term
Loan Lender's Term Loan Commitment Percentage of $58,000,000 as set forth on
Schedule 1 hereto, and Borrower shall execute and deliver to each Term Loan
Lender a Term Loan Note to evidence the Term Loan made by such Term Loan Lender
to Borrower hereunder.
Section 2.2 PRINCIPAL INSTALLMENTS AND INTEREST ON THE TERM LOANS.
Borrower shall pay to the Lenders mandatory principal installments in the amount
and upon the date set forth on the Amortization Schedule and as required on
Section 12.3, 1. All payments under Section 12.3, 1 shall apply against the next
due and owing installments under the Amortization Schedule. The Borrower shall
pay interest on the unpaid, outstanding balance of the Term Loans at a per annum
rate equal to the Base Rate plus the Base Rate Margin. Interest on the Term
Loans shall be payable monthly in arrears on the last day of each month,
commencing January 31, 1999, and continuing until all of the Indebtedness of the
Borrower to the Term Loan Lenders under the Term Loans shall have been paid in
full.
Section 2.3 PROCEDURE FOR RESERVES. Borrower hereby acknowledges and
recognizes that the Borrower and Agent have established the Interest Reserve and
the General Cash Collateral Account. The following provisions shall be
applicable to the Reserves:
(a) All Reserves held by Agent in each respective Reserve Account. The
Borrower shall establish with the Agent a cash collateral account for each
Reserve at the Head Office of Agent in the name of and for the benefit of the
Agent from which withdrawals may be made only by the Agent The Agent shall apply
the proceeds of the Reserve Accounts as follows:
(i) If a Default or Event of Default then exists, the
amounts in any Reserve Account shall be applied in
accordance with Section 12.3(2);
(ii) If no Default or Event of Default exists hereunder,
then, for the purpose of and conditions established
for the respective Reserve Account and pursuant to Section 12.3.
(b) The Reserves shall bear interest at such rate as the Agent and the
Borrower may from time to time agree but in any event at the interest rate
applicable to interest bearing checking accounts by the Agent at its Head
Office.
(c) All Reserves shall be the subject of a first in priority perfected
security interest in favor of the Agent to secure the payment of the Lender
Obligations in accordance with the terms hereof.
Section 2.4 INTEREST RESERVE. Borrower hereby agrees that the Lenders
shall establish the Interest Reserve either from the hold back of proceeds of
the Loan reserved for the payment of interest and for no other purpose or from
cash flow of the Borrower in accordance with Section 12.3 deposited in the
Interest Reserve in a combined amount equal to the interest that will become due
and payable in cash under the Term Loan in the next rolling five (5) month
period. The Interest Reserve shall be disbursed by the Agent to pay: (i)
regularly scheduled installments of accrued and unpaid interest under the Notes
prior to the Maturity Date or (ii) from and after the Maturity Date, for accrued
and unpaid interest under the Notes at the discretion of the Lenders. The
Interest Reserve may be disbursed for purposes other than the foregoing only
with the consent of the Lenders and, prior to the occurrence of a Default, with
the consent of the Borrower.
Section 2.5 GENERAL CASH COLLATERAL ACCOUNT. Borrower hereby
establishes the General Cash Collateral Account with the Agent subject to the
terms and conditions hereof. The General Cash Collateral Account shall be funded
from the cash of the Borrower in an amount elected by the Borrower to be placed
in the General Cash Collateral Account pursuant to Section 12.3. The Borrower
shall have the right to cause the Agent to apply all or a portion of the
proceeds of the General Cash Collateral Account to the payment of principal
under the Term Loan including any principal installments under the Amortization
Schedule.
Section 2.6 ADDITIONAL PAYMENTS. Upon the occurrence and during the
continuance of any Event of Default, the Borrower shall, on demand, pay to the
Agent, for the account of the Lenders, interest on the unpaid principal balance
of the Term Loans, and, to the extent permitted by law, on any overdue
installments of interest, at a rate per annum equal to the Default Rate.
Section 2.7 COMPUTATION OF INTEREST, ETC. Interest hereunder and under
the Loans shall be computed on the basis of a 360-day year for the number of
days actually elapsed. No interest payment or interest rate charged hereunder
shall exceed the maximum rate authorized from time to time by applicable law.
The outstanding balance of the Term Notes as reflected on the Agent's records
from time to time shall be considered correct and binding on the Borrower and
the Lenders (absent manifest error).
Section 2.8 FEES. Borrower shall pay the Fees to the Agent, for the
Agent's own account as are provided in the Fee Letter and as otherwise required
to be paid by the Agent.
Section 2.9 SET-OFF. To the extent not prohibited by applicable law,
the Borrower hereby authorizes the Agent and each Lender, without prior notice
to the Borrower, if and to the extent payment is not promptly made when due
pursuant to the Term Loan Notes or pursuant to any provision hereof or of any
other Lender Agreement, to charge against any account of any Borrower with the
Agent or such Lender, an amount equal to the accrued interest and principal and
other amounts from time to time then due and payable to the Agent and the
Lenders hereunder and under all other Lender Agreements, provided that the Agent
shall notify the Borrower of any such set-off promptly thereafter.
Section 2.10 INCREASED COSTS, ETC.
(a) Anything herein to the contrary notwithstanding, if any changes in
present or future applicable law (which term "applicable law," as used in this
Agreement, includes statutes and rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or other
regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time heretofore or hereafter made upon or otherwise issued
to any Lender by any central bank or other fiscal, monetary or other authority,
whether or not having the force of law), including without limitation any change
according to a prescribed schedule of increasing requirements, whether or not
known or in effect as of the date hereof, shall (i) subject such Lender to any
tax, levy, impost, duty, charge, fee, deduction or withholding of any nature
with respect to this Agreement or the payment to such Lender of any amounts due
to it hereunder, or (ii) materially change the basis of taxation of payments to
such Lender of the principal of or the interest on the Loans or any other
amounts payable to such Lender hereunder, or (iii) impose or increase or render
applicable any special or supplemental deposit or reserve or similar
requirements or assessment against assets held by, or deposits in or for the
account of, or any liabilities of, or loans by an office of such Lender with
respect to the transactions contemplated herein, or (iv) impose on such Lender
any other condition or requirement with respect to this Agreement or the Term
Loans, and the result of any of the foregoing is (a) to increase the cost to
such Lender of making, funding or maintaining all or any part of the Loans or
its commitment hereunder, or (b) to reduce the amount of principal, interest or
other amount payable to such Lender hereunder, or (c) to require such Lender to
make any payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is calculated by
reference to the gross amount of any sum receivable or deemed received by such
Lender from Borrower hereunder, then, and in each such case not otherwise
provided for hereunder, Borrower will upon demand made by such Lender promptly
following such Lender's receipt of notice pertaining to such matters accompanied
by calculations thereof in reasonable detail, pay to such Lender such additional
amounts as will be sufficient to compensate such Lender for such additional
cost, reduction, payment or foregone interest or other sum; PROVIDED that the
foregoing provisions of this sentence shall not apply in the case of any
additional cost, reduction, payment or foregone interest or other sum resulting
from any taxes charged upon or by reference to the overall net income, profits
or gains of any Lender. In determining the additional amounts payable hereunder,
the Lenders may use any reasonable method of averaging, allocating or
attributing such additional costs, reductions, payments, foregone interest or
other sums among their respective customers.
(b) Anything herein to the contrary notwithstanding, if, after the date
hereof, any Lender shall have determined that any present or future applicable
law, rule, regulation, guideline, directive or request (whether or not having
force of law), including without limitation any change according to a prescribed
schedule of increasing requirements, whether or not known or in effect as of the
date hereof, regarding capital requirements for banks or bank holding companies
generally, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
with any of the foregoing, either imposes a requirement upon such Lender to
allocate additional capital resources or increases such Lender's requirement to
allocate capital resources or such Lender's commitment to make, or to such
Lender's maintenance of the Term Loans, which has or would have the effect of
reducing the return on such Lender's capital to a level below that which such
Lender could have achieved (taking into consideration such Lender's then
existing policies with respect to capital adequacy and assuming full utilization
of such Lender's capital) but for such applicability, change, interpretation,
administration or compliance, by any amount deemed by such Lender to be
material, such Lender shall promptly after its determination of such occurrence
give notice thereof to the Borrower accompanied by an opinion of counsel to such
Lender with respect to such matters, the cost of which opinion shall be paid by
Borrower. Borrower and such Lender shall thereafter attempt to negotiate in good
faith an adjustment to the compensation payable hereunder which will adequately
compensate such Lender for such reduction. If Borrower and such Lender are
unable to agree on such adjustment within thirty (30) days of the date on which
Borrower receives such notice, then commencing on the date of such notice (but
not earlier than the effective date of any such applicability, change,
interpretation, administration or compliance), the fees payable hereunder shall
increase by an amount which will, in such Lender's reasonable determination,
evidenced by calculations in reasonable detail furnished to Borrower, compensate
such Lender for such reduction, such Lender's determination of such amount to be
conclusive and binding upon Borrower, absent manifest error. In determining such
amount, such Lender may use any reasonable methods of averaging, allocating or
attributing such reduction among its customers.
Section 2.11 USE OF PROCEEDS. The proceeds of the Term Loans hereunder
shall be advanced to the Borrower pursuant to the terms of the Agreement and
used by Borrower: (a) to pay the fees and expenses associated with the
transactions contemplated hereby, (b) to establish the Interest Reserve, (c) to
the extent (a) and (b) are fully reserved or paid, for amounts shown on the
Budget; and (d) for such other amounts and payees as the Agent shall approve.
Borrower will not, directly or indirectly, use any part of such proceeds for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or to
extend credit to any Person for the purpose of purchasing or carrying any such
margin stock. This provision shall control over the provisions of Section 9.6.
ARTICLE 3. CONDITIONS TO LOANS AND ADVANCES
Section 3.1 CONDITIONS TO THE TERM LOANS AND ALL ADVANCES. The Lenders'
obligations to make the Term Loans and to make Advances shall be subject to
compliance by Borrower with its agreements contained in this Agreement, and to
the condition precedent that the Lenders shall have received each of the
following, in form and substance satisfactory to the Agent and its counsel or in
the form attached hereto as an Exhibit or Schedule, as the case may be:
(a) NOTES. The Term Loan Notes duly executed by the Borrower.
(b) RESOLUTIONS. Copies of the resolutions of the Board of Directors of
Borrower authorizing the execution, delivery and performance of this Agreement,
the Term Loan Notes, the Security Agreements and the other Lender Agreements to
which the Borrower or any Subsidiary is a party, certified by the Secretary or
an Assistant Secretary (or Clerk or Assistant Clerk) of Borrower and each of its
Subsidiaries (which certificate shall state that such resolutions are in full
force and effect).
(c) INCUMBENCY. A certificate of the Secretary or an Assistant
Secretary (or Clerk or Assistant Clerk) of Borrower certifying the name and
signatures of the officers of Borrower authorized to sign this Agreement, the
Term Loan Notes, the Security Agreements, the other Lender Agreements to which
Borrower or any Subsidiary is a party and the other documents to be delivered by
Borrower hereunder.
(d) CERTIFICATES OF EXISTENCE. Certificates of legal existence,
corporate or partnership good standing and foreign qualification for Borrower of
recent date issued by the appropriate California, Colorado, Delaware, Maine,
Nevada, Utah and Vermont Governmental Authorities.
(e) CERTIFICATES OF GOOD STANDING. Certificate of good standing for
Borrower and each Subsidiary of Borrower of recent date issued by the
appropriate California, Colorado, Delaware, Maine, Nevada, Utah and Vermont
Governmental Authorities.
(f) LEGAL OPINIONS. The opinions of counsel to the Borrower, dated the
date of execution of this Agreement, in form acceptable to counsel for the
Lenders.
(g) SATISFACTION OF CONDITIONS. A certificate of the chief operating
officer or chief financial officer of Borrower, dated the Closing Date, to the
effect that all conditions precedent on the part of the Borrower to the
execution and delivery hereof and the making of the Term Loans have been
satisfied.
(h) GOVERNMENTAL APPROVALS. Evidence of the receipt of all necessary
governmental authorizations, consents and approvals for the execution, delivery
and performance by Borrower and its Subsidiaries party thereto of this
Agreement, the Term Loan Notes, the Security Agreements and the other Lender
Agreements.
(i) CLOSING FEE. Receipt by the Agent for the account of the Lenders
of the closing fees due to it pursuant to the Fee Letter.
(j) TITLE. The Designated Properties have been conveyed to Borrower,
and Borrower owns fee simple title or other title acceptable to the Lenders with
respect to the Designated Properties.
(k) PURCHASE OPTION. Borrower is the owner of the Purchase Option. No
encumbrance exists with respect to the Purchase Option other than the lien of
the collateral documents securing the Senior Facility which affects all of the
Purchase Option other than the Base Property.
(l) MARRIOTT. Borrower has assigned a first in priority security
interest (subject to perfection) in the distribution interest of Borrower in the
Marriott Joint Venture.
(m) SECURITY AGREEMENTS. Each of the security agreement modifications
shall have been duly and properly authorized, executed and delivered by the
parties thereto and shall be in full force and effect, and pursuant to the
Security Agreements, Borrower shall have granted to the Agent first valid and
binding perfected security interests, liens and encumbrances on all of the
assets of Borrower (other than personal property which are either de minimis or
non core assets of the Borrower and restricted cash balances and investments of
the disbursed loan proceeds other than the Killington Property prior to the
filing of the required subdivision plats permitted the recording of the Mortgage
applicable to the Killington Property) in favor of the Agent (subject only to
permitted Liens including without limitation:
(i) all fee simple and leasehold interests in and to all real
property owned or leased by Borrower, and all buildings and
improvements now located or to be constructed thereon, whether now
owned or hereafter acquired;
(ii) all tangible and intangible assets of Borrower, whether
now owned or hereafter acquired, including without limitation all
machinery, equipment, furniture, furnishings, inventory, appliances,
contract rights, deposit accounts, cash collateral, hotel and motel
revenues, instruments, general intangibles, etc., whether now owned or
hereafter acquired, but excluding leasehold personal property interests
which Borrower is prohibited by the lessor from assigning and any
interest in any personal property lease agreement which Borrower is
prohibited from assigning;
(iii) all leases, tenancies, purchase and sale agreements for
the sale of condominium units or other property, operating agreements,
contract and rental agreements for the lease, sale (as permitted
hereunder), rental, occupancy, hire or use of any of Borrower's assets,
including without limitation the Mortgaged Properties, or any portion
thereof together with all income, profits, revenues, cash collateral
and other proceeds thereof; and
(iv) all licenses, permits, trade names, patents, trademarks,
approvals and contracts.
(n) INSURANCE. The Agent shall have received (i) certificates of
insurance as to the liability, hazard and other insurance maintained by Borrower
on the Collateral in conformity with the insurance requirements contained herein
(including flood insurance if necessary) from the insurer or an independent
insurance broker dated as of the Closing Date, identifying insurers, types of
insurance, insurance limits, and policy terms all in accordance with the
provisions of the Security Agreements; (ii) certified copies of all policies
evidencing such insurance (or certificates therefor signed by the insurer or an
agent authorized to bind the insurer); and (iii) such further information and
certificates from Borrower, its insurers and insurance brokers as the Agent may
request.
(o) LEASES/SERVICE CONTRACTS. The Agent shall have received copies of
all material service contracts and leases affecting any portion of the Mortgaged
Properties.
(p) SUBORDINATION AGREEMENT. The Agent shall have received the executed
Subordination Agreement.
(q) MISCELLANEOUS. The Agent shall have received such other documents,
certificates and opinions as the Agent or the Lenders may reasonably request.
(r) PERMITTED CONSTRUCTION LOANS. No Default or Event of Default shall
exist with respect to the Permitted Construction Loans.
(s) INTEREST RESERVE FULLY ESTABLISHED. The Interest Reserve is fully
established to the levels required herein.
(t) MASTER EASEMENT. The Master Easement shall be executed and
delivered and remain in full force and effect, and the Title Policies shall
insure the lien and interest thereof subject only to the Permitted Exceptions.
(u) AUTHORIZED EXPENDITURES AND ADVANCES. The borrower shall be
entitled to Advances under the Loan to fund all expenditures reflected in the
Budget as in effect from time to time. Each request for an Advance shall be
accompanied by a requisition for advance in the form attached hereto as Exhibit
containing:
(i) A certification of the Borrower's chief financial officer
or vice president of finance as to the accuracy of the information contained
therein.
(ii) A report reflecting any variance of the Advance requested
from the Budget in effect. Borrower may reallocate budgeted amounts shown as
line items or the contingency line item in the Budget provided the Term Loan is
in Balance.
(iii) Confirmation that the amount of the Advance, when
funded, will not cause the Outstanding Amount of the Term Loan to exceed
$58,000,000.00.
(iv) Certification that, to the best of the knowledge of the
officer executing the certificate, no Default then exists (or if so specifying
the same).
(v) The certification that after the Advance is made, the Term
Loan will remain in Balance.
Section 3.2 CONDITIONS TO ADVANCES. The obligation of each Lender to
make any Term Loan Advances subsequent to the Closing Date shall be subject to
the satisfaction of the following conditions precedent:
(a) Legality of Transactions. It shall not be unlawful for any Person,
including the Agent or any Lender, to perform any of its agreements or
obligations under any of the Lender Agreements to which the Agent or such Lender
is a party on the date of such Term Loan Advance.
