<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BOOTH CREEK SKI HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 84-1359604
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
</TABLE>
and subsidiary guarantors
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
BOOTH CREEK SKI ACQUISITION CORP.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
(Exact name of registrants as specified in their respective charters)
<TABLE>
<S> <C>
CALIFORNIA 94-1640750
DELAWARE 68-0305344
DELAWARE 33-0679795
DELAWARE 84-1359820
DELAWARE 02-0492684
DELAWARE 02-0492680
WASHINGTON 91-0412837
DELAWARE 82-0307639
WYOMING --
DELAWARE 84-1360243
DELAWARE 68-0393702
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
7990
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
</TABLE>
------------------------
<TABLE>
<S> <C>
NANCI N. NORTHWAY
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
BOOTH CREEK SKI HOLDINGS, INC.
HIGHWAY 267 AND NORTHSTAR DRIVE HIGHWAY 267 AND NORTHSTAR DRIVE
TRUCKEE, CALIFORNIA 96160 TRUCKEE, CALIFORNIA 96160
(916) 562-1010 (916) 562-1010
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL NUMBER,
EXECUTIVE OFFICE) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
COPY TO:
BRUCE A. TOTH
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 558-5723
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the Securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Series B 12 1/2% Senior Notes due 2007........ $116,000,000 100% $116,000,000 $35,152
- ----------------------------------------------------------------------------------------------------------------------
Guarantees of Series B 12 1/2% Senior Notes
due 2007.................................... $116,000,000 (2) (2) (2)
- ----------------------------------------------------------------------------------------------------------------------
Total......................................... $116,000,000 100% $116,000,000 $35,152
======================================================================================================================
</TABLE>
(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value, which has been computed as of March 31, 1997, of the
outstanding 12 1/2% Senior Notes due 2007 of Booth Creek Ski Holdings, Inc.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantees.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
BOOTH CREEK SKI HOLDINGS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM
NUMBER ITEM LOCATION IN PROSPECTUS
- ------ ---- ----------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................ Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................... Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information......................... Summary; Risk Factors; Selected Combined
Financial Data; Pro Forma Financial
Information
4. Terms of the Transaction........................ Outside Front Cover Page; Summary;
Description of the Notes; The Exchange Offer;
Certain U.S. Federal Income Tax
Considerations
5. Pro Forma Financial Information................. Pro Forma Financial Information
6. Material Contracts with the Company Being
Acquired...................................... Inapplicable
7. Additional Information Required................. Inapplicable
8. Interests of Named Experts and Counsel.......... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................... Inapplicable
10. Information with Respect to S-3 Registrants..... Inapplicable
11. Incorporation of Certain Information by
Reference..................................... Inapplicable
12. Information with Respect to S-3 or S-2
Registrants................................... Inapplicable
13. Incorporation of Certain Information by
Reference..................................... Inapplicable
14. Information with Respect to Registrants other
than S-3 or S-2 Registrants................... Outside Front Cover Page; Summary; Risk
Factors; The Transactions; Capitalization;
Pro Forma Financial Information; Selected
Combined Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain Transactions;
Ownership and Control; Description of
Certain Indebtedness; Description of the
Notes
15. Information with Respect to S-3 Companies....... Inapplicable
16. Information with Respect to S-3 or S-2
Companies..................................... Inapplicable
17. Information with Respect to Companies Other than
S-3 or S-2 Companies.......................... Inapplicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM
NUMBER ITEM LOCATION IN PROSPECTUS
- ------ ---- ----------------------
<C> <S> <C>
18. Information if Proxies, Consents or
Authorizations are to be Solicited............ Inapplicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer............................. Management; Ownership and Control; Certain
Transactions
</TABLE>
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 29, 1997
PROSPECTUS
BOOTH CREEK SKI HOLDINGS, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS
SERIES B 12 1/2% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF ITS OUTSTANDING
12 1/2% SENIOR NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
------------------------
Booth Creek Ski Holdings, Inc., a Delaware corporation (the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and conditions set forth in
this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), to exchange $1,000 principal amount of its Series
B 12 1/2% Senior Notes due 2007 (the "New Notes"), registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this Prospectus is a part, for each $1,000
principal amount of its outstanding 12 1/2% Senior Notes due 2007 (the "Old
Notes"), of which $116,000,000 principal amount is outstanding. The form and
terms of the New Notes are the same as the form and terms of the Old Notes
(which they replace), except that the New Notes will bear a Series B designation
and will have been registered under the Securities Act and, therefore, will not
bear legends restricting their transfer and will not contain certain provisions
relating to an increase in the interest rate which were included in the terms of
the Old Notes in certain circumstances relating to the timing of the Exchange
Offer. The New Notes will evidence the same debt as the Old Notes (which they
replace) and will be issued under and be entitled to the benefits of the
Indenture, dated as of March 18, 1997 (the "Indenture"), among the Company, the
Guarantors (as defined herein) and Marine Midland Bank, as trustee (the
"Trustee"). The Old Notes and the New Notes are sometimes referred to herein
collectively as the "Notes." See "The Exchange Offer" and "Description of the
Notes."
Interest on the Notes will be paid in cash semi-annually on March 15 and
September 15 of each year, commencing on September 15, 1997. The Notes will
mature on March 15, 2007 and are not subject to any sinking fund requirement.
The Notes are redeemable at the option of the Company, in whole or in part, at
any time on or after March 15, 2002, at the redemption prices set forth herein,
plus accrued and unpaid interest to the date of redemption. In addition, the
Company, at its option, may redeem in the aggregate up to 30% of the original
principal amount of the Notes at any time and from time to time prior to March
15, 2000 at 112.5% of the aggregate principal amount so redeemed, plus accrued
and unpaid interest to the redemption date, with the Net Proceeds (as defined
herein) of one or more Public Equity Offerings (as defined herein), provided
that at least $77.0 million of the principal amount of the Notes originally
issued remain outstanding immediately after the occurrence of any such
redemption and that any such redemption occurs within 90 days following the
closing of any such Public Equity Offering. See "Description of the Notes --
Optional Redemption."
Upon a Change of Control (as defined herein), each holder of the Notes will
be entitled to require the Company to repurchase such holder's Notes at 101% of
the principal amount thereof plus accrued and unpaid interest to the repurchase
date. See "Description of the Notes -- Change of Control Offer." In addition,
the Company is obligated in certain instances to make an offer to repurchase the
Notes at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest to the date of repurchase with the net cash
proceeds of certain asset sales. See "Description of the Notes -- Certain
Covenants -- Limitation on Certain Asset Sales."
The New Notes will be general senior unsecured obligations of the Company
ranking pari passu with all other existing and future senior indebtedness of the
Company and senior to any subordinated indebtedness of the Company. The New
Notes will be unconditionally guaranteed, on a senior unsecured basis, by
certain Restricted Subsidiaries (as defined herein) of the Company. The New
Notes and the Guarantees (as defined herein) will be effectively subordinated to
all secured indebtedness of the Company and the Guarantors, including
indebtedness under the Senior Credit Facility (as defined herein). In addition,
the New Notes will be structurally subordinated to any indebtedness of the
Company's subsidiaries that are not Guarantors. As of January 31, 1997, after
giving pro forma effect to the Transactions (as defined herein) and the Initial
Offering (as defined herein), the Company would have had approximately $3.4
million of senior indebtedness outstanding (other than the Notes and the
Guarantees). In addition, the Company would have had $12.0 million of additional
borrowing availability under the Senior Credit Facility. See "Capitalization."
For
(Continued on Next Page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 25 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE
OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 5
(Continued from Cover Page)
the twelve months ended October 31, 1996 and the three months ended January 31,
1997, after giving pro forma effect to the Transactions, earnings would have
been inadequate to cover fixed charges by $12.4 million and $3.4 million,
respectively. See "Risk Factors -- High Level of Indebtedness and Leverage."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on ,
1997, unless extended by the Company in its sole discretion (the "Expiration
Date"). Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on
the Expiration Date. The Exchange Offer is subject to certain customary
conditions.
The Old Notes were sold in an aggregate principal amount of $110.0 million
by the Company on March 18, 1997 to CIBC Wood Gundy Securities Corp. (the
"Initial Purchaser") in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act. An additional $6.0 million
aggregate principal amount of Old Notes were sold by the Company on April 25,
1997 to the Initial Purchaser pursuant to the exercise of an option by the
Initial Purchaser in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act. These transactions are
collectively hereinafter referred to as the "Initial Offering." The Initial
Purchaser subsequently placed the Old Notes with qualified institutional buyers
in reliance upon Rule 144A under the Securities Act. Accordingly, the Old Notes
may not be reoffered, resold or otherwise transferred in the United States
unless registered under the Securities Act or unless an applicable exemption
from the registration requirements of the Securities Act is available. The New
Notes are being offered hereunder in order to satisfy the obligations of the
Company and the Guarantors under the Registration Rights Agreement (as defined
herein) entered into by the Company and the Guarantors in connection with the
Initial Offering. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and such
holder has no arrangement or understanding with any person to participate in the
distribution of such New Notes. See "The Exchange Offer -- Resale of the New
Notes." Each broker-dealer (a "Participating Broker-Dealer") that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such Participating
Broker-Dealer as a result of marketmaking activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Company
will pay all the expenses incurred by it incident to the Exchange Offer. See
"The Exchange Offer."
There has not previously been any public market for the Old Notes or the
New Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. See "Risk Factors -- Absence of a Public Market." Moreover, to the
extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected.
The New Notes will be available initially only in book-entry form and the
Company expects that the New Notes issued pursuant to the Exchange Offer will be
issued in the form of a Global Note (as defined herein), which will be deposited
with, or on behalf of, The Depository Trust Company ("DTC") and registered in
its name or in the name of Cede & Co., its nominee. Beneficial interests in the
Global Note representing the New Notes will be shown on, and transfers thereof
will be effected through, records maintained by the DTC and its participants.
After the initial issuance of the Global Note, New Notes in certificated form
will be issued in exchange for the Global Note only under the limited
circumstances set forth in the Indenture. See "Description of the Notes --
Book-Entry, Delivery and Form."
2
<PAGE> 6
AVAILABLE INFORMATION
The Company and the Guarantors have filed with the Commission a
Registration Statement on Form S-4 (the "Exchange Offer Registration Statement,"
which term shall encompass all amendments, exhibits, annexes and schedules
thereto) pursuant to the Securities Act, and the rules and regulations
promulgated thereunder, covering the New Notes being offered hereby. This
Prospectus does not contain all the information set forth in the Exchange Offer
Registration Statement. For further information with respect to the Company and
the Exchange Offer, reference is made to the Exchange Offer Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Exchange Offer Registration Statement, reference is made to the
exhibit for a more complete description of the document or matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
The Exchange Offer Registration Statement, including the exhibits thereto, can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at the
Regional Offices of the Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048 and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of such site is http://www.sec.gov.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Company and the Guarantors will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information with the Commission. The obligation of
the Company and the Guarantors to file periodic reports and other information
with the Commission will be suspended if the Notes are held of record by fewer
than 300 holders as of the beginning of any fiscal year of the Company and the
Guarantors other than the fiscal year in which the Exchange Offer Registration
Statement is declared effective. The Company has agreed that, whether or not it
is required to do so by the rules and regulations of the Commission, for so long
as any of the Notes remain outstanding, it will furnish to the holders of the
Notes and file with the Commission (unless the Commission will not accept such a
filing) (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
independent auditors and (ii) all current reports that would be required to be
filed with the Commission on Form 8-K if the Company were required to file such
reports.
FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), CONCERNING FUTURE
OPERATIONS OF THE COMPANY. WHEN USED IN THIS DOCUMENT, THE WORDS "ANTICIPATE,"
"BELIEVE," "ESTIMATE" AND "EXPECT" AND SIMILAR EXPRESSIONS ARE GENERALLY
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING
INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY OR ITS MANAGEMENT, ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING THOSE ITEMS IDENTIFIED
UNDER "RISK FACTORS." THE COMPANY DOES NOT INTEND TO UPDATE THESE
FORWARD-LOOKING STATEMENTS.
3
<PAGE> 7
CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA
The term "day skier" generally refers to a skier or snowboarder who lives
in a resort's regional ski market and skis or snowboards for one day before
returning home.
The terms "EBITDA," "EBITDA margin" and "resort cash flow" are referred to
in various places in this Prospectus. "EBITDA" represents income from operations
before depreciation and amortization expense and the non-cash cost of real
estate sales. "EBITDA margin" is EBITDA divided by total revenue. "Resort cash
flow" represents, with respect to a particular resort for a given period, the
EBITDA of the resort for such period before deducting corporate overhead charges
allocated to the resort for such period. Although EBITDA and resort cash flow
are not measures of performance under United States generally accepted
accounting principles ("GAAP"), the terms are presented because management
believes they provide useful information regarding a company's ability to incur
and service debt. Neither EBITDA nor resort cash flow should be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in accordance
with GAAP, or as a measure of profitability or liquidity.
"Guarantors" refers to all Restricted Subsidiaries of the Company having
either assets or stockholders' equity in excess of $20,000. As of the date of
this Prospectus, the Guarantors consist of (i) Trimont Land Company, a
California corporation and operator of Northstar-at-Tahoe, (ii) Sierra-at-Tahoe,
Inc., a Delaware corporation and operator of Sierra-at-Tahoe, (iii) Bear
Mountain, Inc., a Delaware corporation and operator of Bear Mountain, (iv)
Waterville Valley Ski Resort, Inc., a Delaware corporation and operator of
Waterville Valley, (v) Mount Cranmore Ski Resort, Inc., a Delaware corporation
and operator of Mt. Cranmore, (vi) Booth Creek Ski Acquisition Corp., a Delaware
corporation and direct owner of Waterville Valley Ski Resort, Inc. and Mount
Cranmore Ski Resort, Inc., (vii) Ski Lifts, Inc., a Washington corporation and
operator of Snoqualmie Pass, (viii) Grand Targhee Incorporated, a Delaware
corporation and operator of Grand Targhee, (ix) B-V Corporation, a Wyoming
corporation and a wholly-owned subsidiary of Grand Targhee Incorporated, (x)
Targhee Company, a Delaware corporation and a wholly-owned subsidiary of Grand
Targhee Incorporated, and (xi) Targhee Ski Corp., a Delaware corporation and a
wholly-owned subsidiary of Grand Targhee Incorporated. As of the date of this
Prospectus, the Company's only Unrestricted Subsidiary, which will not be a
Guarantor, holds certain developmental real property formerly owned by Ski
Lifts, Inc.
The term "regional overnight skier" generally refers to a skier or
snowboarder who lives in a resort's regional ski market and lodges in the
vicinity of the resort to ski or snowboard for more than one day before
returning home.
The term "regional resort" refers to a resort that primarily serves a
regional ski market.
The term "regional ski market" generally refers to a market that lies
within a 200 mile radius (or three hours driving time) of a resort.
"Restricted Group" means Booth Creek and its Restricted Subsidiaries (as
defined in "Description of the Notes -- Certain Definitions") as of the date of
this Prospectus.
"Revenue per skier day" represents a resort's total revenue from resort
operations, excluding revenues earned from real estate and timber sales, for a
given period divided by such resort's total skier days for the same period.
"Skier day" represents one skier or snowboarder visiting one ski resort for
one day, including skiers and snowboarders using complimentary and season
passes. Calculation of skier days requires an estimation of visits by season
pass holders. Although different ski resort operators may use different
methodologies for making such estimations, management believes that any
resulting differences in total skier days are immaterial.
The term "ski season" generally refers to the period during which resorts
offer skiing or snowboarding to paying guests. Depending on the location of the
resort, the natural snowfall patterns and/or the amount of snowmaking, the ski
season can range from early November to late May, although the Company's resorts
typically close in April.
4
<PAGE> 8
"Ticket yield" is the ratio of the average ticket price paid by all guests
to the price of a full price weekend adult ticket. The ticket yield reflects the
impact of discounting and promotions and the mix of ticket types (adult,
children, complimentary, multi-day, season passes, etc.)
The term "vertical drop" generally refers to the change in elevation from
the highest skiable point to the base of the mountain.
"Vertical transfer feet per hour" ("VTFH") is the number of people lifted
1,000 vertical feet per hour.
Market data used throughout this Prospectus were obtained from internal
company surveys, industry publications and currently available information. The
sources for this data include, without limitation, the 1995/96 Kottke National
End of Season Survey, the Sporting Goods Manufacturers Association, RRC
Associates and the National Skier/Boarder Opinion Survey. Industry publications
generally state that the information contained therein has been obtained from
sources believed to be reliable, but there can be no assurance as to the
accuracy and completeness of such information. The Company has not independently
verified such market data. Similarly, internal Company surveys, while believed
by the Company to be reliable, have not been verified by any independent
sources.
5
<PAGE> 9
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used in this Prospectus, the "Company" or
"Booth Creek" refers to Booth Creek Ski Holdings, Inc. and its subsidiaries,
after giving effect to the Acquisitions (as defined), unless the context
otherwise requires. Since November 27, 1996 the Company has acquired the
Northstar-at-Tahoe ("Northstar") and Sierra-at-Tahoe ("Sierra") ski resorts in
the Lake Tahoe region of Northern California, the Bear Mountain ski resort
(together with Northstar and Sierra, the "California Resorts") in Southern
California, the Waterville Valley and Mt. Cranmore ski resorts in New Hampshire
(the "New Hampshire Resorts"), the Snoqualmie Pass ski resort complex, which
consists of four separate and distinct resorts ("Snoqualmie Pass") in the
Cascade Mountains of Northwest Washington and the Grand Targhee ski resort
("Grand Targhee") in the Grand Tetons in Wyoming. References in this Prospectus
to the closing date of the Initial Offering shall mean March 18, 1997.
THE COMPANY
Booth Creek owns and operates seven ski resort complexes encompassing ten
separate resorts, making the Company the fourth largest operator in North
America based on approximately 1.8 million skier days recorded during the
1995/96 ski season. Booth Creek primarily operates regional ski resorts which,
in the aggregate, attract approximately 85% of their guests from their regional
ski markets, within a 200 mile driving radius of each resort. The Company's
properties offer approximately 8,150 acres of skiable terrain, 354 trails, 89
lifts (including 12 high-speed lifts) and on-mountain capacity to accommodate
approximately 50,000 guests daily. For the twelve months ended October 31, 1996
and the three months ended January 31, 1997, the Company's resorts generated
approximately $82.1 million and $32.0 million of adjusted pro forma revenue,
respectively, and $20.7 million and $4.6 million of adjusted pro forma EBITDA,
respectively.
The Company has acquired an attractive group of resort properties primarily
located near major skiing populations. According to the Sporting Goods
Manufacturers Association, the average American skier skied approximately 3.3
days during the 1995/96 ski season, of which approximately 80% of visits were at
regional ski resorts. The Company's resorts are located near approximately 26%
of all skiers in the United States, including four of the five largest regional
ski markets: Los Angeles/San Diego, San Francisco/Sacramento, Boston and
Seattle/Tacoma. The Company believes this geographical diversification serves to
limit the Company's exposure to regional economic downturns and unfavorable
weather conditions.
The domestic skiing industry has been relatively consistent, averaging
approximately 52 million skier days over the last 10 years with approximately 54
million skier days recorded during the 1995/96 ski season. While skier
visitation has been relatively stable, the number of U.S. ski areas has declined
from 709 in 1986 to 519 in 1996. The Company believes that this attrition is
occurring primarily because smaller resorts lack the variety of terrain,
infrastructure, capital and management capability required to compete with
larger, more sophisticated resorts. Furthermore, given the lack of suitable real
estate, environmental concerns and considerable development and start-up costs,
no new major ski resort has opened in the United States since 1989. According to
RRC Associates, the 519 domestic ski areas averaged approximately 104,000 skier
days, and only 25% of all resorts reported more than 220,000 skier days during
the 1995/96 ski season. Five of the Company's seven resort complexes typically
exceed the 220,000 skier day threshold. The Company also believes that the ski
resort industry is experiencing a period of consolidation, resulting in larger
companies operating multiple resorts. The four largest ski resort companies,
including the Company, accounted for approximately 23% of all U.S. skier days
recorded during the 1995/96 ski season.
The Company's resorts continue to differentiate themselves in their
respective markets by selectively upgrading on-mountain facilities and guest
services, employing targeted marketing strategies and offering extensive skier
development programs, all of which create a competitively-priced, high-quality
guest experience. The Company's resorts have collectively spent over $35.0
million in expansion-related capital improvements over the past three years,
including the addition of eight high-speed chairlifts, additional snowmaking
capability, improved trail grooming equipment, and enhanced on-mountain lodging,
retail and food service amenities. The Company believes its existing resorts
have been well maintained and ongoing
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<PAGE> 10
capital expenditure requirements are expected to be approximately $5.0 million
in the aggregate in each of the next two years. The Company's California Resorts
have introduced what management believes to be one of the industry's leading
marketing programs, Vertical Plus, an electronic annual frequent skier program
designed to build customer loyalty, increase visitation frequency and maximize
guest revenue yields. In less than three full ski seasons since the introduction
of Vertical Plus, its members already account for approximately 11% of total
skier days at Northstar and Sierra. The Company intends to expand Vertical Plus
to its other resorts over the next two ski seasons. In addition to Vertical
Plus, the Company uses targeted advertising, database marketing and strategic
marketing alliances to enhance the image of its resorts and increase regional
market share. The Company also offers extensive development programs to improve
the technical skill level of all types of skiers, which management believes is
important to expand the total skier population and increase skier visitation
frequency. Northstar and Sierra are consistently rated by consumer publications
as having premier ski instruction and development programs. The Company intends
to implement similar skier development programs at its other resorts in future
ski seasons.
OPERATING STRATEGY
The Company expects to capitalize on certain benefits associated with being
a multiple resort operating company by extending key operating strategies and
management practices which have been successfully implemented at its California
Resorts to the Company's other resorts. The key elements of the Company's
strategy include the following:
Continually Enhance the Guest Experience. In addition to offering
accessible locations, the Company is committed to providing a high-quality
guest experience by offering a diversity of terrain, consistent snow
conditions (the Company's most weather-sensitive resorts have snowmaking
coverage on nearly 100% of their trails), state-of-the-art ski lift
capacity, attractive facilities, a friendly atmosphere and extensive skier
development programs. The Company believes the physical condition of its
resorts is very competitive with other regional resorts, and will continue
to selectively enhance and expand its resorts in order to continuously
offer a diverse and competitively-priced, high-quality skiing experience.
Incorporate Sophisticated Management Information Systems. The
Company's California Resorts utilize what management believes is one of the
industry's premier management information systems, providing daily
statistical and financial information on all operating departments within
each resort. This system enables management to continuously monitor and
align staffing and services to meet market demands, while enhancing the
quality and timing of communications and decisions. The Company plans to
integrate all of its resorts into its management information system.
Develop Effective Marketing Plans. The Company's marketing plans are
designed to attract skiers and snowboarders by emphasizing the Company's
diverse facilities, high-quality services and proximity to each of the
regional skier markets in which it operates. The Company intends to
position each of its resorts as an economical and attractive alternative to
competing regional resorts and to other forms of leisure entertainment. The
Company's marketing objectives are to (i) increase each of its resorts'
relative market share, (ii) expand the number of skiers in each of its
markets, (iii) increase skier visitation frequency and (iv) influence the
vacation destination choices of prospective guests. A key component to the
Company's marketing plans will be the expansion of Vertical Plus to enhance
guest loyalty and increase skier visitation frequency. The Company also
believes there are opportunities to cross-market its resorts through the
integration and expansion of the Vertical Plus program.
Maximize Revenues and Resort Cash Flow. The Company focuses on
increasing revenues and resort cash flow by managing the mix of skier days
and revenue per skier day. The strategy for each resort is based on the
demographic profile of its market and the physical capacity of its mountain
and facilities. The Company seeks to increase skier days by developing
effective ticket pricing strategies and marketing programs to improve peak
and off-peak volume. The Company seeks to improve revenue per skier day by
effectively managing the price, quality and value of each of its
ski-related services, including retail shops, ski rentals, ski lessons and
food and beverage facilities. The Company also generates revenue from a
variety of non-ski related services, such as golf, tennis, health clubs and
conference centers, as well as from real estate and timber sales.
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<PAGE> 11
Pursue Cost Savings Opportunities. The Company expects to realize
significant cost savings from operating multiple resorts through
centralized purchasing of insurance, retail inventory, capital and rental
equipment, bulk purchasing of advertising and printing, as well as through
the selective consolidation of administrative functions. In addition, the
Company intends to extend the flexible staffing practices utilized at its
California Resorts to its other resorts, which management estimates will
reduce annual expenses by approximately $500,000 at its non-California
Resorts. By pursuing these and other operating synergies, management
believes that it can realize significant cost savings while growing skier
days and enhancing profitability.
Selectively Develop New Terrain and Real Estate. Management believes
that the Company has significant opportunities to expand skiable terrain
and trails and to develop Company-owned real estate for commercial and
residential use. The Company owns or has access to approximately 2,640
acres at Northstar, 425 acres at Grand Targhee and 700 acres at Mt.
Cranmore for potential development of additional ski terrain and/or for
residential and commercial purposes. The Company also owns approximately 84
acres at Snoqualmie Pass available for additional residential and
commercial development which it holds through an Unrestricted Subsidiary.
See "The Transactions." Management believes that the Company's undeveloped
acreage at Northstar is the only significant privately-held land available
for skiing expansion in the Lake Tahoe basin and could double the amount of
skiable terrain and the number of trails at Northstar while significantly
increasing the on-site bed base. The Company believes that increasing the
on-site and area bed base is important in attracting regional overnight
skiers, expanding market share and capturing a greater portion of each
guest's expenditures. Management anticipates that any significant
development project would be undertaken through a joint venture with a
major real estate development company, which would offset a significant
portion of the infrastructure cost.
ACQUISITION STRATEGY
The Company believes that the domestic ski industry is highly fragmented
but is undergoing a transition from individual resort ownership to ownership by
multiple resort operating companies. With their high-quality facilities and
services, sophisticated information systems and experienced management team, the
California Resorts, in management's view, will serve as the core of the
Company's operations and its base for future expansion. The acquisitions of the
New Hampshire Resorts, Snoqualmie Pass and Grand Targhee provide the Company
with additional geographical diversity and proximity to other major skiing
population centers. In addition, the Company believes that there are numerous
opportunities to introduce sophisticated management practices, many of which are
already employed at its California Resorts, to all of its resorts, which are
expected to increase the number of skier days, revenue per skier day and resort
cash flow. The Company will consider future acquisition opportunities that it
believes will further expand the Company's national presence or enhance its
operating synergies.
MANAGEMENT
The Company believes that one of its most important assets is its
experienced and guest-oriented management team. The 11 members of the Company's
senior management team have, on average, approximately 17 years of experience in
the ski industry. George N. Gillett, Jr., Chairman of the Board of Directors and
Chief Executive Officer of the Company, has 13 years of experience operating ski
resorts, including the Vail Ski Resort, which during his association as owner
and Chairman became the largest ski mountain complex, and one of the most
profitable ski resorts, in North America. Each of the Company's resorts is
managed by an on-site resort executive with extensive local experience and
industry expertise. See "Management." The Company's principal executive offices
are located at Highway 267 and Northstar Drive, Truckee, California 96160. Its
telephone number at that location is (916) 562-1010. The Company was
incorporated in Delaware on October 8, 1996.
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<PAGE> 12
THE TRANSACTIONS
The Company was formed by a group of investors led by Mr. Gillett in 1996
to acquire the New Hampshire Resorts and the California Resorts. The New
Hampshire Resorts, Waterville Valley and Mt. Cranmore, were acquired for
approximately $17.5 million and the California Resorts, Northstar, Sierra and
Bear Mountain, were acquired for approximately $121.5 million. In addition, the
Company has acquired Snoqualmie Pass for approximately $14.0 million and Grand
Targhee for approximately $7.9 million (excluding certain contingent payments).
The Company financed the purchase of the New Hampshire Resorts and the
California Resorts with the proceeds from: (i) $90.0 million of senior
subordinated notes issued to an affiliate of the Initial Purchaser (the "Bridge
Notes"); (ii) $10.0 million of subordinated option notes (the "Hancock Option
Notes," and together with the Bridge Notes, the "Bridge Financing Facilities")
issued by Parent (as defined); (iii) the issuance of the ASC Seller Note (as
defined) and (iv) the investment in the Company of $40.0 million of equity by
Parent, which was funded through the issuance by Parent of debt and equity
securities to John Hancock Mutual Life Insurance Company ("John Hancock") and
affiliates of George N. Gillett, Jr. and the Initial Purchaser. Snoqualmie Pass
was purchased effective January 15, 1997 for an aggregate purchase price of
approximately $14.0 million, which included the assumption of approximately $3.6
million of indebtedness, the issuance by the Company of the Snoqualmie Seller
Note (as defined) in the amount of approximately $9.8 million, and other
obligations to the selling shareholders of approximately $600,000. Grand Targhee
was purchased on March 18, 1997 for an aggregate purchase price of approximately
$7.9 million. In addition, concurrently with the consummation of the Initial
Offering, the Senior Credit Facility, which initially provided borrowing
availability of up to $10.0 million, was amended to, among other things, provide
a total revolving credit commitment of $20.0 million, subject to certain
conditions, and initial borrowing availability of up to $12.0 million, subject
to seasonal reductions. The Company used the proceeds from the Initial Offering,
together with available cash on hand and an additional equity contribution of
$6.5 million by Parent, (i) to repay the Bridge Financing Facilities, the
Snoqualmie Seller Note and certain debt assumed in connection with the
acquisition of Snoqualmie Pass, (ii) to finance the purchase price for the
acquisition of Grand Targhee and repay certain assumed indebtedness in
connection therewith, (iii) to pay fees and expenses in connection with the
Initial Offering and the Senior Credit Facility and (iv) for general corporate
purposes. The acquisitions of the New Hampshire Resorts, the California Resorts,
Snoqualmie Pass and Grand Targhee are sometimes collectively referred to herein
as the "Acquisitions." The foregoing transactions, as described more fully below
in "The Transactions," as well as the Initial Offering and the application of
the net proceeds therefrom, are hereinafter referred to collectively as the
"Transactions."
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<PAGE> 13
THE INITIAL OFFERING
Notes
Pursuant to a Securities Purchase Agreement dated as of March 13, 1997 (the
"Purchase Agreement"), the Company sold Old Notes in an aggregate principal
amount of $110.0 million to the Initial Purchaser on March 18, 1997, and an
additional $6.0 million aggregate principal amount of Old Notes to the Initial
Purchaser on April 25, 1997 pursuant to the exercise of an option by the Initial
Purchaser. The Initial Purchaser subsequently resold the Old Notes purchased
from the Company to qualified institutional buyers pursuant to Rule 144A under
the Securities Act.
Registration Rights Agreement
Pursuant to the Purchase Agreement, the Company, the Guarantors and the
Initial Purchaser entered into a Registration Rights Agreement, dated as of
March 18, 1997 (the "Registration Rights Agreement"), which grants the holders
of the Old Notes certain exchange and registration rights. The Exchange Offer is
intended to satisfy such exchange rights which terminate upon the consummation
of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered............ $116,000,000 aggregate principal amount of
12 1/2% Senior Notes due 2007 of the Company.
The Exchange Offer............ $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of
Old Notes. As of the date hereof, $116,000,000
aggregate principal amount of Old Notes are
outstanding. The Company will issue the New
Notes to holders on or promptly after the
Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by
any holder thereof (other than any such holder
which is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities
Act) without compliance with the registration
and prospectus delivery provisions of the
Securities Act, provided that such New Notes
are acquired in the ordinary course of such
holder's business and that such holder does not
intend to participate and has no arrangement or
understanding with any person to participate in
the distribution of such New Notes. Each holder
accepting the Exchange Offer is required to
represent to the Company in the Letter of
Transmittal that, among other things, the New
Notes will be acquired by the holder in the
ordinary course of business and the holder does
not intend to participate and has no
arrangement or understanding with any person to
participate in the distribution of such New
Notes.
Any Participating Broker-Dealer that acquired
Old Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that receives New
Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any
resale of such New Notes. The Letter of
Transmittal states that by so acknowledging
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<PAGE> 14
and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may
be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in
connection with resale of New Notes received in
exchange for Old Notes where such Old Notes
were acquired by such Participating
Broker-Dealer as a result of market-making
activities or other trading activities. The
Company has agreed that, for a period of 180
days after the Expiration Date, it will make
this Prospectus available to any Participating
Broker-Dealer for use in connection with any
such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the New Notes could not rely on the position of
the staff of the Commission enunciated in
no-action letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such
instance may result in such holder incurring
liability under the Securities Act for which
the holder is not indemnified by the Company.
Minimum Condition............. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Old Notes
being tendered or accepted for exchange.
Expiration Date............... 5:00 p.m., New York City time, on ,
1997 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange
Offer is extended.
Accrued Interest on the New
Notes and the Old Notes....... Each New Note will bear interest from its
issuance date. Holders of Old Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including,
the issuance date of the New Notes. Such
interest will be paid with the first interest
payment on the New Notes. Interest on the Old
Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange Offer --
Conditions." The Company reserves the right to
terminate or amend the Exchange Offer at any
time prior to the Expiration Date upon the
occurrence of any such condition.
Procedures for Tendering Old
Notes......................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, or an Agent's
Message (as defined) in connection with a book
entry transfer, together with the Old Notes and
other required documentation to the Exchange
Agent (as defined) at the address set forth
herein. By executing the Letter of Transmittal,
each holder will represent to the Company
11
<PAGE> 15
that, among other things, the New Notes
acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of
business of the person receiving such New
Notes, whether or not such person is the
holder, that neither the holder nor any such
other person (i) has any arrangement or
understanding with any person to participate in
the distribution of such New Notes, (ii) is
engaging or intends to engage in the
distribution of such New Notes, or (iii) is an
"affiliate," as defined under Rule 405 of the
Securities Act, of the Company. See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer" and " -- Procedures for
Tendering."
Untendered Old Notes.......... Following the consummation of the Exchange
Offer, holders of Old Notes eligible to
participate but who do not tender their Old
Notes will not have any further exchange rights
and such Old Notes will continue to be subject
to certain restrictions on transfer.
Accordingly, the liquidity of the market for
such Old Notes could be adversely affected.
Consequences of Failure
to Exchange................. The Old Notes that are not exchanged pursuant
to the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Company, (ii) pursuant
to Rule 144A or Rule 144 under the Securities
Act or pursuant to some other exemption under
the Securities Act, (iii) outside the United
States to a non-U.S. person pursuant to the
requirements of Rule 904 under the Securities
Act, or (iv) pursuant to an effective
registration statement under the Securities
Act. See "The Exchange Offer -- Consequences of
Failure to Exchange."
Shelf Registration
Statement..................... In the event that changes in the law or the
applicable interpretations of the staff of the
Commission do not permit the Company to effect
the Exchange Offer, or if for any other reason
the Exchange Offer is not consummated within
210 days of the date of the original issuance
of the Old Notes, the Company and the
Guarantors will (i) as promptly as possible,
file a shelf registration statement (the "Shelf
Registration Statement") covering resales of
the Old Notes, (ii) use their respective best
efforts to cause the Shelf Registration
Statement to be declared effective under the
Securities Act and (iii) use their respective
best efforts to keep effective the Shelf
Registration Statement until three years after
its effective date. A holder of the Old Notes
that sells such Old Notes pursuant to the Shelf
Registration Statement generally would be
required to be named as a selling security
holder in the related prospectus and to deliver
a prospectus to purchasers, will be subject to
certain of the civil liability provisions under
the Securities Act in connection with such
sales and will be bound by the provisions of
the Registration Rights Agreement which are
applicable to such a holder (including certain
indemnification obligations).
Special Procedures for
Beneficial Owners........... Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to
12
<PAGE> 16
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
owner's name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take
considerable time. The Company will keep the
Exchange Offer open for not less than twenty
days in order to provide for the transfer of
registered ownership.
Guaranteed Delivery
Procedures.................... Holders of Old Notes who wish to tender their
Old Notes and whose Old Notes are not
immediately available or who cannot deliver
their Old Notes, the Letter of Transmittal or
any other documents required by the Letter of
Transmittal to the Exchange Agent (or comply
with the procedures for book-entry transfer)
prior to the Expiration Date must tender their
Old Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer --
Guaranteed Delivery Procedures."
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Old Notes and
Delivery of New Notes....... The Company will accept for exchange any and
all Old Notes which are properly tendered in
the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New
Notes issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange Offer --
Terms of the Exchange Offer."
Federal Income Tax
Consequences.................. The exchange of Old Notes for New Notes by
tendering holders will not be a taxable
exchange for federal income tax purposes, and
such holders should not recognize any taxable
gain or loss or any interest income as a result
of such exchange.
Use of Proceeds............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.
Exchange Agent................ Marine Midland Bank.
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<PAGE> 17
THE NEW NOTES
General........................ The form and terms of the New Notes are the
same as the form and terms of the Old Notes
(which they replace) except that (i) the New
Notes bear a Series B designation, (ii) the
New Notes have been registered under the
Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and
(iii) the holders of New Notes will not be
entitled to certain rights under the
Registration Rights Agreement, including the
provisions providing for an increase in the
interest rate on the Old Notes in certain
circumstances relating to the timing of the
Exchange Offer, which rights will terminate
when the Exchange Offer is consummated. See
"The Exchange Offer -- Purpose and Effect of
the Exchange Offer." The New Notes will
evidence the same debt as the Old Notes and
will be entitled to the benefits of the
Indenture. See "Description of the Notes."
The Old Notes and the New Notes are referred
to collectively herein as the "Notes."
Issuer......................... Booth Creek Ski Holdings, Inc.
Securities Offered............. $116,000,000 principal amount of Series B
12 1/2% Senior Notes due 2007.
The Indenture governing the Notes (the
"Indenture") provides for the issuance of
additional series of Notes in aggregate
principal amounts of not less than $25.0
million per series, subject to compliance
with the covenant regarding incurrence of
additional indebtedness and provided that no
Default (as defined) or Event of Default (as
defined) exists under the Indenture at the
time of issuance or would result therefrom
and that the aggregate principal amount of
Notes issued under the Indenture does not
exceed $200.0 million.
Maturity Date.................. March 15, 2007.
Interest Payment Dates......... Interest will accrue on the New Notes from
the date of issuance (the "Issue Date") and
will be payable semi-annually on each March
15 and September 15, commencing September 15,
1997.
Ranking........................ The New Notes will be general senior
unsecured obligations of the Company ranking
pari passu with all other existing and future
senior indebtedness of the Company and senior
to any subordinated indebtedness of the
Company. The New Notes will be effectively
subordinated to all secured indebtedness of
the Company and the Guarantors, including
indebtedness under the Senior Credit
Facility. In addition, the New Notes will be
structurally subordinated to any indebtedness
of the Company's subsidiaries that are not
Guarantors. After giving effect to the
Transactions on a pro forma basis, Booth
Creek and the Guarantors would have had
approximately $3.4 million of senior
indebtedness outstanding (other than the
Notes and the Guarantees) as of January 31,
1997, and borrowing availability of $12.0
million under the Senior Credit Facility. See
"Description of Certain Indebtedness --
Senior Credit Facility."
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<PAGE> 18
Guarantees..................... The New Notes will be unconditionally
guaranteed, on an unsecured senior basis, as
to the payment of principal, premium, if any,
and interest, jointly and severally (the
"Guarantees"), by all Restricted Subsidiaries
of the Company having either assets or
stockholders' equity in excess of $20,000
(the "Guarantors"). As of the Issue Date, all
of the Company's direct and indirect
subsidiaries will be Restricted Subsidiaries,
except the Real Estate LLC (as defined in
"The Transactions -- The Snoqualmie
Acquisition"). Each Guarantee will be
effectively subordinated to all secured
indebtedness of such Guarantor. See
"Description of the Notes -- Certain
Covenants -- Limitation on Creation of
Subsidiaries" and "Description of the
Notes -- Guarantees."
Optional Redemption............ The Notes will be redeemable at the option of
the Company, in whole or in part, at any time
on or after March 15, 2002, at the redemption
prices set forth herein plus accrued interest
to the date of redemption. In addition, the
Company, at its option, may redeem in the
aggregate up to 30% of the original principal
amount of the Notes at any time and from time
to time prior to March 15, 2000 at a
redemption price equal to 112.5% of the
principal amount thereof plus accrued
interest to the redemption date with the Net
Proceeds of one or more Public Equity
Offerings, provided that at least $77.0
million aggregate principal amount of Notes
originally issued remain outstanding
immediately after the occurrence of any such
redemption and that any such redemption
occurs within 90 days following the closing
of any such Public Equity Offering.
Change of Control.............. In the event of a Change of Control, holders
of the Notes will have the right to require
the Company to repurchase their Notes at 101%
of the aggregate principal amount thereof
plus accrued and unpaid interest to the
repurchase date. See "Description of the
Notes -- Change of Control Offer."
Asset Sale Proceeds............ The Company will be obligated in certain
instances to make offers to repurchase the
Notes at a purchase price in cash equal to
100% of the principal amount thereof plus
accrued and unpaid interest to the date of
repurchase with the net cash proceeds of
certain asset sales. See "Description of the
Notes -- Certain Covenants -- Limitation on
Certain Asset Sales."
Certain Covenants.............. The Indenture contains covenants for the
benefit of the holders of the Notes that,
among other things, restrict the ability of
the Company and any Restricted Subsidiaries
(as defined) to: (i) incur additional
Indebtedness; (ii) pay dividends and make
distributions; (iii) issue stock of
subsidiaries; (iv) make certain investments;
(v) repurchase stock; (vi) create liens;
(vii) enter into transactions with
affiliates; (viii) enter into sale and
leaseback transactions; (ix) create dividend
or other payment restrictions affecting
Restricted Subsidiaries; (x) merge or
consolidate the Company or any Guarantors;
and (xi) transfer and sell assets. These
covenants are subject to a number of
important exceptions. See "Description of the
Notes -- Certain Covenants."
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<PAGE> 19
Registration Rights............ Pursuant to the Registration Rights Agreement
(as defined), the Company and the Guarantors
agreed to use their best efforts to file
within 45 days, and cause to become effective
within 150 days, of the closing date of the
Initial Offering a Registration Statement
under the Securities Act with respect to an
offer to exchange the Notes for notes of the
Company with terms substantially identical to
the Notes. In addition, under certain
circumstances the Company may be required to
file a Shelf Registration Statement (as
defined). Among other provisions, in the
event that (i) such Registration Statement or
Shelf Registration Statement has not been
filed with the Commission within 45 days
after the closing date of the Initial
Offering; (ii) such Registration Statement or
Shelf Registration Statement is not declared
effective within 150 days after the closing
date of the Initial Offering; or (iii) an
exchange offer is not consummated within 60
days after the Registration Statement is
declared effective (each such event referred
to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy
available to holders of the Old Notes will be
the immediate assessment of additional
interest ("Additional Interest") as follows:
the per annum interest rate on the Old Notes
will increase by .50%, and the per annum
interest rate will increase by an additional
.25% for each subsequent 90 day period during
which the Registration Default remains
uncured, up to a maximum additional interest
rate of 2% per year in excess of the interest
rate set forth on the cover page hereof. All
Additional Interest will be payable to
holders of the Old Notes in cash on each
March 15 and September 15, commencing with
the first such date occurring after any such
Additional Interest commences to accrue, and
continuing until such Registration Default is
cured. After the date on which such
Registration Default is cured, the interest
rate on the Old Notes will revert to the
interest rate originally borne by the Old
Notes. See "The Exchange Offer."
RISK FACTORS
Before tendering their Old Notes for the New Notes offered hereby, holders
of the Old Notes should consider carefully the information set forth under the
caption "Risk Factors," and all other information set forth in this Prospectus.
16
<PAGE> 20
UNAUDITED ADJUSTED PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SKIER DAY)
The following unaudited adjusted pro forma financial data give effect to
the Transactions as if they had been completed as of November 1, 1995. The
information presented may not be indicative of the actual results had the
Transactions occurred on such date, and there can be no assurance that the
Company will be able to achieve such results in the future. The unaudited
adjusted pro forma financial data reflect the combined financial data of the
Company's seven ski resort complexes adjusted for the removal of (i) corporate
expenses and allocations, (ii) management fees, (iii) one-time expenses and
write-offs and (iv) other non-recurring charges of prior owners. In addition,
the unaudited adjusted pro forma financial data give effect to the Management
Agreement (as defined) with Booth Creek, Inc. and the reduction of full-time
employees and other operating improvements which management of the Company
expects to implement. See "Certain Transactions -- Management Agreement with
Booth Creek, Inc." The unaudited adjusted pro forma financial data presented
below should be read in conjunction with the information contained in "Pro Forma
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
ADJUSTED PRO FORMA
------------------------------------------
YEAR ENDED THREE MONTHS ENDED
OCTOBER 31, 1996(A) JANUARY 31, 1997(B)
(UNAUDITED)
------------------- -------------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations......................................... $ 77,471 $ 31,532
Real Estate and Other..................................... 4,657 444
--------- --------
82,128 31,976
Operating Expenses:
Cost of Sales -- Resort Operations(c)..................... 60,785 27,364
Cost of Sales -- Real Estate and Other(c)................. 690 52
--------- --------
Adjusted Pro Forma EBITDA(c)................................ $ 20,653 $ 4,560
========= ========
OTHER FINANCIAL AND OPERATING DATA:
RESTRICTED GROUP(D)
Skier Days.................................................. 1,828,000 833,781
Revenue per Skier Day....................................... $ 42.38 $ 37.82
Adjusted Pro Forma EBITDA(c)................................ $ 20,653 $ 4,560
Cash Interest Expense(e).................................... 14,826 3,706
Ratio of Adjusted Pro Forma EBITDA to Cash Interest
Expense................................................... 1.4x NM
Ratio of total debt to Adjusted Pro Forma EBITDA(f)......... 5.8x NM
</TABLE>
NM -- Not Meaningful.
(see footnotes on following pages)
17
<PAGE> 21
NOTES TO UNAUDITED ADJUSTED PRO FORMA FINANCIAL DATA
(a) The unaudited adjusted pro forma financial data presented reflect the
following pro forma adjustments to operating expenses and management fee and
corporate expenses. The following table reflects the effect of these items
in the calculation of pro forma EBITDA.
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
----------------
(DOLLARS IN THOUSANDS)
<S> <C>
Historical EBITDA........................................... $16,818
Pro forma adjustments:
Corporate management fee allocations...................... 678
Replacement of executive management....................... 191
Lease modification........................................ 60
Profit sharing payment.................................... 162
-------
Total pro forma adjustments............................. 1,091
-------
Pro forma EBITDA............................................ $17,909
=======
</TABLE>
In addition, the unaudited adjusted pro forma financial data presented
reflect certain additional adjustments which management believes are
relevant in evaluating the future operating performance of the Company. The
following additional adjustments, which eliminate the impact of certain
nonrecurring charges and reflect the estimated impact of management's
business and operating strategy, are based on estimates and assumptions made
and believed to be reasonable by the Company but that are inherently
uncertain and subject to change. The following calculation should not be
viewed as indicative of actual or future results. The following table
reflects the effect of these items on pro forma EBITDA:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
----------------
(DOLLARS IN THOUSANDS)
<S> <C>
Pro forma EBITDA............................................ $17,909
Additional adjustments:
Reduction of insurance premium............................ 652
Snoqualmie Pass cost reductions........................... 500
In-house operation of certain ski-related services........ 435
Removal of Bear Mountain one-time post-acquisition
adjustments............................................. 415
Post-closing inventory and accounting adjustments......... 309
One-time charges at Grand Targhee......................... 237
One-time charges at Waterville Valley..................... 147
Removal of prior owner services at Mt. Cranmore........... 49
-------
Total additional adjustments............................ 2,744
-------
Adjusted pro forma EBITDA................................... $20,653
=======
</TABLE>
Corporate management fee allocations represent the allocations from
Fibreboard Corporation ($791,000) and American Skiing Company and S-K-I
Limited for Waterville Valley ($587,000) net of (i) the management fees that
would have been paid to Booth Creek, Inc. pursuant to the Management
Agreement ($350,000) and (ii) the estimated amounts for certain corporate
expenses if the Company had operated on a stand-alone basis ($350,000).
Replacement of executive management represents elimination of non-recurring
executive management compensation and benefits paid to (i) former owners of
Ski Lifts, Inc. ($116,000) and (ii) former owners of Grand Targhee
Incorporated ($75,000). The responsibilities of these individuals will be
absorbed by existing Company management.
Lease modification represents elimination of lease expenses for the Teewinot
Lodge, which is being acquired by the Company in the Grand Targhee
Acquisition.
Profit sharing payment represents elimination of one-time profit sharing
contribution, considered a retention bonus, given to Ski Lifts, Inc.
workforce in anticipation of the Snoqualmie Acquisition as specified in the
acquisition agreement.
Reduction of insurance premium represents elimination of insurance expenses
as a result of a new insurance package entered into by the Company, which
has reduced insurance premiums as a result of the consolidation of the
Company's resorts.
Snoqualmie Pass cost reductions represents elimination of expenses primarily
related to a reduction in summer labor costs.
In-house operation of certain ski-related services represents the increase
in revenue and elimination of expenses related to services performed by
outside vendors at Snoqualmie Pass that will be performed by the Company and
which are performed by the Company at its other resorts.
18
<PAGE> 22
NOTES TO UNAUDITED ADJUSTED PRO FORMA FINANCIAL DATA -- (CONTINUED)
Removal of Bear Mountain one-time post-acquisition adjustments represents
elimination of certain charges incurred by the Company in connection with
the acquisition of Bear Mountain by Fibreboard Corporation, which the
Company believes will not occur in the future.
Post-closing inventory and accounting adjustments represents elimination of
one-time charges at Northstar for inventory and sales tax adjustments.
One-time charges at Grand Targhee represents elimination of several one-time
expenses incurred by Grand Targhee Incorporated that reduced operating
results. These expenses include the cost associated with abandoning a land
exchange project, the write-off of an investment in a central reservation
system, the establishment of an accrual for vacation pay, contributions to a
local charity associated with the shareholders of Grand Targhee
Incorporated, a loss on the disposal of fixed assets, fees associated with
an application for financing which was never consummated and the write-off
of certain credit card receivables.
One-time charges at Waterville Valley represents elimination of several
expenses incurred by Waterville Valley that were either non-recurring in
nature or related to expenditures for property, plant and equipment which
the Company would have capitalized.
Removal of prior owner services at Mt. Cranmore represents elimination of
expenses incurred by Mt. Cranmore that were allocated to the resort by its
former owner for services which are now being provided by the Company at no
cost.
(b) The unaudited adjusted pro forma financial data presented reflect the
following pro forma adjustments to operating expenses and management fee and
corporate expenses. The following table reflects the effect of these items
in the calculation of pro forma EBITDA.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, 1997
------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Historical EBITDA........................................... $3,886
Pro forma adjustments:
Corporate management fee allocations...................... 22
Replacement of executive management....................... 44
Lease modification........................................ 15
------
Total pro forma adjustments............................. 81
------
Pro forma EBITDA............................................ $3,967
======
</TABLE>
In addition, the unaudited adjusted pro forma financial data presented
reflect certain additional adjustments which management believes are
relevant in evaluating the future operating performance of the Company. The
following additional adjustments, which eliminate the impact of certain
nonrecurring charges and reflect the estimated impact of management's
business and operating strategy, are based on estimates and assumptions made
and believed to be reasonable by the Company but that are inherently
uncertain and subject to change. The following calculation should not be
viewed as indicative of actual or future results. The following table
reflects the effect of these items on pro forma EBITDA:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, 1997
------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Pro forma EBITDA............................................ $ 3,967
Additional adjustments:
Reduction of insurance premium............................ 309
In-house operation of certain ski-related services........ 230
One-time charges at Grand Targhee......................... 54
-------
Total additional adjustments............................ 593
-------
Adjusted pro forma EBITDA................................... $ 4,560
=======
</TABLE>
Corporate management fee allocations represent the allocations from
Fibreboard Corporation ($70,000) and American Skiing Company and S-K-I
Limited for Waterville Valley ($10,000) net of (i) the management fees that
would have been paid to Booth Creek, Inc. pursuant to the Management
Agreement ($29,000) and (ii) the estimated amounts for certain corporate
expenses if the Company had operated on a stand-alone basis ($29,000).
Replacement of executive management represents elimination of non-recurring
executive management compensation and benefits paid to (i) former owners of
Ski Lifts, Inc. ($29,000) and (ii) former owners of Grand Targhee
Incorporated ($15,000). The responsibilities of these individuals will be
absorbed by existing Company management.
19
<PAGE> 23
NOTES TO UNAUDITED ADJUSTED PRO FORMA FINANCIAL DATA -- (CONTINUED)
Lease modification represents elimination of lease expenses for the Teewinot
Lodge, which is being acquired by the Company in the Grand Targhee
Acquisition.
Reduction of insurance premium represents elimination of insurance expenses
as a result of a new insurance package entered into by the Company, which
has reduced insurance premiums as a result of the consolidation of the
Company's resorts.
In-house operation of certain ski-related services represents the increase
in revenue and elimination of expenses related to services performed by
outside vendors at Snoqualmie Pass that will be performed by the Company and
which are performed by the Company at its other resorts.
One-time charges at Grand Targhee represents elimination of the cost
associated with abandoning a land exchange project.
(c) Excludes depreciation and amortization expenses of $12.6 million and $3.2
million and the non-cash cost of real estate and other sales of $1.6 million
and $232,000 for the year ended October 31, 1996 and the three months ended
January 31, 1997, respectively. The historical financial presentations for
the Fibreboard Resort Group, Waterville Valley, Mt. Cranmore, Ski Lifts,
Inc. and Grand Targhee Incorporated are inconsistent in categorizing cost of
sales -- resort operations, selling, general and administrative expense and
management fees and corporate expenses. For presentation purposes in this
Prospectus, all operating expenses have been aggregated as cost of sales --
resort operations.
(d) The Restricted Group includes Booth Creek and its Restricted Subsidiaries as
of the date of this Prospectus. The Restricted Group data excludes the real
estate assets at Snoqualmie Pass, which are held by an entity that is an
Unrestricted Subsidiary. See "The Transactions -- The Snoqualmie
Acquisition." Such assets have not historically generated cash flow and the
Unrestricted Subsidiary has an obligation to purchase shares of preferred
stock of Ski Lifts, Inc. having an aggregate liquidation preference of $3.5
million from the prior owners of Snoqualmie Pass. Such obligation is
recourse only to the assets of the Unrestricted Subsidiary and is
non-recourse to the Company and its Restricted Subsidiaries.
(e) Reflects interest on the $116.0 million of Notes at 12.5%, the ASC Seller
Note at 12.0% and capital leases at 10.0%. Cash interest expense excludes
$860,000 and $215,000 in non-cash amortization of deferred financing fees
for the year ended October 31, 1996 and the three months ended January 31,
1997, respectively.
(f) Total debt for purposes of this ratio includes the Notes, the ASC Seller
Note and other debt, including capital leases. Total debt does not include
any borrowing under the Senior Credit Facility. The Company did not have
borrowings under the Senior Credit Facility upon completion of the Initial
Offering. See "Capitalization."
20
<PAGE> 24
SUMMARY COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SKIER DAY)
The summary combined financial data presented below should be read in
conjunction with the combined financial statements of the Fibreboard Resort
Group and notes thereto included elsewhere in this Prospectus, the unaudited
interim financial statements of the Company and the notes thereto included
elsewhere in this Prospectus, "Selected Combined Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The summary combined financial data (except for the other financial
and operating data) of the Fibreboard Resort Group (i) as of and for the year
ended December 31, 1992 and as of December 31, 1993 have been derived from the
unaudited financial statements of the Fibreboard Resort Group, (ii) for the year
ended December 31, 1993 and as of and for the years ended December 31, 1994 and
1995 and as of and for the ten months ended October 31, 1996 have been derived
from the audited combined financial statements of the Fibreboard Resort Group
and (iii) for the period from November 1, 1996 to December 2, 1996 have been
derived from the unaudited financial statements of the Fibreboard Resort Group.
The summary historical financial data of the Company as of and for the three
months ended January 31, 1997 were derived from the unaudited financial
statements of the Company. The summary pro forma data presented below should be
read in conjunction with the information contained in "Pro Forma Financial
Information."
<TABLE>
<CAPTION>
FIBREBOARD RESORT GROUP COMPANY
--------------------------------------------------------------------- -------------
HISTORICAL
PERIOD FROM -------------
10 MONTHS NOVEMBER 1, THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED 1996 TO ENDED
----------------------------------------- OCTOBER 31, DECEMBER 2, JANUARY 31,
1992(A) 1993(B) 1994(C) 1995(D) 1996(E) 1996(E) 1997(F)
-------- -------- -------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations.................. $ 20,336 $ 25,528 $ 40,810 $ 39,823 $ 36,829 $ 1,395 $23,784
Real Estate and Other.............. -- -- 610 5,213 4,288 304 140
-------- -------- -------- -------- -------- ------- -------
20,336 25,528 41,420 45,036 41,117 1,699 23,924
Operating Expenses:
Cost of Sales -- Resort
Operations....................... 15,224 18,117 26,920 28,569 26,950 2,890 17,141
Cost of Sales -- Real Estate and
Other............................ -- -- 280 1,989 2,142 161 123
Selling, General &
Administrative................... 3,155 4,579 5,545 5,871 5,220 1,087 2,227
Management Fee and Corporate
Expenses......................... 169 507 655 1,247 701 70 306
-------- -------- -------- -------- -------- ------- -------
Operating Income (Loss)............. 1,788 2,325 8,020 7,360 6,104 (2,509) 4,127
Interest (Income) Expense (net)..... (386) 186 666 821 1,189 289 2,549
-------- -------- -------- -------- -------- ------- -------
Pre-tax Income (Loss)............... 2,174 2,139 7,354 6,539 4,915 (2,798) 1,578
Income Taxes (Benefit).............. 880 876 2,979 2,624 2,018 (885) 474
-------- -------- -------- -------- -------- ------- -------
Income (Loss) Before Minority
Interest........................... 1,294 1,263 4,375 3,915 2,897 (1,913) 1,104
Minority Interest................... -- -- -- -- -- -- 15
-------- -------- -------- -------- -------- ------- -------
Net Income (Loss)............ $ 1,294 $ 1,263 $ 4,375 $ 3,915 $ 2,897 $(1,913) $ 1,089
======== ======== ======== ======== ======== ======= =======
OTHER FINANCIAL AND OPERATING DATA:
Skier Days.......................... 324,863 436,153 837,179 784,964 706,075 30,818 586,545
Revenue per Skier Day (i)........... $ 62.60 $ 58.53 $ 48.75 $ 50.73 $ 52.16 $ 45.27 $ 40.55
Depreciation & Amortization......... $ 1,003 $ 2,514 $ 3,449 $ 4,024 $ 4,354 $ 7 $ 1,771
Non-cash Cost of Real Estate and
Other (j).......................... $ -- $ -- $ -- $ 1,618 $ 1,461 $ 133 $ 99
Capital Expenditures Excluding
Acquisitions and Real Estate and
Other.............................. $ 6,192 $ 4,619 $ 6,199 $ 5,226 $ 5,761 $ 5,531 $ 211
EBITDA.............................. $ 2,791 $ 4,839 $ 11,469 $ 13,002 $ 11,919 $(2,369) $ 5,997
EBITDA Margin....................... 13.7% 19.0% 27.7% 28.9% 29.0% (139.4)% 25.1%
<CAPTION>
COMPANY
--------------------------
UNAUDITED
PRO FORMA(G)
--------------------------
THREE MONTHS
YEAR ENDED ENDED
OCTOBER 31, JANUARY 31,
1996 1997
----------- ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations.................. $ 77,471 $31,532
Real Estate and Other.............. 4,657 444
---------- -------
82,128 31,976
Operating Expenses:
Cost of Sales -- Resort
Operations....................... 76,126(h) 31,107(h)
Cost of Sales -- Real Estate and
Other............................ 2,297 284
Selling, General &
Administrative................... -- --
Management Fee and Corporate
Expenses......................... -- --
---------- -------
Operating Income (Loss)............. 3,705 585
Interest (Income) Expense (net)..... 15,686 3,921
---------- -------
Pre-tax Income (Loss)............... (11,981) (3,336)
Income Taxes (Benefit).............. (4,373) (64)
---------- -------
Income (Loss) Before Minority
Interest........................... (7,608) (3,272)
Minority Interest................... 281 70
---------- -------
Net Income (Loss)............ $ (7,889) $(3,342)
========== =======
OTHER FINANCIAL AND OPERATING DATA:
Skier Days.......................... 1,828,000 833,781
Revenue per Skier Day (i)........... $ 42.38 $ 37.82
Depreciation & Amortization......... $ 12,597 $ 3,150
Non-cash Cost of Real Estate and
Other (j).......................... $ 1,607 $ 232
Capital Expenditures Excluding
Acquisitions and Real Estate and
Other.............................. $ 10,308 $ 8,138
EBITDA.............................. $ 17,909 $ 3,967
EBITDA Margin....................... 21.8% 12.4%
</TABLE>
<TABLE>
<CAPTION>
COMPANY
FIBREBOARD RESORT GROUP -----------------------
------------------------------------------------------- AS OF JANUARY 31, 1997
AS OF -----------------------
AS OF DECEMBER 31, OCTOBER 31, UNAUDITED
----------------------------------------- ----------- PRO
1992(A) 1993(B) 1994(C) 1995(D) 1996(E) ACTUAL FORMA(G)
------- ------- ------- ------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital (Deficit)..................... $ 5,414 $ (3,271) $ (6,555) $(35,980) $(36,187) $ (5,271) $ (8,299)
Total Assets.................................. 27,859 39,618 43,065 73,316 69,602 183,380 191,689
Total Debt Including Intercompany Payable..... 10,608 15,743 15,422 41,493 38,715 115,187 119,411
Common Stockholders' Equity/Net Assets........ 13,435 17,826 19,752 23,667 26,564 41,089 44,512
</TABLE>
(see footnotes on following page)
21
<PAGE> 25
NOTES TO SUMMARY COMBINED FINANCIAL DATA
The selection of a December 31 year end does not result in the presentation
of the results of the resorts for a single ski season. Accordingly, as the
results of a single ski season are split into two reporting periods, differing
trends may develop, as compared to results of operations for other resorts
consisting of a single ski season, which should be evaluated by an investor.
As the results of operations of ski resorts are highly seasonal, with the
majority of revenue generated in the period from November through April, the
results of operations for the 10 months ended October 31, 1996, the period from
November 1, 1996 to December 2, 1996, and the three months ended January 31,
1997 are not representative of a pro rata year of operations.
(a) Includes the financial results of Northstar only.
(b) Includes the financial results of Northstar for the entire period and of
Sierra for the period beginning June 11, 1993, the date on which it was
acquired by Fibreboard Corporation.
(c) Includes the financial results of Northstar and Sierra for the entire
period.
(d) Includes the financial results of Northstar and Sierra for the entire
period and of Bear Mountain for the period beginning October 6, 1995, the
date on which it was acquired by Fibreboard Corporation.
(e) Includes the financial results of Northstar, Sierra and Bear Mountain for
the entire period.
(f) Reflects the financial results of Waterville Valley and Mt. Cranmore from
November 27, 1996, Northstar, Sierra and Bear Mountain from December 3,
1996, and Snoqualmie Pass from January 16, 1997.
(g) Pro forma statement of operations and other financial and operating data
for the year ended October 31, 1996 and the three months ended January 31,
1997 give effect to the Transactions as if they had occurred on November 1,
1995. The pro forma balance sheet data give effect to the Transactions as
if they had occurred on January 31, 1997. See "Pro Forma Financial
Information."
(h) The historical financial presentations for the Fibreboard Resort Group,
Waterville Valley, Mt. Cranmore, Ski Lifts, Inc. and Grand Targhee
Incorporated are inconsistent in categorizing cost of sales -- resort
operations, selling, general and administrative expenses and management
fees and corporate expenses. For presentation purposes in this Prospectus,
all operating expenses, including depreciation and amortization, have been
aggregated as cost of sales -- resort operations.
(i) Reflects revenues from resort operations divided by skier days.
(j) Non-cash cost of real estate sales represents the allocated portion of real
estate development expenditures previously capitalized (including
acquisition costs allocated to real estate development) which relate to
current year real estate sales.
22
<PAGE> 26
SUMMARY FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SKIER DAY)
The summary financial data (revenues, resort cash flow and capital
expenditures only) presented below should be read in conjunction with the
respective financial statements of the various resorts and the Company and the
notes thereto to the extent included elsewhere in this Prospectus, "Selected
Combined Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Capital expenditures data excludes
acquisitions, real estate development costs and purchases of timber. Skier days
information is based on management estimates. The following summary financial
data have been presented on a historical basis for each resort. During the
periods presented all resorts except for Grand Targhee experienced ownership
changes. Accordingly, for the periods in which these changes occurred, the data
presented below include information for both before and after such changes on a
combined basis to provide comparable period data.
<TABLE>
<CAPTION>
TEN THREE
MONTHS MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
----------------------------------------- OCTOBER 31, JANUARY 31,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NORTHSTAR-AT-TAHOE
(EXCLUDES REAL ESTATE AND OTHER)
Revenue........................... $ 20,336 $ 24,574 $ 28,821 $ 26,994 $ 21,210 $ 9,338
Resort Cash Flow.................. 2,960 6,193 7,155 5,800 4,670 1,130
Capital Expenditures.............. 6,192 4,240 5,479 1,999 1,562 412
Skier Days........................ 324,863 410,207 509,502 436,954 320,440 163,575
Revenue per Skier Day............. $ 62.60 $ 59.91 $ 56.57 $ 61.78 $ 66.19 $ 57.09
</TABLE>
<TABLE>
<CAPTION>
TEN THREE
MONTHS MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
------------------------------ OCTOBER 31, JANUARY 31,
1993 1994 1995 1996 1997
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SIERRA-AT-TAHOE
Revenue.................................... $ 7,491 $ 11,989 $ 11,395 $ 8,472 $ 2,968
Resort Cash Flow........................... 2,625 4,639 4,073 3,113 (336)
Capital Expenditures....................... 624 750 1,350 3,095 4,815
Skier Days................................. 227,347 327,677 308,992 210,651 71,326
Revenue per Skier Day...................... $ 32.95 $ 36.58 $ 36.88 $ 40.22 $ 41.61
</TABLE>
<TABLE>
<CAPTION>
TEN THREE
MONTHS MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
------------------------------ OCTOBER 31, JANUARY 31,
1993 1994 1995 1996 1997
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BEAR MOUNTAIN
Revenue.................................... $ 12,237 $ 16,082 $ 9,916 $ 7,147 $ 5,605
Resort Cash Flow........................... 3,540 5,995 1,599 1,230 878
Capital Expenditures....................... NA NA 218 1,051 390
Skier Days................................. 291,543 382,253 209,561 174,984 169,029
Revenue per Skier Day...................... $ 41.97 $ 42.07 $ 47.32 $ 40.84 $ 33.16
</TABLE>
23
<PAGE> 27
SUMMARY FINANCIAL DATA -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SKIER DAY)
<TABLE>
<CAPTION>
YEAR YEAR THREE MONTHS
ENDED ENDED ENDED
OCTOBER 29, OCTOBER 27, JANUARY 31,
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
WATERVILLE VALLEY
Revenue..................................................... $ 9,653 $11,733 $4,503
Resort Cash Flow............................................ 1,387 2,018 678
Capital Expenditures........................................ 1,249 1,175 333
Skier Days.................................................. 207,386 256,563 91,984
Revenue per Skier Day....................................... $ 46.55 $ 45.73 $48.95
</TABLE>
<TABLE>
<CAPTION>
YEAR SIX MONTHS
ENDED ENDED
JULY 28, JANUARY 31,
1996 1997
---------- -----------
<S> <C> <C>
MT. CRANMORE
Revenue..................................................... $ 4,161 $1,710
Resort Cash Flow............................................ 637 (295)
Capital Expenditures........................................ 2,533 60
Skier Days.................................................. 123,201 46,648
Revenue per Skier Day....................................... $ 33.77 $36.66
</TABLE>
<TABLE>
<CAPTION>
FOUR
YEAR ENDED SEPTEMBER 30, MONTHS ENDED
------------------------------------------------------------------- JANUARY 31,
1992 1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
SNOQUALMIE PASS
Revenue....................... $ 8,084 $10,247 $10,241 $10,670 $ 9,451 $ 5,175
Resort Cash Flow(a)........... 890 1,677 1,777 1,629 1,251 1,079
Capital Expenditures.......... 582 853 346 1,159 1,466 385
Skier Days.................... 432,014 521,127 519,953 515,487 455,240 252,097
Revenue per Skier Day......... $ 18.71 $ 19.66 $ 19.69 $ 20.69 $ 20.76 $ 20.52
</TABLE>
<TABLE>
<CAPTION>
EIGHT
YEAR ENDED MAY 31, MONTHS ENDED
------------------------------------------------------------------- JANUARY 31,
1992 1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
GRAND TARGHEE
Revenue....................... $ 6,319 $ 6,298 $ 6,285 $ 6,762 $ 7,376 $ 3,467
Resort Cash Flow(a)........... 928 672 1,098 1,066 1,225 (382)
Capital Expenditures.......... 309 292 170 473 236 3,129
Skier Days.................... 134,535 108,666 113,298 117,772 116,696 39,122
Revenue per Skier Day......... $ 46.97 $ 57.96 $ 55.47 $ 57.41 $ 63.21 $ 88.62(b)
</TABLE>
- ---------------
(a) Because no corporate overhead charges were allocated during the fiscal
periods presented, resort cash flow equals EBITDA for each period.
(b) Revenue per skier day for Grand Targhee for the eight months ended January
31, 1997 is significantly higher than the annual amounts due to the
inclusion of lodging and related revenue for the entire 1996 summer season.
The relative impact on revenue per skier day of the summer lodging revenue
will be reduced as the 1996/97 ski season continues and skier days increase.
24
<PAGE> 28
RISK FACTORS
In addition to the other information contained in this Prospectus, before
tendering their Old Notes for the New Notes offered hereby, holders of the Old
Notes should consider carefully the following factors, which may be generally
applicable to the Old Notes as well as the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of the Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth in the legend thereon, as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act and applicable state
securities laws, or pursuant to an exemption therefrom. Except under certain
limited circumstances, the Company does not intend to register the Old Notes
under the Securities Act. In addition, any holder of Old Notes who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Old Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Old Notes not so tendered could be adversely
affected. See "The Exchange Offer."