(b) Representations and Warranties. Each of the representations and
warranties made by or on behalf of the Borrower and the Borrower Subsidiaries to
the Agent and the Lenders in this Agreement or any other Lender Agreements shall
be true and correct in all material respects when made and shall, for all
purposes of this Agreement, be deemed to be repeated on and as of the date of
the Borrower's notice of borrowing for such Term Loan Advance and on and as of
the date of such Term Loan Advance, and shall be true and correct in all
material respects on and as of each of such dates, except, in each case, as
affected by the consummation of the transactions contemplated by the Lender
Agreements.
(c) Performance, etc. The Borrower and its Subsidiaries shall have duly
and properly performed, complied with and observed in all material respects each
of its covenants, agreements and obligations contained in this Credit Agreement,
including the covenants set forth in Article 7 and any of the other Lender
Agreements to which it is a party or by which it is bound on the date of such
Term Loan Advance. No Event of Default or Default shall exist.
(d) Proceedings and Documents. Any corporate, partnership, governmental
and other proceedings which are undertaken in connection with the transactions
contemplated by such Term Loan Advance and any instruments and documents
incidental to such Term Loan Advance shall be in form and substance reasonably
satisfactory to the Agent, and the Agent shall have received all such
counterpart originals or certified or other copies of all such instruments and
documents as the Agent shall have reasonably requested. With respect to any Term
Loan Advance requested after any date on which the outstanding term loan
advances have been repaid in full, the Borrower shall have provided to the Agent
evidence satisfactory to the Agent as to the continuing perfected first in
priority and effectiveness of the Agent's security interest in and lien upon all
of the Collateral.
(e) Payment of Fees. The Borrower shall have complied with its
obligations under ss. 2.5 to pay the Fees, or any other amount arising hereunder
at any time subsequent to the Closing Date and becoming due and payable on or
before the date of such Term Loan Advance.
(f) Interest Reserve Fully Established. The Interest Reserve is fully
established to the levels required herein.
(g) Required Due Diligence. The Required Due Diligence shall be
submitted to and approved by Agent as provided in Section 8.11.
Section 3.3 BUDGET COMPLIANCE. The amount of the proposed Advance when
taken together with all other advances in the category of the Budget shall be
within the amount set forth in the applicable category in the Budget.
Section 3.4 PROCEDURES FOR ADVANCES.
(a) Requests for Advances. Whenever the Borrower desires to receive a
Advance, the Borrower shall give notice to the Agent by telephone, telecopy,
telex or cable, in each case confirmed in writing by the Borrower, delivered to
the Agent's office at 115 Perimeter Center Place, Suite 500, Atlanta, Georgia
30346, Attn. Mr. Jeff Aycock.
Each such notice delivered by the Borrower shall specify the aggregate
principal amount of the Advance requested. Each such notice shall obligate the
Borrower to accept the Advance requested from the Lenders on the proposed
Drawdown Date therefor. Whenever there is an Obligation due and payable, the
Agent may (but shall not be required to) make a Advance in the amount of such
Obligation and apply the proceeds of the Advance to the payment of the
Obligation, provided that the Agent shall promptly notify the Borrower of such
Advance and the application of proceeds thereof.
The time periods in this section are subject to and shall commence only
upon the completion of the Advance Requirements and the determination by the
Agent that the submission meets all requirements for Advances established
herein. The Agent shall have a minimum of two (2) days from the submission of a
complete request for Advance in which to make a determination of compliance. The
Borrower shall be entitled to request Advances no more frequently than once per
month with fundings scheduled for on or about the 25th of each month.
The Borrower shall give the Agent not later than 10:00 a.m. (Boston
time) one Business Day prior to the date of a proposed Advance, irrevocable
prior notice by telephone or telecopy and shall confirm any such telephone
notice with a written request for Advance; provided, however, that the failure
by the Borrower to confirm any notice by telephone or telecopy with a request
for Advance shall not invalidate any notice so given.
(b) Notification of Lenders. Upon receipt of a request for Advance, the
Agent shall promptly notify each Lender by telephone or telecopy of the contents
thereof and the amount of each Lender's portion of any such Advance. Each Lender
shall, not later than 2:00 p.m. (Boston time) on the date specified for such
Advance in such notice, make available to the Agent at the Agent's office, or at
such account as the Agent shall designate, the amount of such Lender's portion
of the Advance in immediately available funds.
(c) Disbursement. Prior to 3:00 p.m. (Boston time) on the date of an
Advance, the Agent shall, subject to the satisfaction of the conditions set
forth in ss.3.4(b), disburse the amounts made available to the Agent by the
Lenders in like funds by transferring the amounts so made available by deposit
into the Borrower's account maintained with BKB. Unless the Agent shall have
received notice from a Lender prior to 11:00 a.m. (Boston time) on the date of
any Advance that such Lender will not make available to the Agent such Lender's
ratable portion of such Advance, the Agent may assume that such Lender has made
or will make such portion available to the Agent on the date of such Advance and
the Agent may, in its sole discretion and in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent such Lender shall not have so made such ratable portion available to the
Agent, such Lender agrees to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, (x) for the first two Business Days, at the rate on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day by the Federal
Reserve Lender of New York, and (y) thereafter, at the Base Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's portion of the applicable Advance for purposes of this
Agreement and if both such Lender and the Borrower shall pay and repay such
corresponding amount, the Agent shall promptly relend to the Borrower such
corresponding amount. If such Lender does not repay such corresponding amount
immediately upon the Agent's demand therefor, the Agent shall notify the
Borrower and the Borrower shall immediately pay such corresponding amount to the
Agent. The failure of any Lender to fund its portion of any Advance shall not
relieve any other Lender of its obligation, if any, hereunder to fund its
respective portion of the Advance on the date of such borrowing, but no Lender
shall be responsible for any such failure of any other Lender. In the event that
a Lender for any reason fails or refuses to fund its portion of an Advance in
violation of this Agreement, then, until such time as such Lender has funded its
portion of such Advance, or all other Lenders have received payment in full
(whether by repayment or prepayment) of the principal and interest due in
respect of such Advance, such non-funding Lender shall (i) have no right to vote
regarding any issue on which voting is required or advisable under this
Agreement or any other Loan Document, and (ii) shall not be entitled to receive
any payments of principal, interest or fees from the Agent (or the other
Lenders) in respect of its Loans, which amounts may be applied by the Agent for
the benefit of the Agent and the other Lenders in accordance with the provisions
of ss.10.5(b) and thereafter in a manner determined by the Agent in its sole
discretion. Furthermore, upon such failure of a Lender to fund its portion of an
Advance, the Agent shall have the right, but not the obligation, at its
election, to purchase the portion of the Loan held by such non-funding Lender
for a purchase price equal to the then outstanding principal balance of such
Lender's Loan or portion thereof.
ARTICLE 4. PAYMENT AND REPAYMENT
Section 4.1 MANDATORY REPAYMENTS AND PREPAYMENTS. Borrower shall repay
the Term Loans in full on the Term Loan Maturity Date.
Section 4.2 VOLUNTARY PREPAYMENTS. Borrower may make prepayments to the
Agent for the ratable accounts of the Term Loan Lenders of any outstanding
principal amount of the Term Loans upon three (3) days notice to the Agent.
Section 4.3 PAYMENT OR OTHER ACTIONS ON NON-BUSINESS DAYS. Whenever any
payment to be made hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fees, as the case may be. In the case of any other action
the last day for performance of which shall be a day other than a Business Day,
the date for performance shall be extended to the next succeeding Business Day.
Section 4.4 METHOD AND TIMING OF PAYMENTS. Borrower shall make each
payment to be made by Borrower hereunder not later than 3:00 (Boston time) on
the day when due in lawful money of the United States to the Agent at its
address set forth in Section 16.1 in immediately available funds. The Agent
will, after its receipt thereof, distribute like funds relating to the payment
of principal, interest or any other amounts payable hereunder ratably to the
Lenders in accordance with their respective Commitment Percentages. Any payment
made by Borrower to the Agent under this Agreement or under the Notes in the
manner provided in this Agreement shall be deemed to be a payment to each of the
respective Lenders, unless the provisions of this Agreement expressly provide
that any such payment shall be solely for the account of the Agent or any
specific Lender.
Section 4.5 CURRENCY. All payments and prepayments provided for under
this Agreement shall be made in lawful currency of the United States of America
in immediately available funds.
Section 4.6 FOREIGN LENDERS. Each Lender (including any Successor
Lender) that is not a citizen or resident of the United States of America, a
corporation, partnership or other entity created or organized in or under the
laws of the United States of America (or any jurisdiction thereof), or any
estate or trust that is subject to federal income taxation regardless of the
source of its income ("Non-U.S. Lender") shall deliver to Borrower and the Agent
(or, in the case of a Credit Participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest," a Form W-8,
or any subsequent versions thereof or successors thereto (and, if such Non-U.S.
Lender delivers a Form W-8, an annual certificate representing that such
Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the Code, is
not a 10% shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of Borrower and is not a controlled foreign corporation related to Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by Borrower under
this Agreement and the other Lender Agreements. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of any Credit Participant, on or before the date such Credit
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this Section 4.6, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this Section 4.6
that such Non-U.S. Lender is not legally able to deliver.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make the Loans as contemplated hereby,
Borrower hereby makes the following representations and warranties:
Section 5.1 EXISTENCE, CHARTER AND FORMATION DOCUMENTS, ETC. Borrower
is a corporation, and is validly organized, legally existing and in good
standing under the laws of the jurisdiction in which it is organized and has
corporate power to own its properties and conduct its business as now conducted
and as proposed to be conducted by it. Certified copies of the charter documents
and By-Laws of Borrower have been delivered to the Lenders and are true,
accurate and complete as of the date hereof.
Section 5.2 PRINCIPAL PLACE OF BUSINESS; LOCATION OF RECORDS.
Borrower's and each Subsidiary's principal place of business is as described on
Schedule 5.2. All of the books and records or true and complete copies thereof
relating to the accounts and contracts of Borrower are and will be kept at such
location and at the other locations designated on Schedule 5.2.
Section 5.3 QUALIFICATION. Borrower and each Subsidiary is duly
qualified, licensed and authorized to do business and is in good standing as a
foreign corporation or partnership in each jurisdiction where its ownership or
leasing of properties or the conduct of its business requires it to be so
qualified except to the extent that any failure to be so qualified would not
have a Material Adverse Effect.
Section 5.4 SUBSIDIARIES.
(a) Borrower has no Subsidiaries except for the Borrower Subsidiaries.
(b) There are no material transactions or relationships between
Borrower and American Ski or its Subsidiaries except for the InterCompany Debt,
except as disclosed on Schedule 5.4, or after the Closing Date, pursuant to an
Affiliate transaction permitted hereunder.
Section 5.5 POWER. The execution, delivery and performance of this
Agreement, the Term Notes, the Security Agreements and all other Lender
Agreements and other documents delivered or to be delivered by Borrower to the
Agent or the Lenders, and the incurrence of Indebtedness to the Lenders
hereunder or thereunder, now or hereafter owing:
(a) are within the powers of Borrower, having been duly authorized by
its Board of Directors or other similar governing body, and, if required by law,
by its charter documents or by its By-Laws, by its stockholders or partners;
(b) do not require any approval or consent of, or filing with, any
governmental agency or other Person (except for such approvals and consents that
have been obtained and delivered to the Lenders) and are not in contravention of
law or the terms of the charter documents or By-Laws of Borrower or any
amendment thereof;
(c) do not and will not
(i) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower or any Subsidiary or American Ski is a
party or by which Borrower or any Subsidiary or American Ski or any of
their respective properties are bound or affected, except for those
breaches or defaults which have been waived or consented to in writing
or which will not in the aggregate result in a Material Adverse Effect,
(ii) result in a violation of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award having applicability to Borrower or any Subsidiary, or to any of
their respective properties.
Section 5.6 VALID AND BINDING OBLIGATIONS. This Agreement, the Term
Loan Notes, the Security Agreements and all the other Lender Agreements executed
in connection herewith and therewith constitute, or will constitute when
delivered, the valid and binding obligations of Borrower, enforceable in
accordance with their respective terms, except as the enforceability thereof may
be subject to bankruptcy, insolvency, moratorium and other laws affecting the
rights and remedies of creditors and secured parties and to the exercise of
judicial discretion in accordance with general equitable principles, subject to
perfection as provided herein.
Section 5.7 OTHER AGREEMENTS. Borrower is not a party to any indenture,
loan or credit agreement, or any lease or other agreement or instrument, or
subject to any charter or corporate restriction or any judgment, decree, order,
rule or regulation, which at the time it is entered into is reasonably likely to
have a Material Adverse Effect, or which restricts the ability of Borrower to
carry out any of the provisions of this Agreement, the Term Loan Notes, the
Security Agreements or any of the Lender Agreements executed in connection
herewith and therewith except for the compliance by Borrower with the provisions
of Section 11.2.
Section 5.8 PAYMENT OF TAXES. Borrower has filed all tax returns which
are required to be filed and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received, except such as are being contested in good faith by
appropriate proceedings.
Section 5.9 FINANCIAL STATEMENTS. All balance sheets, statements and
other financial information furnished to the Agent and the Lenders in connection
with this Agreement and the transactions contemplated hereby, including, without
limitation, the financial statement for the fiscal quarter ended October 25,
1998, has been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except for
normal year-end adjustments and for the absence of footnotes with interim
statements) and present fairly the consolidated financial condition of Borrower
and its Subsidiaries reported therein and all such information so furnished was
true, correct and complete as of the date thereof, in all material respects.
Section 5.10 OTHER MATERIALS FURNISHED. The written information,
exhibits, memoranda or reports furnished to the Agent or the Lenders by or on
behalf of Borrower in connection with the negotiation of this Agreement, taken
as a whole, does not contain any material misstatement of fact or omit to state
a material fact necessary to make the statements contained therein not
misleading.
Section 5.11 STOCK. As of the date hereof, the issued and outstanding
capital stock of Borrower is as set forth on Schedule 5.11 hereto. There are
presently issued by Borrower and outstanding the shares of capital stock
indicated on Schedule 5.11. Borrower has received the consideration for which
such stock was authorized to be issued and have otherwise complied with all
legal requirements relating to the authorization and issuance of shares of stock
and all such shares are validly issued, fully paid and non-assessable. Borrower
has no other capital stock of any class outstanding.
Section 5.12 CHANGES IN CONDITION. Since October 25, 1998, there has
been no material adverse change in the business or assets or in the condition,
financial or otherwise, of Borrower and its Subsidiaries taken as a whole, and
neither Borrower nor any Subsidiary have entered into any transaction outside of
the ordinary course of business which is material to Borrower and its
Subsidiaries taken as a whole other than: (i) the closing of the Key Bank
Facility and (ii) the Borrower's buy-out of the leasehold interest of United
Concerts at The Canyons for an aggregate cash settlement of $1,000,000.00.
Neither Borrower nor any Subsidiary have, as of the date thereof, any contingent
liabilities of any material amount other than the Senior Note Guaranty and the
existing guaranty of a portion of the Key Bank Facility by the Borrower.
Section 5.13 ASSETS, LICENSES, PATENTS, TRADEMARKS, ETC.
(a) Borrower has good and marketable title to, or valid leasehold
interests in, all of its assets, real and personal, including the Designated
Properties and the Purchase Option, subject to no liens, charges or
encumbrances, except for liens, charges and encumbrances described in Schedule
5.13 and permitted by Section 9.2 hereof.
(b) Borrower owns all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, and trade names
necessary to continue to conduct its business.
(c) Except as set forth on Schedule 5.13 hereto, no leasehold personal
property interest which Borrower is prohibited by the lessor from assigning and
no interest in any personal property lease agreement which Borrower is
prohibited from assigning is material, or taken as a whole are material, to the
operations of Borrower.
Section 5.14 LITIGATION. There is no litigation, at law or in equity,
or any proceeding before any federal, state, provincial or municipal board or
other governmental or administrative agency pending or, to the knowledge of
Borrower, threatened, or any basis therefor, which involves a material risk of
any judgment or liability which could have a Material Adverse Effect, and no
judgment, decree, or order of any federal, state, provincial or municipal court,
board or other governmental or administrative agency has been issued against
Borrower or any of its Subsidiaries which has or may have a Material Adverse
Effect.
Section 5.15 PENSION PLANS. No employee benefit plan established or
maintained by Borrower or any of its Subsidiaries or any other Person a member
of the same "control group," as American Ski or any of its Subsidiaries
("Pension Affiliate"), within the meaning of Section 302(f)(6)(b) of ERISA,
(including any multi-employer plan to which American Ski or any of its
Subsidiaries contributes) which is subject to Part 3 of Subtitle B of Title I of
the ERISA, had a material accumulated funding deficiency (as such term is
defined in Section 302 of ERISA) as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, or would have had an
accumulated funding deficiency (as so defined) on such day if such year were the
first year of such plan to which Part 3 of Subtitle B of Title I of ERISA
applied, and no material liability under Title IV of ERISA has been, or is
expected by Borrower or any of its Subsidiaries to be, incurred with respect to
any such plan by Borrower or any of its Subsidiaries or any Pension Affiliate.
The execution, delivery and performance by American Ski and the Borrower of this
Agreement and the other Lender Agreements executed on the date hereof will not
involve any prohibited transaction within the meaning of ERISA or Section 4975
of the Code. Borrower and its Subsidiaries have no Pension Plan other than those
described on Schedule 5.15.
Section 5.16 OUTSTANDING INDEBTEDNESS. After application of the
proceeds of the Term Loans, the outstanding amount of borrowed money of Borrower
and its Subsidiaries as of the date hereof is correctly set forth on Schedule
5.16 hereto, and said Schedule correctly describes the credit agreements,
guaranties, leases and other instruments pursuant to which such Indebtedness has
been incurred and all liens, charges and encumbrances securing such
Indebtedness. This schedule also describes all agreements and other arrangements
pursuant to which Borrower or any of its Subsidiary may borrow any money.
Neither Borrower nor any Subsidiary has any indebtedness other than as set forth
on Section 5.16 and those amounts payable from Term Loan Advances on the Closing
Date.
Section 5.17 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
5.17:
(a) Neither Borrower, any Subsidiaries, nor any operator of any of
their respective properties is in violation, or to Borrower's knowledge is in
alleged violation, of any Environmental Law, which violation would have a
Material Adverse Effect.
(b) Neither Borrower, nor any operator of any of their respective
properties has received notice from any third party, including without
limitation any federal, state, county, or local governmental authority, (i) that
it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA") or any equivalent state law, with respect to any site or
location; (ii) that any Hazardous Materials which it has generated, transported
or disposed of, has been found at any site at which a federal, state, county, or
local agency or other third party has conducted or has ordered Borrower, or
another third party or parties (E.G. a committee of potentially responsible
parties) to conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a named party
to any claim, action, cause of action, complaint (contingent or otherwise) or
legal or administrative proceeding arising out of any actual or alleged release
or threatened release of Hazardous Materials. For purposes of this Agreement,
"release" means any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Material into the Environment, or the
uncontained presence of any Hazardous Material in the Environment.
(c) (i) Borrower, and each operator of any real property owned or
operated by Borrower is in compliance, in all material respects, with all
provisions of the Environmental Laws relating to the handling, manufacturing,
processing, generation, storage or disposal of any Hazardous Materials; (ii) to
the best of Borrower's knowledge, no portion of property owned, operated or
controlled by Borrower has been used for the handling, manufacturing,
processing, generation, storage or disposal of Hazardous Materials except in
accordance with applicable Environmental Laws; (iii) to the best of Borrower's
knowledge, there have been no releases or threatened releases of Hazardous
Materials on, upon, into or from any property owned, operated or controlled by
Borrower, which releases could have a Material Adverse Effect; (iv) to the best
of Borrower's knowledge, there have been no releases of Hazardous Materials on,
upon, from or into any real property in the vicinity of the real properties
owned, operated or controlled by Borrower which, through soil or groundwater
contamination, may have come to be located on the properties of Borrower; and
(v) to the best of Borrower's knowledge, there have been no releases of
Hazardous Materials on, upon, from or into any real property formerly but no
longer owned, operated or controlled by Borrower.
(d) None of the properties of Borrower is or shall be subject to any
applicable environmental cleanup responsibility law or environmental restrictive
transfer law or regulation by virtue of the transactions set forth herein and
contemplated hereby.
Section 5.18 FOREIGN TRADE REGULATIONS. Borrower is not (a) a person
included within the definition of "designated foreign country" or "national" of
a "designated foreign country" in Executive Order No. 8389, as amended, in
Executive Order No. 9193, as amended, in the Foreign Assets Control Regulations
(31 C.F.R., Chapter V, Part 500, as amended), in the Cuban Assets Control
Regulations of the United States Treasury Department (31 C.F.R., Chapter V, Part
515, as amended) or in the Regulations of the Office of Alien Property,
Department of Justice (8 C.F.R., Chapter II, Part 507, as amended) or within the
meanings of any of the said Orders or Regulations, or of any regulations,
interpretations, or rulings issued thereunder, or in violation of said Orders or
Regulations or of any regulations, interpretations or rulings issued thereunder;
or (b) an entity listed in Section 520.101 of the Foreign Funds Control
Regulations (31 C.F.R., Chapter V, Part 520, as amended).
Section 5.19 GOVERNMENTAL REGULATIONS. Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, or is a common carrier under the
Interstate Commerce Act, or is engaged in a business or activity subject to any
statute or regulation which regulates the incurring by Borrower of Indebtedness
for borrowed money, including statutes or regulations relating to common or
contract carriers or to the sale of electricity, gas, steam, water, telephone or
telegraph or other public utility services.
Section 5.20 MARGIN STOCK. Borrower does not own any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations or rulings thereunder, nor
is Borrower engaged principally or as one of its important activities in
extending credit which is used for the purpose of purchasing or carrying margin
stock.
Section 5.21 SOLVENCY. Borrower, before and after giving effect to the
transactions contemplated by this Agreement and the other Lender Agreements is
Solvent.
Section 5.22 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.
(a) Borrower is not in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could result in a Material Adverse Effect.
(b) Borrower has complied in all respects with the requirements of the
Hart-Scott-Rodino Anti-Trust Improvement Act of 1976, as amended ("HSR Act")
Section 5.23 ABSENCE OF FINANCING STATEMENTS, ETC. To the best
knowledge of Borrower and except with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry or other
public office, that purports to cover, effect or give notice of any present or
possible future lien on, or security interest in, any assets or property of
Borrower or any Subsidiary or any rights relating thereto.
Section 5.24 FISCAL YEAR. Borrower has a fiscal year which is the
twelve-months ending on the last Sunday of July of each year.
Section 5.25 TAX STATUS. Borrower is a "C" corporation for all
purposes under the Code.
Section 5.26 PURCHASE OPTION. The Purchase Option is in full force and
effect and no event of default or default exists thereunder. No consent or
approval of the optionor is required for the pledge of the interest of the
Borrower to Lender thereunder.
Section 5.27 LEASES. As of the Closing Date neither the Borrower nor
any Borrower Subsidiary is a party to any Lease other than as set forth on
Schedule 5.27. Any Leases subsequently entered into by the Borrower must be
approved by Agent and will be subject to a first in priority perfected security
interest. All such Leases shall be in full force and effect and no event of
default or default shall exist thereunder. No consent shall be required for the
pledge of the interest of the Borrower to the Lender thereunder.
Section 5.28 PERMITTED CONSTRUCTION LOANS. The Permitted Construction
Loans have been closed and are in full force and effect; no Default or Event of
Default exists thereunder; the amounts thereof are sufficient, when taken
together with amounts previously invested by the Borrower or a Subsidiary, or
scheduled to be invested under the Budget to complete the Project for which they
were granted in the manner contemplated by the Permitted Construction Loan; and
the lender thereof has not indicated any intent to withhold any advances
thereunder other than the delivery of certain due diligence items set forth in
the documents for the respective Permitted Construction Loan.
Section 5.29 STATUS MEMORANDUM. The information contained in the
Status Memorandum is true and correct in all material respects.
Section 5.30 SECURITY AGREEMENTS. The Security Agreements create a
perfected first in priority security interest in and to the Collateral subject
only to Permitted Exceptions. The Collateral includes all of the assets of the
Borrower and all shares of all equity interests of the Borrower Subsidiaries
except for personal property which is either a de minimis asset or non core
asset of the Borrower.
Section 5.31 COMPREHENSIVE EFFECT OF MASTER EASEMENT. The Master
Easement conveys to the Lenders all utilities, access rights, and development
rights in sufficient scope and in an encumbered state to permit the development
of the Mortgaged Property for the Contemplated Improvements and as set forth in
the Appraisals delivered to the Agent on or before the Closing Date. Borrower
acknowledges receipt of the Appraisals on or before the Closing Date subject to
completion of master planning. All such rights may be exercised without the
prior consent of the Borrower any Affiliate of Borrower or American Ski, except
as set forth in the Master Easement.
ARTICLE 6. REPORTS AND INFORMATION
Section 6.1 FINANCIAL STATEMENTS AND OTHER REPORTS. The Borrower will
furnish or cause to be furnished financial statements and other monthly,
quarterly or other periodic reports to the Agent and each of the Lenders as
follows:
(a) within ninety (90) days after the close of each fiscal
year, the consolidated balance sheets and consolidated statements of income,
retained earnings and cash flows (the "Financial Statements") for such year, in
reasonable detail, and, setting forth in comparative form the corresponding
figures for the preceding year, prepared pursuant to agreed upon procedures and
in accordance with generally accepted accounting principles consistently
applied, accompanied by a report of an independent certified public accountant
selected by Borrower and approved by the Agent;
(b) within forty-five (45) days after the end of each Fiscal
Quarter of each fiscal year, the unaudited balance sheet, income statement and a
statement of cash flows similar to those required by clause (a) above (but with
a requirement as to comparison with the prior year) as of the end of such Fiscal
Quarter and for such Fiscal Quarter then ended and for the Fiscal Quarter from
the beginning of the current fiscal year to the end of such Fiscal Quarter,
prepared in accordance with generally accepted accounting principles
consistently applied and certified as to preparation in accordance with
generally accepted accounting principles and that such statements fairly present
the financial condition of the Borrower at the dates thereof and for the periods
then ended, on behalf of the Borrower by its chief financial officer, subject
only to changes resulting from audit and normal year-end adjustments;
(c) at the delivery of each quarterly and annual statement, a
detailed computation showing compliance with the Financial Covenants certified
by the chief financial officer of the Borrower or other designated officer of
Borrower acceptable to Agent ("Compliance Certificate"); and further certifying
that such officer has caused this Agreement to be reviewed and has no knowledge
of any Default by it in the performance or observance of any of the provisions
hereof, during such month or at the end of such year, or, if such officer has
such knowledge, specifying each Default and the nature thereof;
(d) on a quarterly basis: (i) a certification by the chief
financial officer of the Borrower as to the progress of construction and the
ability of the Borrower to complete the Permitted Construction Projects in the
time required by the Permitted Construction Lender or under any presale
contracts with respect to such Project, and evidence that no default or event of
default under the Permitted Construction Loan and that all requirements and
conditions for further advances thereunder have been met, together with: (i) the
most recent construction inspector report for each Permitted Construction Loan
and (ii) at the request of the Agent, copies of all reports of construction
inspectors and architects retained to render periodic construction reports to
the Permitted Construction Loans Lenders, copies of the applicable budgets and
other financial information relevant to the Permitted Construction Projects;
(ii) evidence that the Term Loan is in Balance;
(iii) copies of all title endorsements and title
policies applicable to the Projects.
(e) promptly upon receipt thereof, copies of all management
letters which are submitted to Borrower by its independent accountants in
connection with any annual or interim audit of Borrower's books made by such
accountants;
(f) Borrower shall submit to the Agent and the Lenders updated
versions of the Budget and Cash Flow Projections on a semi-annual basis and Loan
Reserve Analysis quarterly or at such earlier times as may be requested by the
Agent;
(g) The Borrower shall submit to the Agent an updated version
of the Loan Reserve Analysis on a quarterly basis. The Loan Reserve Analysis
shall provide an analysis of the rolling five month interest obligations with
respect to the Term Loans and evidence that the Interest Reserve is in
sufficient amount to fully fund the five month pro forma interest requirement.
The Borrower shall provide the Agent with all necessary support in performing
any due diligence required to verify the information reported in the updated
Loan Reserve Analysis and Budget. In the event of a dispute as to such
calculation, the Agent's calculation shall control;
(h) on a quarterly basis, a Budget variance report as to each
category of the Budget setting forth the current status of the Budget and the
variance of the categories thereof on an incurred basis during the previous
quarter;
(i) on a monthly basis, a report showing the total number and
dollar value of sales of all units at all Projects, including the total units
closed with the total purchase price and Net Proceeds, the total units under
contract including purchase price and total deposit, and a status report of such
contracts and closings as to the amounts projected for the month in the Budget;
(j) such other periodic reports, financial statements, other
information as the Agent from time to time reasonably requests, on a monthly,
quarterly or other periodic basis, including, without limitation, periodic
reports of financial information, construction progress, inventory, marketing
and sales results, and compliance with financial, environmental or other
covenants and including a report from an independent certified public accountant
selected by Borrower and approved by Agent certifying without material
qualification such financial matters relating to Borrower or a Borrower
Subsidiary as Agent may reasonably request. Borrower shall submit to Agent
reports required on an annual basis within ninety (90) days, on a quarterly
basis or within forty-five (45) days and on a monthly basis within thirty (30)
days each after the end of the applicable reporting period. The method and basis
of calculation of financial data shall be consistently calculated in accordance
with generally accepted accounting principles;
(k) Borrower shall provide to Agent with all payments pursuant
to Section 8.12, a cash reconciliation of the Borrower and the Borrower
Subsidiaries in form and substance acceptable to the Agent which sets forth a
report of: (i) the amount of cash and cash equivalents of the Borrower and each
Borrower Subsidiary as of the last date of the month; (ii) the calculation of
any reserves including amounts included in the Borrower Available Cash and the
Interest Reserve; and (iii) a reconciliation of amounts in the Budget as they
apply to any reserves or cash distributed.
Section 6.2 NOTICE OF DEFAULTS. As soon as possible, and in any event
within five (5) days after the occurrence of each Default, Borrower shall
furnish to the Agent and each Lender the statement of their chief executive
officers or chief financial officers setting forth details of such Default and
the action which Borrower has taken or propose to take with respect thereto.
Section 6.3 NOTICE OF LITIGATION. Promptly after the commencement
thereof, Borrower shall furnish to the Agent and each Lender written notice of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting Borrower, which, if adversely determined, would have a Material
Adverse Effect.
Section 6.4 REPORTABLE EVENTS. At any time that Borrower or any Pension
Affiliate has a Pension Plan, Borrower shall furnish to the Agent and each
Lender, as soon as possible, but in any event within thirty (30) days after
Borrower knows or has reason to know that any Reportable Event with respect to
any Pension Plan has occurred, the statement of the chief executive officers or
chief financial officers of Borrower setting forth the details of such
Reportable Event and the action which Borrower or any Pension Affiliate has
taken or proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event to the Pension Benefit Guaranty Corporation.
Section 6.5 COMMUNICATIONS WITH INDEPENDENT PUBLIC ACCOUNTANTS. At any
reasonable time and from time to time upon reasonable request, Borrower shall
provide the Agent and the Lenders and any agents or representatives of the Agent
and the Lenders access to the independent public accountants of Borrower and its
Subsidiaries to discuss their financial condition, including, without limitation
any recommendations of such independent public accountants concerning the
management, finances, financial controls or operations of Borrower and its
Subsidiaries.
Section 6.6 ENVIRONMENTAL REPORTS. In the event that and to the extent
that any of the following provides notice of circumstances, occurrences or
events that have or could reasonably be expected to have a material impact on
the operations of Borrower, the Borrower shall furnish to the Agent and each
Lender: (a) not later than seven (7) days after notice thereof, notice of any
enforcement actions, or, to the knowledge of Borrower, threatened enforcement
actions affecting Borrower or any Subsidiary by any Governmental Authority
related to Environmental Laws; (b) copies, promptly after they are received, of
all orders, notices of responsibility, notices of violation, notices of
enforcement actions, and assessments, and other written communications
pertaining to any such orders, notices, claims and assessments received by
Borrower or any Subsidiary from any Governmental Authority; (c) not later than
seven (7) days after notice thereof, notice of any civil claims or threatened
civil claims affecting Borrower or any Subsidiary by any third party alleging
any violation of Environmental Laws or harm to human health, safety or the
environment; (d) copies of all cleanup plans, site assessment reports, response
plans, remedial proposals, or other submissions of American Ski or any
Subsidiary, other third party (e.g., committee of potentially responsible
parties at a Superfund site), or any combination of same, submitted to a
Governmental Authority in response to any communication referenced in
subsections (a) and (b) herein simultaneously with their submission to such
Governmental Authority; and (e) from time to time, on reasonable request of the
Agent, evidence satisfactory to the Agent of Borrower and its Subsidiaries'
insurance coverage, if any, for any environmental liabilities.
Section 6.7 MISCELLANEOUS. Borrower shall provide the Agent and the
Lenders with such other information as the Agent or the Lenders may from time to
time reasonably request respecting the business, properties, prospects,
condition or operations, financial or otherwise, of Borrower and its
Subsidiaries.
Section 6.8 PURCHASE OPTION AND LEASES. Borrower shall take all actions
necessary to cause the Leases and the Purchase Option to remain in full force
and effect and to cause no event of default to occur or exist thereunder or
under any Purchase Money Mortgage. Borrower hereby authorizes the Lenders to
take such actions as the Lenders may deem necessary to cause this warranty to
remain true and correct. Lenders may advance sums pursuant to the foregoing from
and after the expiration of ten (10) days from the giving of notice to the
Borrower of the intent of the Lender to undertake such action unless either a
Lease or the Purchase Option would terminate without immediate action, and then,
in such event, Lenders may take immediate action hereunder. All funds so
advanced shall be secured by the Security Agreements, bear interest at the
Default Rate of interest specified in the Notes and shall be immediately due and
payable.
Section 6.9 PERMITS, ZONING AND OTHER DEVELOPMENT RIGHTS. Borrower and
the Lenders acknowledge and recognize that the Mortgaged Properties are in
various stages of permitting for ultimate commercial development. Borrower shall
take such actions as are necessary to cause such permits to be issued and vested
in the Borrower and to be included in the Security Agreements. Borrower shall
provide such additional information and periodic reports as the Lenders may
request concerning the business plan and issuance of the foregoing permits,
zoning and development rights.
Section 6.10 MARRIOTT JOINT VENTURE. Borrower shall cause the Marriott
Joint Venture to remain in full force and effect and to cause no default or
event of default thereunder.
Section 6.11 PERMITTED CONSTRUCTION LOANS. Borrower shall provide to
the Agent upon receipt copies of all notices of Default or Event of Default
under the Permitted Construction Loans and copies of all loan documents executed
in connection therewith.
Section 6.12 BUDGET COMPLIANCE. At all times, the Term Loan must be in
Balance.
ARTICLE 7. FINANCIAL COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitment to make any
loans or advances hereunder, Borrower shall observe the following covenants:
Section 7.1 MINIMUM TANGIBLE NET WORTH. Borrower shall maintain a
minimum Tangible Net Worth at all times of not less than the sum of
$60,000,000.00.