HIGH LEVEL OF INDEBTEDNESS AND LEVERAGE
The Company is highly leveraged. At January 31, 1997, after giving pro
forma effect to the Transactions, the Company's total indebtedness (including
current maturities) and stockholders' equity would have been $119.4 million and
$44.5 million, respectively. In addition, for the twelve months ended October
31, 1996, after giving pro forma effect to the Transactions, the Company's pro
forma EBITDA would have been $17.9 million and pro forma interest expense would
have been $15.7 million (including amortization of deferred financing costs of
$860,000). The Company's ability to make scheduled payments of the principal of,
or interest on, or to refinance its indebtedness (including the Notes) depends
on its future performance, which to a certain extent is subject to economic,
financial, competitive and other factors beyond its control. For the twelve
months ended October 31, 1996 and the three months ended January 31, 1997, after
giving pro forma effect to the Transactions, earnings would have been inadequate
to cover fixed charges by $12.4 million and $3.4 million, respectively. There
can be no assurance that the Company will not generate net losses in the future.
Continued net losses could have an adverse effect on the market value and
marketability of the Notes.
The Company believes that its cash flow from operations, together with
borrowings under the Senior Credit Facility, will be adequate to meet its
anticipated requirements for working capital, capital expenditures, interest
payments and scheduled principal payments over the next twelve months. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." However, any decline in the
Company's expected operating performance could have a material adverse effect on
the Company's liquidity and on its ability to service its debt and make required
capital expenditures. There can be no assurance that the Company's business will
generate cash flow at or above expected levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt
and make necessary capital expenditures, or if its future earnings are
insufficient to make all required principal or interest payments out of
internally generated funds, the Company may be required to refinance all or a
portion of its existing debt, sell assets or obtain additional financing. There
can be no assurance that any such refinancing or asset sales would be possible
or that any additional financing could be obtained on terms acceptable to the
Company or at all, particularly in view of the Company's high level of debt.
The Company's high level of debt will have several important effects on its
future operations, including the following: (a) the Company will have
significant cash requirements to service debt, reducing funds available for
operations, expansions and improvements and increasing the Company's
vulnerability to adverse general economic and industry conditions; (b) the
financial covenants and other restrictions contained in the Senior Credit
Facility, the Indenture and other agreements relating to the Company's
indebtedness require the Company to meet certain financial tests and restrict
its ability to borrow additional funds and to dispose of
25
<PAGE> 29
assets and (c) because of the Company's debt service requirements, funds
available for working capital, capital expenditures, acquisitions and general
corporate purposes may be limited. The Company's leveraged position may increase
its vulnerability to competitive pressures and the seasonality of the skiing and
recreational industries. In addition, although management believes that capital
expenditures above maintenance levels can be deferred to address cash flow or
other constraints, such initiatives cannot be deferred for extended periods
without adverse effects on skier days, revenues and profitability. The Company's
continued growth depends, in part, on its ability to maintain its facilities,
and, therefore, to the extent it is unable to do so with internally generated
cash, its inability to finance capital expenditures through borrowed funds could
have a material adverse effect on the Company's future operations.
FINANCIAL PERFORMANCE
For the twelve months ended October 31, 1996, after giving pro forma effect
to the Transactions, the Company would have incurred a net loss of $7.9 million,
primarily as a result of increased depreciation and amortization related to the
Acquisitions, increased interest expense related to the financing of the
Acquisitions and poor operating performance at Bear Mountain. For the three
months ended January 31, 1997, after giving pro forma effect to the
Transactions, the Company would have incurred a net loss of $3.3 million,
primarily as a result of increased depreciation and amortization, increased
interest expense, poor weather conditions, particularly at Sierra, and the
incurrence of certain non-recurring or unusual expenses, as well as the timing
of real estate and timber sales. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- General." There can be no
assurance that the Company's results of operations will improve in future
periods.
HOLDING COMPANY STRUCTURE; EFFECTS OF ASSET ENCUMBRANCES
Virtually all of the Company's operating income will be generated by its
subsidiaries. As a result, the Company will be dependent on the earnings and
cash flow of, and dividends and distributions or advances from, its subsidiaries
to provide the funds necessary to meet its debt service obligations, including
the payment of principal of and interest on the Notes. In particular, the
Company is heavily dependent upon the earnings of Northstar, which accounted for
approximately 37% and 29% of the Company's pro forma revenues for the twelve
months ended October 31, 1996 and the three months ended January 31, 1997,
respectively. There can be no assurance that the Company's subsidiaries will
generate sufficient cash flow to dividend, distribute or advance funds to the
Company. Should the Company fail to satisfy any payment obligation under the
Notes, the holders thereof would have a direct claim therefor against the
Guarantors pursuant to the Guarantees. However, the Guarantees will be
effectively subordinated to all secured indebtedness of the Guarantors,
including the obligations of the Guarantors under the Senior Credit Facility.
Substantially all of the assets of the Guarantors are pledged to secure the
obligations of the Company and such Guarantors under the Senior Credit Facility.
The Indenture limits, but does not prohibit, the ability of the Company and its
Restricted Subsidiaries to incur additional senior or secured indebtedness. In
the event of a default under the Senior Credit Facility (or any other secured
indebtedness), the lenders thereunder would be entitled to a claim on the assets
securing such indebtedness which is prior to any claim of the holders of the
Notes. Accordingly, there may be insufficient assets remaining after payment of
prior secured claims (including claims of lenders under the Senior Credit
Facility) to pay amounts due on the Notes. See "-- High Level of Indebtedness
and Leverage" and "-- Effective Subordination of the Notes."
EFFECTIVE SUBORDINATION OF THE NOTES
The Notes and the Guarantees will be general senior unsecured obligations
of the Company and the Guarantors, respectively, and will be effectively
subordinated to all secured indebtedness of the Company and the Guarantors,
respectively, including indebtedness under the Senior Credit Facility. In
addition, the Notes will be structurally subordinated to any indebtedness of the
Company's subsidiaries that are not Guarantors. The Indenture limits, but does
not prohibit, the ability of the Company and its Restricted Subsidiaries to
incur additional secured indebtedness.
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<PAGE> 30
RESTRICTIONS UNDER DEBT AGREEMENTS
The Indenture contains covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries to incur additional
indebtedness, incur liens, pay dividends and make certain other restricted
payments, make investments, consummate certain asset sales, enter into certain
transactions with affiliates, issue subsidiary stock, create dividend or other
payment restrictions affecting Restricted Subsidiaries, consolidate or merge
with any other person or transfer all or substantially all of the assets of the
Company.
In addition, the Senior Credit Facility contains restrictive covenants
which, generally, are more restrictive than those contained in the Indenture,
and limit the ability of the Company and its subsidiaries to prepay their
indebtedness (including the Notes and obligations under the Guarantees). The
Senior Credit Facility also requires the Company to maintain specified
consolidated financial ratios and satisfy certain consolidated financial tests.
The Company's ability to meet those financial ratios and financial tests can be
affected by events beyond its control, and there can be no assurance that the
Company will meet those ratios and tests. A breach of any of the covenants under
the Senior Credit Facility or the Indenture could result in a default under the
Senior Credit Facility and/or the Indenture. If an event of default occurs under
the Senior Credit Facility, the lenders could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be immediately due
and payable. If the Company is unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness. The
capital stock of the Company's principal subsidiaries, as well as substantially
all of the Company's consolidated assets, will be pledged to secure the Senior
Credit Facility. See "Description of the Notes" and "Description of Certain
Indebtedness -- Senior Credit Facility."
REGIONAL AND NATIONAL ECONOMIC CONDITIONS
The skiing industry is seasonal in nature, and is particularly vulnerable
to shifts in regional and national economic conditions. A significant portion of
the Company's guests reside in California, Washington and the New England
states. The economies of New England and California have been affected in recent
years by substantial job losses in the manufacturing sector and in the defense
industry, and have experienced other adverse economic trends. Although data
indicate an improvement of the New England and California economies, there can
be no assurance that such improvement will continue or that stagnation or
declines in skier days or real estate-related sales will not occur. Skiing is a
discretionary recreational activity entailing relatively high costs of
participation, and a worsening in the regional economy, or deteriorating
national economic conditions, could adversely impact skier days and the
Company's real estate and other revenues. Accordingly, the Company's financial
condition, particularly in light of its highly leveraged condition, could be
adversely affected by such a worsening in regional or national economies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON WEATHER CONDITIONS; SEASONALITY
Although several of the Company's facilities include high quality
snowmaking equipment, its revenues and operating expenses continue to be heavily
influenced by weather conditions, particularly during key holiday periods and
weekends. Adverse weather conditions lead to increased power and other operating
costs associated with snowmaking, and can render snowmaking wholly or partially
ineffective in maintaining quality skiing conditions. Moreover, it has been
management's experience that, despite the presence of high quality snow on the
mountains, unfavorable weather conditions in more highly populated areas can
result in decreased skier days. Prolonged adverse weather conditions, or the
occurrence of such conditions during key periods of the ski season, can
dramatically and adversely affect operating results. For example, skier days and
resort revenue were significantly impacted by severe adverse weather conditions
at Bear Mountain during the 1995/96 ski season and at Northstar, Sierra and the
New Hampshire Resorts during the early part of the 1996/97 ski season. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General." In addition, the Company's revenues are highly seasonal
in nature, with the vast majority of its revenues historically being generated
in the first and fourth calendar quarters. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Seasonality." This
high degree of seasonality of revenues exacerbates the potential effect on
operating results of adverse weather and other developments of even moderate or
limited duration.
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<PAGE> 31
COMPETITION
The skiing industry is highly competitive and is characterized by
relatively high fixed operating expenses and heavy dependence upon marginal
revenues and maintenance or improvement of skier day levels. The Company's
competitors include other major ski resorts in the western and northeastern
United States for skiers and snowboarders in those regional ski markets and
destination ski resorts throughout North America for its vacation business. The
Company also competes with other non-ski-oriented resorts. See "Business --
Competition." The Company believes that competition for skiers focuses on snow
conditions, size, quality and variety of terrain, the extent and quality of
other facilities, quality of service, location and accessibility, and price.
While the Company regularly monitors the activities of its principal competitors
and modifies its marketing and operational strategies and techniques as
necessary, there can be no assurance that its competitors will not be successful
in capturing a material portion of the Company's present or potential customer
base. Some of the Company's competitors have greater financial resources than
the Company and could use these resources to take steps which could adversely
affect the Company's competitive position. Such competitors may also be better
positioned than the Company to withstand downturns in the skiing industry,
adverse weather conditions, price and other forms of competition, and other
negative developments. See "Business -- Competition."
RISKS OF EXPANSION
An element of the Company's business strategy is the development of new
skiable terrain, recreational facilities and residential and commercial real
estate at its ski resorts. See "Business -- Real Estate Development." Such
efforts will be dependent upon, among other things, receipt of adequate
financing on suitable terms and obtaining and maintaining the requisite permits
and licenses. There can be no assurance as to whether, when or on what terms
such financing, permits and licenses may be obtained. In addition, such efforts
entail risks associated with development and construction activities, including
cost overruns, shortages of materials or skilled labor, labor disputes,
unforeseen environmental or engineering problems, work stoppages, and acts of
God, any of which could delay construction and result in a substantial increase
in cost to the Company. See "Business -- Real Estate Development" and
"Business -- Regulatory Matters." The Company may also grow through
acquisitions; however, there can be no assurance that attractive acquisition
candidates will be identified, or that any such acquisitions will be completed
on terms acceptable to the Company, that necessary financing will be available
on suitable terms, if at all, or that such acquisitions will be permitted under
applicable antitrust laws. See "-- High Level of Indebtedness and Leverage."
RISK ASSOCIATED WITH LEASED PROPERTY AND PROPERTY USED PURSUANT TO PERMITS
Portions of the land underlying certain of the Company's ski resorts are
used pursuant to permits or licenses from governmental and private entities. If
any such permit or license were to be terminated as a result of a default by the
user thereunder or not renewed upon expiration or otherwise revoked prior to
expiration, the Company would lose possession of the land subject thereto,
perhaps making it impossible for the Company to operate the affected resort.
Special use permits granted by the United States Forest Service (the "Forest
Service" or the "USFS") are subject to termination if the federal government
determines that the land is needed for a "higher public purpose." Such permits
are granted subject to third party claims to the permitted land, if any, and the
USFS reserves the right to use and permit others to use the permitted land so
long as such use does not materially interfere with the rights and privileges
authorized by the permits. For a description of such permits and licenses, see
"Business -- Regulation and Legislation." In addition, future expansion could
require amendment of the permits or licenses, which may involve additional
review under the federal National Environmental Policy Act (the "NEPA") or other
federal, state or local environmental laws and the imposition of additional
conditions and requirements.
REGULATORY MATTERS
The Company's resorts are subject to a wide variety of federal, state and
local laws and regulations designed to protect the environment. Management
believes that the Company's resorts have all permits, licenses and approvals
material to their operations and are presently in compliance with all land use
and environmental laws and regulations, except where non-compliance is not
expected to have a material adverse
28
<PAGE> 32
effect on the Company's financial condition or future results of operations.
However, failure to comply with such laws and regulations could result in the
imposition of severe penalties and other costs or restrictions on operations by
government agencies or courts that could adversely affect operations. The
restrictions imposed by or enforcement of environmental laws and regulations may
change from time to time, and there can be no assurance that such changes will
not occur in a manner that will cause a detrimental effect to the Company, that
material permits, licenses or agreements will not be canceled, non-renewed, or
renewed on terms materially less favorable to the Company, or that necessary new
permits and approvals will be obtained. See "Business -- Regulation and
Legislation" and "Business -- Regulatory Matters."
ADEQUACY OF WATER SUPPLY
The Company's operations are heavily dependent upon its continued ability,
under applicable laws, regulations, policies, permits, licenses, or contractual
arrangements, including leases, reservations in deeds, easements and
rights-of-way, to have access to adequate supplies of water with which to make
snow and service the other needs of its facilities, and otherwise to conduct its
operations. There can be no assurance that new applications of existing laws,
regulations and policies, or changes in such laws, regulations and policies will
not occur in a manner that could have an adverse effect on the Company, or that
important permits, licenses or agreements will not be canceled, non-renewed, or
renewed on terms materially less favorable to the Company. Additionally, the
rights of the Company to use various water sources on or about its properties
may be also subject to the rights of other riparian users and the public
generally. See "Business -- Regulatory Matters" and "Business -- Resort
Operations." Waterville Valley's snowmaking equipment is presently dependent on
a single source of water that is inconsistent during the winter months;
construction of storage facilities to accumulate sufficient water throughout the
year will begin pending approval by the USFS. See "-- Dependence on Weather
Conditions; Seasonality" and "-- Risk Associated with Leased Property and
Property Used Pursuant to Permits."
CONTROLLING STOCKHOLDERS
George N. Gillett, Jr. beneficially owns all of the issued and outstanding
shares of voting stock of Parent and approximately 38% of the issued and
outstanding shares of capital stock of Parent on a fully-diluted basis. Mr.
Gillett also is Chairman of the Board of Directors and Chief Executive Officer
of the Company and Parent. By virtue of his stock ownership, management position
and pursuant to the Stockholders Agreement (as defined), Mr. Gillett will have
the power to control all matters submitted to stockholders of the Company and
Parent and to elect a majority of the directors of Parent and its subsidiaries.
John Hancock owns common stock and warrants of Parent representing approximately
53% of the issued and outstanding shares of capital stock of Parent on a
fully-diluted basis. Pursuant to the Stockholders Agreement, John Hancock is
entitled to designate two of the five members of Parent's Board of Directors.
The interests of Mr. Gillett and John Hancock as equity holders may differ from
the interests of holders of the Notes. See "Ownership and Control" and "Certain
Transactions."
CHANGE OF CONTROL
Upon a Change of Control, the Company will be required to offer to
repurchase all of the outstanding Notes at 101% of the principal amount thereof,
plus accrued and unpaid interest to the date of repurchase. There can be no
assurance that the Company will have sufficient funds available to finance a
Change of Control Offer. In addition, upon a Change of Control, the Indenture
would require the Company, before repurchase of the Notes, to (i) repay in full
all obligations under or in respect of the Senior Credit Facility or offer to
repay in full all obligations under or in respect of the Senior Credit Facility
and repay the obligations under or in respect of the Senior Credit Facility of
each lender who has accepted such offer or (ii) obtain the requisite consent
under the Senior Credit Facility to permit the repurchase of the Notes as
described above. See "Description of the Notes -- Change of Control Offer." The
Company's inability to repay its obligations or obtain the requisite consent
under the Senior Credit Facility, and to repurchase all of the tendered Notes,
would constitute an event of default under the Indenture.
FRAUDULENT CONVEYANCE
The incurrence by the Company of indebtedness such as the Notes may be
subject to review under relevant state and federal fraudulent conveyance laws if
a bankruptcy case or lawsuit is commenced by or on
29
<PAGE> 33
behalf of unpaid creditors of the Company. Under these laws, if a court were to
find that, after giving effect to the sale of the Notes and the application of
the net proceeds therefrom, either (a) the Company incurred such indebtedness
with the intent of hindering, delaying or defrauding creditors or contemplated
insolvency with a design to prefer one or more creditors to the exclusion in
whole or in part of others or (b) the Company received less than reasonably
equivalent value or consideration for incurring such indebtedness and (i) was
insolvent or rendered insolvent by reason of such transaction, (ii) was engaged
in a business or transaction for which the assets remaining with the Company
constituted unreasonably small capital or (iii) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they matured,
such court may subordinate such indebtedness to presently existing and future
indebtedness of the Company, avoid the issuance of such indebtedness and direct
the repayment of any amounts paid thereunder to the Company's creditors or take
other action detrimental to the holders of such indebtedness.
The Company's obligations under the Notes are guaranteed by the Guarantors.
The incurrence by a Guarantor of a Guarantee may be subject to review under
relevant state and federal fraudulent conveyance laws if a bankruptcy case or
lawsuit is commenced by or on behalf of unpaid creditors of such Guarantor.
Under these laws, if a court were to find that either (a) a Guarantee was
incurred by a Guarantor with the intent of hindering, delaying or defrauding
creditors or such Guarantor contemplated insolvency with a design to prefer one
or more creditors to the exclusion in whole or in part of others or (b) such
Guarantor received less than reasonably equivalent value or consideration for
incurring such Guarantee and (i) was insolvent or rendered insolvent by reason
of such transaction, (ii) was engaged in a business or transaction for which the
assets remaining with such Guarantor constituted unreasonably small capital or
(iii) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, such court may subordinate such
Guarantee to presently existing and future indebtedness of such Guarantor, avoid
the issuance of such Guarantee and direct the repayment of any amounts paid
thereunder to such Guarantor's creditors or take other action detrimental to the
holders of such Guarantee. A legal challenge of a Guarantee on fraudulent
conveyance grounds, may, among other things, focus on the benefits, if any,
realized by the Guarantor as a result of the issuance by the Company of the
Notes.
To the extent any Guarantee were avoided as a fraudulent conveyance or held
unenforceable for any other reason, holders of the Notes would cease to have any
claim in respect of such Guarantor and would be creditors solely of the Company
and any Guarantor whose Guarantee was not avoided or held unenforceable. In such
event, the claims of the holders of the applicable Notes against the issuer of
an invalid Guarantee would be subject to the prior payment of all liabilities
and preferred stock claims of such Guarantor. There can be no assurance that,
after providing for all prior claims and preferred stock interests, if any,
there would be sufficient assets to satisfy the claims of the holders of the
applicable Notes relating to any voided portions of any of the Guarantees.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction which is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its liabilities, including contingent
liabilities, were greater than the value of all its property at a fair
valuation, or if the present fair saleable value of the debtor's assets were
less than the amount required to repay its probable liabilities on its debts,
including contingent liabilities, as they become absolute and matured.
Based upon financial and other information currently available to it,
management of the Company believes that the indebtedness retired with the
proceeds of the Initial Offering and the indebtedness evidenced by the Notes and
the Guarantees was incurred for proper purposes and in good faith, and that at
the time the Company incurred the indebtedness retired with the proceeds of the
Initial Offering and the Company and the Guarantors incurred the indebtedness
evidenced by the Notes and the Guarantees, the Company and each Guarantor was
(i) neither insolvent nor rendered insolvent thereby, (ii) in possession of
sufficient capital to run its business effectively and (iii) incurring debts
within its ability to pay as the same mature or become due. See "Management's
Discussions and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." In reaching these conclusions,
the Company has relied upon various valuations and estimates of future cash flow
that necessarily involve a number of assumptions and choices of methodology.
30
<PAGE> 34
No assurance can be given, however, that the assumptions and methodologies
chosen by the Company would be adopted by a court or that a court would concur
with the Company's conclusions.
DEPENDENCE ON KEY PERSONNEL
The Company's business depends upon the efforts, abilities and expertise of
its executive officers and other key employees, including George N. Gillett, Jr.
If the Company were to lose the services of certain of these executive officers
or key employees, the Company's operating results could be adversely affected.
The Company has no long-term employment contracts with any of its executive
officers or key employees. See "Management."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for New Notes by
holders who are entitled to participate in the Exchange Offer. The holders of
Old Notes (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who are not eligible to
participate in the Exchange Offer are entitled to certain registration rights,
and the Company and the Guarantors are required to file a Shelf Registration
Statement with respect to such Old Notes. The New Notes will constitute a new
issue of securities with no established trading market. The Company does not
intend to list the New Notes on any national securities exchange or seek the
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. The Initial Purchaser has advised the Company that
it currently intends to make a market in the New Notes, but it is not obligated
to do so and may discontinue such market making at any time. In addition, such
market making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act and may be limited during the Exchange Offer and the
pendency of the Shelf Registration Statement. Accordingly, no assurance can be
given that an active public or other market will develop for the New Notes or as
to the liquidity of the trading market for the New Notes. If a trading market
does not develop or is not maintained, holders of the New Notes may experience
difficulty in reselling the New Notes or may be unable to sell them at all. If a
market for the New Notes develops, any such market may be discontinued at any
time.
If a public trading market develops for the New Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the New Notes may trade at a discount from their
principal amount.
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<PAGE> 35
THE TRANSACTIONS
THE NEW HAMPSHIRE ACQUISITIONS
On November 27, 1996, Booth Creek Ski Acquisition Corp., a wholly-owned
subsidiary of the Company, purchased the assets of the Waterville Valley and Mt.
Cranmore resorts from subsidiaries of American Skiing Company for an aggregate
purchase price of $17.5 million (the "New Hampshire Acquisitions"). The purchase
price was paid with $14.75 million in cash (before giving effect to certain
working capital adjustments) and the $2.75 million ASC Seller Note. See
"Description of Certain Indebtedness -- ASC Seller Note."
THE CALIFORNIA ACQUISITIONS
On December 3, 1996, the Company purchased from Fibreboard Corporation all
of the issued and outstanding capital stock of Trimont Land Company, which
operates Northstar, Sierra-at-Tahoe, Inc., which operates Sierra, and Bear
Mountain, Inc., which operates Bear Mountain (the "California Acquisitions").
The aggregate purchase price for the California Acquisitions was $121.5 million
in cash (before giving effect to certain working capital adjustments).
THE SNOQUALMIE ACQUISITION
Effective January 15, 1997, the Company purchased all of the issued and
outstanding common stock of Ski Lifts, Inc. ("Ski Lifts"), the owner and
operator of the ski resort assets of Snoqualmie Pass (the "Snoqualmie
Acquisition"), for an aggregate purchase price of approximately $14.0 million,
which included the assumption of approximately $3.6 million of indebtedness, the
issuance by Ski Lifts of the $9.8 million Snoqualmie Seller Note, and other
obligations to the selling shareholders of approximately $600,000. The
Snoqualmie Seller Note, which bore interest at a rate of 5% per annum, was
repaid with a portion of the proceeds of the Initial Offering.
In connection with the consummation of the Snoqualmie Acquisition, Ski
Lifts transferred approximately 71 acres of owned real estate held for
development purposes into a Delaware limited liability company (the "Real Estate
LLC"), of which Ski Lifts is a member and 99% equity interest holder and the
Company is the other member and 1% equity interest holder. The Real Estate LLC
has been an Unrestricted Subsidiary since the closing of the Initial Offering.
In addition, Ski Lifts granted the Real Estate LLC an option (the "Real Estate
Option") to purchase an additional 14 acres of developmental real estate for
nominal consideration, exercisable under certain conditions. Ski Lifts also
issued 28,000 shares of non-voting preferred stock (the "Ski Lifts Preferred
Stock") to its prior owners having an aggregate liquidation preference equal to
$3.5 million, the aggregate estimated fair market value of the real estate
transferred to the Real Estate LLC and the real estate subject to the Real
Estate Option. Concurrently with these transactions, the Real Estate LLC entered
into an agreement to purchase (the "Preferred Stock Purchase Agreement") the Ski
Lifts Preferred Stock, on a quarterly basis over the five years following the
date of the Snoqualmie Acquisition, at a purchase price equal to the liquidation
preference thereof plus accrued dividends to the date of purchase. The Company
advanced the first three quarterly payments under the Preferred Stock Purchase
Agreement at or prior to the closing date of the Initial Offering. The Real
Estate LLC's obligations under the Preferred Stock Purchase Agreement are
secured by a first priority lien on the developmental real estate held by the
Real Estate LLC and substantially all of its other assets. The Ski Lifts
Preferred Stock provides for a 9% cumulative dividend and is redeemable at the
option of Ski Lifts without premium. In addition, pursuant to the terms of the
Ski Lifts Preferred Stock, the holders thereof have no redemption rights and are
entitled to receive dividend payments only when and if declared by the board of
directors of Ski Lifts. See "Description of Certain Indebtedness -- Ski Lifts
Preferred Stock Purchase Agreement."
32
<PAGE> 36
THE GRAND TARGHEE ACQUISITION
On March 18, 1997, the Company acquired all the issued and outstanding
capital stock of Grand Targhee Incorporated (the "Grand Targhee Acquisition"),
the owner of the ski resort assets of Grand Targhee, for an aggregate purchase
price of approximately $7.9 million plus contingent payments of up to $2.0
million based on the performance of Grand Targhee through the 1998/99 ski season
and additional commissions based on the number of dwelling units developed at
the resort through 2012.
THE SENIOR CREDIT FACILITY
On December 3, 1996, the Company and certain of its subsidiaries entered
into the Senior Credit Facility with The First National Bank of Boston, as
lender and administrative agent, which provided for borrowings in a principal
amount of up to $10.0 million at any one time outstanding. In connection with
the consummation of the Initial Offering, the Senior Credit Facility was amended
to, among other things, increase the total revolving credit commitment
thereunder to $20.0 million, subject to certain conditions, and the initial
borrowing availability to $12.0 million, subject to seasonal reductions. The
Senior Credit Facility is secured by a substantial portion of the Company's
consolidated assets and a pledge of the stock of Booth Creek's principal
subsidiaries. See "Description of Certain Indebtedness -- Senior Credit
Facility."
THE BRIDGE FINANCING FACILITIES
Financing for the acquisitions of the California Resorts and the New
Hampshire Resorts was provided in part by (i) $90.0 million from the issuance of
the Bridge Notes and (ii) $10.0 million from the issuance of the Hancock Option
Notes by Parent to John Hancock. Prior to the consummation of the Offering, the
Hancock Option Notes were exchanged for notes of the Company with substantially
identical terms, which were then repaid with a portion of the net proceeds of
the Initial Offering. The Bridge Notes bore interest at an average rate of
approximately 11 1/4% prior to their repayment. The Hancock Option Notes bore
interest at a rate of 12% per annum.
THE EQUITY FINANCING
Financing for the acquisitions of the California Resorts and the New
Hampshire Resorts was also provided in part by the investment in the Company of
$40.0 million of equity by Parent. The funds comprising the equity contribution
from Parent were obtained from the issuance by Parent of equity and notes to
John Hancock, CIBC WG Argosy Merchant Fund 2, L.L.C. (the "CIBC Merchant Fund")
and Booth Creek Partners Limited II, L.L.L.P. Prior to the consummation of the
Initial Offering, Parent made an additional equity contribution of $6.5 million.
See "Certain Transactions -- The Financing Transactions."
THE INITIAL OFFERING
The Initial Offering, in which $110.0 million aggregate principal amount of
Old Notes were sold by the Company to the Initial Purchaser on March 18, 1997
and an additional $6.0 million aggregate principal amount of Old Notes were sold
by the Company to the Initial Purchaser on April 25, 1997 pursuant to the
exercise of an option by the Initial Purchaser, yielded net proceeds to the
Company of approximately $112.5 million. The Company used the net proceeds from
the Initial Offering, as well as an additional $6.5 million equity contribution
from Parent and available cash on hand, (i) to repay the Bridge Financing
Facilities, the Snoqualmie Seller Note and certain debt assumed in connection
with the Snoqualmie Acquisition, (ii) to finance the purchase price of the Grand
Targhee Acquisition, (iii) to pay fees and expenses in connection with the
Initial Offering and the Senior Credit Facility and (iv) for general corporate
purposes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
33
<PAGE> 37
CAPITALIZATION
The following table sets forth the cash and the capitalization of the
Company (i) at January 31, 1997 and (ii) after giving effect on a pro forma
basis to the Transactions. This table should be read in conjunction with the
information contained in "Pro Forma Financial Information."
<TABLE>
<CAPTION>
AS OF JANUARY 31, 1997
---------------------------
ACTUAL PRO FORMA(B)
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash(a)..................................................... $ 5,996 $ 3,657
======== ========
Debt:
Senior Credit Facility(c)................................. $ -- $ --
Bridge Notes(d)........................................... 90,000 --
Hancock Option Notes(e)................................... 10,000 --
ASC Seller Note(f)........................................ 2,500 2,500
Notes..................................................... -- 116,000
Snoqualmie Seller Note(g)................................. 9,818 --
Other Debt(h)............................................. 2,869 911
-------- --------
Total Debt............................................. 115,187 119,411
Preferred Stock of Subsidiary(i)............................ 3,500 3,125
Common Stockholders' Equity(j).............................. 41,089 44,512
-------- --------
Total Capitalization................................... $159,776 $167,048
======== ========
</TABLE>
- ---------------
(a) Pro forma cash at January 31, 1997 includes $655,000 of cash restricted in
escrow for payment of an assumed $655,000 obligation of Grand Targhee and
restricted cash of $842,000 relating to advance deposits for lodging and
property rentals.
(b) Pro forma to reflect the Transactions (including the Initial Offering and
the application of the net proceeds therefrom). See "The Transactions."
(c) The Senior Credit Facility provides for a total revolving credit commitment
of $20.0 million, subject to certain conditions, and initial borrowing
availability of up to $12.0 million. The Company generates a significant
amount of cash flow from operations between November and April of each
year. A significant portion of the Company's available cash on hand upon
consummation of the Initial Offering was used to fund the Transactions.
(d) The Bridge Notes bore interest at an average rate of 11 1/4% per annum prior
to their repayment. Canadian Imperial Bank of Commerce ("CIBC"), an
affiliate of both the Initial Purchaser and the CIBC Merchant Fund, was the
lender under the Bridge Notes.
(e) The Hancock Option Notes bore interest at a rate of 12% per annum. John
Hancock is a shareholder of Parent and was the lender under the Hancock
Option Notes. At January 31, 1997, the Company had a $10.0 million
liability to Parent, which had issued the Hancock Option Notes. The terms
of the Company's loan from Parent mirror the terms of the Hancock Option
Notes. In conjunction with the Initial Offering, the Hancock Option Notes
were exchanged for notes of the Company with substantially identical terms,
in satisfaction of the Company's loan from Parent, and repaid with a
portion of the net proceeds from the Initial Offering.
(f) The ASC Seller Note was issued in connection with the New Hampshire
Acquisitions. The ASC Seller Note bears interest at 12% per annum and
matures on June 20, 2004.
(g) The Snoqualmie Seller Note was issued by Ski Lifts, Inc. in connection with
the Snoqualmie Acquisition. The Snoqualmie Seller Note bore interest at a
rate of 5% per annum and was repaid with a portion of the net proceeds from
the Initial Offering.
(h) Represents debt assumed in connection with the Snoqualmie Acquisition and
capital leases.
(i) Represents preferred stock of Ski Lifts, Inc., a subsidiary of the Company,
held by the prior owners of Ski Lifts, Inc. An Unrestricted Subsidiary of
the Company has an obligation to purchase the Ski Lifts Preferred Stock.
Such obligation is non-recourse to the Company and its Restricted
Subsidiaries.
(j) Parent contributed an aggregate of $40.0 million to the Company on November
27, 1996 and December 3, 1996 in connection with the New Hampshire
Acquisitions and the California Acquisitions, respectively, and made
additional capital contributions totaling $6.5 million prior to the
consummation of the Initial Offering. The pro forma balance also reflects
the write-off of $3.1 million of deferred financing costs related to the
repayment of the Bridge Financing Facilities.
34
<PAGE> 38
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance sheet of
the Company gives effect to the Transactions as if they had occurred on January
31, 1997. The following unaudited pro forma condensed consolidated statements of
operations give effect to the Transactions as if they had occurred on November
1, 1995.
The pro forma financial information presented below should be read in
conjunction with the separate historical consolidated financial statements of
the Company and certain of the businesses it has acquired, and related notes
thereto, included elsewhere in this Prospectus. The pro forma condensed
consolidated financial statements do not purport to be indicative of the results
that actually would have been obtained had the Transactions occurred as of the
assumed dates and for the periods presented and are not intended to be a
projection of future results or trends. Operating results for any interim period
are not necessarily indicative of results that may be expected for the full
year.
The pro forma adjustments, as described in the accompanying Notes to
Unaudited Pro Forma Financial Information, are based on available information
and certain assumptions that management believes are reasonable. The allocations
of the purchase prices of the Acquisitions are subject to revision when
additional information concerning certain asset valuations is obtained.
35
<PAGE> 39
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE GRAND PRO FORMA
COMPANY TARGHEE PRO FORMA JANUARY 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash..................................................... $ 5,996 $ 32 $ 118,000 (a) $ 3,657
(120,371)(b)
Other current assets..................................... 7,335 1,057 -- 8,392
-------- ------ --------- --------
Total current assets................................ 13,331 1,089 (2,371) 12,049
Property, plant and equipment, net....................... 123,615 8,066 282 (b) 132,457
494 (c)
Real estate held for development and sale................ 13,401 -- -- 13,401
Deferred charges and other assets........................ 8,014 8 4,500 (a) 8,763
(400)(b)
(282)(b)
(3,077)(d)
Goodwill................................................. 25,019 -- -- 25,019
-------- ------ --------- --------
Total Assets........................................ $183,380 $9,163 $ (854) $191,689
======== ====== ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities...................................... $ 18,395 $1,719 $ (400)(b) $ 19,432
(282)(b)
Current portion of long-term debt........................ 207 2,405 (1,696)(e) 916
-------- ------ --------- --------
Total current liabilities........................... 18,602 4,124 (2,378) 20,348
Long-term debt........................................... 114,980 2,279 1,236 (e) 118,495
Other.................................................... 5,209 113 (113)(f) 5,209
-------- ------ --------- --------
Total liabilities................................... 138,791 6,516 (1,255) 144,052
Preferred stock of subsidiary............................ 3,500 -- (375)(b) 3,125
Stockholder's equity..................................... 41,089 2,647 6,500 (a) 44,512
(3,077)(d)
(2,647)(g)
-------- ------ --------- --------
Total Liabilities and Stockholder's Equity.......... $183,380 $9,163 $ (854) $191,689
======== ====== ========= ========
</TABLE>
(see footnotes on following pages)
36
<PAGE> 40
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Reflects the Initial Offering and the additional equity contribution by
Parent, net of estimated fees and expenses, as follows (dollars in
thousands):
<TABLE>
<S> <C>
Notes....................................................... $116,000
Equity contribution by Parent............................... 6,500
Net of estimated fees and expenses.......................... (4,500)
--------
Net proceeds...................................... $118,000
========
</TABLE>
(b) Reflects the acquisition of Grand Targhee and the repayment of the Bridge
Financing Facilities and debt associated with the acquisition of Snoqualmie
Pass as follows (dollars in thousands):
<TABLE>
<S> <C>
Acquisition of Grand Targhee, excluding capital leases and
other assumed debt of $87 ($400 deposit on acquisition was
included in current liabilities at January 31, 1997 and
funded at closing)........................................ $ 7,851
Cash escrowed for payment of outstanding Grand Targhee
obligation................................................ (655)
Payment of expenses related to Grand Targhee Acquisition
accrued for at January 31, 1997........................... 282
Repayment of Bridge Financing Facilities.................... 100,000
Refinancing of Snoqualmie Seller Note and assumed debt,
excluding capital leases and other debt of $169........... 12,518
Purchase of Ski Lifts Preferred Stock....................... 375
--------
Net cash used..................................... $120,371
========
</TABLE>
(c) Adjusts fixed assets related to the Grand Targhee Acquisition to estimated
fair value pursuant to purchase accounting. This is estimated based on a
preliminary purchase price allocation which is subject to final allocation
pursuant to appraisal.