Section 7.2 LOAN TO VALUE RATIO. From and after the Closing Date, the
Borrower will not permit the amount outstanding under the Lender Obligations to
exceed 45% of the Appraised Value of the Collateral.
ARTICLE 8. AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitment to make any
loans or advances hereunder, Borrower will, comply with the following covenants
and provisions in all material respects:
Section 8.1 REPRESENTATIONS AND WARRANTIES. Borrower shall take all
actions necessary in order to cause the representations and warranties set forth
in this Agreement to be true, accurate and in full force and effect.
Section 8.2 TAXES AND OTHER OBLIGATIONS. Borrower (a) will duly pay and
discharge, or cause to be paid and discharged, before the same shall become in
arrears, all material taxes, assessments and other governmental charges, imposed
upon each of them and its properties, sales and activities, or upon the income
or profits therefrom, as well as the claims for labor, materials, or supplies
which if unpaid might by law result in a lien or charge upon any of its
properties; PROVIDED, HOWEVER, that Borrower may contest any such charges or
claims in good faith so long as (i) an adequate reserve therefor has been
established and is maintained if and as required by generally accepted
accounting principles and (ii) no action to foreclose any such lien has been
commenced and (b) will promptly pay or cause to be paid when due, or in
conformance with customary trade terms (but not later than ninety (90) days from
the due date in the case of trade debt), all material lease obligations, trade
debt and all other Indebtedness incident to its operations. Borrower shall cause
all applicable tax returns and all amounts due thereunder to be filed and paid,
as the case may be, in order to maintain its good standing with the Internal
Revenue Service and state, local and foreign tax authorities.
Section 8.3 MAINTENANCE OF PROPERTIES AND LEASES. Borrower shall
maintain, keep and preserve all of its material properties (tangible and
intangible) including the Mortgaged Properties in good repair and working order,
ordinary wear and tear excepted. Borrower shall replace and improve its material
properties as necessary for the conduct of its business. Borrower and each
Subsidiary shall comply in all material respects with all leases naming it as
lessee.
Section 8.4 INSURANCE. The Borrower will maintain with financially
sound and reputable insurers insurance with respect to its properties and
business against such casualties and contingencies including windstorm and
hurricane insurance and as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas, and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent in accordance with sound business practices. With respect
to the Collateral, all such insurance shall be in such amount, such form, for
such periods and written by such companies as may be reasonably satisfactory to
the Agent and shall be payable to the Agent and to the Borrower, as the case may
be, as their interests may appear. If a Default then exists, the Agent may apply
all proceeds received by it to pay the Obligations hereunder in such order as it
shall determine in its discretion; but if no Default then exists, then the
Borrower shall have the right to determine whether to apply such proceeds
against the Obligations or against the costs of repairing or restoring the
damage to the Mortgaged Property. All policies of insurance shall provide for a
minimum thirty (30) days prior written minimum cancellation notice to the Agent
and shall name the Agent as additional insured party, and, in the case of the
Collateral, shall name the Agent as mortgagee and loss payee. Certificates of
insurance (or, if requested by the Agent, certified copies of policies) with
respect to all renewals or replacements of such insurance from time to time in
force together with evidence of payment of premiums thereon satisfactory to the
Agent shall be delivered to the Agent at least ten (10) days before the
expiration date of then current insurance. No settlement on account of any loss
covered by such insurance shall be made without the consent of the Agent. In the
event of failure to provide and maintain insurance as herein provided, the Agent
may, at its option, after giving notice to the Borrower, as applicable, provide
such insurance and charge the amount thereof to the Borrower (including by
making an Advance therefor). The Borrower shall furnish to the Agent
certificates or other evidence satisfactory to the Agent of compliance with the
foregoing insurance provision. Without limiting the foregoing, the Borrower will
(i) keep all of its physical property insured against fire and extended coverage
risks in amounts and with deductibles and endorsements acceptable to the Agent,
(ii) maintain all such workers' compensation or similar insurance as may be
required by law, and (iii) maintain, in amounts, deductibles and endorsements
acceptable to the Agent, general public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the properties
of the Borrower and business interruption insurance, and (iv) in the event the
Property or any portion thereof is located in a flood hazard area identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, as amended by the Flood Disaster Act of 1973 (and
any successor Act thereto), maintain a flood insurance policy as required by the
Flood Disaster Act of 1973. The Borrower shall at all times comply with and
conform to all provisions of each such insurance policy and to all requirements
of the insurers thereunder applicable to Borrower the Property or to the use,
occupation, possession, operation, maintenance or repair of all or any portion
of the Property.
Section 8.5 RECORDS, ACCOUNTS AND PLACES OF BUSINESS. Borrower shall
maintain comprehensive and accurate records and accounts in accordance with
generally accepted accounting principles consistently applied. Borrower shall
maintain adequate and proper reserves. Borrower shall promptly notify the Agent
of (a) any changes in the places of business of Borrower and (b) any additional
places of business which may arise hereafter.
Section 8.6 INSPECTION. At any reasonable time and from time to time,
Borrower shall permit the Agent and the Lenders and any of the Agent's and the
Lenders' agents or representatives to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, Borrower
and to discuss the affairs, finances and accounts of Borrower with any of their
officers or directors and with American Ski's and its Subsidiaries' independent
accountants. In addition, the Agent shall be entitled, and Borrower shall permit
the Agent, to conduct field examinations of Borrower, at Borrower's sole expense
and at any time or times in the Agent's sole discretion.
Section 8.7 MAINTENANCE OF ACCOUNTS. Borrower and Borrower's
Subsidiaries shall maintain their principal concentration and disbursement
accounts with the Agent unless otherwise required by the Permitted Construction
Lender.
Section 8.8 OWNERSHIP OF SUBSIDIARIES. Borrower will maintain legal and
beneficial ownership, directly or indirectly, of 100% of the equity interests of
each of the Subsidiaries, except for its interest in Heavenly Resort which is a
partial percentage interest and such other joint ventures as the Agent may
approve from time to time and sales of stock in existing Subsidiaries as Agent
may approve from time to time.
Section 8.9 DUE DILIGENCE MATTERS. Borrower agrees to provide to the
Agent, upon request, such surveys, evidence of zoning, title insurance policies,
appraisals, copies of permits, environmental reports, evidence of utilities, and
consents of lessors and optionors as the Agent may request, all at the sole cost
and expense of the Borrower.
Section 8.10 REQUIRED DUE DILIGENCE. The Borrower shall submit the
Required Due Diligence to the Agent for and obtain approval of the Agent on or
before February 8, 1999.
The term "Required Due Diligence" shall mean:
1. A mortgagee title insurance policy which insures the lien and
interest of the Mortgages as a perfected, first in priority security interest
subject only to the Permitted Exceptions and a survey exception issued by the
Title Company in the Term Loan Amount containing such endorsements as the Agent
may reasonably request.
2. Updates of or new Phase 1 reports with respect to all Mortgaged
Properties with reliance letters in favor of the Agent.
3. Evidence of availability of utilities provided by utility providers
or engineers certifying to the Agent such availability.
4. Evidence of zoning of the Mortgaged Property in the form of an
opinion of a lawyer or engineer acceptable to the Agent, a zoning endorsement to
the Title Policy or letter from the applicable governmental authority having
jurisdiction over the respective portion of the Mortgaged Property.
5. Evidence of the availability of all permits and licenses for the
Mortgaged Property to permit the construction of a resort, retail, hotel or
condominium facility on the Mortgaged Property as contemplated to be constructed
prior to the Maturity Date as described in the Contemplated Improvements.
6. The consents and requirements circled on the closing agenda attached
hereto as Exhibit E and made a part hereof.
7. Such other requirements as the Agent may reasonably require.
The conditions set forth at 3, 4, and 5 may be satisfied by the
submission of an analysis by an engineer or lawyer acceptable to the Agent which
describes the time period and procedure required to attain sufficient utilities,
zoning and permits and licenses to permit the development of the Mortgaged
Property in the manner described in requirement 5. As used herein, the term
"Mortgaged Property" shall not include the Master Easement or the Purchase
Option.
Section 8.11 PLEDGE OF COLLATERAL. Borrower shall pledge a perfected
first in priority security interest in and to all assets of the Borrower and all
stock of all Borrower Subsidiaries and all assets of a Borrower subsidiary which
are not subject to the lien of a Permitted Construction Loan except for personal
property which is either de minimis or non core asset of the Borrower.
The Collateral shall include:
1. Any unencumbered real or personal property of a Borrower
Subsidiary;
2. The Reserves; and
3. Any cash or cash equivalents held by or on behalf of a Borrower
Subsidiary required by a Permitted Construction Loan.
Section 8.12 DISTRIBUTION OF CASH AND CASH EQUIVALENTS BY BORROWER
SUBSIDIARIES. Borrower shall cause all Borrower Subsidiaries to pay to the
Borrower all Subsidiary Available Cash on the last day of each month or upon the
request of the Agent. The term "Subsidiary Available Cash" is hereby defined as
all cash or cash equivalents held by or on behalf of the Borrower Subsidiary
excluding Project Equity minus: (i) an operating reserve for obligations of the
Borrower Subsidiary to be paid within a rolling three month period as provided
in the Budget and (ii) any mandatory cash or cash equivalent reserves required
under a Permitted Construction Loan, which is not available for the operating
expenses of the Borrower Subsidiary. All Borrower Available Cash including, any
Net Proceeds, shall be immediately deposited by the Borrower with the Agent for
disposition in accordance with Section 12.3. Borrower shall provide the reports
required under Section 6.1 (k) upon any payments made hereunder.
Section 8.13 ADDITIONAL DOCUMENTS AND COLLATERAL. Except for collateral
or guaranties granted at the closing of the Permitted Construction Loans or
otherwise approved by the Agent, Borrower shall grant or execute and deliver to
the Agent such additional collateral, guaranties, intercreditor agreements or
other documents and instruments that it executes or delivers in favor of any
Permitted Construction Loan Lender, agent of the Senior Facility or the trustee
of the Senior Notes.
ARTICLE 9. NEGATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitment to make any
loans or advances hereunder, Borrower covenants that Borrower will not and
Borrower will take such actions as are necessary to cause the Borrower
Subsidiaries not to do any of the following without the prior written consent of
the Agent:
Section 9.1 RESTRICTIONS ON INDEBTEDNESS. Create, incur, suffer or
permit to exist, or assume or guarantee, either directly or indirectly, or
otherwise become or remain liable with respect to, any Indebtedness, except the
following:
(a) Indebtedness to the Lenders and the Agent under this Agreement,
the Term Loan Notes, and the other Lender Agreements;
(b) the InterCompany Debt and such other indebtedness by the Borrower
to American Ski and its Subsidiaries provided that it is governed by the
Subordination Agreement;
(c) the Purchase Money Indebtedness;
(d) as to the Borrower Subsidiaries, Permitted Construction Loans, and
indebtedness of a Subsidiary of Borrower associated with the exercise of
Borrower's rights under the Purchase Option (collectively, "Permitted Financial
Facilities") Indebtedness shall not constitute a Permitted Financial Facility or
a Permitted Construction Loan unless: (i) the terms and conditions and documents
evidencing and securing the Indebtedness, and any proposed modifications
thereto, have been approved in advance by the Agent and (ii) no such document or
instrument either prohibits or causes the acceleration of the respective
Indebtedness upon the pledge of the equity interests of the Borrower Subsidiary
to the Agent or upon the foreclosure of such pledge by the Agent. Agent hereby
approves those documents and instruments delivered to the Agent on or before the
Closing Date (but not otherwise) executed in connection with the Permitted
Construction Loans which have been closed as of the Closing Date, and such
facilities shall constitute Permitted Financial Facilities regardless of
satisfaction of the conditions of the preceding sentence. Subject to the
preceding sentence, any Indebtedness of the Borrower or a Borrower Subsidiary
that initially qualifies as a Permitted Financial Facility shall automatically
be disqualified as a Permitted Financial Facility upon the failure of the
Borrower or the Borrower Subsidiary to meet the requirements set forth above;
(e) the existing indebtedness set forth on Schedule 5.16, or otherwise
approved by the Agent from time to time subject to the conditions established in
subsection (d) and the guaranty of a portion of the Key Bank Facility;
(f) guaranties by a Borrower Subsidiary for the Indebtedness permitted
hereunder of another Borrower Subsidiary;
(g) Indebtedness which refinances any previously permitted Indebtedness
hereunder provided the terms and conditions of such Indebtedness are no less
stringent that the previous permitted Indebtedness and the refinance
Indebtedness otherwise meets the requires established herein for permitted
Indebtedness;
(h) the Senior Note Guaranty provided that it remains subordinate to
the Lender Obligations;
(i) such other subordinated indebtedness as is approved by the Agent;
and
(j) indebtedness under the Purchase Option.
Section 9.2 RESTRICTION ON LIENS. Create or incur or suffer to be
created or incurred or permit to exist any encumbrance, mortgage, pledge, lien,
charge or other security interest of any kind upon any of its property or assets
of any character, whether now owned or hereafter acquired, or transfer any of
such property or assets for the purposes of subjecting the same to the payment
of Indebtedness or performance of any other obligation in priority to payment of
its general creditors, or acquire or agree or have an option to acquire any
property or assets upon conditional sale or other title retention agreement,
device or arrangement (including Capitalized Leases) or suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
Indebtedness against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over the claims of
its general creditors, or sell, assign, pledge or otherwise transfer for
security any of its accounts, contract rights, general intangibles, or chattel
paper (as those terms are defined in the UCC) with or without recourse (each of
the foregoing, a "Lien"); PROVIDED, HOWEVER, that Borrower may create or incur
or suffer to be created or incurred or permit to exist the following ("Permitted
Liens"):
(a) The Purchase Money Mortgages;
(b) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or other
social security and liens for taxes, assessments or governmental charges or
levies and liens to secure claims for labor, material or supplies and liens
securing obligations to carriers, warehousemen and mechanics to the extent that
payment thereof shall not at the time be required to be made in accordance with
Section 8.2;
(c) Encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which do not
materially detract from the value of such property or impair its use in the
business of the owner or lessee;
(d) Liens (other than judgments and awards) created by or resulting
from any litigation or legal proceeding which has not yet resulted in an Event
of Default; PROVIDED that the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being actively contested
in good faith by appropriate proceedings satisfactory to the Agent;
(e) Liens arising by operation of law to secure landlords, lessors or
renters under leases or rental agreements made in the ordinary course of
business and confined to the premises or property rented;
(f) Liens in favor of the Agent for the benefit of the Lenders
securing the Lender Obligations;
(g) the liens created with respect to any Permitted Financial
Facilities;
(h) liens securing the Indebtedness set forth on Schedule 5.16;
(i) liens with respect to the Indebtedness permitted under Section
9.1(j).
Nothing contained in this Section 9.2 shall permit Borrower to incur any
Indebtedness or take any other action or permit to exist any other condition
which would be in contravention of any other provision of this Agreement.
Section 9.3 INVESTMENTS. Have outstanding or hold or acquire or make or
commit itself to acquire or enter into any contract to make any Investment
except the following:
(a) Investments having a maturity of less than one year from the date
thereof by the Borrower or any Subsidiary in: (i) obligations of the Agent or
any of the Lenders; (ii) obligations of the United States of America or any
agency or instrumentality thereof; (iii) repurchase agreements involving
securities described in clauses (i) and (ii) with the Agent or any of the
Lenders; and (iv) commercial paper which is rated not less than prime-one or A-1
or their equivalents by Moody's Investor Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors.
(b) Investments received as consideration from the sale of assets
otherwise permitted hereunder, which Investments are pledged to the Agent on
terms and conditions acceptable to the Agent.
(c) Investments consisting of advances to employees in the ordinary
course of business up to a maximum at any one time of an aggregate of
$500,000.00.
(d) Investments acquired in connection with the bankruptcy or workout
of account debtors.
(e) The conveyance of sites for the Permitted Construction Projects to
the Subsidiaries of the Borrower and the investments permitted under Section
9.7, subject to the release provisions of Section 10.1.
(f) investments in Borrower Subsidiaries set forth on Schedule 9.3.
Section 9.4 MERGERS, ACQUISITIONS, CREATION OF SUBSIDIARIES. Enter into
any merger or consolidation with or acquire all or substantially all of the
assets of any Person, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person. Borrower shall
not create a Subsidiary without the prior consent of the Agent. Any consent of
the Agent shall be conditioned upon the newly created Subsidiary entering into
such documents as the Agent may request based upon the Lender Agreements so that
the required pledge and mortgage provisions hereof are complied with.
Section 9.5 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate, except that Borrower and its
Subsidiaries (a) may pay reasonable salaries, fees and bonuses to their
directors, officers and employees as are usual and customary in Borrower's
business, (b) may enter into transactions among each other on terms that are not
materially less favorable to Borrower or its Subsidiaries than those which could
be obtained at the time from Persons who are not Affiliates and which
transactions (to the extent in excess of $250,000 for each transaction or a
series of related transactions) are disclosed to the Agent in Compliance
Certificates, and (c) Borrower may enter into and perform their obligations
under the Lender Agreements, Master Easement and the existing affiliate
contracts set forth on Schedule 9.5.
Section 9.6 DISTRIBUTIONS. Make any Distribution or make any other
payment on account of the purchase, acquisition, redemption, or other retirement
of any shares of stock, whether now or hereafter outstanding. The provisions of
this Section shall not apply to any distributions of a Borrower Subsidiary to
the Borrower, but shall apply to any payment or Distribution from the Borrower
to American Ski.
Section 9.7 CAPITAL EXPENDITURES. Make any Capital Expenditure except
as limited by and provided in the Budget or Intercompany subordinated debt which
is subject to the Subordination Agreement.
Section 9.8 DISPOSITIONS OF ASSETS. Subject to the payment of Net
Proceeds, sell, lease or otherwise dispose of any assets except for the sale,
lease or other disposition of inventory, including residential real property
held for resale, in the ordinary course of business, sales under the Marriott
Joint Venture, and dispositions permitted under Section 9.3(e).
Section 9.9 ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. Assume, guarantee, endorse or otherwise be or become directly or
contingently liable (including, without limitation, by way of agreement,
contingent or otherwise, to purchase, provide funds for payment, supply funds to
or otherwise invest in any Person or otherwise assure the creditors of any such
Person against loss) in connection with any Indebtedness of any other Person.
The Permitted Financial Facilities, the Senior Note Guaranty and the completion
guaranty to be executed by Borrower in connection therewith shall be permitted
hereunder.
Section 9.10 ERISA. At any time while Borrower or any of its
Subsidiaries has a Pension Plan, permit any accumulated funding deficiency to
occur with respect to any Pension Plan or other employee benefit plans
established or maintained by American Ski or any of its Subsidiaries or to which
contributions are made by Borrower or any of its Subsidiaries ("Plans"), and
which are subject to the "Pension Reform Act" and the rules and regulations
thereunder or to Section 412 of the Internal Revenue Code, and at all times
comply in all material respects with the provisions of the Act and Code which
are applicable to the Plans. Borrower will not permit the Pension Benefit
Guaranty Corporation to cause the termination of any Pension Plan under
circumstances which would cause the lien provided for in Section 4068 of the
Pension Reform Act to attach to the assets of Borrower or any of its
Subsidiaries.
Section 9.11 SALE AND LEASEBACK. Sell or transfer any of its properties
with the intention of taking back a lease of the same property or leasing other
property for substantially the same use as the property being sold or
transferred.
Section 9.12 RESTRICTIVE OR INCONSISTENT AGREEMENTS. Enter into any
agreement (a) other than the Lender Agreements which, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining or
otherwise imposes any materially adverse or burdensome condition upon, the
declaration or payment of dividends or distributions, the incurrence of
Indebtedness, the granting of liens, the making of loans or advances to Borrower
or the amendment or modification of any of the Lender Agreements or (b)
containing any provision that would be violated or breached by any Loan or the
performance by Borrower of its obligations hereunder or under any of the Lender
Agreements.
Section 9.13 NO AMENDMENT OF MARRIOTT JOINT VENTURE, INTER COMPANY
DEBT, PURCHASE OPTION AND LEASES. Borrower shall not modify or amend any of the
Marriott Joint Venture, InterCompany Debt, Purchase Money Option or the Leases.
Section 9.14 LIMITATION ON ISSUANCE OF CAPITAL STOCK. Borrower will not
issue any class of preferred stock or any class of redeemable common stock which
would cause a Change of Control to occur.
Section 9.15 PURCHASE MONEY MORTGAGES. Borrower shall not modify or
amend or permit a Default or Event of Default to exist under any of the Purchase
Money Mortgages.
Section 9.16 PERMITTED FINANCIAL FACILITIES. Borrower or its
Subsidiaries shall not modify or amend or permit a Default or Event of Default
to occur or exist under any document or instrument given in connection with any
Permitted Financial Facility.
Section 9.17 CHANGE OF CONTROL. Borrower will not permit a Change of
Control to occur.
Section 9.18 PROPERTY ACQUISITIONS. Borrower shall not be permitted to
make or commit to make additional property acquisitions without the prior
written consent of the Agent.
Section 9.19 COMMENCEMENT OF PROJECTS. Borrower shall not commence
work on any Project prior to the satisfaction of the following:
(i) the Borrower has obtained the required written approval of the
Lender or the Agent as the case may be;
(ii) the Budget will be in Balance after the commencement of such
Project;
(iii) All necessary federal, state and local licenses, permits,
approvals and other entitlements required for commencement of the Project have
been obtained or will be provided subject to release of the property under
Article 10;
(iv) A guaranteed maximum price construction contract providing for
the construction of the Project is in full force and effect;
(v) Closing on the construction financing for the project in an amount
at least sufficient to fund all Project costs in excess of the equity for the
project plus any amounts that the Lenders have approved to be Advanced from the
General Cash Collateral Account, if any;
(vi) The Presale Requirements shall be continuously satisfied;
(vii) No Default or Event of Default exists or would exist after the
entry into the Proposed Project Construction Loan and corresponding release of a
portion or the Collateral; and
(viii) the Master Easement shall be in full force and effect and
insured by the Title Policy as unencumbered except for the Permitted Exceptions.
The provisions set forth in (i) through (viii) shall be collectively
referred to herein as the "Commencement Release Provisions."
ARTICLE 10. RELEASE OF COLLATERAL AND ADDITIONAL
CONSTRUCTION AND CAPITAL IMPROVEMENTS
Section 10.1 RELEASE PROVISIONS.
(a) Agent and the Lenders acknowledge that subject to the restrictions
contained herein, the Borrower contemplates entering into the Proposed Project
Construction Loans. Agent and the Lenders agree to release their first in
priority security interests in the real property to be developed provided that
Agent and the Lenders receive a first in priority perfected assignment of Net
Proceeds (after repayment of release prices to the Construction Lender) and
partnership or other entity interests of the applicable Borrower Subsidiary all
upon such terms, conditions and procedures as the Agent may require. Prior to
the commencement of construction and the release of the Mortgage lien in favor
of the Agent, all Financial Covenants are and will be in compliance after the
release, and the Commencement Release Provisions shall be satisfied.
(b) Agent shall release parcels affected by the Marriott Joint Venture
provided that: (i) Borrower provides to Agent evidence prior to the conveyance
that the parcel to be released is affected by the Marriott Joint Venture; (ii)
all Net Proceeds are applied pursuant to Section 12.3; and (iii) the purchase
price for the parcel to be released is calculated in accordance with the
provisions of the Marriott Joint Venture together with any amendments thereto
approved by the Agent.
(c) Without the permission of Agent, no release shall be granted while
a Default is pending or for any non-cash sale.
(d) Agent shall have the right to release: (i) non material portions of
the Mortgaged Property for easements, licenses and other interests required for
the development of the Permitted Construction Projects and (ii) portions of the
Mortgaged Property sold in accordance with the provisions of Section 9.8.
Section 10.2 PRESALE REQUIREMENTS. In the event Lenders agree to
approve a new Project, in order to request a release of any portion of the
Collateral for a Proposed Project Construction Loan, the Borrower must satisfy
the following PreSales Requirements:
1. As to Quartershare Facilities: existing contracts which
produce sufficient Net Proceeds to pay 35% of the construction
costs of the Proposed Project; and
2. As to Condominiums (single owner): existing contracts which
produce sufficient Net Proceeds to pay 100% of the
construction costs of the Proposed Project.
All of the contracts to satisfy the PreSales Requirement must be bona
fide third party contracts, containing a non-refundable deposit of at least 5%
of the purchase price and for which there is any financing contingency.
ARTICLE 11. DESIGNATED PROPERTIES AND FURTHER ASSURANCES
Section 11.1 SELECTION OF MORTGAGED PROPERTIES. Borrower and Lenders
acknowledge and recognize that the Agent has relied upon certain representations
and warranties summarized in the memorandum attached as Exhibit D as to the
Mortgaged Properties in order for the Agent to designate them as Designated
Properties. In the event any representations or warranties are inaccurate or
events contemplated therein as material to such property's value as collateral
do not materialize, Borrower and Agent shall exercise good faith and due
diligence to identify substitute properties owned by American Ski and exchange
the impaired parcel(s) for the identified parcels as newly Designated Property,
which shall become Mortgaged Property hereunder. Borrower and Agent agree to
undertake all such action as may be reasonably necessary to effect such
exchange.
Section 11.2 FURTHER ASSURANCES. Borrower agrees that the Mortgaged
Properties are subject to a first in priority security interest in favor of the
Agent for the benefit of the Lenders subject to the Permitted Exceptions.
Borrower shall take such actions as are necessary in order to cause the Security
Agreements to constitute a first in priority security interest on the Mortgaged
Property subject to the Permitted Exceptions and related development rights and
further to deliver to the Agent such additional due diligence materials as the
Lenders may request from time to time with respect thereto. Without limitation
to the foregoing, Borrower shall provide such additional documents and
instruments as the Agent may request in order to assure the Agent that the
Mortgaged Property may be fully developed in the manner contemplated by the
Appraisals and the Contemplated Improvements.
ARTICLE 12. EVENTS OF DEFAULT AND REMEDIES
Section 12.1 EVENTS OF DEFAULT. Each of the following events shall be
deemed to be Events of Default hereunder:
(a) Borrower shall fail to make any payment in respect of (i) the
principal of any of the Lender Obligations as the same shall become due, whether
at the stated payment date, required prepayment or by acceleration, demand or
otherwise or (ii) interest or commitment fees on or in respect of any of the
Lender Obligations as the same shall become due.
(b) Borrower shall fail to perform or observe any other material term,
covenant, condition or provision to be performed or observed by Borrower under
this Agreement or any other Lender Agreement, including the maintenance of the
Interest Reserve in the amount required under Section 2.3, and such failure
shall not be rectified or cured to the Agent's satisfaction within thirty (30)
days after written notice thereof to Borrower.
(c) Any representation or warranty of Borrower or any Subsidiary herein
or in any other Lender Agreement or any amendment to any thereof shall have been
materially false or misleading at the time made or intended to be effective.
(d) An event of default or termination shall occur under the Purchase
Money Mortgage, the Marriott Joint Venture, the Leases, or the Purchase Option,
a default under any of the Permitted Financial Facilities or should a default
occur under the Senior Facility.
(e) Borrower shall be involved in financial difficulties as evidenced:
(i) by its commencement of a voluntary case under Title 11 of
the United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(ii) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking,
consenting to or acquiescing in the relief therein provided, or by its
failing to controvert timely the material allegations of any such
petition;
(iii) by the entry of an order for relief in any involuntary
case commenced under said Title 11;
(iv) by its seeking relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its consenting to or
acquiescing in such relief;
(v) by the entry of an order by a court of competent
jurisdiction (l) finding it to be bankrupt or insolvent, (2) ordering
or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors or (3) assuming custody of,
or appointing a receiver or other custodian for all or a substantial
part of its property and such order shall not be vacated or stayed on
appeal or otherwise stayed within thirty (30) days;
(vi) by the filing of a petition against American Ski or any
Subsidiary under said Title ll which shall not be vacated within thirty
(30) days; or
(vii) by its making an assignment for the benefit of, or
entering into a composition with, its creditors, or appointing or
consenting to the appointment of a receiver or other custodian for all
or a substantial part of its property.
(f) There shall have occurred a judgment against Borrower or any
Subsidiary in any court which constitutes a Material Adverse Effect.
(g) A Change of Control shall occur.
(h) Any "Event of Default" under any other Lender Agreement.
(i) Any of the Lender Agreements shall be canceled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Agent; or any Lender
Agreement, or any Lien granted thereunder, shall (except in accordance with its
terms or the terms of this Agreement), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of any Borrower; or any Lien securing any Lender Obligation shall, in
whole or in part, cease to be a perfected first priority Lien, subject only to
those exceptions expressly permitted by a Lender Agreement or the terms of this
Agreement and except to the extent that any such Lien has ceased to be a
perfected first priority Lien solely due to an act or omission by the Agent or a
Lender; or any action at law suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Lender Agreements or the acquisition of all
or portions of the property affected by the Purchase Option.
(j) Borrower or any Subsidiary shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of Borrower or
such Subsidiary.
An Event of Default shall occur upon the occurrence set forth above
except for the following Defaults which shall ripen into an Event of Default
after the giving of notice by the Agent to the Borrower and failure of the
Borrower to completely cure the Default within the time period set forth below.
The cure periods applicable to certain Defaults are as set forth below:
NO CURE PERIOD: Monetary events of default, Defaults under sections
8.4, 8.6, 8.8, 8.12, 9.1, 9.2 (except for the right of Borrower to bond off
materialmen liens within thirty (30) days of discovery of the filing of such
lien), 9.3, 9.4, 9.6, 9.7, 9.8, 9.9, 9.11, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18,
9.19.
TEN DAY CURE PERIOD: 6.1, 6.8, 8.2, 8.10, 8.11.
All other cure periods shall be governed by the provisions of Section 12.1(b).
Section 12.2 REMEDIES. Upon the occurrence of an Event of Default, in
each and every case, the Agent may, and upon the request of the Majority Lenders
shall, exercise any right or remedy under the Security Agreements or other
Lender Agreement, proceed to protect and enforce the rights of the Agent and the
Lenders by suit in equity, action at law and/or other appropriate proceeding
either for specific performance of any covenant or condition contained in this
Agreement or any other Lender Agreement or in any instrument delivered to the
Agent or the Lenders pursuant hereto or thereto, or in aid of the exercise of
any power granted in this Agreement, any Lender Agreement or any such
instrument, and (unless there shall have occurred an Event of Default under
Section 12.1(e), in which case the unpaid balance of the Lender Obligations
shall automatically become due and payable without notice or demand) by notice
in writing to the Borrower declare all or any part of the unpaid balance of the
Lender Obligations then outstanding to be forthwith due and payable, whereupon
such unpaid balance or part thereof shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived, and the Agent may proceed to enforce payment of such
balance or part thereof in such manner as the Agent may elect, and the Agent and
each Lender may offset and apply toward the payment of such balance or part
thereof any Indebtedness of the Agent or any Lender to any Borrower or to any
Subsidiary, or to any obligor of the Lender Obligations, including any
Indebtedness represented by deposits in any general or special account
maintained with the Agent or any Lender or with any other Person controlling,
controlled by or under common control with the Agent or any Lender.
Upon the occurrence of a default under Section 12.1(d) the Agent shall
have the right to advance such sums and to take such actions as it determines to
be necessary in order to protect its security interest in the portions of the
Collateral affected by such default. The amounts so advanced shall constitute
Advances and shall be subject to the Advance provisions as to the payment by
Lenders of such amounts as set forth herein. All such curative amounts shall:
(i) be secured by the Lender Agreements; (ii) be immediately due and payable;
and (iii) bear interest at the Default Rate.
Section 12.3 APPLICATION OF CASH INCLUDING NET PROCEEDS.
1. In the event that a Default has not occurred and is not continuing,
the Borrower Available Cash shall be paid to the Agent on the last day of each
month and shall be applied as follows:
First, (a) in the manner set forth in Section 12.3, 2, (a);
Second, (b) in the manner set forth in Section 12.3, 2 (b)
Third, (c) to fund the Interest Reserve to the required amount;
Fourth, (d) to fund overhead requirements of the Borrower for the next
month as set forth in the Budget which are not otherwise reserved for either by
a Borrower Subsidiary or in the calculation of the Borrower Available Cash,
Fifth, (e) at the election of the Borrower, to the General Cash
Collateral Account; and
Sixth, (f) the remainder shall be applied against the principal amount
of the Term Loan.
The payments set forth at 2(d) shall be conditioned upon the
satisfaction of the Financial Covenants both prior to and after the payment is
made.
2. Upon the occurrence or during the continuance of any Default, the
Borrower shall pay all of its cash and cash equivalents to the Agent and the
Agent or any Lender receives any monies on account of the Lender Obligations
from the Borrower or otherwise, including distributions from the Borrower
Subsidiaries or the proceeds of the Reserves; such monies shall be distributed
for application as follows:
(a) First, to the payment of or the reimbursement of, the
Agent for or in respect of all costs, expenses, disbursements and losses which
shall have been incurred or sustained by the Agent in connection with the
collection of such monies by the Agent, or in connection with the exercise,
protection or enforcement by the Agent of all or any of the rights, remedies,
powers and privileges of the Agent or the Lenders under this Agreement or any
other Lender Agreement;
(b) Second, to the payment of all interest, including interest
on overdue amounts, interest calculated at the Default Rate and late charges,
then due and payable with respect to the Loans, allocated among the Lenders in
proportion to their respective Commitment Percentages;
(c) Third, to the payment of the outstanding principal balance
of the Loans, allocated among the Lenders in proportion to their respective
Commitment Percentages;
(d) Fourth, to any other outstanding Lender Obligations,
allocated among the Lenders in proportion to their respective Commitment
Percentages.
ARTICLE 13. CONSENTS; AMENDMENTS; WAIVERS; REMEDIES
Section 13.1 ACTIONS BY LENDERS. Except as otherwise expressly set
forth in any particular provision of this Agreement, any consent or approval
required or permitted by this Agreement to be given by the Agent may be given,
and any term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by Borrower
or any Subsidiary of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Borrower and the Majority Lenders;
PROVIDED, HOWEVER, that no amendment of Article 15 may be made without the
consent of the Agent without the written consent of all Lenders:
i) no reduction in the interest rates on or any fees relating
to the Loans shall be made;
ii) no extension or postponement shall be made of the stated
time of payment of the principal amount of, interest on, or fees
payable to the Lenders relating to the Term Loans;
iii) no change in the principal amount of the Term Loans and
extension of the Term Loan Maturity Date shall be made;
iv) no release of all or substantially all of the collateral
security for, or any guarantor of, the Lender Obligations shall be
made;
v) no change in the definition of the term "Majority Lenders"
shall be made;
vi) approval of new Projects other than Fully Funded Projects;
and
vii) disbursements from the General Cash Collateral Account.
Section 13.2 ACTIONS BY BORROWER. No delay or omission on the Agent's
or the Lenders' part in exercising their rights and remedies against Borrower or
any other interested party shall constitute a waiver. A breach by Borrower of
its obligations under this Agreement may be waived only by a written waiver
executed by the Agent and the Lenders in accordance with Section 13.1. The
Agent's and the Lenders' waiver of Borrower's breach in one or more instances
shall not constitute or otherwise be an implicit waiver of subsequent breaches.