(d) Reflects write-off of $3.1 million of deferred financing costs related to
the repayment of the Bridge Financing Facilities.
(e) Reflects the following (dollars in thousands):
<TABLE>
<S> <C>
Notes....................................................... $ 116,000
Repayment of Bridge Financing Facilities.................... (100,000)
Repayment of Snoqualmie Seller Note and assumed debt,
excluding capital leases and other debt of $169........... (12,518)
Repayment of Grand Targhee historical debt, excluding
capital leases and other assumed debt of $87.............. (3,942)
---------
Net............................................... $ (460)
=========
Reflected in pro forma balance sheet as:
Adjustment to current portion of long-term debt............. $ (1,696)
Adjustment to long-term debt................................ 1,236
---------
Net............................................... $ (460)
=========
</TABLE>
(f) Reflects adjustment of the estimated deferred tax liability for book/tax
basis differences related to stock purchase for the Grand Targhee
Acquisition.
(g) Reflects elimination of historical stockholder's equity of Grand Targhee.
37
<PAGE> 41
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
FOR THE THREE MONTHS ENDED JANUARY 31, 1997
<TABLE>
<CAPTION>
CALIFORNIA
RESORTS NEW HAMPSHIRE RESORTS
---------------- -------------------------------------
FIBREBOARD
RESORT WATERVILLE SNOQUALMIE
GROUP VALLEY MT. CRANMORE PASS
HISTORICAL HISTORICAL HISTORICAL HISTORICAL
---------------- ---------- ------------ ----------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FROM FROM FROM FROM
THE NOVEMBER 1, 1996 OCTOBER 28, 1996 OCTOBER 28, 1996 NOVEMBER 1, 1996
COMPANY THROUGH THROUGH THROUGH THROUGH
HISTORICAL(A) DECEMBER 2, 1996 NOVEMBER 26, 1996 NOVEMBER 26, 1996 JANUARY 15, 1997
------------- ---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Resort Operations....... $23,784 $ 1,395 $ 310 $ 45 $3,465
Real Estate and Other... 140 304
Operating Expenses:
Resort Operations....... 17,903 4,040 674 245 2,816
Cost of Sales -- Real
Estate and Other...... 123 161 -- --
Depreciation and
Amortization.......... 1,771 7 82 18 208
------- ------- ----- ----- ------
Operating Income......... 4,127 (2,509) (446) (218) 441
Interest Expense (net)... 2,549 289 10 15 79
------- ------- ----- ----- ------
Pre-tax Income (Loss).... 1,578 (2,798) (456) (233) 362
Income Taxes (Benefit)... 474 (885) -- -- --
------- ------- ----- ----- ------
Income (Loss) Before
Minority Interest....... 1,104 (1,913) (456) (233) 362
Minority Interest........ 15 -- -- -- --
------- ------- ----- ----- ------
Net Income (Loss)........ $ 1,089 $(1,913) $(456) $(233) $ 362
======= ======= ===== ===== ======
OTHER DATA:
EBITDA................... $ 5,997 $(2,369) $(364) $(200) $ 649
Non-cash Cost of Real
Estate and Other........ $ 99 $ 133 $ -- $ -- $ --
<CAPTION>
GRAND
TARGHEE
HISTORICAL
----------------
FOR THE PERIOD
FROM PRO FORMA
NOVEMBER 1, 1996 FOR THE THREE
THROUGH PRO FORMA MONTHS ENDED
JANUARY 31, 1997 ADJUSTMENTS JANUARY 31, 1997
---------------- ----------- ----------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Resort Operations....... $2,533 $ -- $31,532
Real Estate and Other... -- 444
Operating Expenses:
Resort Operations....... 2,360 (59)(b) 27,957
(22)(c)
Cost of Sales -- Real
Estate and Other...... -- -- 284
Depreciation and
Amortization.......... 196 868(d) 3,150
------ ------- -------
Operating Income......... (23) (787) 585
Interest Expense (net)... 39 940(e) 3,921(h)
------ ------- -------
Pre-tax Income (Loss).... (62) (1,727) (3,336)
Income Taxes (Benefit)... (14) 361(f) (64)
------ ------- -------
Income (Loss) Before
Minority Interest....... (48) (2,088) (3,272)
Minority Interest........ -- 55(g) 70
------ ------- -------
Net Income (Loss)........ $ (48) $(2,143) $(3,342)
====== ======= =======
OTHER DATA:
EBITDA................... $ 173 $ 81 $ 3,967(i)
Non-cash Cost of Real
Estate and Other........ $ -- $ -- $ 232
</TABLE>
(see footnotes on following pages)
38
<PAGE> 42
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(a) The Company historical consolidated statement of operations includes the
results of operations for each acquisition since the respective date of
acquisition as follows:
<TABLE>
<S> <C> <C>
California Resorts -- December 3, 1996
New Hampshire -- November 27, 1996
Snoqualmie Pass -- January 16, 1997
</TABLE>
(b) The following adjustments have been made to reduce historical operating
expenses:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
THE ACQUISITIONS
Replacement of executive management....................... $44
Lease modification........................................ 15
---
Total........................................... $59
===
</TABLE>
Replacement of executive management represents elimination of non-recurring
executive management compensation and benefits paid to (i) former owners of
Ski Lifts, Inc. and (ii) former owners of Grand Targhee Incorporated. The
responsibilities of these individuals will be absorbed by existing Company
management.
Lease modification represents elimination of lease expenses for the
Teewinot Lodge, which is being acquired by the Company in the Grand Targhee
Acquisition.
(c) Represents corporate management fee allocations from Fibreboard Corporation
($70,000) for the period from November 1, 1996 through December 2, 1996 and
American Skiing Company and S-K-I Limited for Waterville Valley ($10,000)
for the period from October 28, 1996 through November 27, 1996 net of (i)
the management fees that would have been paid to Booth Creek, Inc. pursuant
to the Management Agreement ($29,000) and (ii) the estimated amounts for
certain corporate expenses if the Company had operated on a stand-alone
basis ($29,000).
(d) Historical depreciation and amortization for periods prior to the respective
resort acquisition dates has been adjusted to reflect post-acquisition date
assumptions. Pro forma depreciation and amortization charges relate to the
estimated fair values assigned using purchase accounting. Land improvements
and buildings have been assigned a 20 year life, machinery and equipment 3
to 15 year lives, and goodwill a 15 year life. These are estimated charges
based on preliminary purchase price allocations which are subject to final
allocations pursuant to appraisals.
(e) Historical interest expense has been eliminated. Pro forma interest expense
includes interest on the $116.0 million of Notes at 12.5%, the ASC Seller
Note at 12%, certain capital leases at 10% and amortization of $6.0 million
of deferred financing fees (amortized generally over a 10 year period).
(f) Adjusts income tax provision to reflect the benefit of operating losses to
the extent of recorded deferred tax liabilities.
(g) Reflects cumulative preferred stock dividend of 9% on the Ski Lifts
Preferred Stock.
(h) Pro forma cash interest expense would be approximately $3.7 million which
excludes $215,000 in amortization of deferred financing fees.
(i) Pro forma EBITDA does not reflect certain additional adjustments which
management believes are relevant in evaluating the future operating
performance of Company. The following additional adjustments, which
eliminate the impact of certain nonrecurring charges and reflect the
estimated impact of management's business and operating strategy are based
on estimates and assumptions made and believed to be reasonable by the
Company and are inherently uncertain and subject to change. The following
39
<PAGE> 43
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS -- (CONTINUED)
calculation should not be viewed as indicative of actual or future results.
The following table reflects the effects of these items:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Pro forma EBITDA........................................... $3,967
Additional adjustments:
Reduction of insurance premium........................... 309
In-house operation of certain ski related services....... 230
One-time charges at Grand Targhee........................ 54
-------
Total additional adjustments.......................... 593
-------
Adjusted pro forma EBITDA.................................. $4,560
=======
</TABLE>
Reduction of insurance premium represents elimination of insurance expenses
as a result of a new insurance package entered into by the Company, which
has reduced insurance premiums as a result of the consolidation of the
Company's resorts.
In-house operation of certain ski-related services represents the increase
in revenues and elimination of expenses related to services performed by
outside vendors at Snoqualmie Pass that will be performed by the Company
and which are performed by the Company at its other resorts.
One-time charges at Grand Targhee represents elimination of the cost
associated with abandoning a land exchange project.
40
<PAGE> 44
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 1996
------------------------------------------------------------------------------------------
CALIFORNIA
RESORTS NEW HAMPSHIRE
---------- RESORTS
FIBREBOARD -----------------------
THE RESORT WATERVILLE MT. SNOQUALMIE
COMPANY GROUP VALLEY CRANMORE PASS PRO FORMA
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Resort Operations..... $-- $44,773 $11,733 $4,004 $9,504 $ -- $70,014
Real Estate and
Other............... -- 4,657 -- -- -- -- 4,657
Operating Expenses:
Resort Operations..... -- 36,017 10,302 3,556 8,176 (278)(a) 57,095
(678)(b)
Cost of Sales -- Real
Estate and Other.... -- 2,297 -- -- -- -- 2,297
Depreciation and
Amortization........ -- 5,483 1,229 222 950 4,134(c) 12,018
--- ------- ------- ------ ------ -------- -------
Operating Income........ -- 5,633 202 226 378 (3,178) 3,261
Interest Expense
(net)................. -- 1,676 100 225 335 10,395(d) 12,731
--- ------- ------- ------ ------ -------- -------
Pre-tax Income (Loss)... 3,957 102 1 43 (13,573) (9,470)
Income Taxes
(Benefit)............. -- 1,630 455 -- -- (5,542)(e) (3,457)
--- ------- ------- ------ ------ -------- -------
Income (Loss) Before
Minority Interest..... -- 2,327 (353) 1 43 (8,031) (6,013)
Minority Interest....... -- -- -- -- -- 281(f) 281
--- ------- ------- ------ ------ -------- -------
Net Income (Loss)....... $-- $ 2,327 $ (353) $ 1 $ 43 $ (8,312) $(6,294)
=== ======= ======= ====== ====== ======== =======
OTHER DATA:
EBITDA.................. $-- $12,723 $ 1,431 $ 448 $1,328 $ 956 $16,886
Non-cash Cost of Real
Estate and Other...... $-- $ 1,607 $ -- $ -- $ -- $ -- $ 1,607
<CAPTION>
YEAR ENDED OCTOBER 31, 1996
-------------------------------------
GRAND
TARGHEE PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Resort Operations..... $7,457 $ -- $77,471
Real Estate and
Other............... -- -- 4,657
Operating Expenses:
Resort Operations..... 6,569 (135)(a) 63,529
Cost of Sales -- Real
Estate and Other.... -- 2,297
Depreciation and
Amortization........ 626 (47)(g) 12,597
------ ------- -------
Operating Income........ 262 182 3,705
Interest Expense
(net)................. 122 2,833(h) 15,686(j)
------ ------- -------
Pre-tax Income (Loss)... 140 (2,651) (11,981)
Income Taxes
(Benefit)............. 48 (964)(i) (4,373)
------ ------- -------
Income (Loss) Before
Minority Interest..... 92 (1,687) (7,608)
Minority Interest....... -- -- 281
------ ------- -------
Net Income (Loss)....... $ 92 $(1,687) $(7,889)
====== ======= =======
OTHER DATA:
EBITDA.................. $ 888 $ 135 $17,909(k)
Non-cash Cost of Real
Estate and Other...... $ -- $ -- $ 1,607
</TABLE>
(see footnotes on following pages)
41
<PAGE> 45
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(a) The following adjustments have been made to reduce historical operating
expenses:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
THE ACQUISITIONS (EXCLUDING THE GRAND TARGHEE ACQUISITION)
Replacement of executive management....................... $116
Profit sharing payment.................................... 162
------
Total........................................... $278
======
THE GRAND TARGHEE ACQUISITION
Replacement of executive management....................... $ 75
Lease modification........................................ 60
------
Total........................................... $135
======
</TABLE>
Replacement of executive management represents elimination of non-recurring
executive management compensation and benefits paid to (i) former owners of
Ski Lifts, Inc. and (ii) former owners of Grand Targhee Incorporated. The
responsibilities of these individuals will be absorbed by existing Company
management.
Profit sharing payment represents elimination of one-time profit sharing
contribution, considered a retention bonus, given to Ski Lifts, Inc.
workforce in anticipation of the Snoqualmie Acquisition as specified in the
acquisition agreement.
Lease modification represents elimination of lease expenses for the
Teewinot Lodge, which is being acquired by the Company in the Grand Targhee
Acquisition.
(b) Represents corporate management fee allocations from Fibreboard Corporation
($791,000) and American Skiing Company and S-K-I Limited for Waterville
Valley ($587,000) net of (i) the management fees that would have been paid
to Booth Creek, Inc. pursuant to the Management Agreement ($350,000) and
(ii) the estimated amounts for certain corporate expenses if the Company had
operated on a stand-alone basis ($350,000).
(c) Historical depreciation and amortization are eliminated. Pro forma
depreciation and amortization charges relate to the estimated fair values
assigned using purchase accounting. Land improvements and buildings have
been assigned a 20 year life, machinery and equipment 3 to 15 year lives,
and goodwill a 15 year life. These are estimated charges based on
preliminary purchase price allocations which are subject to final
allocations pursuant to appraisals.
(d) Historical interest expense has been eliminated. Pro forma interest expense
includes interest on the Bridge Financing Facilities at 11%, the Senior
Credit Facility at 8.5%, the Snoqualmie Seller Note and debt assumed in
connection with the Snoqualmie Acquisition, the ASC Seller Note at 12% and
amortization of $5.2 million of deferred financing fees (amortized generally
over a 10 year period).
(e) Adjusts income tax provision to reflect an estimated 36.5% effective tax
rate.
(f) Reflects cumulative preferred stock dividend of 9% on the Ski Lifts
Preferred Stock.
(g) Historical depreciation and amortization are eliminated. Pro forma
depreciation and amortization charges relate to the estimated fair values
assigned using purchase accounting. Land improvements and buildings have
been assigned a 20 year life, machinery and equipment 3 to 15 year lives,
and goodwill a 15 year life. These are estimated charges based on
preliminary purchase price allocations which are subject to final
allocations pursuant to appraisals.
(h) Historical interest expense has been eliminated. Pro forma interest expense
includes interest on the $116.0 million of Notes at 12.5%, the ASC Seller
Note at 12%, certain capital leases at 10% and amortization of $6.0 million
of deferred financing fees (amortized generally over a 10 year period).
(i) Adjusts income tax provision to reflect an estimated 36.5% effective tax
rate.
(j) Pro forma cash interest expense would be approximately $14.8 million which
excludes $860,000 in amortization of deferred financing fees.
(k) Pro forma EBITDA does not reflect certain additional adjustments which
management believes are relevant in evaluating the future operating
performance of Company. The following additional adjustments, which
eliminate the impact of certain nonrecurring charges and reflect the
estimated impact of
42
<PAGE> 46
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS -- (CONTINUED)
management's business and operating strategy are based on estimates and
assumptions made and believed to be reasonable by the Company and are
inherently uncertain and subject to change. The following calculation should
not be viewed as indicative of actual or future results. The following table
reflects the effects of these items:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Pro forma EBITDA........................................... $17,909
Additional adjustments:
Reduction of insurance premium........................... 652
Snoqualmie Pass cost reductions.......................... 500
In-house operation of certain ski related services....... 435
Removal of Bear Mountain one-time post-acquisition
adjustments........................................... 415
Post-closing inventory and accounting adjustments........ 309
One-time charges at Grand Targhee........................ 237
One-time charges at Waterville Valley.................... 147
Removal of prior owner services at Mt. Cranmore.......... 49
-------
Total additional adjustments.......................... 2,744
-------
Adjusted pro forma EBITDA.................................. $20,653
=======
</TABLE>
Reduction of insurance premium represents elimination of insurance expenses
as a result of a new insurance package entered into by the Company, which
has reduced insurance premiums as a result of the consolidation of the
Company's resorts.
Snoqualmie Pass cost reductions represents elimination of expenses
primarily related to a reduction in summer labor costs.
In-house operation of certain ski-related services represents the increase
in revenues and elimination of expenses related to services performed by
outside vendors at Snoqualmie Pass that will be performed by the Company
and which are performed by the Company at its other resorts.
Removal of Bear Mountain one-time post-acquisition adjustments represents
elimination of certain charges incurred by the Company in connection with
the acquisition of Bear Mountain by Fibreboard Corporation, which the
Company believes will not occur in the future.
Post-closing inventory and accounting adjustments represents elimination of
one-time charges at Northstar for inventory and sales tax adjustments.
One-time charges at Grand Targhee represents elimination of several
one-time expenses incurred by Grand Targhee Incorporated that reduced
operating results. These expenses include the cost associated with
abandoning a land exchange project, the write-off of an investment in a
central reservation system, the establishment of an accrual for vacation
pay, contributions to a local charity associated with the shareholders of
Grand Targhee Incorporated, a loss on the disposal of fixed assets, fees
associated with an application for financing which was never consummated
and the write-off of certain credit card receivables.
One-time charges at Waterville Valley represent elimination of several
expenses incurred by Waterville Valley that were either non-recurring in
nature or related to expenditures for property, plant and equipment which
the Company would have capitalized.
Removal of prior owner services at Mt. Cranmore represents elimination of
expenses incurred by Mt. Cranmore that were allocated to the resort by its
former owner for services which are now being provided by the Company at no
cost.
43
<PAGE> 47
SELECTED COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SKIER DAY)
The selected combined financial data presented below should be read in
conjunction with the combined financial statements of the Fibreboard Resort
Group and notes thereto included elsewhere in this Prospectus, the unaudited
interim financial statements of the Company and the notes thereto included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The selected combined financial
data (except for the other financial and operating data) of the Fibreboard
Resort Group (i) as of and for the year ended December 31, 1992 and as of
December 31, 1993 have been derived from the unaudited financial statements of
the Fibreboard Resort Group, (ii) for the year ended December 31, 1993 and as of
and for the years ended December 31, 1994 and 1995 and as of and for the ten
months ended October 31, 1996 have been derived from the audited combined
financial statements of the Fibreboard Resort Group and (iii) for the period
from November 1, 1996 to December 2, 1996 have been derived from the unaudited
financial statements of the Fibreboard Resort Group. The selected historical
financial data of the Company as of and for the three months ended January 31,
1997 were derived from the unaudited financial statements of the Company. The
selected pro forma data presented below should be read in conjunction with the
information contained in "Pro Forma Financial Information."
<TABLE>
<CAPTION>
FIBREBOARD RESORT GROUP COMPANY
--------------------------------------------------------------------- -------------
HISTORICAL
PERIOD FROM -------------
10 MONTHS NOVEMBER 1, THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED 1996 TO ENDED
----------------------------------------- OCTOBER 31, DECEMBER 2, JANUARY 31,
1992(A) 1993(B) 1994(C) 1995(D) 1996(E) 1996(E) 1997(F)
-------- -------- -------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations................... $ 20,336 $ 25,528 $ 40,810 $ 39,823 $ 36,829 $ 1,395 $23,784
Real Estate and Other............... -- -- 610 5,213 4,288 304 140
-------- -------- -------- -------- -------- ------- -------
20,336 25,528 41,420 45,036 41,117 1,699 23,924
Operating Expenses:
Cost of Sales -- Resort
Operations........................ 15,224 18,117 26,920 28,569 26,950 2,890 17,141
Cost of Sales -- Real Estate and
Other............................. -- -- 280 1,989 2,142 161 123
Selling, General & Administrative... 3,155 4,579 5,545 5,871 5,220 1,087 2,227
Management Fee and Corporate
Expenses.......................... 169 507 655 1,247 701 70 306
-------- -------- -------- -------- -------- ------- -------
Operating Income (Loss).............. 1,788 2,325 8,020 7,360 6,104 (2,509) 4,127
Interest (Income) Expense (net)...... (386) 186 666 821 1,189 289 2,549
-------- -------- -------- -------- -------- ------- -------
Pre-tax Income (Loss)................ 2,174 2,139 7,354 6,539 4,915 (2,798) 1,578
Income Taxes (Benefit)............... 880 876 2,979 2,624 2,018 (885) 474
-------- -------- -------- -------- -------- ------- -------
Income (Loss) Before Minority
Interest............................ 1,294 1,263 4,375 3,915 2,897 (1,913) 1,104
Minority Interest.................... -- -- -- -- -- -- 15
-------- -------- -------- -------- -------- ------- -------
Net Income (Loss)............. $ 1,294 $ 1,263 $ 4,375 $ 3,915 $ 2,897 $(1,913) $ 1,089
======== ======== ======== ======== ======== ======= =======
OTHER FINANCIAL AND OPERATING DATA:
Skier Days........................... 324,863 436,153 837,179 784,964 706,075 30,818 586,545
Revenue per Skier Day (i)............ $ 62.60 $ 58.53 $ 48.75 $ 50.73 $ 52.16 $ 45.27 $ 40.55
Depreciation & Amortization.......... $ 1,003 $ 2,514 $ 3,449 $ 4,024 $ 4,354 $ 7 $ 1,771
Non-cash Cost of Real Estate and
Other (j)........................... $ -- $ -- $ -- $ 1,618 $ 1,461 $ 133 $ 99
Capital Expenditures Excluding
Acquisitions and Real Estate and
Other............................... $ 6,192 $ 4,619 $ 6,199 $ 5,226 $ 5,761 $ 5,531 $ 211
Ratio of Earnings to Fixed
Charges (k)......................... -- -- -- -- -- -- 1.51
EBITDA............................... $ 2,791 $ 4,839 $ 11,469 $ 13,002 $ 11,919 $(2,369) $ 5,997
EBITDA Margin........................ 13.7% 19.0% 27.7% 28.9% 29.0% (139.4)% 25.1%
<CAPTION>
COMPANY
--------------------------
UNAUDITED
PRO FORMA(G)
--------------------------
THREE MONTHS
YEAR ENDED ENDED
OCTOBER 31, JANUARY 31,
1996 1997
----------- ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations................... $ 77,471 $31,532
Real Estate and Other............... 4,657 444
---------- -------
82,128 31,976
Operating Expenses:
Cost of Sales -- Resort
Operations........................ 76,126(h) 31,107(h)
Cost of Sales -- Real Estate and
Other............................. 2,297 284
Selling, General & Administrative... -- --
Management Fee and Corporate
Expenses.......................... -- --
---------- -------
Operating Income (Loss).............. 3,705 585
Interest (Income) Expense (net)...... 15,686 3,921
---------- -------
Pre-tax Income (Loss)................ (11,981) (3,336)
Income Taxes (Benefit)............... (4,373) (64)
---------- -------
Income (Loss) Before Minority
Interest............................ (7,608) (3,272)
Minority Interest.................... 281 70
---------- -------
Net Income (Loss)............. $ (7,889) $(3,342)
========== =======
OTHER FINANCIAL AND OPERATING DATA:
Skier Days........................... 1,828,000 833,781
Revenue per Skier Day (i)............ $ 42.38 $ 37.82
Depreciation & Amortization.......... $ 12,597 $ 3,150
Non-cash Cost of Real Estate and
Other (j)........................... $ 1,607 $ 232
Capital Expenditures Excluding
Acquisitions and Real Estate and
Other............................... $ 10,308 $ 8,138
Ratio of Earnings to Fixed
Charges (k)......................... -- --
EBITDA............................... $ 17,909 $ 3,967
EBITDA Margin........................ 21.8% 12.4%
</TABLE>
<TABLE>
<CAPTION>
FIBREBOARD RESORT GROUP COMPANY
------------------------------------------------------- -----------------------
AS OF JANUARY 31, 1997
AS OF -----------------------
AS OF DECEMBER 31, OCTOBER 31, UNAUDITED
----------------------------------------- ----------- PRO
1992(A) 1993(B) 1994(C) 1995(D) 1996(E) ACTUAL FORMA(G)
------- ------- ------- ------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital (Deficit)..................... $ 5,414 $ (3,271) $ (6,555) $(35,980) $(36,187) $ (5,271) $ (8,299)
Total Assets.................................. 27,859 39,618 43,065 73,316 69,602 183,380 191,689
Total Debt Including Intercompany Payable..... 10,608 15,743 15,422 41,493 38,715 115,187 119,411
Common Stockholders' Equity/Net Assets........ 13,435 17,826 19,752 23,667 26,564 41,089 44,512
</TABLE>
(see footnotes on following page)
44
<PAGE> 48
NOTES TO SELECTED COMBINED FINANCIAL DATA
The selection of a December 31 year end does not result in the presentation
of the results of the resorts for a single ski season. Accordingly, as the
results of a single ski season are split into two reporting periods, differing
trends may develop, as compared to results of operations for other resorts
consisting of a single ski season, which should be evaluated by an investor.
As the results of operations of ski resorts are highly seasonal, with the
majority of revenue generated in the period from November through April, the
results of operations for the 10 months ended October 31, 1996, the period from
November 1, 1996 to December 2, 1996, and the three months ended January 31,
1997 are not representative of a pro rata year of operations.
(a) Includes the financial results of Northstar only.
(b) Includes the financial results of Northstar for the entire period and of
Sierra for the period beginning June 11, 1993, the date on which it was
acquired by Fibreboard Corporation.
(c) Includes the financial results of Northstar and Sierra for the entire
period.
(d) Includes the financial results of Northstar and Sierra for the entire period
and of Bear Mountain for the period beginning October 6, 1995, the date on
which it was acquired by Fibreboard Corporation.
(e) Includes the financial results of Northstar, Sierra and Bear Mountain for
the entire period.
(f) Reflects the financial results of Waterville Valley and Mt. Cranmore from
November 27, 1996, Northstar, Sierra and Bear Mountain from December 3, 1996
and Snoqualmie Pass from January 16, 1997.
(g) Pro forma statement of operations and other financial and operating data for
the year ended October 31, 1996 and the three months ended January 31, 1997
give effect to the Transactions as if they had occurred on November 1, 1995.
The pro forma balance sheet data give effect to the Transactions as if they
had occurred on January 31, 1997. See "Pro Forma Financial Information."
(h) The historical financial presentations for the Fibreboard Resort Group,
Waterville Valley, Mt. Cranmore, Ski Lifts, Inc. and Grand Targhee
Incorporated are inconsistent in categorizing cost of sales -- resort
operations, selling, general and administrative expenses and management fees
and corporate expenses. For presentation purposes in this Prospectus, all
operating expenses, including depreciation and amortization, have been
aggregated as cost of sales -- resort operations.
(i) Reflects revenues from resort operations divided by skier days.
(j) Non-cash cost of real estate sales represents the allocated portion of real
estate development expenditures previously capitalized (including
acquisition costs allocated to real estate development) which relate to
current year real estate sales.
(k) For purposes of this computation, earnings are defined as pretax income
(loss) and fixed charges excluding the Ski Lifts Preferred Stock dividend
requirement. Fixed charges are the sum of (i) interest costs (including the
interest portion of operating leases), (ii) amortization of deferred
financing costs and (iii) the Ski Lifts Preferred Stock dividend
requirement. Earnings were inadequate to cover fixed charges by
approximately $12.4 million and $3.4 million for the unaudited pro forma
year ended October 31, 1996 and the unaudited pro forma three months ended
January 31, 1997, respectively.
45
<PAGE> 49
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and analysis below relates to (i) the historical financial
statements and results of operations of the Company, the California Resorts,
Waterville Valley, Ski Lifts and Grand Targhee and (ii) the liquidity and
capital resources of the Company after giving effect to the consummation of the
Transactions. The following discussion should be read in conjunction with the
consolidated financial statements and related notes thereto included elsewhere
in this Prospectus.
GENERAL
The Company's ski operations are highly sensitive to regional weather
conditions and the overall strength of the regional economies in the areas in
which the Company operates. The Company believes that the geographic diversity
of the Company's resorts and the use of extensive snowmaking technology coupled
with advanced trail grooming equipment, which together can provide consistent
skiing conditions, can partially mitigate the risk of both economic downturns
and adverse weather conditions in any given region. However, the Company remains
vulnerable to warm weather, heavy rains and drought conditions, which can have a
significant effect on the operating revenues and profitability at any one of the
Company's resorts. Bear Mountain experienced its worst early winter conditions
in over 40 years during the 1995/96 ski season, with a lack of natural snowfall
and warm weather which severely limited snowmaking. As a result, skier days were
approximately 30% below the prior year's level. In addition, during the early
part of the 1996/97 ski season, the Lake Tahoe region experienced significant
rainfall, flooding and mudslides. The inclement weather resulted in poor ski
conditions at Northstar and Sierra and a major access highway to Sierra being
closed for several weeks during the first quarter of the Company's current
fiscal year. Furthermore, much of the poor weather occurred during the Christmas
holiday period, a traditionally busy period at the Company's resorts. As a
result, skier days and resort revenue at Sierra were adversely impacted. Certain
of the Company's other resorts also experienced poor weather conditions during
the quarter ended January 31, 1997, which resulted in a reduction in skier days,
revenue and EBITDA.
The Company's three most weather-sensitive resorts, Bear Mountain,
Waterville Valley and Mt. Cranmore, have invested heavily in snowmaking
capabilities to provide coverage on virtually all of their trails and have been
open for skiing at least 123, 160, and 103 days, respectively, during each of
the last five ski seasons. The Company's Northstar, Sierra, Snoqualmie Pass and
Grand Targhee resorts are less weather-sensitive based on their historical
natural snowfall, averaging approximately 268, 472, 317, and 448 inches of snow,
respectively, per year since 1991 through the 1995/96 ski season. As a result of
their historic natural snowfall, their snowmaking capabilities are considerably
less extensive than at Bear Mountain or the New Hampshire Resorts.
The Company's results of operations are also highly dependent on its
ability to compete in each of the large regional ski markets in which it
operates. At Northstar and Sierra, more than 75% and 88%, respectively, of the
1995/96 ski season total skier days were attributable to residents of the San
Francisco, Sacramento and Central California Valley regions. At Bear Mountain,
more than 94% of the 1995/96 ski season total skier days were attributable to
residents of the Los Angeles and San Diego metropolitan regions. At Waterville
Valley and Mt. Cranmore, more than 78% and 76%, respectively, of the 1995/96 ski
season total skier days were attributable to residents of the Boston
metropolitan area and Southern New Hampshire. At Snoqualmie Pass, the Company
estimates that more than 95% of the 1995/96 ski season total skier days were
attributable to residents of the Seattle/Tacoma metropolitan region. The
Company's Grand Targhee resort attracts approximately 60% of its skiers from
outside its local skiing population.
The Company maximizes revenues and resort cash flow by managing the mix of
skier days and revenue per skier day. The strategy for each resort is based on
the demographic profile of its market and the physical capacity of its mountain
and facilities. The Company seeks to increase skier days by developing effective
ticket pricing strategies and marketing programs to improve peak and off-peak
volume. The Company seeks to improve revenue per skier day by effectively
managing the price, quality and value of each of its ski-related services,
including retail shops, ski rentals, ski lessons and food and beverage
facilities. The Company also
46
<PAGE> 50
generates revenue from a variety of non-ski related services, such as golf,
tennis, health clubs and conference centers, as well as from real estate and
timber sales.
The Company expects to increase skier days by offering a consistent,
quality guest experience and developing effective target marketing programs. See
"Business -- Marketing and Sales." The Company's resorts have spent more than
$35.0 million in capital expenditures during the last three years to upgrade
chairlift capacity, expand terrain, improve rental lodging and retail facilities
and increase snowmaking capabilities, all of which management believes are
important in providing a consistent, quality guest experience.
The Company believes it can increase lift ticket prices and skier days to
generate additional revenue and resort cash flow from other related services and
activities in conjunction with the upgrading of its resort infrastructure and
facilities. For example, Grand Targhee announced a $4 per lift ticket increase
effective upon installation of two new lifts completed in January 1997.
Management believes that this lift ticket price increase will increase revenue
and resort cash flow by over $400,000 based on the number of skier days in the
1995/96 ski season. In addition, the Company's Northstar resort has been
successful in increasing lift ticket revenues, other ski-related revenues and
non-ski related revenues (excluding real estate and timber sales) by 16.6%,
43.6% and 13.6%, respectively, from the year ended December 31, 1992 to the year
ended October 31, 1996. The Company believes that by extending its successful
operating strategies it can significantly increase revenue per skier day at each
of its resorts.
In addition to revenues generated from skiing operations, the Company's
resorts generate significant revenues from non-ski operations, including
lodging, conference center services, health and tennis clubs and summer
activities such as mountain biking rentals and golf course fees. Moreover, real
estate and timber sales at Northstar generated $4.7 million during the year
ended October 31, 1996, accounting for 15.0% of Northstar's total revenue during
such period. The table below summarizes the components of revenue (excluding
real estate and timber sales) for each of the resorts for the recent twelve
month periods indicated.
COMPONENTS OF REVENUE
<TABLE>
<CAPTION>
TWELVE MONTHS REVENUE PER LIFT TICKET OTHER SKI-RELATED NON-SKI RELATED
RESORT ENDED SKIER DAY REVENUE REVENUE REVENUE
------ ------------------ ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Northstar.............. October 31, 1996 $63.52 41.2% 43.5% 15.3%
Sierra................. October 31, 1996 40.71 60.7 39.3 0.0
Bear Mountain.......... October 31, 1996 40.04 59.0 36.0 5.0
Waterville Valley...... October 27, 1996 45.73 46.8 39.0 14.2
Mt. Cranmore........... July 28, 1996 33.77 53.8 33.5 12.7
Snoqualmie Pass........ September 30, 1996 20.76 63.2 32.4 4.4
Grand Targhee.......... May 31, 1996 63.21 35.2 52.3 12.5
</TABLE>
A significant portion of total operating costs at the Company's resorts are
variable, consisting primarily of retail and food service cost of sales,
utilities and labor expense. These variable costs can fluctuate significantly
based upon skier days and seasonal factors. With the exception of certain
management, marketing and maintenance personnel, all of the Company's employees
are compensated on an hourly basis. Management believes a key element to
maximizing profitability during the winter season is to closely monitor staffing
requirements and to redirect or lay-off employees when skier volumes or seasonal
needs dictate. In addition to financial performance, the advanced management
information system currently in place at Northstar, Sierra, and Bear Mountain
provides detailed statistics regarding staffing utilization which is
instrumental in adjusting personnel requirements. Management believes that
significant labor savings can be realized by implementing this system throughout
the Company's resorts. The table below highlights the employment at each of the
resorts as of January 31, 1997 and resort revenue per employee based on such
employment and revenue
47
<PAGE> 51
(excluding real estate and other) for each resort's last completed fiscal year
or, in the case of Northstar, Sierra and Bear Mountain, the twelve months ended
October 31, 1996.
EMPLOYMENT BREAKDOWN
<TABLE>
<CAPTION>
RESORT
SEASONAL EMPLOYMENT NON-SEASONAL REVENUE PER
RESORT (WINTER) EMPLOYMENT EMPLOYEE
------ ------------------- ------------ -----------
<S> <C> <C> <C>
Northstar............................................ 685 174 $29,927
Sierra............................................... 342 22 28,802
Bear Mountain........................................ 520 41 15,296
Waterville Valley.................................... 402 59 25,452
Mt. Cranmore......................................... 300 66 11,372
Snoqualmie Pass...................................... 969 60 9,185
Grand Targhee........................................ 220 100 23,266
</TABLE>
As part of its business and operating strategy, management has identified
and is in the process of implementing certain cost reduction measures and
operating improvements that are expected to result in improved operating
results. The following table sets forth certain expenses incurred by either the
Fibreboard Resort Group, the New Hampshire Resorts, Ski Lifts, Inc. or Grand
Targhee Incorporated for the twelve month period ending October 31, 1996, which
the Company believes will not recur in future periods as a result of such cost
reduction measures and operating improvements. In addition, while management
believes the following expenses will not recur in future periods, there can be
no assurance that the Company will not incur other expenses similar to the
expenses described below in future periods. The following calculation should not
be viewed as indicative of future results.
<TABLE>
<CAPTION>
EXPECTED COST
SAVINGS
-------------
<S> <C>
Reduction in insurance premiums............................. $ 652,000
Snoqualmie Pass cost reductions............................. 500,000
In-house operation of certain ski-related services.......... 435,000
Removal of Bear Mountain one-time post-acquisition
adjustments............................................... 415,000
Post-closing inventory and accounting adjustments........... 309,000
One-time charges at Grand Targhee........................... 237,000
One-time charges at Waterville Valley....................... 147,000
Removal of prior owner services at Mt. Cranmore............. 49,000
----------
Expected cost savings adjustment.................. $2,744,000
==========
</TABLE>
Reduction of insurance premium represents elimination of insurance expenses
as a result of a new insurance package entered into by the Company, which
has reduced insurance premiums as a result of the consolidation of the
Company's resorts.
Snoqualmie Pass cost reductions represents elimination of expenses
primarily related to a reduction in summer labor costs.
In-house operation of certain ski-related services represents the increase
in revenue and elimination of expenses related to services performed by
outside vendors at Snoqualmie Pass that will be performed by the Company
and which are performed by the Company at its other resorts.
Removal of Bear Mountain one-time post-acquisition adjustments represents
elimination of certain charges incurred by the Company in connection with
the acquisition of Bear Mountain by Fibreboard Corporation, which the
Company believes will not occur in the future.
Post-closing inventory and accounting adjustments represents elimination of
one-time charges at Northstar for inventory and sales tax adjustments.
48
<PAGE> 52
One-time charges at Grand Targhee represents elimination of several
one-time expenses incurred by Grand Targhee Incorporated that reduced
operating results. These expenses include the cost associated with
abandoning a land exchange project, the write-off of an investment in a
central reservation system, the establishment of an accrual for vacation
pay, contributions to a local charity associated with the shareholders of
Grand Targhee Incorporated, a loss on the disposal of fixed assets, fees
associated with an application for financing which was never consummated
and the write-off of certain credit card receivables.
One-time charges at Waterville Valley represents elimination of several
expenses incurred by Waterville Valley that were either non-recurring in
nature or related to expenditures for property, plant and equipment which
the Company would have capitalized.
Removal of prior owner services at Mt. Cranmore represents elimination of
expenses incurred by Mt. Cranmore that were allocated to the resort by its
former owner for services which are now being provided by the Company at no
cost.
RESULTS OF OPERATIONS OF THE COMPANY
Pro Forma Three Months Ended January 31, 1997 as Compared to the Combined
Three Months Ended January 31, 1996
The Company was formed on October 8, 1996. During the three months ended
January 31, 1997, the Company acquired Northstar, Sierra, Bear Mountain,
Waterville Valley, Mt. Cranmore and Snoqualmie Pass. Each resort has been
included in the statement of operations of the Company from the respective
purchase date and accounted for using the purchase method. In addition, on March
18, 1997, the Company acquired Grand Targhee.
To provide an understanding of the results of operations of the Company's
resorts for the three months ended January 31, 1997, for purposes of this
discussion the Company is comparing revenue and EBITDA amounts on a pro forma
basis for the three months ended January 31, 1997 to the combined historical
results of the seven resorts for the three months ended January 31, 1996. Due to
the application of purchase accounting and the new capital structure of the
Company, expenses for depreciation, amortization, interest and income taxes are
not comparable to prior periods. Accordingly, the Company has not attempted to
compare earnings between periods that include any of these expenses. EBITDA,
however, should not be considered in isolation or as a substitution for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity.
Total pro forma revenue for the three months ended January 31, 1997 was
$31,976,000, a decrease of $1,816,000, or 5.4%, from the combined revenue of the
Company's resorts for the three months ended January 31, 1996. The decrease
resulted from two factors. The first factor related to road closures at Sierra
and Grand Targhee, resulting in 96.9% and 36.1% decreases in skier visits,
respectively, and 36.1% and 24.5% decreases in revenues, respectively. The
second factor was a $704,000, or 61.3%, decrease in real estate revenues as
three lots were sold during the current period versus eight lots during the
three months ended January 31, 1996.
Pro forma EBITDA for the three months ended January 31, 1997 was
$3,967,000, a decrease of $5,119,000, or 56.3%, from the combined EBITDA of the
Company's resorts in the prior period. Lower visitation at Sierra and Grand
Targhee resulted in $1,884,000 (127.1%) and $698,000 (77.5%) decreases in EBITDA
at each resort, respectively. Northstar EBITDA decreased $1,050,000 due
primarily to higher operating expenses as a result of the earlier start of the
1996/97 ski season as compared to the 1995/96 ski season. While Northstar
operated for 11 more days during the three months ended January 31, 1997 than
during the comparable period in the prior year, skier days and revenue did not
increase commensurately due to weather-related impacts during late December and
early January. Another factor contributing to lower EBITDA was fewer real estate
lot sales, resulting in a $655,000, or 62.9%, decrease in the amount that real
estate sales contributed to EBITDA.
49
<PAGE> 53
RESULTS OF OPERATIONS OF CALIFORNIA RESORTS
The following table summarizes Fibreboard Resort Group's historical results
of operations as a percentage of revenue for the years ended December 31, 1992,
1993, 1994, and 1995, for the ten month periods ended October 31, 1995 and 1996.
<TABLE>
<CAPTION>
TEN MONTHS TEN MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
----------------------------- OCTOBER 31, OCTOBER 31,
1992 1993 1994 1995 1995 1996
----- ----- ----- ----- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Revenue
Lift Tickets........................................ 44.7% 45.0% 50.8% 44.7% 42.7% 45.0%
Ski Related Resort.................................. 38.3 39.9 38.5 35.1 34.0 34.0
Non-Ski Related Resort.............................. 17.0 15.1 9.2 8.6 10.6 10.6
Real Estate and Timber.............................. -- -- 1.5 11.6 12.7 10.4
----- ----- ----- ----- ----- -----
Total Net Revenue............................ 100.0 100.0 100.0 100.0 100.0 100.0
Cost of Sales -- Resort Operations.................... 74.9 71.0 65.0 63.4 58.6 65.5
Cost of Sales -- Real Estate and Other................ -- -- 0.7 4.4 4.8 5.2
Selling, General and Administrative Expense........... 15.5 17.9 13.4 13.0 11.4 12.7
Management Fee and Corporate Expenses................. 0.8 2.0 1.6 2.8 1.4 1.7
----- ----- ----- ----- ----- -----
Operating Income...................................... 8.8% 9.1% 19.3% 16.4% 23.8% 14.9%
===== ===== ===== ===== ===== =====
OTHER DATA:
EBITDA................................................ 13.7% 19.0% 27.7% 28.9% 35.7% 29.0%
</TABLE>
Ten Months Ended October 31, 1996 as Compared to the Ten Months Ended October
31, 1995
The ski resort industry is highly seasonal, with operations typically
commencing in November or December of each year, and closing in April or May.
The exclusion of the months of November and December from the 1996 and 1995
fiscal periods results in decreases in virtually all income statement captions
when compared to full fiscal periods.
Total revenue for the ten months ended October 31, 1996 was $41,117,000, an
increase of $4,386,000 or 11.9% from the comparable period in 1995. This
increase is attributable to the acquisition of Bear Mountain in October 1995,
which accounted for $7,147,000 of additional revenue during the ten month period
ended October 31, 1996. Partially offsetting this increase was a $2,390,000
decline in lift ticket and ski-related revenues at the Company's Northstar and
Sierra resorts, primarily resulting from fewer skier days, and a $371,000
decline in real estate and timber sales, primarily resulting from fewer
developmental real estate sales.
Skier days and revenue per skier day were 706,075 and $52.16 for the ten
months ended October 31, 1996, as compared to 626,500 and $51.19 for the
comparable period in 1995. The increase in skier days is attributable to the
acquisition of Bear Mountain in October 1995, which accounted for 174,984 of the
additional skier days. Skier days at the Company's Northstar and Sierra resorts
declined by 95,409 in the ten months ended October 31, 1996 as compared to the
comparable period in the prior year due to particularly favorable ski conditions
in the prior period.
Cost of sales for resort operations for the ten months ended October 31,
1996 increased by $5,414,000, or 25.1%, from the comparable period in the prior
year due to a $5,860,000 increase in costs resulting from the acquisition of
Bear Mountain in October 1995, offset by slightly lower cost of sales for resort
operations at Northstar and Sierra of approximately $500,000.
Selling, general, administrative and other operating expenses (including
management fees and corporate allocations) increased by $1,235,000, or 26.4%, in
the ten months ended October 31, 1996 as compared to the comparable period in
the prior year due to a $1,406,000 increase in costs resulting from the
acquisition of Bear Mountain in October 1995, offset by slightly lower selling,
general, administrative and other operating expenses at Northstar and Sierra.
50
<PAGE> 54
EBITDA for the ten months October 31, 1996 was $11,919,000, a decrease of
$1,188,000, or 9.1%, from the comparable period in the prior year. EBITDA margin
decreased from 35.7% during the ten months ended October 31, 1995 to 29.0%
during the comparable 1996 period.
Year Ended December 31, 1995 as Compared to the Year Ended December 31, 1994
Total revenue for 1995 was $45,036,000, an increase of $3,616,000, or 8.7%,
from 1994. This increase is attributable to the completion and sale of
residential lots at the Big Springs development at Northstar, which accounted
for an increase in revenue in 1995 of $4,418,000. Partially offsetting this
increase was a $802,000 decline in lift ticket and ski-related revenues,
primarily as a result of fewer skier days.
Skier days and revenue per skier day were 784,964 and $50.73 for 1995, as
compared to 837,179 and $48.75 for 1994. The operating season is dependent on
favorable snow conditions, and in 1995 the season did not open until
mid-December due to unusually warm weather and low precipitation. Revenue per
skier day increased in 1995 as a result of increased lift ticket prices.
Costs of sales for resort operations for 1995 increased by $1,649,000, or
6.1%, from the prior year, primarily as a result of increased costs resulting
from the acquisition of Bear Mountain.
Selling, general, administrative and other operating expenses increased by
$326,000, or 5.9%, from 1994 to 1995. This increase was due to the formation of
the Fibreboard Resort Group, which was necessitated by the acquisition of Bear
Mountain, which added resort operating personnel, and the expansion of
management training programs. Prior to this time, management at Northstar
oversaw both Northstar and Sierra. Additionally, corporate allocation from
Fibreboard Corporation increased by $592,000, or 90.4%, due to a one-time charge
from Fibreboard Corporation to the California Resorts.
Net interest expense increased by $155,000 over the prior year. This
increase is due to an increase in intercompany interest of $488,000 charged to
the California Resorts by Fibreboard Corporation, as Fibreboard Corporation did
not charge intercompany interest in 1994. This increase was partially offset by
a decrease in interest expense to third parties of $302,000, as the Company paid
all of its outstanding debt to third parties during 1995, and an increase in
interest income of $31,000.
For 1995, the tax rate applied to the California Resorts was 40%, a
decrease from the rate of 40.5% applied in 1994.
EBITDA for 1995 was $13,002,000, an increase of $1,533,000, or 13.4%, from
1994. EBITDA margin increased from 27.7% in 1994 to 28.9% in 1995.
51
<PAGE> 55
RESULTS OF OPERATIONS OF WATERVILLE VALLEY
The following review of the performance of Waterville Valley is for the
audited fiscal periods ended October 31, 1995 and October 27, 1996. Waterville
Valley was sold by S-K-I Limited to American Skiing Company effective June 30,
1996. Accordingly, for the financial statements covering periods subsequent to
June 30, 1996, purchase price accounting was reflected. Therefore, the pre- and
post-acquisition financial statements of Waterville Valley reflect different
bases of accounting which can significantly impact depreciation, amortization,
interest and related tax expenses. However, for purposes of the following
discussion regarding fiscal 1996 and fiscal 1995 activity, the pre- and
post-acquisition financial information has been combined to provide the reader
with an indication of the trend of results. Such combined information is
referred to herein as "Combined 1996" information. The following table
summarizes Waterville Valley's historical results of operations as a percentage
of revenue for the year ended October 31, 1995 and Combined 1996.
<TABLE>
<CAPTION>
COMBINED
1995 1996
----- --------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue..................................................... 100.0% 100.0%
Cost of Sales............................................... 48.3 49.1
----- -----
Gross Margin................................................ 51.7 50.9
Other Costs and Expenses.................................... 39.7 38.7
Depreciation and Amortization............................... 11.3 10.5
----- -----
Income from Operations...................................... 0.7 1.7
Interest Expense............................................ 1.0 0.8
----- -----
Income (Loss) Before Income Taxes........................... (0.3) 0.9
Income Tax Expense (Benefit)................................ (0.1) 3.9
----- -----
Net Income (Loss)................................. (0.2)% (3.0)%
===== =====
OTHER DATA:
EBITDA...................................................... 12.0% 12.2%
</TABLE>
Year Ended October 27, 1996 as Compared to the Year Ended October 31, 1995
Combined 1996 revenue increased by $2,081,000, or 22%, over fiscal 1995
revenue of $9,653,000. The revenue increase was primarily due to more favorable
weather conditions, including a significant increase in snowfall (203 inches in
fiscal 1996 vs. 101 inches in fiscal 1995) which contributed to a 23.7% increase
in skier days. In addition, fiscal 1995 revenue was negatively impacted by
problems with the high-speed quad lift which was non-operational for two and
one-half weeks in December 1994. Skier days and revenue per skier day were
256,563 and $45.73 for 1996, as compared to 207,386 and $46.55 in 1995.
Cost of sales as a percent of revenue increased slightly to 49.1% in the
Combined 1996 fiscal period compared to 48.3% in fiscal 1995.
Due to increased revenue volumes in fiscal 1996, the other costs and
expenses and depreciation and amortization percentages of revenue decreased
slightly in the Combined 1996 fiscal period as compared to 1995 due to the fixed
nature of certain of these expenses.
The tax provision for the Combined 1996 fiscal period is significantly
higher than the prior year due to the inability in the post-acquisition period
to recognize the tax benefits of the operating losses generated.
EBITDA for the Combined 1996 period was $1,431,000, an increase of
$272,000, or 23.5%, from 1995 EBITDA of $1,159,000. EBITDA margin increased from
12.0% in 1995 to 12.2% in 1996.
52
<PAGE> 56
RESULTS OF OPERATIONS OF SNOQUALMIE PASS
Ski Lifts, Inc. was acquired by Booth Creek effective January 15, 1997, and
its results of operations have been included in the Company's consolidated
results of operations since such date. The following review of the performance
of Ski Lifts, Inc. is for the audited fiscal periods ended September 30, 1994,
1995 and 1996 and the unaudited three and one-half month periods ended January
15, 1996 and 1997. The comparison of the three and one-half month period ended
January 15, 1997 to the four month period ended January 31, 1996, as summarized
in the historical financial statements, would significantly impact revenues,
cost of sales, general, administrative and other expenses as the second half of
January is a significant revenue producing period. Thus, as noted above, this
discussion covers the two three and one-half month periods ended January 15,
1997 and 1996 based on unaudited results through January 15, 1997 and estimated
unaudited results through January 15, 1996.
The following table summarizes Ski Lifts' historical results of operations
as a percentage of revenue for the years ended September 30, 1994, 1995 and 1996
and the three and one-half month periods ended January 15, 1996 and 1997.
<TABLE>
<CAPTION>
THREE AND ONE- THREE AND ONE-
HALF MONTHS HALF MONTHS
YEAR ENDED SEPTEMBER 30, ENDED ENDED
-------------------------- JANUARY 15, JANUARY 15,
1994 1995 1996 1996 1997
------ ------ ------ -------------- --------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating Salaries, Wages and Other Employee
Costs.......................................... 46.9 48.0 48.6 54.7 50.0
General, Administrative and Other Operating
Expenses....................................... 29.4 30.5 32.1 45.3 38.1
Other Operating Expenses......................... 15.8 15.9 16.4 19.5 15.4
----- ----- ----- ----- -----
Gross Margin..................................... 7.9 5.6 2.9 (19.5) (3.5)
Other Costs and Expenses (Income)................ 2.3 3.2 3.0 (0.2) (0.6)
----- ----- ----- ----- -----
Income (Loss) from Operations.................... 5.6 2.4 (0.1) (19.3) (2.9)
Income Tax Expense (Benefit)..................... 1.9 (3.7) 0.0 0.0 0.0
----- ----- ----- ----- -----
Net Income (Loss) (Before Cumulative
Effect of Change in Accounting
Principle)............................ 3.7% 6.1% (0.1)% (19.3) (2.9)
Net Income (Loss)....................... 2.0% 6.1% (0.1)% (19.3) (2.9)
===== ===== ===== ===== =====
OTHER DATA:
EBITDA........................................... 17.4% 15.3% 13.2% (2.4)% 7.6%
</TABLE>
Three and One-Half Months Ended January 15, 1997 as Compared to the Three and
One-Half Months Ended January 15, 1996
Ski Lifts, Inc. was acquired by Booth Creek effective January 15, 1997. The
discussion below compares the results of operations of Ski Lifts, Inc. prior to
its acquisition by Booth Creek and since its last completed fiscal year to the
comparable period in the prior year. The operating data presented are based on
unaudited results through January 15, 1997 and estimated unaudited results
through January 15, 1996.
Total revenues for the 1997 period were $3,511,000, an increase of
$890,000, or 34% from the 1996 period. The increase resulted from increased
operating days and skier visits.
Skier days and revenue per skier day were 167,708 and $20.94 for the 1997
period, as compared to 112,985 and $23.20 for 1996 period. There were 47
operating days through January 15, 1997 as compared to 33 operating days through
January 15, 1996. The Snoqualmie Pass ski areas opened November 22, 1996 for the
1996/97 season as compared to December 9, 1995 for the 1995/96 season. Revenue
per skier day was lower for the 1997 period as compared to the 1996 period as a
result of the ski areas being closed for six days from December 26, 1996 through
January 1, 1997 due to highway closures from avalanche danger and severe weather
conditions. This six day closure was largely responsible for the decrease in
revenue per skier day in the 1997 period as these were higher holiday priced
days. Additionally, the early season days are priced at lower rates initially
until all four ski areas comprising Snoqualmie Pass are in full operation. Due
to the late start in the 1995/96 season, there were fewer days when the lower
rates were in effect.
53
<PAGE> 57
Operating salaries, wages and other employee costs for the 1997 period
increased by $323,000, or 22.6%, as compared to the 1996 period. The higher
labor costs were due to the earlier start of the 1996/97 ski season as well as
increased labor costs associated with additional snow grooming and removal
required as a result of unusually heavy snowfall during late December and early
January.
General, administrative and other operating expenses for the 1997 period
increased by $150,000, or 12.7%, as compared to the 1996 period. Approximately
30% of this increase was due to increased maintenance, gas, oil, diesel and
electricity charges incurred as a result of the unusually large snowfall
experienced at the areas during 1997, as discussed above. The remaining increase
was a result of the increased number of operating days and skier visits in the
1997 period as compared to the 1996 period.
Net interest expense for the 1997 period was approximately $113,000 as
compared to approximately $110,000 for the 1996 period.
EBITDA for the 1997 period was $266,000, an increase of $330,000 from the
1996 period. EBITDA margin increased from (2.4%) in the 1996 period to 7.6% in
the 1997 period due to the increased number of operating days and skier visits
in the 1997 period, which resulted in higher revenues.
Year Ended September 30, 1996 as Compared to the Year Ended September 30, 1995
Total revenues for 1996 were $9,451,000, a decrease of $1,219,000, or 11%,
from 1995, primarily due to a shorter operating season. Lift revenues, which
comprised 65% of total revenue in 1996, declined by $922,000, or 13%, from 1995,
while ski rental revenue decreased by 12%. For 1996, the operating ski season
lasted only 117 days, as compared to 158 days for 1995, because of unfavorable
weather conditions.
Skier days and revenue per skier day were 455,240 and $20.76 for 1996, as
compared to 515,487 and $20.69 for 1995. The operating season is dependent on
favorable snow conditions, and in 1996 the season did not open until
mid-December, as compared to mid-November in 1995, due to lack of snow, and
after opening snow coverage was minimal, resulting in lower than average skier
days in December. In addition, in February of 1996 there were unusual weather
patterns which resulted in significantly fewer skier days than in the prior
year. Snow conditions and the quantity of snow most directly impact the number
of skier days, and therefore total revenue.
Operating salaries, wages and other employee costs for 1996 were
$4,595,000, a decrease of $525,000, or 10%, from 1995. The decrease resulted
from the shorter operating season due to the later opening of the resort which
was offset by a profit sharing contribution of $162,000 in 1996. The Company
employs approximately 60 year-round employees and 1,000 seasonal employees.
Thus, with a shorter operating season, employee costs decreased in proportion to
overall lift revenues. As a result of the poor operating season in 1996, a large
number of year-round employees were laid off for a period of four to ten weeks,
whereas in 1995 the same group of employees were laid off for a two week period.
General, administrative and other operating expenses decreased by $218,000,
or 6.6%, from 1995 to 1996. This decrease was primarily due an overall decrease
in the number of operating days.
Interest expense increased by $37,500 from 1995 to 1996, due primarily to
higher average borrowings.
For 1995, Ski Lifts, Inc. recognized a tax benefit of $408,000 for the
elimination of certain deferred tax balances upon conversion to S Corporation
status for federal income tax purposes.
EBITDA for 1996 was $1,251,000, a decrease of $378,000, or 23.2%, from
1995. EBITDA margin decreased from 15.3% in 1995 to 13.2% in 1996.
Year Ended September 30, 1995 as Compared to the Year Ended September 30, 1994
Total revenues for 1995 were $10,670,000, an increase of $429,000, or 4%,
from 1994. Lift revenues, which comprised 66% of total revenue in 1995,
increased by $471,000, or 7%, from 1994. The increase in lift revenues was
offset by a decrease in ski rentals and ski shop sales which decreased overall
by approximately $60,000 from 1994 to 1995. This decrease resulted from poor
snow conditions during the December holidays,
54
<PAGE> 58
which resulted in decreased rentals and retail sales. The 1995 operating season
lasted 158 days, as compared to 130 days for 1994.
Skier days and revenue per skier day were 515,487 and $20.69 for 1995, as
compared to 519,953 and $19.69 for 1994. The increase in revenue per skier day
resulted from an increase in lift ticket prices of approximately $1 per ticket.
The operating season is dependent on favorable snow conditions, and in 1995,
while there was an increase in operating days of 21%, the overall revenue
increase was only 4% due to the deterioration of ski conditions from
mid-December through February. Snow conditions and the quantity of snow most
directly impact the number of skier days, and therefore total revenue.
Operating salaries, wages and other employee costs for 1995 were
$5,120,000, an increase of $316,000, or 6.5%, from 1994. The increase results
from the longer operating season in 1995 compared to 1994. The longer operating
season increased labor hours and, as a result, employee costs.
General, administrative and other operating expenses increased by $244,897,
or 8%, from 1994 to 1995. This increase was primarily due to an overall increase
in the number of operating days.
Interest expense decreased by $14,800 from 1994 to 1995, due primarily to
lower average borrowings.
For 1995, Ski Lifts, Inc. recognized a tax benefit of $408,000 for the
elimination of certain deferred tax balances upon conversion to S Corporation
status for federal income tax purposes.
EBITDA for 1995 was $1,629,000, a decrease of $148,000, or 8.3%, from 1994.
EBITDA margin decreased from 17.4% in 1994 to 15.3% in 1995.
RESULTS OF OPERATIONS OF GRAND TARGHEE
Grand Targhee Incorporated was acquired by the Company on March 18, 1997.
The following review of the performance of Grand Targhee Incorporated is for the
audited fiscal periods ended May 31, 1994, 1995 and 1996 and the unaudited eight
month periods ended January 31, 1996 and 1997. The following table summarizes
Grand Targhee Incorporated's historical results of operations as a percentage of
revenue for the years ended May 31, 1994, 1995 and 1996 and the eight month
periods ended January 31, 1996 and 1997.
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED EIGHT MONTHS ENDED
1994 1995 1996 JANUARY 31, 1996 JANUARY 31, 1997
----- ----- ----- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Direct Expenses................ 55.1 55.1 56.4 58.7 73.3
----- ----- ----- ------ ------
Gross Margin................... 44.9 44.9 43.6 41.3 26.7
Other Costs and Expenses....... 40.5 40.7 39.5 44.1 54.0
----- ----- ----- ------ ------
Income (Loss) Before Income
Taxes........................ 4.4 4.2 4.1 (2.8) (27.3)
Income Tax Expense (Benefit)... 1.8 1.2 1.0 (.7) (5.5)
----- ----- ----- ------ ------
Net Income (Loss).... 2.6% 3.0% 3.1% (2.1)% (21.8)%
===== ===== ===== ====== ======
OTHER DATA:
EBITDA......................... 17.5% 15.7% 16.6% 9.0% (11.0)%
</TABLE>
Eight Months Ended January 31, 1997 as Compared to the Eight Months Ended
January 31, 1996
Total revenues for the eight months ended January 31, 1997 were $3,467,000,
a decrease of $719,000, or 17% as compared to the same period in 1996. Revenues
from lift ticket and season pass sales, which comprised 28% of the 1997 period's
total revenue, decreased $482,000 or 33% from the 1996 period. This decrease was
due primarily to a 33% decrease in skier days. Actual 1997 period skier days
were 39,122 as compared to 58,359 in the 1996 period. Skier days in the current
period were significantly impacted by poor weather
55
<PAGE> 59
conditions which limited access to the resort, particularly during the Christmas
holiday season, and delays in the completion of a new high-speed detachable quad
lift which became operational on January 27, 1997.
The remaining decrease in revenues is attributable to lower revenues from
food, beverage, retail merchandise and other guest services resulting from fewer
skiers and lodging guests. Total revenue per skier (excluding lodging revenue)
increased by 11% from $46.11 per skier in the 1996 period to $51.08 per skier in
the 1997 period. Total revenues per lodging guest (excluding lift ticket
revenue) in the 1997 period were $67.66, a 15% increase from $59.07 in the 1996
period. The number of lodging guests in the 1997 period was 22,924, a 9%
decrease from 25,110 in the 1996 period.
Direct expenses in the 1997 period were $2,541,000, or 73.3% of revenues,
as compared to $2,458,000, or 58.7% of revenues, in the 1996 period. The
increase in direct expenses as a percentage of revenue was primarily due to
fewer skiers and the relatively high level of direct expenses that are fixed in
nature. As a result, gross margin decreased from 41.3% in the 1996 period to
26.7% in the 1997 period.
Other costs and expenses increased by $26,000 from $1,846,000 in the 1996
period to $1,872,000 in the 1997 period and increased as a percentage of
revenues from 44.1% to 54.0%. The increase in other costs and expenses as a
percent of revenue was due to fewer skiers and the fixed nature of these costs
and expenses.
EBITDA for the 1997 period was ($382,000), a decrease of $759,000 from
$377,000 in the 1996 period. EBITDA margin was (11.0)% in the 1997 period
compared to 9.0% in the 1996 period.
Year Ended May 31, 1996 as Compared to the Year Ended May 31, 1995
Total revenues for 1996 were $7,376,000, an increase of $614,000, or 9%,
over 1995. Revenues from lift ticket and season pass sales, which comprised 36%
of 1996 total revenues, increased $143,000, or 6%, over 1995. This increase was
due to a 7% increase in lift ticket revenue per skier, offset by a 1% decrease
in skier days. Actual 1996 skier days were 116,696 as compared to 117,772 skier
days in 1995. Skier days were not significantly impacted by the length of the
ski season, which was 148 days in 1996, 8 days shorter than the 156 days in
1995.
The remaining increase in revenues is attributable to a higher level of
spending by both skiers and lodging guests for food, beverage, retail
merchandise and other guest services. Total revenue per skier (excluding lodging
revenue) increased by 11% from $38.64 per skier in 1995 to $42.91 per skier in
1996. Total revenues per lodging guest (excluding lift ticket revenue) were
$63.53, a 7.6% increase from 1995. The number of lodging guests in 1996 was
37,987, a 1% decrease from 1995. Increased spending by skiers and lodging guests
is primarily due to new guest facilities at the resort, including a restaurant,
liquor store, snowboard retail shop and spa.
Direct expenses in 1996 were $4,159,000, or 56.4%, of revenues, as compared
to 55.1% of revenues in 1995. The increase in direct expenses as a percentage of
revenues is primarily due to an increase in direct labor costs resulting from
the hiring of additional staff to operate new guest facilities and a change in
the employee benefit package which increased the percentage of insurance
benefits paid by the Company. As a result of these increases, gross margin
decreased from 44.9% in 1995 to 43.6% in 1996.
Other costs and expenses increased by $167,000 from $2,751,000 in 1995 to
$2,918,000 in 1996 but decreased as a percentage of revenues from 40.7% in 1995
to 39.5% in 1996. The decrease as a percentage of revenues was generally due to
management's efforts to control general and administrative marketing costs, a
$36,000 reduction in lease expense related to employee housing and a $54,000
reduction in interest expense due primarily to lower average borrowings.
Significant increases in other costs and expenses included $99,000 of costs
related to an abandoned land exchange, a $43,000 loss on disposition of
miscellaneous assets and a $43,000 write-off of the net book value of the
Shoshone lift which was replaced in fiscal 1997.
EBITDA for 1996 was $1,225,000, an increase of $159,000, or 14.9%, from
1995. EBITDA margin increased from 15.8% in 1995 to 16.6% in 1996.
56
<PAGE> 60
Year Ended May 31, 1995 as Compared to the Year Ended May 31, 1994
Total revenues for 1995 were $6,762,000, an increase of $477,000, or 8%,
over 1994. Revenues from lift ticket and season pass sales, which comprise 37%
of 1995 total revenues, increased $281,000, or 13%, over 1994. This increase is
due to a 4% increase in skier days, 113,298 skier days in 1994 versus 117,772
skier days in 1995, and a 8% increase in lift ticket revenue per skier. The
resort was open for skiing 156 days in 1995 as compared to 150 days in 1994.
The remaining net revenue increase of $196,000 in 1995 was due to higher
lodging, food and beverage and retail sales which increased a total of $271,000
(8%) over 1994. Revenue increases in these categories were primarily due to the
higher number of skier days and a higher number of lodging guests. The number of
lodging guests increased 14% from 32,937 guests in 1994 to 37,528 in 1995.
Direct expenses increased 8% to $3,728,000 in 1995. However, direct
expenses as a percentage of revenues and gross margin as a percentage of
revenues remained constant at 55.1% and 44.9%, respectively.
Other costs and expenses increased 8% in 1995 to $2,751,000 as compared to
$2,549,000 in 1994. As a percentage of revenue, other costs and expenses
increased slightly from 40.5% in 1994 to 40.7% in 1995. Significant increases in
expenses included a $50,000 increase in professional fees primarily due to legal
fees associated with an environmental impact statement and an increase in
marketing labor and advertising expenses of $79,000 related to increased resort
marketing programs. Interest expense decreased $33,000 primarily due to lower
average borrowings.
EBITDA for 1995 was $1,066,000, a decrease of $32,000, or 2.9%, from 1994.
EBITDA margin decreased from 17.5% in 1994 to 15.7% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are to fund capital expenditures,
service indebtedness and support seasonal working capital requirements. The
Company's primary sources of liquidity will be cash flow from operations and
borrowings under the Senior Credit Facility. The Senior Credit Facility
currently provides for borrowing availability of up to $12.0 million during the
period from each July 15 through each January 31 during the term of such
facility and $6.0 million during the remainder of each year. In addition, the
Company is required to repay all borrowings under the Senior Credit Facility on
or before March 1 of each year and have no outstanding indebtedness thereunder
during the two months thereafter. Upon the satisfaction of a certain financial
ratio on or after July 15, 1998, total borrowing availability under the Senior
Credit Facility increases to $20.0 million. The Company intends to use
borrowings under the Senior Credit Facility to meet seasonal fluctuations in
working capital requirements, primarily related to off-season operations and
maintenance activities during the months of May through October, to fund capital
expenditures for lifts, trail work, grooming equipment and other on-mountain
equipment and facilities and to build retail and other inventories prior to the
start of the skiing season. The Senior Credit Facility requires the Company to
escrow $5,820,000 on or prior to August 1, 1997 to fund the first payment of
interest payable on the Notes after the Issue Date. Pursuant to the terms of the
Senior Credit Facility, the Company may not borrow in excess of $1,430,000
thereunder to fund such interest payment. The Company expects to fund such
interest payment through an equity contribution, available cash on hand
(including any remaining proceeds from the Initial Offering) and/or alternative
financing sources. The Company used a substantial portion of available cash on
hand upon consummation of the Initial Offering to fund a portion of the
Transactions. Such use of cash and borrowings may affect the Company's ability
to undertake significant off-season capital projects during 1997.
The Company's pro forma capital expenditures for the year ended October 31,
1996 and the three months ended January 31, 1997 were approximately $10.3
million and $8.1 million, respectively. For the pro forma year ended October 31,
1996, expenditures included approximately $5.5 million for maintenance capital
expenditures, $1.2 million for the development of Northstar's Big Springs
project, $1.7 million for two lifts at Grand Targhee, $1.7 million for a lift at
Mt. Cranmore and $200,000 for other facility upgrades. For the pro forma three
months ended January 31, 1997, expenditures related primarily to new lifts at
Sierra and Grand Targhee. Management anticipates that total capital expenditures
following consummation of the Initial Offering through fiscal year 1998 will be
approximately $15.0 million. Future capital expenditures include approximately
$5.0 million in each of the next two years for resort maintenance and safety and
$5.0 million for resort upgrades that management deems
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<PAGE> 61
appropriate. The Company plans to fund these capital expenditures from available
cash flow, vendor financing to the extent permitted under the Senior Credit
Facility and the Indenture and borrowings under the Senior Credit Facility.
Management believes that there is a considerable degree of flexibility in
the timing (and, to a lesser degree, the scope) of its capital expenditure
program, and even greater flexibility as to its real estate development
objectives. While the capital expenditure program described above is regarded by
management as important, both as to timing and scope, discretionary capital
spending above maintenance levels can be deferred, in some instances for
substantial periods of time, in order to address cash flow or other constraints.