To the extent permitted by applicable law, Borrower hereby agrees to waive, and
does hereby absolutely and irrevocably waive, (a) all presentments, demands for
performance, notices of protest and notices of dishonor in connection with any
of the Indebtedness evidenced by the Term Loan Notes; (b) any requirement of
diligence or promptness on the Agent's or the Lenders' part in the enforcement
of their rights under the provisions of this Agreement or any Lender Agreement;
and (c) any and all notices of every kind and description which may be required
to be given by any statute or rule of law with respect to its liability (i)
under this Agreement or with respect to the Indebtedness evidenced by the Term
Loan Notes or (ii) under any other Lender Agreement. No course of dealing
between the Borrower and the Lenders shall waive or modify the terms and
conditions hereof. This Agreement shall be amended only by a written instrument
executed by the Agent and the Lenders. The Agent's and the Lenders' rights and
remedies under this Agreement and under all subsequent agreements between the
Agent, the Lenders and Borrower shall be cumulative and any rights and remedies
expressly set forth herein shall be in addition to, and not in limitation of,
any other rights and remedies which may be applicable to the Agent and the
Lenders in law or at equity.
ARTICLE 14. SUCCESSORS AND ASSIGNS
Section 14.1 GENERAL. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
(which shall include in the case of the Agent or any Lender any entity resulting
from a merger or consolidation) and assigns, except that (a) Borrower may not
assign its rights or obligations under this Agreement and (b) each Lender may
assign its rights in this Agreement only as set forth below in this Article 14.
Section 14.2 ASSIGNMENTS.
(a) CONDITIONS TO ASSIGNMENT BY LENDERS. Except as provided
herein, each Lender may assign to one or more Eligible Assignees all of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment Percentage and Commitment and the same portion of the
Loan at the time owing to it, and the Notes held by it; provided that (a) the
Agent shall have given its prior written consent to such assignment, (b) each
such assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Agreement; (c) Agent may
make partial or non-voting assignments in amounts it deems appropriate; (d) each
Lender which is a Lender on the date hereof shall retain, free of any such
assignment, an amount of its Commitment of not less than $5,000,000.00, and, as
long as no Default exists, Agent shall retain, free of any such assignment, of
not less than $10,000,000 provided that the Agent assign greater amounts of its
Commitment with the approval of the Borrower which shall not be unreasonably
withheld; and (e) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), an Assignment
and Acceptance, substantially in the form established by Administrative Agent
("Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, but in no event prior to recording (i) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender shall, to the extent provided in such assignment and upon payment to the
Agent of the registration fee referred to in Section 14.2.(c), be released from
its further obligations under this Agreement with respect to the interest
assigned.
Subject to the provisions of this Article 14, each Lender may at any
time assign or pledge its Loan or Note to a Federal Reserve Bank, and a Lender
which is a "fund" may at any time assign or pledge all or any portion of its
rights under this Agreement to secure such Lender's indebtedness, in each case
without the prior written consent of the Borrower, provided that each such
assignment shall be made in accordance with applicable law and shall be either
to a Federal Reserve Bank or Eligible Assignee, and no such assignment shall
release a Lender from any of its obligations hereunder. In order to facilitate
any such assignment, the Borrower shall, at the request of the assigning Lender,
duly execute a registered promissory note or notes evidencing the Lender
Obligations made or extended to the Borrower by the assigning Lender hereunder,
provided that the assignment is otherwise in compliance with the terms hereof.
For avoidance of doubt, the parties to this Agreement acknowledge that the
provisions of this subsection concerning assignments do not prohibit assignments
creating security interests, including, without limitation, any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law and the terms hereof.
(b) CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Lender Agreements or any other instrument or document
furnished pursuant hereto; (b) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any other Person primarily or secondarily liable in respect
of any of the Lender Obligations, or the performance or observance by the
Borrower or any other Person primarily or secondarily liable in respect of any
of the Lender Obligations or any of their obligations under this Agreement or
any of the other Lender Agreements or any other instrument or document furnished
pursuant hereto or thereto; (c) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in ss.5.9 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (d) such assignee will, independently and
without reliance upon the assigning Lender, the Agent or any Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (e) such assignee represents and warrants that it is an Eligible
Assignee; (f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Lender Agreements as are delegated to the Agent by the terms
hereof or thereof, together with such powers as are reasonably incidental
thereto; (g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required to
be performed by it as a Lender; (h) such assignee represents and warrants that
it is legally authorized to enter into such Assignment and Acceptance; and (i)
such assignee represents that it is acquiring the portion of the Loans assigned
to it pursuant to the Assignment and Acceptance for investment only and not with
a view to or with any intention to resell, distribute, subdivide or
fractionalize such portion in whole or in part, or grant any participation
therein.
(c) REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list ("Register") for the
recordation of the names and addresses of the Lenders and the Commitment
Percentages and Commitments of, and principal amount of the Loans owing to the
Lenders from time to time as a condition to the effectiveness thereof. All
assignments of Loans or Commitment must be reported to the Agent to permit
registration in the Register. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower and the Lenders at any reasonable time and from
time to time upon reasonable prior notice. Upon each such recordation, (i) the
assigning Lender agrees to pay to the Agent a registration fee in the sum of
$2,500.00 and (ii) the Agent will deliver a copy of the Register to the Arranger
and the Borrower.
(d) NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the Lenders
(other than the assigning Lender). Within five (5) Business Days after receipt
of such notice, the Borrower, at its own expense, shall execute and deliver to
the Agent, in exchange for each surrendered Note, a new Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Lender
has maintained some portion of its obligations hereunder, a new Note to the
order of the assigning Lender in an amount equal to the amount retained by it
hereunder. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the Notes delivered at the time of execution of this
Agreement. Within five (5) Business Days of issuance of any new Notes pursuant
to this Article 14, the Borrower shall deliver an opinion of counsel, addressed
to the Lenders and the Agent, relating to the due authorization, execution and
delivery of such new Notes and the legality, validity, enforceability and
binding effect thereof. The surrendered Notes shall be canceled and returned to
the Borrower.
(e) NO ASSIGNMENT BY BORROWER. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Lender Agreements
without the prior written consent of each of the Lenders.
(f) DISCLOSURE. Each Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrower and
provided to it by the Borrower, or by the Agent on Borrower's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Lender Agreements; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Lender or (ii) was or becomes available on a
non-confidential basis from a source other than the Borrower, provided that such
source is not bound by a confidentiality agreement with the Borrower known to
the Lender; provided, however, that any Lender may disclose such information (A)
at the request or pursuant to any requirement of any Governmental Authority to
which the Lender is subject or in connection with an examination of such Lender
by any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
requirement of law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Lender or their respective
affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Lender's independent auditors and other professional advisors; (G) to
any participant or assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the same extent
required of the Lenders hereunder, and (H) as to any Lender, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party with such
Lender.
(g) WITHHOLDING TAX.
i) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the
Agent, to deliver to the Agent:
(1) if such Lender claims an exemption from, or
a reduction of, withholding tax under a
United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of
any interest in the first calendar year and
before the payment of any interest in each
third succeeding calendar year during which
interest may be paid under this Agreement;
(2) if such Lender claims that interest paid
under this Agreement is exempt from United
States withholding tax because it is
effectively connected with a United States
trade or business of such Lender, two
properly completed and executed copies of
IRS Form 4224 before the payment of any
interest is due in the first taxable year of
such Lender and in each succeeding taxable
year of such Lender during which interest
may be paid under this Agreement, and IRS
Form W-9;
(3) such other form or forms as may be required
under the Code or other laws of the United
States as a condition to exemption from, or
reduction of, United States withholding tax;
and
(4) in the case of any Lender claiming exemption
from U.S. Withholding Tax under Section
871(b) or 881(c) of the Code, with respect
to payments of "Portfolio Interest" a Form
W-8, or any subsequent versions thereof or
successors thereto and if the Lender
delivers a Form W-8, a certificate
representing that such Lender is not a bank
for purposes of Section 881(c) of the Code,
is not a ten percent (10%) shareholder
(within the meaning of Section 871(h)(3)(b)
of the Code) of the Borrower thereof, and is
not a controlled foreign corporation related
to the Borrower (within the meaning of
Section 864(d)(4) of the Code). Each such
certificate and form shall be properly
completed and duly executed by such Lender
claiming complete exemption from a reduced
rate of U.S. Withholding Tax on payments by
the Borrower under this Agreement and other
Lender Agreements.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(ii) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by
providing IRS Form 1001 and such Lender sells,
assigns, grants a participation in, or otherwise
transfers all or part of the Lender Obligations of
the Borrower to such Lender, such Lender agrees to
notify the Agent of the percentage amount in which it
is no longer the beneficial owner of Lender
Obligations of the Borrower to such Lender. To the
extent of such percentage amount, the Agent will
treat such Lender's IRS Form 1001 as no longer valid.
(iii) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the
Agent, sells, assigns, grants a participation in, or
otherwise transfers all or part of the Lender
Obligations of the Borrower to such Lender, such
Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.
(iv) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold
from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or
other documentation required by subsection (a) of
this ss.19.7 are not delivered to the Agent, then the
Agent may withhold from any interest payment to such
Lender not providing such forms or other
documentation an amount equivalent to the applicable
withholding tax.
(v) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim
that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was
not properly executed, or because such Lender failed
to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as
tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction
on the amounts payable to the Agent under this
Article 14 together with all costs and expenses
(including reasonable attorney's fees and legal
expenses). The obligation of the Lenders under this
subsection (e) shall survive the payment of all
Lender Obligations and the resignation or replacement
of the Agent.
Section 14.3 BANKBOSTON AS AGENT UNDER SENIOR FACILITY AND ROLE OF BRS.
Borrower and the Lenders acknowledge and recognize that BankBoston, N.A. is the
agent under the Senior Facility and, in such capacity, may take actions which
may be in conflict with or detrimental to this facility, the Borrower and the
Lenders. Furthermore, Borrower and Lenders acknowledge and recognize that BRS
has advised the Borrower in connection with the structure, syndication and
funding of the Term Loan. Borrower and Lenders agree that such BKB, N.A. may
serve in both capacities and take such actions as it deems necessary as the
agent of both this facility and under the Senior Facility. Furthermore, Borrower
and Lenders agree that the actions of BRS or BKB as agent under the Senior
Facility shall not constitute a conflict of interest of the obligations and
duties and rights of the Agent hereunder or create any liability of Agent or BKB
with respect thereto and shall not constitute a defense by Borrower or Lenders
to the performance of any obligation of any of them hereunder including the
Lender Obligations or any obligation of a Lender to timely fund its Commitment
Percentage of the Term Loan.
ARTICLE 15. THE AGENT
Section 15.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement and the other Lender Agreements as are delegated to
the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Lender Agreements (including, without limitation,
enforcement or collection of the Term Loan Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders; PROVIDED, HOWEVER, that the
Agent shall not be required to take any action which exposes the Agent to
liability or which is contrary to this Agreement or the other Lender Agreements
or applicable law. Subject to the foregoing provisions and to the other
provisions of this Article 13, the Agent shall, on behalf of the Lenders: (a)
execute any documents on behalf of the Lenders providing collateral for or
guarantees of the Lender Obligations; (b) hold and apply any collateral for the
Lender Obligations, and the proceeds thereof, at any time received by it, in
accordance with the provisions of this Agreement and the other Lender
Agreements; (c) exercise any and all rights, powers and remedies of the Lenders
under this Agreement or any of the other Lender Agreements, including the giving
of any consent or waiver or the entering into of any amendment, subject to the
provisions of Section 13.1; (d) at the direction of the Lenders, execute,
deliver and file UCC financing statements, mortgages, deeds of trust, lease
assignments and such other agreements in respect of any collateral for the
Lender Obligations, and possess instruments included in the collateral on behalf
of the Lenders; and (e) in the event of acceleration of Borrower's Indebtedness
hereunder, act at the direction of the Lenders to exercise the rights of the
Lenders hereunder and under the other Lender Agreements.
Section 15.2 AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Lenders for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Lender Agreements, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (a) may treat the payee of any Term Loan Note as the
holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form required under Article 14
hereof; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representations to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made in or in connection with this Agreement or the other
Lender Agreements; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or the other Lender Agreements on the part of Borrower or any
other Person or to inspect the property (including the books and records) of
Borrower or any other Person; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Lender Agreements or any other instrument
or document furnished pursuant hereto or thereto; and (f) shall incur no
liability under or in respect of this Agreement or the other Lender Agreements
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy or telegram) believed by the Agent to be genuine and
signed or sent by the proper party or parties.
Section 15.3 AGENT AS A LENDER AND AGENT UNDER SENIOR FACILITY. With
respect to its interest in its Commitment Percentage of the Loans hereunder,
BankBoston, N.A. shall have the same rights and powers under this Agreement and
the other Lender Agreements as any other Lender and may exercise the same as
though it were not the Agent; and the term "Lender" or "Lender(s)" shall, unless
otherwise expressly indicated, include BankBoston, N.A. in its individual
capacity. BankBoston, N.A. and its affiliates may lend money to, and generally
engage in any kind of business with, Borrower, American Ski, any Affiliate of
American Ski and any Person who may do business with or own securities of
American Ski or any such Affiliate of American Ski, all as if BankBoston, N.A.
were not the Agent and without any duty to account therefor to the Lenders.
Borrower and Lenders hereby acknowledge that BankBoston, N.A. is the agent under
this facility and under the Senior Facility. Borrower and the Lenders agree that
BankBoston, N.A. as the agent under the Senior Facility may take actions adverse
to the Lenders and the Borrower under this facility. Borrower and Lenders agree
that this Agreement and all Lender Agreement shall not constitute "Lender
Agreements" under the Senior Credit Facility.
Section 15.4 LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 5.9 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 15.5 INDEMNIFICATION OF AGENT. Each Lender agrees to indemnify
the Agent and its directors, officers, employees and agents (to the extent that
the Agent is not reimbursed by Borrower), ratably according to each Lender's
Commitment Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent or its directors, officers, employees or
agents in any way relating to or arising out of this Agreement or any other
Lender Agreement or any action taken or omitted by the Agent in such capacity
under this Agreement; PROVIDED that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or wilful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Lender Agreement, to the
extent that the Agent is not reimbursed for such expenses by Borrower.
Section 15.6 SUCCESSOR AGENT. Except as provided below, the Agent may
resign at any time by giving written notice thereof to the Lenders and Borrower.
Upon any such resignation, the Lenders shall have the right to appoint a
successor Agent which shall be reasonably acceptable to Borrower. If no
successor Agent shall have been so appointed by the Lenders (other than the
resigning Agent), and shall have accepted such appointment, within thirty (30)
days after the retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
commercial bank or financial institution organized under the laws of the United
States of America or of any state thereof and having a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
refiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Lender Agreements. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
15 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Lender Agreements.
Section 15.7 AMENDMENT OF ARTICLE 15. Borrower hereby agrees that the
foregoing provisions of this Article 15 constitute an agreement among the Agent
and the Lenders (and the Agent and the Lenders acknowledge that except for the
provisions of Section 13.5, Borrower is not party to or bound by such foregoing
provisions) and that any and all of the provisions of this Article 15 (excepting
Section 15.6) may be amended at any time by the Lenders and the Agent without
the consent or approval of, or notice to Borrower (other than the requirement of
notice to Borrower of the resignation of the Agent and the appointment of a
successor Agent).
ARTICLE 16. MISCELLANEOUS
Section 16.1 NOTICES. All notices and other communications made or
required to be given pursuant to this Agreement shall be in writing and shall be
mailed by United States mail, postage prepaid, or sent by hand, by telecopy or
by nationally-recognized overnight carrier service, addressed as follows:
(a) If to the Agent, BankBoston, N.A., 115 Perimeter Center Place,
N.E., Suite 500, Atlanta, GA and Paul, Hastings, Janofsky & Walker LLP,, 600
Peachtree Street, N.E., Suite 2400, Atlanta, Georgia 30308-2222, Attention:
Charles T. Sharbaugh, or at such other address(es) or to the attention of such
other Person(s) as the Agent shall from time to time designate in writing to
Borrower and the Lenders.
(b) If to Borrower, c/o American Skiing Company, P.O. Box 450, Bethel,
ME 04217, or for overnight delivery service, Sunday River Road, Bethel, ME
04217, Telecopier No. 207/824-5158, Attention: Christopher E. Howard, Esq.,
Senior Vice President and Chief Administrative Officer and Mark J. Miller, Chief
Financial Officer, with a copy to: David J. Champoux, Esq., Pierce Atwood, One
Monument Square, Portland, ME 04101, Telecopier No. 207/791-1350 or at such
other address(es) or to the attention of such other Person(s) as Borrower shall
from time to time designate in writing to the Agent and the Lenders.
(c) If to any Lender, at the address(es) and to the attention of the
Person(s) specified below such Lender's name on the execution page of this
Agreement (or in the case of a Successor Lender, at the address(es) and to the
attention of the Person(s) specified in the Assignment and Acceptance Agreement
executed by such Successor Lender), or at such other address(es) and to the
attention of such other Person(s) as any Lender shall from time to time
designate in writing to the Agent and Borrower.
Any notice so addressed and mailed by registered or certified mail
shall be deemed to have been given when mailed. Any notice so addressed and sent
by hand, by telecopy or by overnight carrier service shall be deemed to have
been given when received.
A notice from the Agent stating that it has been given on behalf of the
Lenders shall be relied upon by Borrower as having been given by the Lenders.
Section 16.2 MERGER. This Agreement and the other Lender Agreements and
documents contemplated hereby constitute the entire agreement of the Borrower,
the Agent and the Lenders and express their entire understanding with respect to
credits advanced or to be advanced by the Lenders to the Borrower.