With respect to the Company's potential real estate development opportunities,
management believes that such efforts will enhance ski-related revenues and will
contribute independently to earnings. In addition, with respect to significant
development projects, the Company anticipates entering into joint venture
arrangements that would reduce infrastructure and other development costs.
Nonetheless, existing lodging facilities in the vicinity of each resort are
believed to be adequate to support current skier volumes, and a deferral or
curtailment of these development efforts is not regarded by management as likely
to adversely affect skier days and ski-related revenues or profitability. The
Company also believes that its current infrastructure is sufficient, and that
development of real estate opportunities is not presently necessary, to support
its existing operations.
The Company's liquidity will be significantly affected by the substantial
indebtedness incurred in connection with the financing of the Acquisitions,
including the indebtedness evidenced by the Notes. As a result of its leveraged
position, the Company will have significant cash requirements to service debt
and funds available for working capital, capital expenditures, acquisitions and
general corporate purposes may be limited. In addition, the Company's high level
of debt may increase its vulnerability to competitive pressures and the
seasonality of the skiing and recreational industries. Any decline in the
Company's expected operating performance could have a material adverse effect on
the Company's liquidity and on its ability to service its debt and make required
capital expenditures. See "Risk Factors -- High Level of Indebtedness and
Leverage." Further, upon the occurrence of a Change of Control, the Company may
be required to repurchase the Notes at 101% of the principal amount thereof,
plus accrued and unpaid interest. The occurrence of a change of control may also
constitute a default under the Senior Credit Facility. See "Risk
Factors -- Change of Control" and "Description of the Notes -- Change of
Control."
Management believes that the Company's cash flow from operations and
borrowings available under the Senior Credit Facility will be sufficient to
enable the Company to meet all of its cash operating requirements over the next
twelve months.
SEASONALITY
The business of the Company is highly seasonal, with the vast majority of
its annual revenues expected to be generated between November and April of each
fiscal year. Management considers it essential to achieve optimal operating
results during key holidays and weekends during this period. During the
off-season months of May through October, the Company's resorts typically
experience a substantial reduction in labor and utility expense due to the
absence of ski operations, but make significant expenditures for maintenance,
expansion and capital improvement in preparation for the ensuing ski season. See
"Risk Factors -- Dependence on Weather Conditions; Seasonality."
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<PAGE> 62
BUSINESS
OVERVIEW
Booth Creek owns and operates seven ski resort complexes encompassing ten
separate resorts, making the Company the fourth largest operator in North
America based on approximately 1.8 million skier days recorded during the
1995/96 ski season. Booth Creek primarily operates regional ski resorts which,
in the aggregate, attract approximately 85% of their guests from their regional
ski markets, within a 200 mile driving radius of each resort. The Company's
properties offer approximately 8,150 acres of skiable terrain, 354 trails, 89
lifts (including 12 high-speed lifts) and on-mountain capacity to accommodate
approximately 50,000 guests daily. For the twelve months ended October 31, 1996
and the three months ended January 31, 1997, the Company's resorts generated
approximately $82.1 million and $32.0 million of adjusted pro forma revenue,
respectively, and $20.7 million and $4.6 million of adjusted pro forma EBITDA,
respectively.
The Company has acquired an attractive group of resort properties primarily
located near major skiing populations. According to the Sporting Goods
Manufacturers Association, the average American skier skied approximately 3.3
days during the 1995/96 ski season, of which approximately 80% of visits were at
regional ski resorts. The Company's resorts are located near approximately 26%
of all skiers in the United States, including four of the five largest regional
ski markets: Los Angeles/San Diego, San Francisco/Sacramento, Boston and
Seattle/Tacoma. The Company believes this geographical diversification serves to
limit the Company's exposure to regional economic downturns and unfavorable
weather conditions.
In addition to their proximity to four of the five largest metropolitan
skier population markets, the Company's resorts continue to differentiate
themselves in their respective markets by selectively upgrading on-mountain
facilities and guest services, employing targeted marketing strategies and
offering extensive skier development programs, all of which create a
competitively-priced, high-quality guest experience. The Company's resorts have
collectively spent over $35.0 million in expansion-related capital improvements
over the past three years, including the addition of eight high-speed
chairlifts, additional snowmaking capability, improved trail grooming equipment,
and enhanced on-mountain lodging, retail and food service amenities. The Company
believes its existing resorts have been well maintained and ongoing capital
expenditure requirements are expected to be approximately $5.0 million in the
aggregate in each of the next two years. The Company's California Resorts have
introduced what management believes to be one of the industry's leading
marketing programs, Vertical Plus, an electronic annual frequent skier program
designed to build customer loyalty, increase visitation frequency and maximize
guest revenue yields. In less than three full ski seasons since the introduction
of Vertical Plus, its members already account for approximately 11% of total
skier days at Northstar and Sierra. The Company intends to expand Vertical Plus
to its other resorts over the next two ski seasons. In addition to Vertical
Plus, the Company uses targeted advertising, database marketing and strategic
marketing alliances to enhance the image of its resorts and increase regional
market share. The Company also offers extensive development programs to improve
the technical skill level of all types of skiers, which management believes is
important to expand the total skier population and increase skier visitation
frequency. Northstar and Sierra are consistently rated by consumer publications
as having premier ski instruction and development programs. The Company intends
to implement similar skier development programs at its other resorts in future
ski seasons.
The Company believes that one of its most important assets is its
experienced and guest-oriented management team. The 11 members of the Company's
senior management team have, on average, approximately 17 years of experience in
the ski industry. George N. Gillett, Jr., Chairman of the Board of Directors and
Chief Executive Officer of the Company, has 13 years of experience operating ski
resorts, including the Vail Ski Resort, which during his association as owner
and Chairman became the largest ski mountain complex, and one of the most
profitable ski resorts, in North America. Each of the Company's resorts is
managed by an on-site resort executive with extensive local experience and
industry expertise. See "Management."
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<PAGE> 63
OPERATING STRATEGY
The Company expects to capitalize on certain benefits associated with being
a multiple resort operating company by extending key operating strategies and
management practices which have been successfully implemented at its California
Resorts to the Company's other resorts. The key elements of the Company's
strategy include the following:
Continually Enhance the Guest Experience. In addition to offering
accessible locations, the Company is committed to providing a high-quality
guest experience by offering a diversity of terrain, consistent snow
conditions (the Company's most weather-sensitive resorts have snowmaking
coverage on nearly 100% of their trails), state-of-the-art ski lift
capacity, attractive facilities, a friendly atmosphere and extensive skier
development programs. The Company believes the physical condition of its
resorts is very competitive with other regional resorts, and will continue
to selectively enhance and expand its resorts in order to continuously
offer a diverse and competitively-priced, high-quality skiing experience.
Incorporate Sophisticated Management Information Systems. The
Company's California Resorts utilize what management believes is one of the
industry's premier management information systems, providing daily
statistical and financial information on all operating departments within
each resort. This system enables management to continuously monitor and
align staffing and services to meet market demands, while enhancing the
quality and timing of communications and decisions. The Company plans to
integrate all of its resorts into its management information system.
Develop Effective Marketing Plans. The Company's marketing plans are
designed to attract skiers and snowboarders by emphasizing the Company's
diverse facilities, high-quality services and proximity to each of the
regional skier markets in which it operates. The Company intends to
position each of its resorts as an economical and attractive alternative to
competing regional resorts and to other forms of leisure entertainment. The
Company's marketing objectives are to (i) increase each of its resorts'
relative market share, (ii) expand the number of skiers in each of its
markets, (iii) increase skier visitation frequency and (iv) influence the
vacation destination choices of prospective guests. A key component to the
Company's marketing plans will be the expansion of Vertical Plus to enhance
guest loyalty and increase skier visitation frequency. The Company also
believes there are opportunities to cross-market its resorts through the
integration and expansion of the Vertical Plus program.
Maximize Revenues and Resort Cash Flow. The Company focuses on
increasing revenues and resort cash flow by managing the mix of skier days
and revenue per skier day. The strategy for each resort is based on the
demographic profile of its market and the physical capacity of its mountain
and facilities. The Company seeks to increase skier days by developing
effective ticket pricing strategies and marketing programs to improve peak
and off-peak volume. The Company seeks to improve revenue per skier day by
effectively managing the price, quality and value of each of its
ski-related services, including retail shops, ski rentals, ski lessons and
food and beverage facilities. The Company also generates revenue from a
variety of non-ski related services, such as golf, tennis, health clubs and
conference centers, as well as from real estate and timber sales.
Pursue Cost Savings Opportunities. The Company expects to realize
significant cost savings from operating multiple resorts through
centralized purchasing of insurance, retail inventory, capital and rental
equipment, bulk purchasing of advertising and printing, as well as through
the selective consolidation of administrative functions. In addition, the
Company intends to extend the flexible staffing practices utilized at its
California Resorts to its other resorts, which management estimates will
reduce expenses by approximately $500,000 at its non-California Resorts. By
pursuing these and other operating synergies, management believes that it
can realize significant cost savings while growing skier days and enhancing
profitability.
Selectively Develop New Terrain and Real Estate. Management believes
that the Company has significant opportunities to expand skiable terrain
and trails and to develop Company-owned real estate for commercial and
residential use. The Company owns or has access to approximately 2,640
acres at Northstar, 425 acres at Grand Targhee and 700 acres at Mt.
Cranmore for potential development of
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<PAGE> 64
additional ski terrain and/or for residential and commercial purposes. The
Company also owns approximately 84 acres at Snoqualmie Pass available for
additional residential and commercial development which it holds through an
Unrestricted Subsidiary. See "The Transactions." Management believes that
the Company's undeveloped acreage at Northstar is the only significant
privately-held land available for skiing expansion in the Lake Tahoe basin
and could double the amount of skiable terrain and the number of trails at
Northstar while significantly increasing the on-site bed base. The Company
believes that increasing the on-site and area bed base is important in
attracting regional overnight skiers, expanding market share and capturing
a greater portion of each guest's expenditures. Management anticipates that
any significant development project would be undertaken through a joint
venture with a major real estate development company, which would offset a
significant portion of the infrastructure cost.
ACQUISITION STRATEGY
The Company believes that the domestic ski industry is highly fragmented
but is undergoing a transition from individual resort ownership to ownership by
multiple resort operating companies. With their high-quality facilities and
services, sophisticated information systems and experienced management team, the
California Resorts, in management's view, will serve as the core of the
Company's operations and its base for future expansion. The acquisitions of the
New Hampshire Resorts, Snoqualmie Pass and Grand Targhee provide the Company
with additional geographical diversity and proximity to other major skiing
population centers. In addition, the Company believes that there are numerous
opportunities to introduce sophisticated management practices, many of which are
already employed at its California Resorts, to all of its resorts, which are
expected to increase the number of skier days, revenue per skier day and resort
cash flow. The Company will consider future acquisition opportunities that it
believes will further expand the Company's national presence or enhance its
operating synergies.
INDUSTRY
There are 519 ski areas in the United States, which during the 1995/96 ski
season generated approximately 54 million skier days. These areas range from
small ski resort operations, which cater primarily to day skiers and regional
overnight skiers from nearby population centers, to larger resorts which, given
the scope of their operations and their accessibility, are able to attract
skiers and snowboarders from their regional ski markets as well as destination
resort guests who are seeking a comprehensive vacation experience. While
regional ski market skiers tend to focus primarily on lift ticket price and
round-trip travel time, destination travelers tend to be heavily influenced by
the number of amenities and activities offered as well as the perceived overall
quality of the vacation experience. The table below summarizes regional skier
days from the 1991/92 ski season through the 1995/96 ski season.
U.S. SKI INDUSTRY REGIONS AND SKIER DAYS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PACIFIC
SEASON NORTHEAST SOUTHEAST MIDWEST ROCKY MTS WEST LAKE TAHOE TOTAL
- ------ --------- --------- ------- --------- ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1991/92......................... 12,252 4,425 6,535 17,687 7,036 2,900 50,835
1992/93......................... 13,217 4,660 6,978 18,602 7,375 3,200 54,032
1993/94......................... 13,718 5,808 7,364 17,503 7,144 3,100 54,637
1994/95......................... 11,265 4,746 6,907 18,412 7,446 3,900 52,676
1995/96......................... 13,825 5,693 7,284 18,148 6,033 3,000 53,983
5 year avg...................... 12,855 5,066 7,014 18,070 7,007 3,220 53,233
</TABLE>
- ---------------
Northeast: CT, MA, ME, NH, NY, VT, RI
Southeast: AL, GA, KY, MD, NC, NJ, PA, TN, VA, WV
Midwest: IA, IL, IN, MI, MN, MO, ND, NE, OH, SD, WI
Rocky Mts: CO, ID, MT, NM, UT, WY
Pacific West: AK, AZ, CA (excluding Lake Tahoe Region), NV, OR, WA
Source: 1995/96 Kottke National End of Season Survey
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The ski resort industry is presently experiencing a period of
consolidation. The number of U.S. ski areas has declined from 709 in 1986 to 519
in 1996 and, based on industry estimates, the number of ski areas is expected to
decline further, as many mountain resorts lack the infrastructure, capital and
management capability to compete in this multi-dimensional and service-intensive
industry. No major new ski resort has opened in the United States since 1989. Of
the 519 ski areas, RRC Associates estimates the average resort recorded
approximately 104,000 skier days and only 25% of all resorts reported more than
220,000 skier days during the 1995/96 ski season. All of the Company's resorts
except Mt. Cranmore and Grand Targhee typically record more than 220,000 annual
skier days. The trend among leading resorts is toward investing in improving
technology and infrastructure, including high speed lifts, attractive facilities
and extensive snowmaking capabilities to deliver a more consistent, quality
experience. The Company's resorts have spent over $35.0 million in
expansion-related capital expenditures over the last three years to improve
their competitive position. Management believes the need for increased
investment in a resort has required a greater access to capital and has enhanced
the position of larger and better capitalized resort owners. Despite this
consolidation, the ski industry remains highly fragmented, with no one resort
and no one resort operator accounting for more than 3% and 10%, respectively, of
the United States' 54 million skier days during the 1995/96 ski season.
Management believes that changes in demographics and certain ski industry
trends will be favorable for the U.S. ski industry. The single largest group of
skiers is the baby boom generation, which accounted for approximately 26% of all
U.S. skier days during the 1995/96 ski season. Members of this generation are
moving into an age and economic cycle when a greater portion of their disposable
income is available for recreational activities and the purchase of vacation
homes. The next largest groups are the echo boom generation (children of baby
boomers) and the "X" generation (young adults). With an estimated 114 million
people, members of these generations are beginning to form their recreational
habits and offer the largest potential increase in skiers since the emergence of
the baby boom generation in the late 1960's through the mid 1970's.
The emergence and growth of snowboarding, driven primarily by the echo boom
and X generations, have energized interest in "on-snow" recreation. According to
the National Sporting Goods Association, the estimated number of snowboarders
has increased from 1.5 million in the 1992/93 ski season to 2.3 million in the
1995/96 ski season, an increase of almost 55%. Snowboarding is now regarded as
one of the fastest growing sports in the world. Recently the International
Olympic Committee designated snowboarding as a medal event in the 2002 Winter
Olympic Games. Snowboarders are primarily between the ages of 13 and 25 and
presently represent an estimated 14% of all domestic ski resort visitors, an
estimated 16% at domestic regional resorts, and an estimated 20% at the
Company's resorts. Regional resorts are the industry leaders in providing
designated snowboarding parks, trails and specialized trial grooming techniques
for snowboarders. All of the Company's resorts have allocated significant
terrain to snowboarders. Management believes that the growth in snowboarding has
had, and will continue to have, a positive impact on the snow sports industry,
especially since it is attracting new age groups, and will continue to be an
important source of lift ticket, ski school, retail and rental revenue growth
for the Company.
The advent of snowboarding has been accompanied by the recent introduction
of new "parabolic," or shaped, alpine skis which are making skiing easier to
learn and enjoy. The new skis, which are estimated to account for up to 75% of
all new ski sales, are expected to significantly improve a new skier's learning
progression, as well as enhance the experience of skiers of all abilities
through increased technical ability and control. The California Resorts have
replaced all of their rental skiing equipment for the 1996/97 ski season with
the new skis. Further advances and innovations in skier equipment, trail
maintenance and lift technology are also expected to lead to the greater
popularity of skiing.
In the 1995/96 ski season, skier days declined at the Company's Northern
California Resorts as the Lake Tahoe region experienced unusually low December
snowfall and warm weather. The Lake Tahoe region has averaged approximately 3.2
million annual skier days over the last five years, including approximately 3.0
million in the 1995/96 ski season. Management estimates that approximately 60%
of the skiers visiting Lake Tahoe resorts during the 1995/96 ski season were
from the San Francisco, Sacramento and Central Valley metropolitan areas. Other
guests come principally from Southern California and states with large ski
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populations, such as Texas, Illinois and Florida. Skiers in this market can
choose from among nine major resorts, which include Northstar, Sierra, Squaw
Valley, Heavenly Valley, Alpine Meadows, Kirkwood, Diamond Peak, Homewood and
Mt. Rose. Squaw Valley and Heavenly Valley attract a significantly greater share
of destination skiers than the area's other resorts.
The Southern California market has averaged approximately 2.3 million
annual skier days over the last five years. Management estimates that
approximately 95% of the skiers visiting Southern California resorts during the
1995/96 ski season were drawn primarily from the Los Angeles, Orange County and
San Diego metropolitan areas. Skiers in this market can choose from among five
major resorts, which include Bear Mountain, Snow Summit, Snow Valley, Mammoth,
and Mountain High.
The Northeast market (including New York) has averaged approximately 12.9
million annual skier days over the last five years. The Northeast market
consists of a significant percentage of day or weekend skiers due to the
relatively short driving radius to major metropolitan areas. While the Northeast
does not draw significant numbers of vacationing skiers from the Western regions
of the United States, it does compete with the Rocky Mountains and Pacific West
areas for Eastern vacationing skiers. Within the Northeast region, skiers can
choose from among over 50 major ski areas and resorts. The region's major ski
areas and resorts are concentrated in the mountainous areas of New England and
eastern New York, with the bulk of skiers coming from the population centers
located in eastern Massachusetts, southern New Hampshire, Connecticut, eastern
New York, New Jersey and the Philadelphia area.
The Company's Snoqualmie Pass resort complex operates in the Washington
State segment of the Pacific West market, which recorded approximately 1.4
million skier days during the 1995/96 ski season. Management estimates that
approximately 95% of the skier days recorded at Washington State resorts during
the 1995/96 ski season were attributable to residents of the Seattle/Tacoma
metropolitan area. Other guests come primarily from other parts of Washington,
Oregon and Western Canada. Washington State resorts do not attract a significant
number of destination skiers. Within Washington State, skiers can choose from
among 14 ski resorts, including the four resorts comprising Snoqualmie Pass. The
largest ski areas in Washington State are Snoqualmie Pass, Stevens Pass and
Crystal Mountain, each of which had over 250,000 skier days during the 1995/96
ski season. Other ski areas in Washington are moderate to small in size.
The Rocky Mountains market has averaged over 18 million skier days over the
last five years, with a high percentage of visitors consisting of destination
skiers. Of the 94 ski areas in the region, 29 are located in Colorado,
accounting for approximately 63% of all recorded skier days during the 1995/96
ski season. The 40 ski resorts in the northern Rocky Mountain states of Montana,
Idaho and Wyoming recorded a total of approximately 2.9 million skier days
during the 1995/96 ski season. Because resorts in this part of the region are
generally less accessible than resorts in Colorado or Utah, they tend to be
smaller and attract fewer destination skiers from outside of the northern Rocky
Mountain states.
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RESORT OPERATIONS
The Company's seven resort complexes offer a variety of ski and non-ski
activities. The table below provides a summary of each resort's ski operations
and is followed by a more detailed description of each resort.
<TABLE>
<CAPTION>
1994/95 1995/96
SKIABLE VERTICAL SNOWMAKING LODGES ON SKIER SKIER
RESORT ACRES DROP TRAILS LIFTS COVERAGE GROOMERS PREMISES VISITS VISITS
------ ------- -------- ------ -------------- ---------- -------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northstar-at-Tahoe.... 2,000 2,280 61 1 Gondola 50% 12 6 527,653 404,736
4 High-Speed
Quads(1)
4 Fixed Grip
3 Surface
Sierra-at-Tahoe....... 1,675 2,212 46 3 High-Speed 12% 8 1 369,932 257,499
Quads
6 Fixed Grip
1 Surface
Bear Mountain......... 175 1,665 33 1 High-Speed 100% 6 3 305,799 214,284
Quad
8 Fixed Grip
2 Surface
Waterville Valley..... 300 2,020 50 1 High-Speed 91% 4 3 207,386 256,563
Quad
8 Fixed Grip
4 Surface
Mt. Cranmore.......... 200 1,200 36 1 High-Speed 100% 3 2 96,527 123,201
Quad
4 Fixed Grip
1 Surface
Snoqualmie Pass....... 2,300 2,200 65 23 Fixed Grip -- 16 7 515,487 455,240
9 Surface
Grand Targhee......... 1,500 2,200 63 1 High-Speed -- 6 3 117,772 116,696
Quad
3 Fixed Grip
1 Surface
<CAPTION>
1996
BEDS IN
RESORT VICINITY
------ --------
<S> <C>
Northstar-at-Tahoe.... 16,000
Sierra-at-Tahoe....... 20,000
Bear Mountain......... 11,000
Waterville Valley..... 6,500
Mt. Cranmore.......... 16,000
Snoqualmie Pass....... 1,000
Grand Targhee......... 750
</TABLE>
- ---------------
(1) High-Speed Quads are four-person chairlifts which detach from a cable during
passenger loading and unloading and reattach and accelerate thereafter.
Northstar-at-Tahoe
Northstar-at-Tahoe, located near the north end of Lake Tahoe, is, in
management's opinion, Lake Tahoe's most complete year-round destination resort.
The resort's 8,600-foot Mt. Pluto features 2,000 acres of skiable terrain for
all abilities and a 2,280 foot vertical drop. Northstar's 61 ski trails are
served by 12 operating lifts, including one gondola, four high-speed quads, two
triple lifts and two double lifts, which combine to transport up to 19,275
skiers uphill per hour. Northstar also has approximately 42 kilometers of
groomed trails for cross-country skiing and snowbiking and several on-mountain
terrain parks for snowboarders and adventurous skiers offering non-traditional
bumps, jumps and turns. Since the 1988 ski season, Northstar has spent over
$25.0 million in capital expenditures, including $10.0 million to install four
new high-speed lifts, $12.0 million to install snowmaking equipment, upgrade
trail grooming equipment, and expand skiable terrain, and $3.0 million to
upgrade lodging and retail facilities. Other facilities at Northstar include a
European-style village that consists of a 22,700 sq. ft. ski lodge,
condominium/hotel accommodations, various restaurants, bars, shops, a day-care
center and entertainment and convention facilities. Summer recreation facilities
include an 18-hole golf course, ten tennis courts, a horseback riding stable,
mountain bike rentals and a swimming pool. Northstar currently ranks third in
skier days in the Lake Tahoe area and is one of only 18 resorts in the United
States to surpass the 500,000 skier days milestone, which it did during the
1994/95 ski season. Between 1990 and 1997, Northstar was named one of the top
ten United States family resorts by Travel & Leisure, Better Homes & Gardens and
Family Circle, as well as one of the best 50 North American ski resorts by Snow
Country and Ski magazines.
Northstar provides a full-service skiing experience for its clientele,
which typically includes the upper-income, baby boomer population. Northstar's
marketing is focused on the San Francisco Bay and the
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<PAGE> 68
Sacramento Valley areas as a destination alternative to Colorado and Utah
resorts. Northstar also markets aggressively in Southern California and states
with large ski populations. Northstar is within a one hour drive of the Reno
International Airport, which offers convenient scheduled air service to all
parts of the United States, Western Canada and Mexico. Small private planes can
fly into the all-weather Truckee Airport, where Northstar operates transit buses
to the resort.
Typical Northstar guests include single male intermediate skiers between
the ages of 25 and 44 earning between $50,000 and $100,000 and families headed
by professionals or business executives with incomes in excess of $100,000.
Northstar is within a 200 mile driving radius of the major population centers of
San Francisco and Sacramento and, therefore, attracts a significant number of
its guests from Northern California. Northstar has approximately 6,000 beds at
the resort with an additional 40,000 beds in the vicinity, 10,000 of which are
within a 10 mile radius. Management estimates that during the 1995/96 ski season
75% of the skiers visiting Northstar came from Northern California, 8% from
Southern California, 16% from other states, and 1% from international locales.
Northstar's snowmaking system is engineered to cover approximately 50% of
its ski trails, which management believes is adequate given the area's heavy
annual snowfall, which averaged approximately 268 inches per year during the
past five years. Northstar has pumping rights from nearby water sources which,
when coupled with its 60 million gallon water storage capacity, have been more
than sufficient to support the resort's needs. Snowmaking during the 1995/96 ski
season consumed approximately 35.9 million gallons of water, which was slightly
below Northstar's six year average of 36.3 million gallons per year.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Northstar during the previous five ski seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92................................................ 136 323,526 118
1992/93................................................ 162 415,959 370
1993/94................................................ 142 416,498 153
1994/95................................................ 156 527,653 432
1995/96................................................ 121 404,736 269
</TABLE>
Northstar consists of over 6,500 acres of privately owned land, of which
less than one-third has been developed. Management believes that Northstar has
significant opportunities to develop additional ski terrain as well as
residential and commercial space. See "Business -- Real Estate Development."
Sierra-at-Tahoe
Sierra-at-Tahoe is conveniently located near the large bed base of South
Lake Tahoe and is the closest major ski resort to Sacramento and the Central
California Valley. The resort's 8,852-foot peak offers 1,675 skiable acres and a
2,212 foot vertical drop. Sierra's 46 ski trails are currently served by 10
operating lifts, including three high-speed quads, one triple lift and five
double lifts, which combine to transport up to 16,400 skiers uphill per hour. In
addition to significantly upgrading its retail and restaurant facilities in
recent years, Sierra has invested approximately $9.8 million since 1994 to
replace its Yan lifts with new high-speed lifts, upgrade its grooming equipment
and rebuild its base lodge facilities. Sierra operates a 49,000 sq. ft. base
lodge which offers a variety of food and beverage services. Management believes
that Sierra's recent investment in its ski infrastructure has made it the best
ski value in the South Lake Tahoe area. Sierra does not offer summertime
activities.
Sierra's demographic characteristics closely parallel Northstar's, although
Sierra's core customer base is slightly younger and less affluent with more
aggressive skiing demands. Sierra does not own or manage any real estate units
in the area but there are 50,000 beds in the South Lake Tahoe vicinity,
including 20,000 beds within a 10 mile radius. Sierra attracts a larger share of
its guests from the Sacramento and Central Valleys than the San Francisco Bay
area.
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Sierra owns 21 acres of its 1,700 gross acreage and leases the remainder
under a special use permit with the United States Forest Service. See
"-- Regulation and Legislation." Sierra's skiable terrain, notable for its
extensive summer grooming and wind-protected slopes, requires less snow than
other resorts to provide ideal ski conditions. Due to its abundant annual
snowfall, which has averaged approximately 472 inches per year since 1991,
Sierra is not dependent upon snowmaking and, as a result, its snowmaking
equipment covers only 12% of Sierra's total acreage. Sierra also employs a
modern fleet of groomers which maintain high-quality skiing surfaces.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Sierra during the previous five ski seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92................................................ 138 210,805 257
1992/93................................................ 136 243,254 608
1993/94................................................ 135 247,883 425
1994/95................................................ 165 369,932 590
1995/96................................................ 121 257,499 480
</TABLE>
Bear Mountain
Bear Mountain is located in the San Bernardino mountains of Southern
California. Its 8,805-foot peak features 175 acres of skiable terrain and a
1,665 foot vertical drop. Bear Mountain's 33 ski trails are served by 11 lifts,
including one high-speed quad, one fixed grip quad, three triple lifts and two
double lifts, which combine to transport up to 15,500 skiers uphill per hour.
During the 1996 off-season, Bear Mountain invested approximately $1.0 million to
upgrade its base lodge facilities. Other facilities at Bear Mountain include
three lodges which provide an aggregate of approximately 31,000 sq. ft. of space
for food and beverage services (restaurants and cafeterias), skier services and
entertainment. Summer recreation facilities include a nine-hole golf course.
Bear Mountain is within a one to three hour drive of the Los Angeles and
San Diego metropolitan areas, providing it with access to nearly 16 million
Southern Californians of whom approximately 800,000 actively participate in
skiing and snowboarding. Nearly 94% of Bear Mountain's skiers are from Southern
California. Bear Mountain appeals to the younger generations of skiers, the echo
boom and "X" generations, who are generally less affluent than the targeted
customers at the Company's Lake Tahoe resorts. While Bear Mountain is in the
middle of an 11,000 bed base area, it is primarily a day ski facility.
Bear Mountain owns 34 of its 732 gross acreage and leases 698 acres of
mountain terrain under a Forest Service special use permit. See "-- Regulation
and Legislation." Management believes that Bear Mountain has one of the largest
snowmaking capacities per acre of any resort west of the Mississippi and
incorporates a state-of-the-art system which allows it to efficiently cover 100%
of its ski trails. Bear Mountain also has access to three reservoirs capable of
holding 11 million gallons of water for snowmaking. Management believes that the
skiing infrastructure at Bear Mountain, including lifts, snowmaking and trail
grooming equipment, is very strong, making it one of the most attractive ski
areas in Southern California.
Bear Mountain was acquired by Fibreboard Corporation shortly before the
1995/96 ski season. At the time of such acquisition, the resort had no marketing
manager and no significant advertising campaigns were planned heading into the
ski season. These factors, combined with the warmest early winter weather in 43
years, led to a significant decline in skier days during the 1995/96 ski season.
Early season skier days are more important at Bear Mountain than at the
Company's other resorts, and during the 1995/96 ski season, the resort was not
fully open until late December 1995. The Company is in the process of
implementing an aggressive marketing campaign for the current ski season,
targeted to Bear Mountain's core customer base. The Company believes that these
efforts will enhance Bear Mountain's reputation as one of Southern California's
premier ski facilities.
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<PAGE> 70
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Bear Mountain during the previous five ski
seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92................................................ 169 340,616 184
1992/93................................................ 159 295,070 240
1993/94................................................ 156 320,227 117
1994/95................................................ 175 305,799 161
1995/96................................................ 123 214,284 119
</TABLE>
Waterville Valley
Waterville Valley has long been recognized as one of the largest and most
picturesque ski resorts in New Hampshire. Waterville's major base facilities are
located on the 4,004 foot high Mt. Tecumseh and offer 300 skiable acres and a
vertical drop of 2,020 feet. Waterville Valley's 50 trails are served by 13
operating lifts, including one high-speed quad, three triple lifts and four
double lifts, which combine to transport up to 16,631 skiers uphill per hour.
The resort operates a 30,000 sq. ft. base lodge (complete with multiple food
service centers and child care), a mid-mountain lodge featuring a cafeteria and
deli and a mountain-top lodge with snack bar and acclaimed restaurant dining.
The Waterville Valley resort has a year-round Base Camp Adventure Center
offering mountain bikers, cross-country skiers, and hikers access to 105
kilometers of trails in the White Mountain National Forest. Other resort
amenities include an ice skating arena, golf course, tennis center, sports and
fitness center, and horseback riding. Waterville Valley's Conference Center has
17,000 sq. ft. of meeting space and provides banquet facilities for up to 1,000
people. With 11 meeting rooms, a business center, audio-visual capabilities and
a self-contained pub, the Conference Center's on-site staff supports events
year-round.
Waterville has traditionally created an environment conducive to families
who are either day skiers, regional overnight skiers or vacation skiers. Its
location adjacent to Interstate 93 (a major north-south thoroughfare for skiers)
makes it one of the most accessible of the larger New England resorts and it has
the facilities, trails and programs to satisfy adults and children of all
abilities. Waterville's proximity to large East Coast markets (Boston is less
than two and one-half hours away by car) attracts day skiers, while the town's
substantial bed base can accommodate the regional overnight skiers and
vacationers who will stay an average of two to four days. There are
approximately 6,500 beds in the Waterville area, of which approximately 3,000
can be rented. The majority of Waterville's skiers come from Massachusetts (49%)
and New Hampshire (23%), with the remainder coming from Connecticut, New York,
New Jersey and other regional locations.
Waterville owns 35 acres on its smaller Snow's Mountain and two acres at
the Conference Center. It leases 790 acres of land on Mt. Tecumseh from the
federal government under a Special Use Permit issued by the Forest Service.
Waterville's snowmaking system is engineered to cover 91% of the ski trails on
Mt. Tecumseh. Snowmaking during the 1995/96 ski season consumed approximately
116 million gallons of water for about 682 acre feet of coverage; water for
snowmaking is currently pumped from a local river and a pond. Waterville has
begun the process of obtaining permits for additional water sources and water
storage facilities for snowmaking.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Waterville Valley during the previous five ski
seasons. Prior to the 1994/95 ski season, Waterville was operated by a local
developer who eventually lost the property and related real estate through
bankruptcy.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92................................................ 167 333,863 108
1992/93................................................ 160 333,213 145
1993/94................................................ 165 300,821 148
1994/95................................................ 163 207,386 101
1995/96................................................ 168 256,563 203
</TABLE>
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Mt. Cranmore
Mt. Cranmore is the oldest continuously operated ski area in the United
States. Strategically located in the hub of New Hampshire's Mount Washington
Valley, Mt. Cranmore's 1,714 foot summit offers 200 skiable acres and a 1,200
foot vertical drop. Mt. Cranmore's 36 trails, including 12 trails lighted for
night skiing, are served by six operating lifts, including one high-speed quad,
one triple lift, three double lifts and one surface lift, which combine to
transport up to 6,600 skiers uphill per hour. The installation of the high-speed
quad in 1995 and other recent capital improvements totaling $2.0 million,
together with an aggressive marketing program, contributed to a 28% increase in
skier days for Mt. Cranmore during the 1995/96 ski season. The mountain is
serviced by two base lodges, offering multiple eating locations and
pub/restaurant facilities, as well as a restaurant at the summit. In addition,
Mt. Cranmore owns a year-round 43,000 sq. foot athletic facility which includes
an outdoor tennis stadium with seating for up to 5,500 people, four indoor
tennis courts, a pool, a spa, a weight-lifting area, aerobic rooms, an
indoor-climbing wall, locker rooms, a snack area and a nursery. Mt. Cranmore
also operates on-premises ski and rental shops.
Management believes that Mt. Cranmore has great appeal to the family skier
due to its intimate size, high percentage of intermediate trails (45%, with 33%
for advanced) and its well-developed children's ski programs. An additional
family attraction is Mt. Cranmore's neighboring town of North Conway, which is
within walking distance of the mountain and has one of New England's largest
rural retail outlet and restaurant centers. North Conway is part of the White
Mountains area, which is the dominant tourist destination in New Hampshire.
Approximately 10 million people live within a four-hour drive of Mt. Cranmore.
During the 1995/96 ski season, management estimates that 61% of the resort's
guests were from the Boston metropolitan area, 16% were from New Hampshire and
8% were from Rhode Island. To accommodate destination/vacation skiers there are
16,000 rental beds in the Mt. Washington Valley, including 76 condominium units
at Mt. Cranmore itself.
Mt. Cranmore owns 840 acres and holds deeded easements enabling it to
develop an additional 1,200 acres of ski terrain. Mt. Cranmore does not lease
any of its land from the federal government. Mt. Cranmore's snowmaking equipment
consists of a computerized Hydralink weather-monitoring snowmaking system which,
when installed in 1995, increased snowmaking output by 40% and currently covers
100% of the resort's ski trails. In addition to pumping rights from a nearby
stream, Mt. Cranmore has an agreement with the local water district for
unrestricted access to an additional reservoir of 1 million gallons of water for
snowmaking. Mt. Cranmore's base area pond also holds 2.5 million gallons.
Snowmaking during the 1995/96 ski season consumed approximately 90 million
gallons of water for complete coverage.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Mt. Cranmore during the previous five ski
seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92........................................ 103 108,416 68
1992/93........................................ 112 103,841 96
1993/94........................................ 106 104,935 90
1994/95........................................ 105 96,527 63
1995/96........................................ 142 123,201 115
</TABLE>
Snoqualmie Pass
Snoqualmie Pass is located in the Cascade mountains of Northwest Washington
and consists of four resorts, Alpental, Snoqualmie Summit, Ski Acres and Hyak,
which collectively offer 2,300 acres of skiable terrain. Individually, Alpental
has a 5,400 foot top elevation, 754 acres of skiable terrain (188 of which are
lighted) and a 2,200 foot vertical drop; Snoqualmie Summit has a 3,900 foot top
elevation, 334 acres of skiable terrain (285 of which are lighted) and a 1,000
foot vertical drop; Ski Acres has a 3,900 foot top elevation, 490 acres of
skiable terrain (344 of which are lighted) and a 1,060 foot vertical drop; and
Hyak has a 3,700 foot top elevation, 730 acres of skiable terrain (58 of which
are lighted) and a 1,080 foot vertical drop. Snoqualmie Pass' 65 ski trails are
served by 32 operating lifts, including one fixed-grip quad, four triple lifts,
18 double lifts
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<PAGE> 72
and nine surface lifts, which combine to transport up to 30,290 skiers uphill
per hour. Ski Acres and Hyak also offer approximately 55 kilometers of
cross-country skiing on an expert trail system and a lighted beginner/student
trail which hosts a season-long night racing series. In addition, Snoqualmie
Summit, Ski Acres and Hyak are interconnected by cross-over trails. Since 1987,
Snoqualmie Pass has invested approximately $9.9 million to improve base
facilities and lodges and install additional lifts. Snoqualmie Pass operates
seven lodges which provide an aggregate of approximately 111,175 sq. ft. of
space for food and beverage services (restaurants and cafeterias), skier
services and entertainment.
Snoqualmie Pass is within a one-hour drive of the Seattle/Tacoma
metropolitan area, providing it with access to nearly 442,000 active skiers and
snowboarders. Although the Snoqualmie Pass complex offers a relatively even
variety of trail difficulty, each of its resorts have been designed to appeal to
specific skier profiles: 90% of Alpental's trails are designed for intermediate
and advanced skiers, 82% of Hyak's trails are designed for beginner and
intermediate skiers, 80% of Snoqualmie Summit's trails are designed for beginner
and intermediate skiers, and 50% of Ski Acres' trails are designed for beginner
skiers. Overall, Snoqualmie Pass is one of the largest learn-to-ski areas in the
United States, with approximately 26% of its 1995/96 ski season skier days being
attributable to guests enrolled in ski school. In addition, Snoqualmie Pass is
the largest night ski complex in the United States, with approximately 40% of
its 1995/96 ski season skier days being recorded at night.
Snoqualmie Pass owns 768 acres of its 4,152 gross acreage, leases 1,520
acres under a private permit and utilizes 1,864 acres of mountain terrain under
a Forest Service special use permit. See "-- Regulation and Legislation."
Snoqualmie Pass enjoys abundant annual snowfall, averaging approximately 317
inches per year since 1991. As a result, there are no snowmaking capabilities at
any of the Snoqualmie Pass resorts. Snoqualmie Pass does, however, possess water
rights that would allow it to engage in snowmaking, if necessary. The Company
intends to purchase five Bombardier Snowcat groomers for Snoqualmie Pass to
complement and upgrade the resort's existing fleet of 16 groomers.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Snoqualmie Pass during the previous five ski
seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92........................................ 83 432,014 210
1992/93........................................ 127 521,127 295
1993/94........................................ 130 519,953 300
1994/95........................................ 158 515,487 405
1995/96........................................ 117 455,240 375
</TABLE>
Grand Targhee
Grand Targhee is located in the Grand Teton mountains of Wyoming,
approximately 50 miles northwest of the town of Jackson. Jackson, Wyoming is a
major ski destination resort center, recording an average of 400,000 skier days
at the area's three resorts in the last three ski seasons. Grand Targhee, with a
top elevation of 10,200 feet, 1,500 acres of skiable terrain for all abilities
and a 2,200 foot vertical drop, offers two different mountain ski areas. The
first mountain is served by four operating lifts, including the longest
high-speed quad in the state of Wyoming, which combine to transport up to 4,680
skiers uphill per hour. The second mountain is reserved for Snowcat powder
skiing. Grand Targhee also has approximately 17 kilometers of groomed trails for
cross-country skiing. Grand Targhee recently has invested approximately $3.0
million to improve uphill capacity and the overall ski experience. Other
facilities at Grand Targhee include base lodge facilities, hotel accommodations,
restaurants, shops, a child care center and retail stores. In addition, Grand
Targhee owns and operates a spa, fitness and conference center.
Grand Targhee competes for day and regional overnight skiers in the
northern Rocky Mountain region as well as national destination skiers traveling
to the greater Jackson, Wyoming area. Guests from Idaho, Utah, Wyoming and
Montana have accounted for approximately 38% of Grand Targhee's total skier days
over the past five ski seasons. Grand Targhee's national destination guests,
those guests residing outside the northern
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<PAGE> 73
Rocky Mountain region, accounted for the remaining 62% of the resort's skier
days during the same period. A majority of these guests came from California,
Washington, New York and Minnesota. Overall, approximately 60% of Grand
Targhee's skiers reside more than 200 miles from the resort. Given that Grand
Targhee only operates 96 rental units, many of the resort's overnight regional
and destination skiers secure hotel accommodations at other resorts or hotels in
the area. The Company believes that there are in excess of 5,000 beds in the
Jackson, Wyoming vicinity. Management believes that the distinguishing features
of Grand Targhee are well-maintained and uncrowded facilities, excellent ski
conditions, attractive vacation packages and a high quality family ski school.
Grand Targhee is located entirely on land leased under a Forest Service
special use permit. See "-- Regulation and Legislation." Grand Targhee has
averaged approximately 448 inches of snowfall during the last five years, and
historically has received the second highest snowfall amount of all ski resorts
in the United States. In 1996, Ski magazine rated Grand Targhee as the second
best ski area in North America for snow conditions. In the same survey, Ski
magazine readers rated snow conditions as the most important factor in choosing
a ski destination resort.
The following table summarizes the number of ski days operated, skier days
and seasonal snowfall totals at Grand Targhee during the previous five ski
seasons.
<TABLE>
<CAPTION>
YEAR DAYS OPERATED SKIER DAYS SNOWFALL (INCHES)
- ---- ------------- ---------- -----------------
<S> <C> <C> <C>
1991/92........................................ 153 134,535 258
1992/93........................................ 153 108,666 553
1993/94........................................ 151 113,298 368
1994/95........................................ 153 117,772 537
1995/96........................................ 149 116,696 523
</TABLE>
Management believes that Grand Targhee is currently underutilized, and that
a key component of increasing skier days at the resort will be expanding its
on-mountain bed base. Grand Targhee has recently received United States Forest
Service approval to build 590 rental units and has had discussions that would
allow for the future development of private dwellings.
REAL ESTATE DEVELOPMENT
The Company believes that it has significant opportunities to develop
available acreage for additional skiing terrain and trails as well as for
residential lodging and commercial uses. Management believes that selective real
estate development can enhance the Company's resorts and that there is
opportunity for synergy between real estate development and the Company's ski
operations. In management's view, increasing the on-mountain bed base, expanding
retail and other commercial services and developing additional skiable terrain
at a resort can accelerate growth in skier days and ski-related revenues. The
following table lists certain owned or leased land available to the Company for
expansion.
<TABLE>
<CAPTION>
RESIDENTIAL/
COMMERCIAL/ NUMBER
LOCATION OWNED/DEEDED SKI TERRAIN OF ACRES PRINCIPAL USES
-------- ------------ ------------ -------- --------------
<S> <C> <C> <C> <C>
Northstar: Big Springs...... Owned Residential 90 On-mountain housing
Northstar: North Lookout
Mountain......... Owned Ski Terrain 1,300 Expand ski terrain by 65%
Northstar: Sawtooth Ridge... Owned Ski Terrain 700 Expand ski terrain by 35%
Northstar: Zoned/
Undeveloped..... Owned Residential/ 550 Increases on-mountain
Commercial housing by 78% (1,100 units)
Mt. Cranmore: Black Cap..... Deeded: Ski Terrain 700 Significantly expand and
Privately Owned vary ski terrain
</TABLE>
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<PAGE> 74
<TABLE>
<CAPTION>
RESIDENTIAL/
COMMERCIAL/ NUMBER
LOCATION OWNED/DEEDED SKI TERRAIN OF ACRES PRINCIPAL USES
-------- ------------ ------------ -------- --------------
<S> <C> <C> <C> <C>
Bear Mountain............... Leased: Ski Terrain 114 Expand ski terrain by 25%
Forest Service
Bear Mountain: Big Bear
Lake...................... Owned Residential 6 56 condominiums
Snoqualmie Pass............. Owned Residential 84 On-mountain housing
Grand Targhee............... Leased: Ski Terrain 320 Expand ski terrain
Forest Service
Grand Targhee............... Leased: Residential/ 105 Ski Village which would
Forest Service Commercial increase on-mountain bed
base by 615% and expand
commercial facilities
</TABLE>
The Company's strategy with regard to the expansion of skiable terrain at
its resorts is based on the evaluation of several key factors, including (i) the
anticipated growth of the skier base within the relevant market and the
Company's ability to improve its competitive market position in that market, as
measured by the potential increase in the number of skier days and revenue per
skier on a long-term basis which the Company believes it can capture through
expansion and (ii) the return on capital expected to be realized from an
expansion project versus alternative projects. Management plans to undertake
extensive planning and pre-development steps prior to investing significant
capital into any development project. As the Company has done with Northstar's
"Big Springs" development project, management intends to undertake a number of
these projects with real estate partners who can provide a substantial portion
of the construction capital.
The Company's resorts have traditionally taken a conservative approach
toward residential and commercial development and real estate development
efforts have taken place primarily at Northstar. Beginning in 1995, the resort
developed a new single family home residential community on Mt. Pluto ("Big
Springs") consisting of 158 private residential subdivision lots. The total
project has been planned in five phases to reduce infrastructure development
costs and maximize returns by controlling both the timing and inventory of lots
on the market. Northstar sold all of the 44 lots offered in phase one for an
average price of approximately $154,000 and has sold 16 of the 35 lots available
in phase two for an average price of approximately $152,000. Northstar is
selling these lots in advance with the builder or property owner responsible for
construction, resulting in little required capital investment by the Company.
New homes range in price from approximately $600,000 to $1.2 million. The sale
of the remaining lots in phase two requires no significant capital expenditures
by the Company, since the infrastructure has already been developed. The sale of
the remaining lots in phases three, four and five will require an estimated $3.0
million in capital expenditures to complete infrastructure development.
Northstar expects to sell the remaining properties over the next five years.
Management believes that the Big Springs development project alone will increase
the on-mountain bed base by 5% over the next two years, and should contribute to
an increase in paid skier days. Northstar also has opportunities to develop an
additional 550 acres of owned real property on Mt. Pluto, which has been zoned
for commercial and residential use.
In addition, Northstar has begun a program to harvest timber through third
party contracting. The timber harvesting program, which produced revenues of
approximately $693,000 in the ten months ended October 31, 1996, is managed
carefully to avoid interference with Northstar's resort operations and prevent
any diminution in the quality of the resort's natural environment. The Company
also intends to eventually expand Northstar's ski operations to the challenging
additional terrain it owns on both North Lookout Mountain and Sawtooth Ridge,
which are adjacent to the resort's current operations. Management believes that
the skiable acreage at Northstar could more than double with the development of
this terrain. The timing and scope of this expansion will depend on market
conditions and on an evaluation of the Company's other expansion criteria.
Mt. Cranmore holds deeded rights to develop at least 700 acres of
additional ski terrain known as the "Black Cap Mountain area" or "Black Cap."
The Black Cap easement was granted in 1951 and allows the Company to expand Mt.
Cranmore's existing ski and recreational infrastructure and develop additional
trails.
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<PAGE> 75
The Black Cap property underlying the Company's easement is privately owned and
therefore not subject to the same governmental regulations which presently
restrict the activities of many New England ski areas that are located on
national or state forest land. The Black Cap land available for development by
the Company is high-quality, mostly south and southwest-facing ski terrain
located in an area that can accommodate alpine and cross country trails, ski
lifts, snowmaking and night ski lighting. Expansion would not only significantly
increase Mt. Cranmore's skier capacity, but would also enhance the quality and
diversity of its skiable terrain. Given the resort's location in the heart of
the Mt. Washington region, the dominant tourist destination in New Hampshire,
the Company believes that expansion into Black Cap could position Mt. Cranmore
as a premier attraction in the White Mountains area and one of the largest and
most appealing resorts in New Hampshire.
Bear Mountain has received final approval from the Forest Service and local
governmental authorities of an expansion plan (the "Bear Mountain Expansion
Plan") that would, among other things, increase the resort's skiable terrain by
114 acres and increase daily skier capacity by approximately 25%. The approval,
however, is subject to numerous mitigation conditions, including a requirement
that Bear Mountain acquire and dedicate to the Forest Service two acres of
spotted owl habitat and one acre of flying squirrel habitat in exchange for each
acre proposed for development. Bear Mountain has also entered into a developer's
agreement with the City of Big Bear Lake that generally authorizes, subject to
certain conditions, the construction of up to 56 condominium units on property
currently owned by Bear Mountain. The Company does not presently have any
imminent expansion or development plans for Bear Mountain, and any future
expansion or development would depend on a variety of factors, including local
market conditions and the resolution of regulatory and Forest Service permitting
issues.
Snoqualmie Pass owns 84 acres of real property at the base of its mountain,
which is available for residential development. The developmental real estate at
Snoqualmie Pass is currently owned by the Real Estate LLC, an Unrestricted
Subsidiary of the Company. The Real Estate LLC has executed a deed of trust with
respect to the real property in favor of the holders of the Ski Lifts Preferred
Stock to secure the Real Estate LLC's obligation to purchase such preferred
stock. See "The Transactions." In the event the Real Estate LLC defaults under
its obligation to purchase the Ski Lifts Preferred Stock, the holders thereof
could foreclose on the developmental real property and deprive the Company of
the benefit thereof.
The Company, through a study commissioned by Grand Targhee, has identified
approximately 320 acres of additional skiable terrain adjacent to the resort
which could be developed with Forest Service approval. The study also contains
numerous recommendations for the further development of Grand Targhee's
infrastructure, including the creation of a European-style village center
comprising a variety of tightly-knit structures with central pedestrian streets,
plazas, commercial and recreation facilities and amenity spaces which reflect
and complement the sloped mountain topography. The village center design
includes nine additional or renovated hotel/condotel developments providing 590
additional public accommodation units, which would increase the resort's
on-mountain bed base by 615%. The village center would be built on Forest
Service land, and the Company has received preliminary approval for the
construction of the residential units envisioned by the study, together with the
development of an additional 320 acres of skiable terrain, subject to certain
conditions. Management believes that the expansion of Grand Targhee's
on-mountain bed base will be an important component in addressing the resort's
historic underutilization. The Company intends to pursue long-term development
opportunities with third parties, although the timing and scope of any such
development is still being evaluated.
The Company has no agreements, arrangements or understandings with respect
to financing the development of any of the real estate projects discussed
herein. Any future development would be subject to, among other things, the
Company's ability to obtain the necessary financing and all necessary permits
and approvals. No assurance can be given that the Company will develop
successfully any additional properties or, if completed, any such properties
will be successful. In addition, there are risks inherent in any expansion
project and in the implementation of the Company's development strategy. See
"Risk Factors -- Risks of Expansion" and "Risk Factors -- High Level of
Indebtedness and Leverage."
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MARKETING AND SALES
Staff
The Company has a total marketing staff of approximately 36 persons,
including a marketing director at each resort who reports to the corporate
director of marketing as well as to each resort's general manager. The marketing
staff at each resort is responsible for the development of resort-specific
marketing plans and also participates in the development of the Company's
overall marketing strategy.
Strategy
The Company's marketing plans are designed to attract both day skiers and
vacationers by emphasizing the Company's diverse facilities and services and
proximity to approximately 26% of the total skiers in the United States. The
Company intends to position each of its resorts as an attractive alternative to
competing regional resorts and to other forms of leisure and entertainment. The
primary objectives of the Company's marketing efforts are to (i) increase each
of its resorts' relative market share, (ii) expand the number of skiers in each
of its markets, (iii) increase skier visitation frequency and (iv) influence the
vacation destination choice of its prospective guests.
The Company's marketing efforts are predicated on knowing its guests and
understanding the markets in which it competes. Accordingly, the Company's
resorts, typically through professional marketing firms, conduct extensive
market research, including on-site guest surveys, off-site focus groups,
advertising tests and regional phone surveys. Each of the Company's resorts
develops its own resort-specific marketing program based upon its unique
qualities and characteristics as well as the demographics of its skier base.
Management believes that a major benefit of being a multiple resort operator
will be the ability to coordinate resort marketing programs in a manner that
makes them more effective. For example, the extension of Vertical Plus to all of
the Company's resorts will, in management's view, reinforce the existing
marketing programs at each resort and create significant cross-marketing
opportunities.
The Company's resorts offer a variety of terrain for alpine skiing and
snowboarding, with most providing a high percentage of intermediate trails and
well developed skier development programs, which can accommodate skiers and
snowboarders of all skill levels. Northstar markets primarily to the upper
income baby boom generation and their families residing in the San Francisco Bay
and Sacramento Valley areas as a full service, all season resort for day and
vacation guests. In addition, the resort has been successful in attracting
vacationing skiers from major Southern California markets largely through the
use of targeted marketing programs, including tour packages with major airlines.
Management believes that Northstar's diverse year round activities and services
have made it attractive to affluent families interested in recreation-centered
vacation homes. Real estate development and the resulting increase in
on-mountain bed base likewise provide Northstar with significant opportunities
for future growth. Sierra has been positioned as Lake Tahoe's economical "value"
resort, primarily targeted to families, teenagers and young adults from the
Central California Valley. Bear Mountain primarily targets generation "X" skiers
and snowboarders as well as value-oriented families from the major Southern
California metropolitan areas. Waterville Valley generally focuses on regional
and vacationing families from the Southern New Hampshire and Boston metropolitan
markets by promoting the resort's diverse year round facilities and New England
village atmosphere. Mt. Cranmore targets vacationing families (including
non-skiers) from the Boston metropolitan area by emphasizing its proximity to
the Mt. Washington 16,000 area bed base and North Conway retail and restaurant
district. Snoqualmie Pass' diversity of terrain among its four resorts and
significant night skiing programs allow the resort to target multiple
demographic groups including families, teenagers and young adults from the
Seattle/ Tacoma metropolitan area. Grand Targhee primarily targets destination
skiers visiting the Jackson Hole area as well as day skiers and regional
overnight skiers from Wyoming, Idaho and Utah.
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Programs
The Company has developed a number of specific marketing programs to
achieve its objectives, including the following:
- Customer loyalty programs
- Multimedia advertising
- Data-based marketing programs
- Extensive skier development programs
- Strategic marketing alliances
- School, group and business affiliations
Customer loyalty programs. The Company believes that the success of each
of its resorts depends, in large part, on its ability to retain and increase the
skier visitation frequency of its existing customer base. For example,
approximately 82% of Northstar's 1995/96 ski season skier days were attributable
to guests who had visited the resort on at least one other occasion. The Company
believes a critical component to developing customer loyalty will be the
expansion of Vertical Plus, the Company's electronic, frequent skier program.
For an annual membership fee of $49, Vertical Plus members receive a special,
personalized identification wristband containing a preprogrammed computer
microchip which acts as their lift access for the season. In addition to
offering daily ticket discounts, the system tracks the amount of vertical feet
skied at participating resorts and rewards members with prizes based on the
number of vertical feet skied in a season. Other benefits of the program include
members-only lift lines, direct lift access, the convenience of being able to
make cashless retail transactions and electronic messaging. An additional major
benefit provided by this proprietary program is a state-of-the-art data
collection system that provides "real-time" information for marketing,
operations and capital investment analysis. The program was created in 1992 and
currently has approximately 16,000 members, which accounted for approximately
11% of all skier days recorded at Northstar and Sierra during the 1995/96 ski
season. Vertical Plus is currently in operation at Northstar, Sierra and Bear
Mountain, and will be extended to the Company's other resorts in the near
future.
Multimedia advertising. The Company's marketing efforts include print,
broadcast, outdoor, Internet and direct mail advertising, with the particular
method tailored for each resort and existing market opportunities. The Company
is also very active in a variety of promotional programs designed to attract
guests from population centers in and around the Los Angeles, San Diego, San
Francisco, Sacramento and Boston metropolitan areas and states with large skier
populations such as Texas, Illinois, Florida and New York. For example, the
Company's Northstar and Sierra resorts have participated in extensive
cooperative marketing with other Lake Tahoe resorts to promote the region as a
premier vacation destination.
Data-based marketing programs. Primarily through the information obtained
from Vertical Plus and extensive market surveys and other market research, the
Company maintains a database containing detailed information on its existing
customers. Currently, the database contains information on the Company's
California Resorts, but is currently being updated with customer information
from the Company's other resorts. Management believes that database marketing is
an effective and efficient method to identify, target and maintain an on-going
relationship with the Company's best customers. For example, the Company has
been successful in the use of targeted direct mailings, which are designed to
match customer preferences with special ski package offers to build peak and
off-peak volume. Management believes that these types of relationship-based
marketing programs build guest loyalty and play an important role in solidifying
a resort's existing customer base.
Extensive skier development programs. The Company's resorts operate a
variety of skier development programs designed to improve the skills of children
and beginners, as well as more advanced skiers and snowboarders. Management
believes that these development programs increase skier days at the Company's
resorts by expanding the total market of skiers and making skiing more
enjoyable. Northstar, Sierra and Waterville Valley operate ski schools that are
consistently rated among the best in their respective regions. In addition,
several of the Company's resorts have introduced a development program, Vertical
Improvement, geared toward intermediate and advanced skiers, which offers free
specialized instruction and daily training. Northstar has also been an industry
leader in developing interesting terrain features and trails designed to
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improve the skill levels of its guests. For example, the resort recently
developed four "terrain feature" ski trails geared toward its intermediate and
advanced-level guests. The Company intends to expand its highly successful
skiing and snowboarding instruction programs developed at Northstar and Sierra
to all of its resorts over the next two ski seasons.
Strategic marketing alliances. The Company is a national ski resort
operator with more than 1.8 million skier days recorded during the 1995/96 ski
season. At least one of the Company's resorts is within driving distance of four
of the five largest consumer markets in the United States. These factors,
together with the attractive demographics of the Company's skier base, position
the Company to further develop resort marketing programs with major corporate
sponsors. Sponsorship opportunities include potential relationships with
automobile manufacturers, soft drink companies, and ski and snowboard equipment
manufacturers. Currently, Northstar and Sierra have a relationship with a major
automobile manufacturer that involves over $1 million worth of television
exposure, free use of vehicles for Company purposes and a vehicle give-away
promotion for resort guests. Management believes that the media exposure
generated by this partnership is important in building market share and the
image of the resorts, and that current joint marketing programs can be greatly
expanded.
School, group and business affiliations. The Company is dedicated to
developing special programs designed to attract school, business and other
groups. By introducing skiing and snowboarding to a wider audience, these
programs broaden the Company's customer base and have proven to be a
particularly effective way to build name recognition and brand loyalty. Ski
groups have also emerged as the fastest and most profitable way of increasing
business during non-peak periods. Marketing personnel at each resort provide
year-round assistance to group leaders in organizing and developing events.
Business affiliations are developed and maintained through corporate tickets
programs, whereby participating businesses are given an opportunity to provide
their employees with incentive-based pricing.
COMPETITION
The general unavailability of new mountains, regulatory requirements and
the high costs and expertise required to build and operate resorts present
significant barriers to entry in the ski industry. The last major new ski resort
to open in the United States was in 1989, and in the past 15 years, management
believes at least 85 proposed resorts have been stalled or abandoned due to
environmental issues and the high costs of entering into the capital intensive
ski industry. The domestic ski industry is currently composed of 519 resorts and
is highly competitive. The Company's competitive position in the markets in
which it competes is dependent upon many diverse factors, including proximity to
population centers, pricing, snowmaking capabilities, type and quality of skiing
offered, prevailing weather conditions, quality and price of complementary
services. The Company's Lake Tahoe resorts, Northstar and Sierra, face strong
competition from Lake Tahoe's seven other major ski resorts. Northstar's primary
competition in the Northwestern Lake Tahoe area is from Squaw Valley and Alpine
Meadows. Northstar also competes with major ski and non-ski destination resorts
throughout North America. Sierra primarily competes in the Southern Lake Tahoe
area with Heavenly Valley and Kirkwood. The Company's other California Resort,
Bear Mountain, competes primarily with Snow Summit and Mammoth.
The Company's New England resorts, Waterville Valley and Mt. Cranmore,
compete in the highly competitive Northeast ski market, which consists of Maine,
New Hampshire, Vermont, Massachusetts, Connecticut and New York. Within the
Northeast region, skiers can choose from over 50 major resorts and ski areas,
most of which are located in the mountainous areas of New England and eastern
New York. Waterville's primary regional competitors include Loon Mountain,
Bretton Woods, Attitash/Bear Peak and Gunstock. Mt. Cranmore's primary regional
competitors are the Attitash/Bear Peak ski resort and Gunstock.
Snoqualmie Pass competes primarily with five local ski areas, including
Crystal Mountain, Stevens Pass, White Pass, Mission Ridge and Mt. Baker.
Additional competition comes from the regional destination resorts at Mt.
Bachelor, Mt. Hood Meadows, Sun Valley and Whistler/Blackcomb, as well as other
day and weekend ski facilities in Washington, Oregon and British Columbia.
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Grand Targhee competes for day and regional overnight skiers in the
northern Rocky Mountain region as well as national destination skiers traveling
to the greater Jackson, Wyoming area. Jackson Hole Ski Resort is the resort's
largest single competitor. Grand Targhee has participated in joint marketing
programs with Jackson Hole to promote the Jackson area and many visitors to the
region ski at both resorts. Grand Targhee also competes for day and regional
overnight skiers with Sun Valley and resorts in Utah.
On a regional basis, at least one of the Company's resorts is readily
accessible to four of the five largest ski markets in the United States.
Management estimates that approximately 80% of the skiers visiting the Company's
Lake Tahoe resorts are from the San Francisco, Sacramento Valley and Central
Valley metropolitan areas, while approximately 94% of Bear Mountain's skiers are
from the Los Angeles and San Diego metropolitan areas. Waterville Valley and Mt.
Cranmore are estimated to attract more than 78% and 76%, respectively, of their
guests from the Boston metropolitan area and southern New Hampshire. Snoqualmie
Pass attracts approximately 95% of its skier guests from the Seattle/Tacoma
region. Grand Targhee primarily attracts day and regional overnight skiers from
the northern Rocky Mountain region and destination skiers visiting the region.
REGULATION AND LEGISLATION
The Company's operations are dependent upon its ownership or control over
the real estate constituting each resort. The real property presently used at
the Northstar and Mt. Cranmore resorts is owned by the Company. The Company has
the right to use a substantial portion of the real property associated with the
Bear Mountain, Sierra, Snoqualmie Pass, Grand Targhee and Waterville Valley
resorts under the terms of special use permits issued by the Forest Service. The
special use permits for the Bear Mountain, Sierra, and Waterville Valley resorts
were reissued at the time of the Company's acquisition of such resorts, with the
Bear Mountain permit expiring in 2020, the Sierra permit expiring in 2008 and
the Waterville Valley permit expiring in 2034. As a result of the acquisitions
of Snoqualmie Pass and Grand Targhee, the Company will be similarly required to
obtain reissuance of the permits for these resorts from the Forest Service. The
Company is currently seeking such reissuance and is unaware of any reason that
it will be unable to obtain reissuance of these permits in a timely manner on
satisfactory terms, as it did at Bear Mountain, Sierra, and Waterville Valley,
although no assurance can be given in this regard. The failure of the Company to
obtain the reissuance of the Snoqualmie Pass or Grand Targhee permits, or the
termination or revocation of any of its other Forest Service permits, could
result in a default under the Senior Credit Facility and/or the inability of the
Company to borrow thereunder. Assuming that the Snoqualmie Pass and Grand
Targhee permits are reissued, they will expire in 2032 and 2034, respectively.
The Forest Service has the right to approve the location, design and
construction of improvements in the permit area and many operational matters.
Under the permits, the Company is required to pay fees to the Forest Service.
Under recently enacted legislation, retroactively effective to the 1995/96 ski
season, the fees range from 1.5% to approximately 4.0% of certain revenues, with
the rate generally rising with increased revenues. However, through fiscal 1998,
the Company is required to pay the greater of (i) the fees due under the new
legislation and (ii) the fees actually paid for the 1994/95 ski season, unless
gross revenue in a ski season falls more than 10% below that of the 1994/95 ski
season, in which case the fees due are calculated solely under the new
legislation. The calculation of gross revenues includes, among other things,
lift tickets, ski school lessons, food and beverages, rental equipment and
retail merchandise revenues. Total fees paid to the Forest Service by the
Company's resorts during their last completed fiscal years were approximately
$810,000. The new legislation is not expected to have a material effect on fees
payable in future periods.
The Company believes that its relations with the Forest Service are good,
and, to the best of its knowledge, no special use permit for any major ski
resort has ever been terminated by the Forest Service. Prior to permit
termination, the USFS would be required to notify the Company of the grounds for
such action and to provide it with reasonable time to correct any curable
non-compliance.
LEGAL PROCEEDINGS
Each of the Company's resorts has pending and is regularly subject to
litigation with respect to personal injury claims relating principally to skiing
activities at its resorts. The Company and each of its resorts maintain
extensive liability insurance that the Company considers adequate to insure
claims related to usual
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and customary risks associated with the operation of ski resorts. The Company
does not believe that it or any of its resorts are involved in any litigation
that will, individually or in the aggregate, have a material adverse effect on
its financial condition or future results of operations.
EMPLOYEES
As of March 31, 1997, the Company employed a full-time corporate staff of
10 persons. In addition, the Company's resorts employ an aggregate of
approximately 520 full-time and 3,500 seasonal employees. None of the employees
of the Company or its resorts is represented by a labor union, and the Company
considers its employee relations to be good.
REGULATORY MATTERS
The Company's resorts are subject to a wide variety of federal, state and
local laws and regulations relating to land use, water resources, discharge,
storage, treatment and disposal of various materials and other environmental
matters. Management believes that the Company's resorts are presently in
compliance with all land use and environmental laws, except where non-compliance
is not expected to result in a material adverse effect on its financial
condition. The Company also believes that the cost of complying with known
requirements, as well as anticipated investigation and remediation activities,
will not have a material adverse effect on its financial condition or future
results of operations. However, failure to comply with such laws could result in
the imposition of severe penalties and other costs or restrictions on operations
by government agencies or courts that could adversely affect operations.
The Company has not received any notice of material non-compliance with
permits, licenses or approvals necessary for the operation of its properties or
of any material liability under any environmental law or regulation. However, at
Grand Targhee, the Wyoming Department of Environmental Quality (the "DEQ") has
issued a Notice of Violation of state water pollution requirements based on
alleged discharge from a wastewater lagoon without a permit. The Company expects
to enter into an amended consent order with the DEQ requiring construction and
operation of a new wastewater facility by November 1998 at a cost ranging from
approximately $750,000 to $1.0 million. Penalties for the alleged noncompliance
have not been sought by the DEQ or by any other governmental authority or
person, although such action could be pursued.
Pursuant to the air emissions reduction program currently in effect in the
area regulated by the South Coast Air Quality Management District (the
"SCAQMD"), where Bear Mountain is located, Bear Mountain will be required to
"bank" emission credits from other facilities which have already implemented
NO(x) emission reductions. The Company may purchase "banked" emission credits in
a one-time transaction at the current market rate of approximately $681,000 or
over time up to the year 2010 at prevailing market rates.
The Company believes it has all permits, licenses and approvals from
governmental authorities material to the operation of the resorts as currently
configured. As a result of the Acquisitions, the Company has been required, and
will in the future be required, to obtain certain governmental approvals with
respect to the transfer of certain licenses and permits, including licenses to
sell alcoholic beverages at certain of its resorts. The Company will continue to
seek such approvals and is unaware of any reason that it will be unable to
obtain such approvals in a timely manner on satisfactory terms, although no
assurances can be given in this regard.
The operations at the resorts require permits and approvals from certain
federal, state and local authorities. In addition, the Company's operations are
heavily dependent upon its continued ability, under applicable laws,
regulations, policies, permits, licenses or contractual arrangements, to have
access to adequate supplies of water with which to make snow and service the
other needs of its facilities, and otherwise to conduct its operations. There
can be no assurance that new applications of existing laws, regulations and
policies, or changes in such laws, regulations and policies will not occur in a
manner that could have a detrimental effect on the Company, or that material
permits, licenses or agreements will not be canceled, non-renewed, or renewed on
terms materially less favorable to the Company. Major expansions of any one or
more resorts could require, among other things, the filing of an environmental
impact statement or other documentation with the Forest Service and state or
local governments under the NEPA and certain state or local counterparts if it
is determined that the expansion may have a significant impact upon the
environment. Although the Company has no reason to believe that it will not be
successful in implementing its operations and development plans, no assurance
can be given that necessary permits and approvals will be obtained.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth information with respect to the directors,
executive officers and other key employees of the Company.
<TABLE>
<CAPTION>
YEARS IN
NAME AGE POSITION INDUSTRY
- ---- --- -------- --------
<S> <C> <C> <C>
George N. Gillett, Jr.................. 58 Chairman of the Board of Directors;
Chief Executive Officer; Director 13
Jeffrey J. Joyce....................... 35 Executive Vice President, Finance 8
Nanci N. Northway...................... 42 Vice President, Treasurer, Chief
Financial Officer and Secretary 20
Julianne Maurer........................ 40 Corporate Director of Marketing 13
Timothy Silva.......................... 45 General Manager -- Northstar 23
John A. Rice........................... 41 General Manager -- Sierra 16
Catherine M. Thero..................... 34 General Manager -- Bear Mountain 10
Bruce S. McCloy........................ 48 General Manager -- Waterville 24
Timothy M. Harris...................... 32 General Manager -- Mt. Cranmore 8
Chris Thompson......................... 49 General Manager -- Snoqualmie Pass 33
Larry H. Williamson.................... 55 General Manager -- Grand Targhee 21
</TABLE>
George N. Gillett, Jr. Mr. Gillett has been the Chairman of the Board of
Directors of the Company since its formation in October 1996 and Chief Executive
Officer since February 1997. Mr. Gillett served as Chairman from 1977 until
September 1996 of Gillett Holdings, Inc. (which was renamed Vail Resorts, Inc.
in 1996). Gillett Holdings, Inc. owned Packerland Packing Company, Inc. until
its sale in 1994, the Vail ski resort since its acquisition in 1985 and various
media properties, including a controlling interest in SCI Television, Inc. from
1987 until 1993. Since August 1994 he has served as Chairman of Packerland
Packing Company, Inc., a meatpacking company based in Green Bay, Wisconsin. From
October 1987 until May 1993, Mr. Gillett served as Chairman and Chief Executive
Officer of SCI Television, Inc. and from May 1993 until May 1996 as President of
New World Television, Inc. (renamed from SCI Television Inc. in 1993). Mr.