Section 16.3 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed and enforced under the laws of the State of
Georgia.
Section 16.4 COUNTERPARTS. This Agreement and all amendments to this
Agreement may be executed in several counterparts, each of which shall be an
original. The several counterparts shall constitute a single Agreement.
Section 16.5 EXPENSES AND INDEMNIFICATION.
(a) Borrower agrees to pay, on demand, all of the Agent's reasonable
expenses in preparing, executing, delivering and administering this Agreement,
the Lender Agreements, all related instruments and documents and any requested
amendment, waiver or consent relating hereto or thereto, including, without
limitation, the reasonable fees and out-of-pocket expenses of the Agent's
third-party consultants, special counsel, Paul, Hastings, Janofsky & Walker LLP,
and local counsel in each jurisdiction in which Borrower and or any Subsidiary
has assets and the Agent's and Lenders' reasonable expenses in connection with
periodic audits of Borrower and its Subsidiaries. Borrower also agrees to pay,
on demand, all reasonable out-of-pocket expenses incurred by the Agent and the
Lenders, including, without limitation, reasonable legal, accounting and
third-party consultant fees, in connection with the collection of amounts due
hereunder and under all other Lender Agreements upon the occurrence of a Default
hereunder, the revision, protection or enforcement of any of the Agent's or the
Lenders' rights against Borrower under this Agreement, the Notes, the Guaranty
Agreements, the Security Agreements, and all other Lender Agreements and the
administration of special problems that may arise under this Agreement or any
other Lender Agreement. Borrower also agrees to pay all stamp and other taxes in
connection with the execution and delivery of this Agreement and related
instruments and documents.
(b) Without limitation of any other obligation or liability of Borrower
or right or remedy of the Agent or the Lenders contained herein, Borrower hereby
covenants and agrees to indemnify and hold the Agent, the Lenders, and the
directors, officers, subsidiaries, shareholders, agents, affiliates and Persons
controlling the Agent and the Lenders, harmless from and against any and all
damages, losses, settlement payments, obligations, liabilities, claims,
including, without limitation, claims for finder's or broker's fees, actions or
causes of action, and reasonable costs and expenses incurred, suffered,
sustained or required to be paid by any such indemnified party in each case by
reason of or resulting from any claim, investigation, litigation or other
proceeding related to the entering into of this Agreement or any other Lender
Agreement, the use of the proceeds of any Loans, the consummation of the
transactions contemplated herein, the exercise by the Agent and the Lenders of
their rights and remedies, or otherwise relating to the transactions
contemplated hereby, other than any such claims which are determined by a final,
non-appealable judgment or order of a court of competent jurisdiction to be the
result of the gross negligence or willful misconduct of such indemnified party.
Promptly upon receipt by any indemnified party hereunder of notice of the
commencement of any action against such indemnified party for which a claim is
to be made against Borrower hereunder, such indemnified party shall notify
Borrower in writing of the commencement thereof, although the failure to provide
such notice shall not affect the indemnification rights of any such indemnified
party hereunder unless and only to the extent Borrower demonstrates to the
reasonable satisfaction of such party that such failure to provide notice
prejudiced Borrower in its defense of such claim. Borrower shall have the right,
at its option upon notice to the indemnified parties, to defend any such matter
at its own expense and with their own counsel, except as provided below, which
counsel must be reasonably acceptable to the indemnified parties. The
indemnified party shall cooperate with Borrower in the defense of such matter.
The indemnified party shall have the right to employ separate counsel and to
participate in the defense of such matter at its own expense. In the event that
(a) the employment of separate counsel by an indemnified party has been
authorized in writing by Borrower, (b) Borrower has failed to assume the defense
of such matter within fifteen (15) days of notice thereof from the indemnified
party, or (c) the named parties to any such action (including impleaded parties)
include any indemnified party who has been advised by counsel that there may be
one or more legal defenses available to it or prospective bases for liability
against it, which are different from those available to or against Borrower,
then Borrower shall not have the right to assume the defense of such matter with
respect to such indemnified party. Borrower shall not compromise or settle any
such matter against an indemnified party without the written consent of the
indemnified party, which consent may not be unreasonably withheld or delayed.
Section 16.6 CONFIDENTIALITY. The Agent and the Lenders agree to use
commercially reasonable efforts to keep in confidence all financial data and
other information relative to the affairs of Borrower and its Subsidiaries
heretofore furnished or which may hereafter be furnished to them pursuant to the
provisions of this Agreement; PROVIDED, HOWEVER, that this Section 16.6 shall
not be applicable to information otherwise disseminated to the public by
Borrower or any of its Subsidiaries or any of their Affiliates; and PROVIDED
FURTHER, that such obligation of the Agent and the Lenders shall be subject to
the Agent's or the Lenders', as the case may be, (a) obligation to disclose such
information pursuant to a request or order under applicable laws and regulations
or pursuant to a subpoena or other legal process, (b) right to disclose any such
information to bank or other regulatory examiners, affiliates, auditors,
accountants and counsel or to any Person who evaluates, approves, structures or
administers the Loans on behalf of a Lender who agree to keep such information
confidential and (c) right to disclose any such information (i) in connection
with the transactions set forth herein including assignments, so long as such
potential assignees or participants shall agree in writing to be bound by the
terms of this Section 16.6 or (ii) in connection with any litigation or dispute
involving the Agent or any transfer or other disposition by the Agent or the
Lenders, as the case may be, of any of the Lender Obligations; PROVIDED that
information disclosed pursuant to this provision shall be so disclosed subject
to such procedures as are reasonably calculated to maintain the confidentiality
thereof.
Section 16.7 JOINT AND SEVERAL OBLIGATIONS. Borrower waives
presentment, demand, protest, notice of acceptance, notice of indebtedness
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 marshaling of assets of Borrower
and its Subsidiaries, and all suretyship defenses generally.
Section 16.8 WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS, AND BORROWER
AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION INVOLVING THE
AGENT OR ANY LENDER AS A PARTY BASED UPON OR ARISING OUT OF, THIS AGREEMENT, THE
TERM LOAN NOTES, ANY LENDER AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL
OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM OR (B) 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 EACH OF THE AGENT, THE LENDERS AND BORROWER WITH THEIR RESPECTIVE
COUNSEL, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NONE OF THE
LENDERS, AGENT OR BORROWER HAVE AGREED WITH OR REPRESENTED TO ANY OTHER PARTY
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
Section 16.9 AMENDMENT AND RESTATEMENT. This Amended and Restated
Credit Agreement amends and restates the Original Credit Agreement. The Lender's
Obligations of the Original Credit Agreement shall be amended and restated in
accordance with the terms and conditions hereof but shall continue to be
secured, without interruption or novation, by the Security Agreements. Borrower
hereby acknowledges and recognizes that the outstanding principal balance of the
Lenders Obligations as of the Closing Date under the Original Credit Agreement
was the Closing Date Balance and that the Closing Date Balance is included in
the Term Loans and Lenders Obligations as of the Closing Date.
Section 16.10 NONRECOURSE OBLIGATION UNDER SENIOR NOTE INDENTURE.
Lenders and Agent understand and acknowledge that this Agreement constitutes
"Non-Recourse Real Estate Debt" as defined in that certain Indenture dated as of
June 28, 1996 among American Ski, United States Trust Company of New York, as
trustee and the other parties named therein. The Lenders shall not, in any
circumstance, have recourse to the assets of ASC East, Inc. or any of its
subsidiaries, other than the Borrower and its Subsidiaries, for satisfaction of
the Lender Obligations.
<PAGE>
IN WITNESS WHEREOF, Borrower, the Agent and the Lenders have caused
this Agreement to be executed by their duly authorized officers as of the date
set forth above.
AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
By: /s/ Christopher E. Howard
-------------------------------------------
Name: Christopher E. Howard
Title: Senior Vice President
[EXECUTION CONTINUED ON FOLLOWING PAGES]
<PAGE>
BANKBOSTON, N.A., as Agent
By: /s/ Paul F. DeVito
------------------------------------------
Name: Paul F. DeVito
Title: Managing Director
[EXECUTION CONTINUED ON FOLLOWING PAGES]
<PAGE>
BANKBOSTON, N.A.
By: /s/ Paul F. DeVito
------------------------------------------
Name: Paul F. DeVito
Title: Managing Director
[EXECUTION CONTINUED ON FOLLOWING PAGES]
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: Unreadable
-------------------------------------------
Name: Unreadable
Title: Vice President
<PAGE>
LIST OF SCHEDULES
Schedule 1 Commitment Percentages, Designated Lenders
Schedule 1.1 Mandatory Amortization Payments
Schedule 1.2 Borrower Subsidiaries
Schedule 2 Purchase Money Mortgages
Schedule 5.2 Borrower and each Subsidiary's principal place of business
Schedule 5.4 Intercompany Debt Disclosure
Schedule 5.11 Issued and Outstanding Capital Stock of Borrower
Schedule 5.13 Liens, Charges, and Encumbrances
Schedule 5.15 ERISA
Schedule 5.16 Outstanding Indebtedness
Schedule 5.17 Environmental Matters
Schedule 5.27 Leases
Schedule 8.8 Legal Ownership of Subsidiaries
Schedule 9.3 Borrower Subsidiary Investments
Schedule 9.5 Existing Affiliate Transactions
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Term Loan Notes
Exhibit B Designated Properties
Exhibit C Budget
Exhibit D Status Memorandum
Exhibit E Closing Agenda
Exhibit F Advance Certificate
Exhibit G Loan Reserve Analysis
Exhibit H Base Property
Exhibit I Cash Flow Projection
<PAGE>
SCHEDULE 1
Lenders: Commitment Percentage:
BankBoston, N.A. 100%
<PAGE>
SCHEDULE 1.1
Mandatory Amortization Schedule
<PAGE>
SCHEDULE 1.2
Borrower Subsidiaries
1. Grand Summit Resort Properties, Inc., a Maine corporation
2. Canyons Resort Properties, Inc., a Maine corporation
3. Heavenly Resort Properties, LLC, a Nevada limited liability company
<PAGE>
SCHEDULE 5.11
Issued and Outstanding Capital Stock of Borrower
<PAGE>
SCHEDULE 5.27
Leases
<PAGE>
SCHEDULE 9.3
Borrower Subsidiary Investments
THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of March 3, 1999
Among
ASC EAST, INC.
SUNDAY RIVER SKIWAY CORPORATION
SUNDAY RIVER, LTD.
PERFECT TURN, INC.
SUNDAY RIVER TRANSPORTATION, INC.
L.B.O. HOLDING, INC.
SUGARBUSH RESORT HOLDINGS, INC.
SUGARBUSH LEASING COMPANY
SUGARBUSH RESTAURANTS, INC.
MOUNTAIN WASTEWATER TREATMENT, INC.
S-K-I, LTD.
KILLINGTON, LTD.
MOUNT SNOW, LTD.
PICO SKI AREA MANAGEMENT COMPANY
RESORTS SOFTWARE SERVICES, INC.
KILLINGTON RESTAURANTS, INC.
RESORTS TECHNOLOGIES, INC.
DOVER RESTAURANTS, INC.
SUGARLOAF MOUNTAIN CORPORATION
MOUNTAINSIDE
SUGARTECH
as Borrowers,
AMERICAN SKIING COMPANY,
as Guarantor,
THE LENDERS PARTY HERETO,
and
BANKBOSTON, N.A.,
as Agent for the Lenders
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is
entered into as of March 3, 1999 by and among ASC East, Inc., a Maine
corporation ("ASC East"), SUNDAY RIVER SKIWAY CORPORATION, a Maine corporation,
SUNDAY RIVER, LTD., a Maine corporation, PERFECT TURN, INC., a Maine
corporation, SUNDAY RIVER TRANSPORTATION, INC., a Maine corporation, L.B.O.
HOLDING, INC., a Maine corporation, SUGARBUSH RESORT HOLDINGS, INC., a Vermont
corporation , SUGARBUSH LEASING COMPANY, a Vermont corporation, SUGARBUSH
RESTAURANTS, INC., a Vermont corporation, MOUNTAIN WASTEWATER TREATMENT, INC., a
Vermont corporation, S-K-I, LTD., a Delaware corporation ("S-K-I"), KILLINGTON,
LTD., a Vermont corporation ("Killington"), MOUNT SNOW, LTD., a Vermont
corporation, PICO SKI AREA MANAGEMENT COMPANY, a Vermont corporation, RESORTS
SOFTWARE SERVICES, INC., a Vermont corporation, KILLINGTON RESTAURANTS, INC., a
Vermont corporation, RESORTS TECHNOLOGIES, INC., a Vermont corporation, DOVER
RESTAURANTS, INC., a Vermont corporation, SUGARLOAF MOUNTAIN CORPORATION, a
Maine corporation, MOUNTAINSIDE, a Maine corporation and SUGARTECH, a Maine
corporation (each a "Borrowers" and collectively, the "Borrowers"), AMERICAN
SKIING COMPANY, a Maine corporation ("American Ski"), the lenders party hereto
(the "Lenders") and BANKBOSTON, N.A., a national banking association, as Agent
(the "Agent") for the lenders from time to time party to the Credit Agreement
referred to below.
Recitals
The Borrowers, American Ski, the Lenders and the Agent are parties to a
Credit Agreement dated as of November 12, 1997 (as amended, the "Credit
Agreement"). The Borrowers and American Ski desire to amend the Credit Agreement
in various respects. The Agent and the Lenders are willing to amend the Credit
Agreement on the terms and conditions set forth herein. All capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.
NOW, THEREFORE, subject to the satisfaction of the conditions to
effectiveness specified in Section 6, American Ski, the Borrowers, the Lenders
and the Agent hereby agree as follows:
Section 1. Definitions. Article 1 of the Credit Agreement is hereby
amended by inserting the following definitions in alphabetical order, as
follows:
"Base Capital Expenditure Amount" shall mean $30,000,000.
<PAGE>
"Permitted Non-Strategic Asset Sales" shall mean
sales or other dispositions of assets of American Ski and its
Restricted Subsidiaries, between January 25, 1999 and January
30, 2000, for gross proceeds not to exceed $30,000,000, which
American Ski determines are not strategic to the skiing and
other resort activities of American Ski and its Restricted
Subsidiaries, with the specific assets so sold or disposed of
to be approved by the Agent, such approval not to be
unreasonably withheld.
Section 2. Amendment of Article 7. Effective January 24, 1999, Article
7 of the Credit Agreement is hereby deleted in its entirety and the following
substituted therefor:
Section 7.1 Ratio of Consolidated Total Debt to Consolidated
EBITDA.
(a) American Ski and its Restricted Subsidiaries
shall maintain as of the end of each fiscal quarter, commencing with
2000 Fiscal Quarter 2, a ratio of (i) Consolidated Total Debt as of
such date to (ii) Consolidated EBITDA for the four-quarter period
ending on such date of not more than the following levels as of the
fiscal quarters indicated:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio Fiscal Quarter Ratio
<S> <C> <C> <C>
2000 Quarter 2 5.75-to-1.00 2002 Quarter 1 5.00-to-1.00
2000 Quarter 3 5.75-to-1.00 2002 Quarter 2 5.00-to-1.00
2000 Quarter 4 5.75-to-1.00 2002 Quarter 3 4.50-to-1.00
2001 Quarter 1 5.75-to-1.00 2002 Quarter 4 4.50-to-1.00
2001 Quarter 2 5.50-to-1.00 2003 Quarter 1 4.50-to-1.00
2001 Quarter 3 5.00-to-1.00 2003 Quarter 2 4.50-to-1.00
2001 Quarter 4 5.00-to-1.00 2003 Quarter 3 4.00-to-1.00
and Thereafter
</TABLE>
(b) Until the Subordinated Notes Release Date, ASC
East and its Restricted Subsidiaries shall maintain as of the end of
each fiscal quarter, commencing with 2000 Fiscal Quarter 2, a ratio of
(i) ASC East Consolidated Total Debt as of such date to (ii) ASC East
Consolidated EBITDA for the four-quarter period ending on such date of
not more than the following levels as of the fiscal quarters indicated:
2
<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter Ratio Fiscal Quarter Ratio
<S> <C> <C> <C>
2000 Quarter 2 5.75-to-1.00 2002 Quarter 1 5.00-to-1.00
2000 Quarter 3 5.75-to-1.00 2002 Quarter 2 5.00-to-1.00
2000 Quarter 4 5.75-to-1.00 2002 Quarter 3 4.50-to-1.00
2001 Quarter 1 5.75-to-1.00 2002 Quarter 4 4.50-to-1.00
2001 Quarter 2 5.50-to-1.00 2003 Quarter 1 4.50-to-1.00
2001 Quarter 3 5.00-to-1.00 2003 Quarter 2 4.50-to-1.00
2001 Quarter 4 5.00-to-1.00 2003 Quarter 3 4.00-to-1.00
and Thereafter
</TABLE>
Section 7.2 Ratio of Consolidated Adjusted Cash Flow to
Consolidated Debt Service. American Ski and its Restricted Subsidiaries shall
maintain as of the end of each fiscal quarter, commencing with 2000 Fiscal
Quarter 2, for the four-quarter period ending on such date a ratio of (a)
Consolidated Adjusted Cash Flow to (b) Consolidated Debt Service of not less
than the following levels as of the end of each fiscal quarter indicated:
Fiscal Quarter Ratio
2000 Quarter 2 1.10-to-1.00
2000 Quarter 3 1.10-to-1.00
2000 Quarter 4 1.10-to-1.00
2001 Quarter 1 1.10-to-1.00
2001 Quarter 2 1.10-to-1.00
2001 Quarter 3 1.25-to-1.00
and Thereafter
Section 7.3 Ratio of Consolidated EBITDA to Consolidated
Interest Expense. American Ski and its Restricted Subsidiaries shall maintain as
of the end of each fiscal quarter for the four-quarter period ending on such
date a ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense of
not less than the following levels:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio Fiscal Quarter Ratio
<S> <C> <C> <C>
1999 Quarter 2 1.20-to-1.00 2001 Quarter 1 1.75-to-1.00
1999 Quarter 3 1.20-to-1.00 2001 Quarter 2 1.75-to-1.00
1999 Quarter 4 1.20-to-1.00 2001 Quarter 3 2.00-to-1.00
2000 Quarter 1 1.20-to-1.00 2001 Quarter 4 2.00-to-1.00
2000 Quarter 2 1.50-to-1.00 2002 Quarter 1 2.00-to-1.00
2000 Quarter 3 1.50-to-1.00 2002 Quarter 2 2.00-to-1.00
2000 Quarter 4 1.75-to-1.00 2002 Quarter 3 2.25-to-1.00
and Thereafter
</TABLE>
3
<PAGE>
Section 7.4 Minimum Consolidated Net Worth.
(a) American Ski and its Restricted Subsidiaries
shall maintain minimum Consolidated Net Worth at all times of
not less than the sum of (a) $200,000,000 plus (b) 75% of
cumulative Consolidated Net Income of American Ski and its
Restricted Subsidiaries for the period after January 24, 1999
plus (c) all amounts received by American Ski or the Borrowers
after the Closing Date from the issuance of equity interests.
(b) American Ski - East and its Restricted
Subsidiaries shall maintain at all times the minimum
consolidated net worth (excluding from assets investments in
Unrestricted Subsidiaries) determined in accordance with
generally accepted accounting principles, of not less than
$20,000,000.
Section 7.5 Minimum EBITDA. American Ski and its Restricted
Subsidiaries shall have EBITDA of not less than the amounts set forth
below for the applicable fiscal quarter.
Fiscal Quarter Minimum EBITDA
1999 Quarter 3 $60,000,000
1999 Quarter 4 ($21,000,000)
2000 Quarter 1 ($21,000,000)
2000 Quarter 2 $25,000,000
Section 3. Amendment of Article 9. Article 9 of the Credit Agreement is
hereby amended as follows:
(A) Article 9 of the Credit Agreement is hereby amended by
deleting Section 9.7 in its entirety and substituting therefor the following:
"Section 9.7 Capital Expenditures. Make any Capital
Expenditure except that:
(a) for the fiscal year ending in July, 2000, American Ski and
its Restricted Subsidiaries may make Capital expenditures not to exceed
the sum of (i) $15, 000,000 plus (ii) $5,000,000 after American Ski and
its Restricted Subsidiaries have consummated, or entered into binding
commitments for, not less than $10,000,000 of Permitted Non-Strategic
Asset Sales.
(b) Thereafter, American Ski and its Restricted Subsidiaries
may make Capital Expenditures in each fiscal year, commencing with the
fiscal year ending in July 2001, of not more than the lesser of (a)
$35,000,000 or (b) (i) Consolidated EBITDA for the four fiscal quarters
4
<PAGE>
ended in April of the previous fiscal year less (ii) Consolidated Debt
Service for the four fiscal quarters ended in April of the previous
fiscal year."
(B) Article 9 of the Credit Agreement is hereby further
amended by deleting Section 9.8 thereof in its entirety and substituting
therefor the following:
"Section 9.8 Disposition of Assets. Sell, lease or
otherwise dispose of any assets except for (a) the sale, lease
or other disposition of inventory, including residential real
property held for resale, in the ordinary course of business,
(b) Permitted Dispositions, and (c) Permitted Non-Strategic
Asset Sales."
Section 4. Pricing Schedule. Schedule 2 to the Credit
Agreement is hereby amended by deleting that Schedule in its entirety and
substituting therefor the Pricing Schedule attached hereto as Exhibit A.
Section 5. Fees and Expenses. Upon the execution and delivery
hereof by the Majority Lenders, the Borrowers and American Ski hereby agree to
pay to the Agent in cash all of the Agent's reasonable expenses in preparing,
executing and delivering this Third Amendment to Amended and Restated Credit
Agreement and all related instruments and documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of the Agent's
special counsel, Goodwin, Procter & Hoar LLP.
Section 6. Effectiveness; Conditions to Effectiveness. This
Third Amendment to Amended and Restated Credit Agreement shall become effective
upon execution hereof by the Borrowers, the Majority Lenders and the Agent and
satisfaction of the following conditions:
(a) Officer's Certificate. The Borrowers and
American Ski shall have delivered to the Agent
an Officer's Certificate in the form of Exhibit
B hereto.
(b) Execution of the Third Amendment to West Credit
Agreement. Execution of the Third Amendment to
Credit Agreement among the American Ski - West
Borrowers, the Agent and the Lenders party
thereto simultaneously herewith and the
compliance by the American Ski - West Borrowers
with all agreements contained in the Third
Amendment to Credit Agreement, including
satisfaction of all conditions precedent to
effectiveness thereunder.
5
<PAGE>
Section 7. Representations and Warranties; No Default.
American Ski and the Borrowers, jointly and severally, hereby confirm to the
Agent and the Lenders, the representations and warranties of American Ski and
the Borrowers set forth in Article 5 of the Credit Agreement (as amended hereby)
as of the date hereof, as if set forth herein in full (unless stated to relate
solely to an earlier date, in which case they were true and correct as of such
earlier date). American Ski and the Borrowers hereby certify that, after giving
effect to this Third Amendment to Amended and Restated Credit Agreement, no
Default exists under the Credit Agreement.
Section 8. Lender Agreement. All references to the Credit
Agreement in the Credit Agreement, the other Lender Agreements or any other
document shall be deemed to refer to the Credit Agreement as amended hereby.
This Third Amendment to Amended and Restated Credit Agreement shall be a Lender
Agreement and shall be governed by and construed and enforced under the laws of
The Commonwealth of Massachusetts.
6
<PAGE>
IN WITNESS WHEREOF, American Ski, the Borrowers, the Lenders
and the Agent have caused this Third Amendment to Amended and Restated Credit
Agreement to be executed by their duly authorized officers as of the date first
set forth above.
ASC EAST, INC.
SUNDAY RIVER SKIWAY CORPORATION
SUNDAY RIVER, LTD.
PERFECT TURN, INC.
SUNDAY RIVER TRANSPORTATION, INC.
L.B.O. HOLDING, INC.
SUGARBUSH RESORT HOLDINGS, INC.
SUGARBUSH LEASING COMPANY
SUGARBUSH RESTAURANTS, INC.
MOUNTAIN WASTEWATER TREATMENT, INC.
S-K-I, LTD.
KILLINGTON, LTD.
MOUNT SNOW, LTD.
PICO SKI AREA MANAGEMENT COMPANY
RESORTS SOFTWARE SERVICES, INC.
KILLINGTON RESTAURANTS, INC.
RESORTS TECHNOLOGIES, INC.
DOVER RESTAURANTS, INC.
SUGARLOAF MOUNTAIN CORPORATION
MOUNTAINSIDE
SUGARTECH
By: /s/ Mark J. Miller
---------------------------------
Name: Mark J. Miller
Title: Chief Financial Officer
AMERICAN SKIING COMPANY, as Guarantor
By: /s/ Mark J. Miller
---------------------------------
Name: Mark J. Miller
Title: Chief Financial Officer
<PAGE>
BANKBOSTON, N.A., as Agent
By: /s/ Carlton F. Williams
---------------------------------
Name: Carlton F. Williams
Title: Director
BANKBOSTON, N.A.
By: /s/ Carlton F. Williams
---------------------------------
Name: Carlton F. Williams
Title: Director
<PAGE>
BANKBOSTON, N.A., as Agent
By: /s/ Carlton F. Williams
---------------------------------
Name: Carlton F. Williams
Title: Director
BANKBOSTON, N.A.
By: /s/ Carlton F. Williams
---------------------------------
Name: Carlton F. Williams
Title: Director
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By: Unreadable
---------------------------------
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: Unreadable
---------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
d/b/a COLORADO NATIONAL BANK
By: Unreadable
---------------------------------
Name:
Title:
FIRST SECURITY BANK, N.A.
By: Unreadable
---------------------------------
Name:
Title:
FLOATING RATE PORTFOLIO
By:INVESCO SENIOR SECURED MANAGEMENT, INC., as
Attorney in Fact
By: Unreadable
---------------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By: Unreadable
---------------------------------
Name:
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By: Unreadable
---------------------------------
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: Unreadable
---------------------------------
Name:
Title:
EATON VANCE SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:Unreadable
---------------------------------
Name:
Title:
By: Unreadable
---------------------------------
Name:
Title:
HOWARD BANK
By: Unreadable
---------------------------------
Name:
Title:
CAPTIVA II FINANCE, LTD.
By: Unreadable
---------------------------------
Name:
Title:
KZH-PAMCO LLC
By: Unreadable
---------------------------------
Name:
Title:
PAM CAPITAL FUNDING, L.P.
By: Highland Capital Management L.P., as
Collateral Manager
By: Unreadable
---------------------------------
Name:
Title:
KZH III LLC
By: Unreadable
---------------------------------
Name:
Title:
PAMCO CAYMAN, LTD.
By: Highland Capital Management L.P., as
Collateral Manager
By: Unreadable
---------------------------------
Name:
Title:
DEBT STRATEGIES FUND II, INC.
By:Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By: Unreadable
---------------------------------
Name:
Title:
MORGAN STANLEY SENIOR FUNDING, INC.
By: Unreadable
---------------------------------
Name:
Title:
OASIS COLLATERALIZED HIGH
INCOME PORTFOLIOS-I, LTD.
By: Unreadable
---------------------------------
Name:
Title:
<PAGE>
<PAGE>
SCHEDULE 2 Exhibit A
Pricing Schedule
Through April 30, 2000, the LIBOR Rate Margin, the Base Rate Margin
and the Commitment Fee for any day are the respective percentages set forth
below in the applicable column in the row corresponding to the ratio of
Consolidated Total Debt to Consolidated EBITDA that exists on such day as set
forth below:
<TABLE>
REVOLVING CREDIT ADVANCES TERM LOANS
<CAPTION>
Consolidated
Total Debt/ Base
Consolidated Rate LIBOR Rate Commitment Base Rate LIBOR Rate
EBITDA Margin Margin Fee Margin Margin
- ------ ------ ------ --- ------ ------
<S> <C> <C> <C> <C> <C>
>/-7.00x 2.00% 3.50% 0.500% 2.50% 4.00%
>/-6.00x<7.00x 1.50% 3.00% 0.500% 2.00% 3.50%
>/-5.50x<6.00x 1.25% 2.75% 0.500% 1.75% 3.25%
>/-5.00x<5.50x 1.00% 2.50% 0.500% 1.50% 3.00%
>/-4.50x<5.00x 0.75% 2.25% 0.500% 1.25% 2.75%
>/-4.00x<4.50x 0.50% 2.00% 0.375% 1.25% 2.50%
>/-3.50x<4.00x 0.25% 1.75% 0.375% 1.25% 2.50%
<3.50x 0.00% 1.50% 0.375% 1.25% 2.50%
</TABLE>
From and after May 1, 2000, the LIBOR Rate Margin, the Base Rate Margin
and the Commitment Fee for any day are the respective percentages set forth
below in the applicable column in the row corresponding to the ratio of
Consolidated Total Debt to Consolidated EBITDA that exists on such day as set
forth below:
<TABLE>
REVOLVING CREDIT ADVANCES TERM LOANS
<CAPTION>
Consolidated
Total Debt/ Base
Consolidated Rate LIBOR Rate Commitment Base Rate LIBOR Rate
EBITDA Margin Margin Fee Margin Margin
------ ------ ------ --- ------ ------
<S> <C> <C> <C> <C> <C>
>/- 5.75x 1.25% 2.75% 0.500% 1.75% 3.25%
>/- 5.00x<5.75x 1.00% 2.50% 0.500% 1.50% 3.00%
>/- 4.50x<5.00x 0.75% 2.25% 0.500% 1.25% 2.75%
>/- 4.00x<4.50x 0.50% 2.00% 0.375% 1.25% 2.50%
>/- 3.50x<4.00x 0.25% 1.75% 0.375% 1.25% 2.50%
< 3.50x 0.00% 1.50% 0.375% 1.25% 2.50%
</TABLE>
The ratio of Consolidated Total Debt to Consolidated EBITDA shall be
determined on a date selected by the Agent within ten days of the Agent's
receipt of the unaudited financial statements and the Compliance Certificate for
each fiscal quarter then ended and within ten days of the Agent's receipt of the
audited financial statements and the Compliance Certificate for each fiscal year
end and shall be equal to the ratio of Consolidated Total Debt to Consolidated
EBITDA in effect as of the end of such previous fiscal quarter or year as
reflected in the audited financial statements and the Compliance Certificate for
such periods.
<PAGE>
Exhibit B
ASC EAST, INC.
SUNDAY RIVER SKIWAY CORPORATION
SUNDAY RIVER, LTD.
PERFECT TURN, INC.
SUNDAY RIVER TRANSPORTATION, INC.
L.B.O. HOLDING, INC.
SUGARBUSH RESORT HOLDINGS, INC.
SUGARBUSH LEASING COMPANY
SUGARBUSH RESTAURANTS, INC.
MOUNTAIN WASTEWATER TREATMENT, INC.
S-K-I, LTD.
KILLINGTON, LTD.
MOUNT SNOW, LTD.
PICO SKI AREA MANAGEMENT COMPANY
RESORTS SOFTWARE SERVICES, INC.
KILLINGTON RESTAURANTS, INC.
RESORTS TECHNOLOGIES, INC.
DOVER RESTAURANTS, INC.
SUGARLOAF MOUNTAIN CORPORATION
MOUNTAINSIDE
SUGARTECH
as Borrowers,
AMERICAN SKIING COMPANY,
as Guarantor,
Certificate of Officer
Reference is made to the Amended and Restated Credit Agreement dated as
of November 12, 1997, by and among ASC EAST, INC., a Maine corporation, SUNDAY
RIVER SKIWAY CORPORATION, a Maine corporation, SUNDAY RIVER, LTD., a Maine
corporation, PERFECT TURN, INC., a Maine corporation, SUNDAY RIVER
TRANSPORTATION, INC., a Maine corporation, L.B.O. HOLDING, INC., a Maine
corporation, SUGARBUSH RESORT HOLDINGS, INC., a Vermont corporation, SUGARBUSH
LEASING COMPANY, a Vermont corporation, SUGARBUSH RESTAURANTS, INC., a Vermont
corporation, S-K-I LTD., a Delaware corporation, KILLINGTON, LTD., a Vermont
corporation, MOUNT SNOW, LTD., a Vermont corporation, PICO SKI AREA MANAGEMENT
COMPANY, a Vermont corporation, RESORTS SOFTWARE SERVICES, INC., a Vermont
corporation, KILLINGTON RESTAURANTS, INC., a Vermont corporation, RESORTS
TECHNOLOGIES, INC., a Vermont corporation, DOVER RESTAURANTS, INC., a Vermont
corporation, MOUNTAIN WASTEWATER TREATMENT, INC., a Vermont Corporation,
SUGARLOAF MOUNTAIN CORPORATION, a Maine corporation, MOUNTAINSIDE, a Maine
corporation and SUGARTECH, a Maine corporation (collectively, the "Borrowers"),
AMERICAN SKIING COMPANY, as Guarantor, BankBoston, N.A. (the "Agent"), as Agent
for itself and the other lenders from time to time parties thereto (the
"Lenders"), as amended through the date hereof (the "Credit Agreement").
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
The undersigned, being the Chief Financial Officer of each of the
Borrowers, hereby certifies to the Agent and the Lenders that:
1. I am familiar with and have access to all of the records regarding
its business and financial affairs of American Ski and the Borrowers, including,
without limitation, all of the matters and things hereinafter described.
2. The representations and warranties of American Ski and the Borrowers
contained in the Credit Agreement are true and correct on and as of the date
hereof.
3. All covenants and agreements of American Ski and the Borrowers
required to be performed by them on or before the date hereof have been duly
performed by it or them on or prior to the date hereof.
4. No Default or Event of Default under the Credit Agreement exists as
of the date hereof after giving effect to the execution and delivery of the
Third Amendment to Amended and Restated Credit Agreement and the other
transactions contemplated thereby.
5. Since January 24, 1999, there has been no material adverse change in
the financial condition, operations or any material assets of American Ski and
the Borrowers, taken as a whole.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this third day of
March, 1999.
ASC EAST, INC.
SUNDAY RIVER SKIWAY CORPORATION
SUNDAY RIVER, LTD.
PERFECT TURN, INC.
SUNDAY RIVER TRANSPORTATION, INC.
L.B.O. HOLDING, INC.
SUGARBUSH RESORT HOLDINGS, INC.
SUGARBUSH LEASING COMPANY
SUGARBUSH RESTAURANTS, INC.
MOUNTAIN WASTEWATER TREATMENT, INC.
S-K-I, LTD.
KILLINGTON, LTD.
MOUNT SNOW, LTD.
PICO SKI AREA MANAGEMENT COMPANY
RESORTS SOFTWARE SERVICES, INC.
KILLINGTON RESTAURANTS, INC.
RESORTS TECHNOLOGIES, INC.
DOVER RESTAURANTS, INC.
SUGARLOAF MOUNTAIN CORPORATION
MOUNTAINSIDE
SUGARTECH
as Borrowers,
AMERICAN SKIING COMPANY,
as Guarantor,
By:_________________________
Name: Mark J. Miller
Title: Chief Financial Officer