Gillett filed a petition of voluntary bankruptcy under Chapter 7 of the United
States Bankruptcy Code on August 13, 1992 and was discharged from bankruptcy on
July 27, 1993. In addition, certain entities for which Mr. Gillett has served as
an executive officer or director, including Gillett Holdings, Inc., SCI
Television, Inc. and their respective subsidiaries, filed bankruptcy petitions,
or had bankruptcy petitions filed against them, in 1991 and 1993 under Chapter
11 of the United States Bankruptcy Code. All of these entities have since been
discharged from bankruptcy.
Jeffrey J. Joyce. Mr. Joyce has held the position of Executive Vice
President, Finance of the Company since October 1996. He also has served since
August 1994 as a Vice President of Packerland Packing Company, Inc., which is
indirectly controlled by George N. Gillett, Jr., Chairman of the Board of
Directors and Chief Executive Officer of the Company. From July 1988 until July
1993, Mr. Joyce was employed by Gillett Holdings, Inc., an affiliate of George
N. Gillett, Jr., in various financial management positions.
Nanci N. Northway. Ms. Northway has held the positions of Vice President,
Treasurer, Chief Financial Officer and Secretary of the Company since December
1996. Prior to this time, she served as Assistant Controller and Treasurer of
Trimont Land Company, Sierra-at-Tahoe, Inc. and Bear Mountain, Inc. from May
1983, July 1993 and October 1995, respectively, until the consummation of the
Acquisitions in December 1996.
Julianne Maurer. Ms. Maurer has held the position of Corporate Director of
Marketing of the Company since December 1996. Prior to this time she served as
Director of Marketing of the Fibreboard Resort Group since November 1982.
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Timothy Silva. Mr. Silva has been the General Manager of Northstar since
January 1995. Prior to this time, he served as Director of Operations of Trimont
Land Company, the owner and operator of Northstar, since February 1992.
John A. Rice. Mr. Rice has been the General Manager of Sierra since July
1993. Prior to this time, he served as Vice President of Administration of Bear
Mountain, Ltd. (the predecessor of Bear Mountain, Inc.) since July 1988.
Catherine M. Thero. Ms. Thero has been the General Manager of Bear
Mountain, since March 1996. Prior to this time, she served as a Senior Associate
of Sno.engineering, Inc. since May 1995. From June 1989 until May 1995, Ms.
Thero was the President of Resort Consulting Group. From May 1992 until January
1994, Ms. Thero was the Director of Projects at the Sunday River Ski Resort in
Maine.
Bruce S. McCloy. Mr. McCloy has been the General Manager of Waterville
Valley since October 1994. From October 1994 until November 1996, he also served
as Vice President of Waterville Valley Ski Area, Ltd., the previous owner of the
Waterville Valley ski resort. From August 1977 to October 1994, Mr. McCloy
served as Vice President of Marketing and Resort Operations of Mount Snow Ltd.
Timothy M. Harris. Mr. Harris has been the General Manager of Mount
Cranmore since July 1995. From October 1994 to July 1995, Mr. Harris served as
Skier Services Manager, and from November 1987 to October 1994, he served Guest
Services Manager, at Sugarbush Resort.
Chris Thompson. Mr. Thompson became the General Manager of Snoqualmie Pass
upon consummation of the Snoqualmie Acquisition. He has also served as Chief
Operating Officer and Vice President of Ski Lifts, Inc., the owner and operator
of Snoqualmie Pass, since 1994 and 1992, respectively. From 1987 to 1992, he
served as General Manager of the Alpental ski resort at Snoqualmie Pass.
Larry H. Williamson. Mr. Williamson became the General Manager of Grand
Targhee upon consummation of the Grand Targhee Acquisition. Mr. Williamson has
held the position of General Manager of Grand Targhee Incorporated, the owner
and operator of Grand Targhee, since March 1996. Prior to this time, he served
as Director of Mountain Operations of Grand Targhee since 1989.
EMPLOYMENT AND OTHER AGREEMENTS
The Company is a party to an agreement with Nanci N. Northway, Vice
President, Treasurer, Chief Financial Officer and Secretary of the Company,
pursuant to which Ms. Northway is entitled to a one-time payment of $100,000
within 90 days following an initial public offering of the Company's common
stock or a change in control of the Company, in each case occurring while Ms.
Northway is an employee of the Company.
DIRECTORS
All directors of Booth Creek and Parent hold office until the respective
annual meeting of stockholders next following their election, or until their
successors are elected and qualified. George N. Gillett, Jr. is the sole
director of Booth Creek. Pursuant to the Stockholders Agreement, John Hancock
has nominated Dean C. Kehler to serve on Parent's Board of Directors and the
Gillett Family Partnership has nominated George N. Gillett, Jr. to serve as
Chairman of the Board of Directors of Parent and Jeffrey J. Joyce to serve as a
director. One additional nomination to Parent's Board of Directors remains to be
made by each of John Hancock and the Gillett Family Partnership. See "Certain
Transactions -- Stockholders Agreement." No directors of Booth Creek or Parent
receives compensation for acting in such capacity.
Since August 1995, Mr. Kehler has been a Managing Director of the Initial
Purchaser, an affiliate of Canadian Imperial Bank of Commerce and the CIBC
Merchant Fund, and has investment responsibilities with respect to the CIBC
Merchant Fund. From February 1990 to August 1995, Mr. Kehler was a Managing
Director of Argosy Group, L.P., an investment banking firm.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's compensation policies are determined and executive officer
compensation decisions are made by the Board of Directors. Mr. George N.
Gillett, Jr. has been the sole director of the Company since its formation in
October 1996.
CERTAIN TRANSACTIONS
THE FINANCING TRANSACTIONS
Since its formation in October 1996, the Company has engaged in a series of
related transactions for the purpose of raising capital to finance the
Acquisitions. As part of these transactions, (i) in November and December 1996
Booth Creek Partners Limited II, L.L.L.P. (the "Gillett Family Partnership")
contributed an aggregate of $7.5 million to Parent in exchange for 3,630 shares
of Class A Common Stock of Parent; (ii) on November 27, 1996, Parent entered
into a Securities Purchase Agreement (the "Hancock Securities Purchase
Agreement") with John Hancock Mutual Life Insurance Company ("John Hancock")
pursuant to which John Hancock purchased for an aggregate consideration of $42.5
million (a) 2,558 shares of Parent's Class B Common Stock (the "Hancock
Purchased Common Shares"), (b) warrants (the "Hancock Warrants") to purchase an
additional 2,500 shares of Parent's Class B Common Stock (the "Hancock
Underlying Shares") and (c) $35.0 million aggregate principal amount of Parent's
notes, including the Hancock Option Notes (the "Hancock Parent Financing Debt");
(iii) on November 27, 1996, Parent entered into a Securities Purchase Agreement
(the "CIBC Merchant Fund Securities Purchase Agreement" and, together with the
Hancock Securities Purchase Agreement, the "Securities Purchase Agreements")
with the CIBC Merchant Fund pursuant to which the CIBC Merchant Fund purchased
for an aggregate consideration of $6.5 million (a) 512 shares of Parent's Class
B Common Stock (the "CIBC Merchant Fund Purchased Common Shares" and, together
with the Hancock Purchased Common Shares, the "Purchased Common Shares"), (b)
warrants (the "CIBC Merchant Fund Warrants" and, together with the Hancock
Warrants, the "Warrants") to purchase an additional 400 shares of Parent's Class
B Common Stock (the "CIBC Merchant Fund Underlying Shares" and, together with
the Hancock Underlying Shares, the "Underlying Shares") and (c) $5.0 million
aggregate principal amount of Parent's notes (the "CIBC Merchant Fund Parent
Financing Debt"); and (iv) in December 1996, using the proceeds of the
foregoing, Parent made an equity contribution of $40.0 million and a loan of
$10.0 million to the Company, which was used to consummate the Acquisitions (the
foregoing transactions are collectively referred to herein as the "Financing
Transactions"). The loan from Parent to the Company had terms identical to the
Hancock Option Notes and was repaid in connection with the consummation of the
Initial Offering.
In connection with the consummation of the Initial Offering, the Hancock
Option Notes were exchanged for notes of the Company with substantially
identical terms and repaid with a portion of the proceeds of the Initial
Offering. The remaining portion of the Hancock Parent Financing Debt and the
CIBC Merchant Fund Parent Financing Debt (collectively, the "Parent Financing
Debt") matures on November 27, 2008 and bears interest at 12% per annum, if paid
in cash, or 14% per annum, if paid in kind, payable semi-annually on each May 27
and November 27 commencing on May 27, 1997.
The Securities Purchase Agreements, which govern the Parent Financing Debt,
contain financial covenants relating to the maintenance of ratios of (a)
consolidated total debt to consolidated cash flow, (b) consolidated cash flow to
consolidated fixed charges and (c) consolidated cash flow to consolidated
interest charges. The Securities Purchase Agreements also contain restrictive
covenants pertaining to the management and operation of Parent and its
subsidiaries, including the Company. The covenants include, among others,
significant limitations on discounts or sales of receivables, funded debt and
current debt, dividends and other stock payments, redemption, retirement,
purchase or acquisition of equity interests in Parent and its subsidiaries,
transactions with affiliates, investments, liens, issuances of stock, asset
sales, acquisitions, mergers, fundamental corporate changes, tax consolidation,
modifications of certain documents and leases. The Securities Purchase
Agreements further required that all of the issued and outstanding common stock
of Booth Creek be pledged upon consummation of the Initial Offering to secure
the Parent
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Financing Debt and provide that Parent shall cause Booth Creek to pay cash
dividends to Parent in the maximum amount permitted by law, subject to
restrictions contained in the Company's debt agreements, in order to satisfy
Parent's interest payment obligations under the Parent Financing Debt.
The Securities Purchase Agreements provide for events of default customary
in agreements of this type, including: (i) failure to make payments when due;
(ii) breach of covenants; (iii) bankruptcy defaults; (iv) breach of
representations or warranties in any material respect when made; (v) default by
Parent or any of its subsidiaries under any agreement relating to debt for
borrowed money in excess of $1.0 million in the aggregate; (vi) final judgments
for the payment of money against Parent or any of its subsidiaries in excess of
$1.0 million in the aggregate; (vii) ERISA defaults; (viii) any operative
document ceasing to be in full force and effect; (ix) any enforcement of liens
against Parent or any of its subsidiaries; and (x) a change of control of
Parent. The Securities Purchase Agreements contain financial and operating
covenants, events of default and other provisions customary for agreements of
this type.
The Warrants are exercisable, subject to certain conditions, at a per share
price of $0.01 (as adjusted by certain anti-dilution provisions) at any time
prior to November 27, 2008, on which date all unexercised Warrants will be
deemed automatically exercised. The Securities Purchase Agreements provide that
the holders of at least two-thirds of the Purchased Common Shares and the
Underlying Shares will each be entitled to require Parent to register their
shares under the Securities Act for resale to the public. The holders of
Registrable Shares (as defined in the Securities Purchase Agreements) are also
entitled to certain piggyback and other registration rights, subject in all
cases to certain qualifications.
STOCKHOLDERS AGREEMENT
In connection with the consummation of the Financing Transactions, Parent,
the Gillett Family Partnership, John Hancock and the CIBC Merchant Fund entered
into a Stockholders Agreement dated November 27, 1996 (the "Stockholders
Agreement"). Pursuant to the Stockholders Agreement, the Board of Directors of
Parent shall consist of five directors, three of whom shall be designated by the
Gillett Family Partnership and two of whom (the "Unaffiliated Directors") shall
be designated by John Hancock. No transaction between Parent or any of its
subsidiaries, including the Company, and George N. Gillett, Jr. or any of his
affiliates may be approved by the Board of Directors of Parent unless such
transaction is approved by all of the Unaffiliated Directors. Moreover, without
the consent of John Hancock and the CIBC Merchant Fund (or their respective
transferees) (collectively, the "Institutional Investors"), neither Parent nor
any subsidiary of Parent, including the Company, may issue any equity securities
except, in the case of Parent, for certain enumerated permitted issuances and,
in the case of any subsidiary of Parent, issuances to Parent or to any
wholly-owned subsidiary of Parent. With respect to issuance of equity securities
of Parent requiring the approval of the Institutional Investors, the
Institutional Investors also are entitled to certain preemptive rights. In
addition, the Stockholders Agreement provides that neither Parent nor any of its
subsidiaries, including the Company, may acquire any assets or business from any
other person (other than inventory and equipment in the ordinary course of
business) without the consent of the Required Institutional Investors (as
defined in the Stockholders Agreement).
The Stockholders Agreement further provides that, subject to certain
exceptions, the Gillett Family Partnership may not sell, assign, gift, pledge or
otherwise transfer any equity securities of Parent beneficially owned by it
(other than to an affiliate of the Gillett Family Partnership that becomes a
party to the Stockholders Agreement) prior to November 27, 1999. In the event
that at any time after such date, the Gillett Family Partnership shall not hold
a majority of the outstanding Class A Common Stock of Parent as a result of the
conversion of shares of Class B Common Stock into Class A Common Stock, the
Stockholders Agreement requires that Parent grant to the Gillett Family
Partnership registration rights with respect to its equity securities which are
in all material respects the same as those provided to the Institutional
Investors under the Securities Purchase Agreements.
In addition to the foregoing, the Stockholders Agreement gives each party
thereto certain co-sale rights and rights of first offer upon the sale or other
transfer of any equity securities of Parent by any other party, and requires
that, as a condition to the issuance or transfer of any equity securities of
Parent to any third party
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(other than a person who acquires such securities pursuant to an effective
registration statement under the Securities Act) that such person become a party
to the Stockholders Agreement and agree to be bound by all the terms and
conditions thereof.
The provisions of the Stockholders Agreement relating to the composition of
the Board of Directors of Parent terminate following any transfer or transfers
of equity securities of Parent by the Gillett Family Partnership, John Hancock
and the CIBC Merchant Fund (other than a transfer by any of them to any of their
respective affiliates) if after giving effect to any such transfer or transfers
the Gillett Family Partnership, John Hancock and the CIBC Merchant Fund have
transferred in the aggregate 20% or more of the equity securities of Parent, as
calculated in the Stockholders Agreement. The Stockholders Agreement shall
terminate, and be of no force or effect, upon the consummation of a Qualified
Public Offering (as defined in the Stockholders Agreement).
Pursuant to the Stockholders Agreement, John Hancock has nominated Dean C.
Kehler to serve on Parent's Board of Directors. The Gillett Family Partnership
has nominated George N. Gillett, Jr. to serve as Chairman of the Board of
Directors of Parent and Jeffrey J. Joyce to serve as a director. One additional
nomination to Parent's Board of Directors remains to be made by each of John
Hancock and the Gillett Family Partnership. George N. Gillett, Jr., Chairman and
Chief Executive Officer of the Company, is the managing general partner of the
Gillett Family Partnership. See "Management -- Directors."
THE INITIAL OFFERING
CIBC Wood Gundy Securities Corp. was the Initial Purchaser in the Initial
Offering and received compensation in such capacity. CIBC Wood Gundy Securities
Corp. is an affiliate of CIBC, which was the lender under the Bridge Notes, and
is an affiliate of the CIBC Merchant Fund, which owns 512 shares, and Warrants
to acquire an additional 400 shares, of Class B Common Stock of Parent and $5.0
million aggregate principal amount of notes issued by Parent.
MANAGEMENT AGREEMENT WITH BOOTH CREEK, INC.
Booth Creek, Inc. (the "Management Company") provides management services
to the Company, the Parent and the Company's subsidiaries pursuant to the
Management Agreement dated November 27, 1996 (the "Management Agreement")
between the Company and the Management Company. The Management Company provides
the Company, the Parent and the Company's subsidiaries with financial advice
with respect to, among other matters, cash management, accounting and data
processing systems and procedures, budgeting, equipment purchases, business
forecasts, treasury functions and investor relations. The Management Company
also provides general supervision and management advice concerning tax, legal
and corporate finance matters, administration and operation, personnel matters,
business insurance and the employment of consultants, contractors and agents.
Under the terms of the Management Agreement, the Company provides customary
indemnification, reimburses certain costs and pays the Management Company an
annual management fee of $350,000 plus an operating bonus, not to exceed
$400,000, equal to 2.5% of the excess of Consolidated EBITDA (as defined in the
Securities Purchase Agreements) for such year over $25 million. The obligation
of the Company to make payments under the Management Agreement is subject to the
provisions of the Securities Purchase Agreements.
Since the formation of the Company, the Management Company and certain of
its affiliates have made advances and deposits, and have incurred fees and
expenses, in connection with certain of the Acquisitions for which they were
later reimbursed by the Company pursuant to the Management Agreement.
Reimbursement amounts did not include any payment of interest.
The Management Agreement will terminate automatically upon consummation of
a sale of all or substantially all of the assets or stock of the Parent and its
subsidiaries on a consolidated basis, and may be terminated earlier for certain
cause by either the Company or the Management Company. George N. Gillett, Jr.,
Chairman and Chief Executive Officer of the Company is the sole shareholder,
sole director and the Chief Executive Officer of the Management Company.
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OWNERSHIP AND CONTROL
The Company is a wholly-owned subsidiary of Booth Creek Ski Group, Inc., a
Delaware corporation ("Parent"). The following table sets forth information
concerning the beneficial ownership of Parent's Common Stock (including Class A
Common Stock and Class B Common Stock) as of March 31, 1997 by (i) each person
known to the Company to own beneficially more than 5% of the outstanding Common
Stock of Parent, (ii) by each director and executive officer of the Company and
(iii) all directors and executive officers of the Company as a group. Each share
of Parent's Class B Common Stock is non-voting (except with respect to certain
amendments to the certificate of incorporation and bylaws of Parent and as
otherwise required by the General Corporation Law of the State of Delaware) and
is convertible into one share of voting Class A Common Stock of Parent at any
time, subject to applicable regulatory approvals. All shares are owned with sole
voting and investment power, unless otherwise indicated.
<TABLE>
<CAPTION>
PARENT'S CLASS A PARENT'S CLASS B
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- ------------------
BENEFICIAL OWNER SHARES % SHARES %
- ---------------- -------- ----- ------- ----
<S> <C> <C> <C> <C>
Booth Creek Partners Limited II, L.L.L.P.................. 3,630 100%
6755 Granite Creek Road
Teton Village, Wyoming 83025
John Hancock Mutual Life Insurance Company................ 5,058(1) 58% 5,058(1) 85%
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
CIBC WG Argosy Merchant Fund 2, L.L.C..................... 912(2) 20% 912(2) 15%
425 Lexington Avenue, 3rd Floor
New York, New York 10017
George N. Gillett, Jr..................................... 3,630(3) 100%
Chairman of the Board of the Company
Rose Gillett.............................................. 3,630(3) 100%
6755 Granite Creek Road
Teton Village, Wyoming 83025
Jeffrey J. Joyce.......................................... 544.5(4) 15%
Executive Vice President, Finance of the Company
Total Executive Officers and Directors as a Group......... 3,630(5) 100%
</TABLE>
- ---------------
(1) Comprised of 2,558 shares of Class B Common Stock of Parent and Warrants to
purchase 2,500 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(2) Comprised of 512 shares of Class B Common Stock of Parent and Warrants to
purchase 400 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(3) Booth Creek Partners Limited II, L.L.L.P. owns directly 3,630 shares of
Class A Common Stock of Parent. George N. Gillett, Jr. is the managing
general partner and Rose Gillett is a co-general partner of Booth Creek
Partners Limited II, L.L.L.P. and each may be deemed to possess shared
voting and/or investment power with respect to the interests held therein.
Accordingly, the beneficial ownership of such interests may be attributed
to George N. Gillett, Jr. and Rose Gillett. Rose Gillett is the wife of
George N. Gillett, Jr.
(4) Represents shares of Class A Common Stock of Parent that Mr. Joyce has an
option to purchase from Booth Creek Partners Limited II, L.L.L.P. (the
"Option") pursuant to that certain Option Letter
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<PAGE> 87
Agreement dated December 3, 1996. The Option is exercisable, in whole or in
part, at any time on or prior to December 1, 2006 at an initial exercise
price equal to $2,066.12 per share, which exercise price shall increase by
$55.10 on December 1, 1997 and on each December 1 thereafter. The shares
subject to the Option and the per share exercise price are subject to
adjustment under certain circumstances, and the obligation of Booth Creek
Partners Limited II, L.L.L.P. to sell shares of Class A Common Stock of
Parent upon exercise of the Option is subject to compliance with applicable
securities laws.
(5) Represents 3,630 shares of Class A Common Stock of Parent owned by Booth
Creek Partners Limited II, L.L.L.P., of which George N. Gillett, Jr. may be
deemed to be the beneficial owner. Jeffrey J. Joyce may be deemed to be the
beneficial owner of 544.5 of such shares pursuant to the Option described
in note (4) above.
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
The following is a summary of certain provisions of the Amended and
Restated Credit Agreement dated as of March 18, 1997 (the "Senior Credit
Facility"), among the Company, its subsidiaries, the financial institutions
party thereto and The First National Bank of Boston, as administrative agent
("Agent"). The following summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
Senior Credit Facility, including all of the definitions therein of terms not
defined in this Prospectus.
General. The Senior Credit Facility provides for borrowing availability of
up to $12.0 million during the period from each July 15 through each January 31
during the term of such facility and $6.0 million during the remainder of each
year. In addition, the Company is required to repay all borrowings under the
Senior Credit Facility on or before March 1 of each year and have no outstanding
indebtedness thereunder during the two months thereafter. From and after July
15, 1998, borrowing availability under the Senior Credit Facility increases to
$20.0 million upon the Company achieving a certain level of adjusted
consolidated cash flow to total debt service for any trailing four quarter
period ending on or after April 30, 1998. The Senior Credit Facility requires
the Company to escrow $5,820,000 on or prior to August 1, 1997 to fund the first
payment of interest payable on the Notes after the Issue Date. Pursuant to the
terms of the Senior Credit Facility, the Company may not borrow in excess of
$1,430,000 thereunder to fund such interest payment. The Company expects to fund
such interest payment from an equity contribution, available cash on hand
(including any remaining proceeds from the Initial Offering) and/or alternative
financing sources. Borrowings under the Senior Credit Facility are collectively
referred to herein as the "Loans." See "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Interest. For purposes of calculating interest, the Loans can be, at the
election of the Company, Base Rate Loans or LIBOR Rate Loans or a combination
thereof. Base Rate Loans will bear interest at the sum of (a) a margin of
between 0% and .50%, depending on the level of consolidated EBITDA of the
Company and its subsidiaries (as determined pursuant to the Senior Credit
Facility), plus (b) the higher of (i) The First National Bank of Boston's base
rate or (ii) the federal funds rate plus .50%. LIBOR Rate Loans will bear
interest at the LIBOR Rate plus a margin of between 2.0% and 3.0%, depending on
the level of consolidated EBITDA.
Repayment. Subject to the provisions of the Senior Credit Facility, the
Company may, from time to time, borrow, repay and reborrow under the Senior
Credit Facility. The entire unpaid balance under the Senior Credit Facility is
payable on the second anniversary of the closing date of the Senior Credit
Facility.
Security. Borrowings under the Senior Credit Facility are secured by (i) a
pledge to the Agent for the ratable benefit of the financial institutions party
to the Senior Credit Facility of all of the capital stock of the Company's
principal subsidiaries and (ii) a grant of a security interest in substantially
all of the consolidated assets of the Company and its Restricted Subsidiaries.
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<PAGE> 88
Covenants. The Senior Credit Facility contains financial covenants
relating to the maintenance of (i) ratios of (a) financing debt to consolidated
cash flow, (b) adjusted consolidated cash flow to total debt service and (c)
consolidated cash flow to consolidated interest expense, (ii) consolidated net
worth and (iii) consolidated cash flow. The Senior Credit Facility also contains
restrictive covenants pertaining to the management and operation of the Company
and its subsidiaries. The covenants include, among others, significant
limitations on indebtedness, guarantees, mergers, acquisitions, fundamental
corporate changes, capital expenditures, asset sales, leases, investments, loans
and advances, liens, dividends and other stock payments, transactions with
affiliates, optional payments and modification of debt instruments and issuances
of stock.
Events of Default. The Senior Credit Facility provides for events of
default customary in facilities of this type, including: (i) failure to make
payments when due; (ii) breach of covenants; (iii) breach of representations or
warranties in any material respect when made; (iv) default by the Company or
Parent under any agreement relating to financing debt for borrowed money in
excess of $1.0 million in the aggregate; (v) bankruptcy defaults; (vi) judgments
in excess of $1.0 million; (vii) ERISA defaults; (viii) any security document
ceasing to be in full force and effect or any security interest created thereby
ceasing to be enforceable and of the same effect and priority purported to be
created thereby; and (ix) a change of control of the Company.
ASC SELLER NOTE
As part of the purchase price for the acquisitions of the New Hampshire
Resorts, Booth Creek Ski Acquisition Corp., a wholly-owned subsidiary of the
Company, and Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski Resort,
Inc., wholly-owned subsidiaries of Booth Creek Ski Acquisition Corp. and the
respective owners of the assets of the Waterville Valley and Mt. Cranmore
resorts, jointly and severally issued a promissory note to American Skiing
Company in the aggregate principal amount of $2.75 million (the "ASC Seller
Note"). The ASC Seller Note matures on June 30, 2004 and bears interest at 12%
per annum payable semi-annually on each June 30 and December 31 commencing on
June 30, 1997.
SKI LIFTS PREFERRED STOCK PURCHASE AGREEMENT
In connection with the consummation of the Snoqualmie Acquisition, Ski
Lifts issued 28,000 shares of Ski Lifts Preferred Stock to its former
shareholders having an aggregate liquidation preference equal to $3.5 million,
the aggregate estimated fair market value of the developmental real estate held
by the Real Estate LLC and the real estate subject to the Real Estate Option.
Concurrently with these transactions, the Real Estate LLC entered into the
Preferred Stock Purchase Agreement pursuant to which the Real Estate LLC is
required to purchase the Ski Lifts Preferred Stock, on a quarterly basis over
the five years following the date of the Snoqualmie Acquisition, at a purchase
price equal to the liquidation preference thereof plus accrued dividends to the
date of purchase. The Company advanced the first three quarterly payments under
the Preferred Stock Purchase Agreement at or prior to the closing date of the
Initial Offering. The Real Estate LLC's obligations under the Preferred Stock
Purchase Agreement are secured by a first priority lien on the development real
estate held by the Real Estate LLC and substantially all of its other assets.
The Ski Lifts Preferred Stock provides for a 9% cumulative dividend and is
redeemable at the option of Ski Lifts without premium. In addition, pursuant to
the terms of the Ski Lifts Preferred Stock, the holders thereof have no
redemption rights and are entitled to receive dividend payments only when and if
declared by the board of directors of Ski Lifts.
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<PAGE> 89
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company to the Initial Purchaser
pursuant to the Purchase Agreement. The Initial Purchaser subsequently resold
the Old Notes to qualified institutional buyers in reliance on Rule 144A under
the Securities Act. As a condition to the Purchase Agreement, the Company and
the Guarantors entered into the Registration Rights Agreement with the Initial
Purchaser pursuant to which the Company and the Guarantors have agreed, for the
benefit of the holders of the Old Notes, at the Company's cost, to use their
best efforts to (i) file the Exchange Offer Registration Statement within 45
days after the date of the original issue of the Old Notes with the Commission
with respect to the Exchange Offer for the New Notes; (ii) use their best
efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act within 150 days after the date of the
original issuance of the Old Notes and (iii) unless the Exchange Offer would not
be permitted by applicable law or Commission policy, commence the Exchange Offer
and use their best efforts to issue on or prior to 60 days after the date on
which the Exchange Offer Registration Statement was declared effective by the
Commission (the "Exchange Offer Effectiveness Date"). Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the New
Notes in exchange for surrender of the Old Notes. The Company will keep the
Exchange Offer open for not less than 20 days (or longer if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to the holders of the Old Notes. For each Old Note surrendered to the Company
pursuant to the Exchange Offer, the holder of such Old Note will receive a New
Note having a principal amount equal to that of the surrendered Old Note.
Interest on each Old Note will accrue from the last interest payment date on
which interest was paid on the Old Note surrendered in exchange therefor or, if
no interest has been paid on such Old Note, from the date of its original issue.
Interest on each New Note will accrue from the date of its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the New Notes will in general be
freely tradeable after the Exchange Offer without further registration under the
Securities Act. However, any purchaser of Old Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing the New Notes (i) will not be able to rely on the interpretation of
the staff of the Commission, (ii) will not be able to tender its Old Notes in
the Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Old Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage, in distribution of the
New Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act, and (v) the
holder or any such other person acknowledges that if such holder or any other
person participates in the Exchange Offer for the purpose of distributing the
New Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the New
Notes and cannot rely on those no-action letters. As indicated above, each
Participating Broker-Dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that it (i) acquired the Old Notes for
its own account as a result of market-making activities or other trading
activities, (ii) has not entered into any arrangement or understanding with the
Company or any "affiliate" of the Company (within the meaning of Rule 405 under
the Securities Act) to distribute the New Notes to be received in the Exchange
Offer and (iii) will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. For a
description of the procedures for resales by Participating Broker-Dealers, see
"Plan of Distribution."
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<PAGE> 90
In the event that changes in the law or the applicable interpretations of
the staff of the Commission do not permit the Company to effect such an Exchange
Offer, or if for any other reason the Exchange Offer is not consummated within
210 days of the date of the original issuance of the Old Notes, the Company and
the Guarantors will (i), as promptly as possible, file the Shelf Registration
Statement covering resales of the Old Notes, (ii) use their respective best
efforts to cause the Shelf Registration Statement to be declared effective under
the Securities Act and (iii) use their respective best efforts to keep effective
the Shelf Registration Statement until three years after its effective date. The
Company will, in the event of the filing of the Shelf Registration Statement,
provide to each holder of the Old Notes copies of the prospectus which is a part
of the Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resale of the Old Notes. A holder of the Old
Notes that sells such Old Notes pursuant to the Shelf Registration Statement
generally would be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each holder of the Old Notes will be
required to deliver information to be used in connection with the Shelf
Registration Statement within the time periods set forth in the Registration
Rights Agreement in order to have their Old Notes included in the Shelf
Registration Statement and to benefit from the provisions set forth in the
following paragraph.
The Registration Rights Agreement provides that (i) the Company and the
Guarantors will file an Exchange Offer Registration Statement with the
Commission on or prior to 45 days after the date of the original issue of the
Old Notes with the Commission, (ii) the Company and the Guarantors will use
their best efforts to have the Exchange Offer Registration Statement declared
effective by the Commission on or prior to 150 days after the date of the
original issue of the Old Notes, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Company and the Guarantors
will commence the Exchange Offer and use their best efforts to issue on or prior
to 60 days after the Exchange Offer Effectiveness Date, New Notes in exchange
for all Old Notes tendered prior thereto in the Exchange Offer and (iv) if
obligated to file the Shelf Registration Statement, the Company and the
Guarantors will use their best efforts to file the Shelf Registration Statement
with the Commission in a timely fashion. If (a) the Company and the Guarantors
fail to file any of the Registration Statements required by the Registration
Rights Agreement on or before the date specified for such filing, (b) any of
such Registration Statements is not declared effective by the Commission on or
prior to the date specified for such effectiveness, or (c) the Company fails to
consummate the Exchange Offer within 60 days of the effectiveness of the
Exchange Offer Registration Statement, or (d) the Shelf Registration Statement
or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of
Transfer Restricted Securities during the period specified in the Registration
Rights Agreement (each such event referred to in clauses (a) through (d) above a
"Registration Default"), the sole remedy available to holders of the Old Notes
will be the immediate assessment of Additional Interest as follows: the per
annum interest rate on the Old Notes will increase by 0.5% during the first
90-day period the Registration Default exists and is not waived or cured and the
per annum interest rate will increase by an additional 0.25% for each subsequent
90-day period during which the Registration Default remains uncured, up to a
maximum additional interest rate of 2.0% per annum in excess of 12 1/2% per
annum. All Additional Interest will be payable to holders of the Old Notes in
cash on each March 15 and September 15, commencing with the first such date
occurring after any such Additional Interest commences to accrue, until such
Registration Default is cured. After the date on which such Registration Default
is cured, the interest rate on the Old Notes will revert to 12 1/2% per annum.
Holders of Old Notes will be required to make certain representations (as
described in the Registration Rights Agreement) in order to participate in the
Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement within the time periods set
forth in the Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Additional Interest set forth above.
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<PAGE> 91
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount outstanding Old Notes accepted in
the Exchange Offer. Holders may tender some or all of their Old Notes pursuant
to the Exchange Offer. However, Old Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes bear a Series B designation and a
different CUSIP Number from the Old Notes, (ii) the New Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (iii) the holders of the New Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for an increase in the interest rate on the Old Notes in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture.
As of the date of this Prospectus, $116,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
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In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, prior to the
Expiration Date (i) to delay accepting any Old Notes, to extend the Exchange
Offer or to terminate the Exchange Offer if any of the conditions set forth
below under "Conditions" shall not have been satisfied, by giving oral or
written notice of such delay, extension or termination to the Exchange Agent or
(ii) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered holders.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Holders of
Old Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid with the first interest payment on the New Notes on
September 15, 1997. Interest on the Old Notes accepted for exchange will cease
to accrue upon issuance of the New Notes.
Interest on the New Notes is payable semi-annually on each March 15 and
September 15, commencing on September 15, 1997.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. To be tendered effectively,
the Old Notes, Letter of Transmittal or an Agent's Message in connection with a
book-entry transfer and other required documents must be completed and received
by the Exchange Agent at the address set forth below under "Exchange Agent"
prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the
Old Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry transfer, which states that such Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
such Book-Entry Transfer Facility tendering the Notes that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against such participant.
By executing the Letter of Transmittal, each holder will make the
representations set forth above in the third paragraph under the heading "--
Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR
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<PAGE> 93
RESPECTIVE BROKERS, DEALER, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contract the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing such
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the
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tendering holders, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution,
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of
such Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent upon three New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"); (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited); (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Issuers, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no New Notes will be issued with respect thereto unless the
Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuers shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in their reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old Notes
and return all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such Old
Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn.
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: By Overnight Courier:
MARINE MIDLAND BANK MARINE MIDLAND BANK
140 Broadway -- Level A 140 Broadway -- Level A
New York, New York 10005-1180 New York, New York 10005-1180
</TABLE>
Attention: Corporate Trust Services
(registered or certified mail recommended)
By Hand:
MARINE MIDLAND BANK
140 Broadway -- Level A
New York, New York 10005-1180
Attention: Corporate Trust Services
Attention: Corporate Trust Services
Facsimile Transmission:
(212) 658-2292
Confirm by Telephone:
(212) 658-5931
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
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The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so
long as the Old Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Company), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States.
RESALE OF THE NEW NOTES
With respect to resales of New Notes, based on interpretations by the staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that a holder or other person who receives New Notes, whether
or not such person is the holder (other than a person that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) who
receives New Notes in exchange for Old Notes in the ordinary course of business
and who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the distribution
of the New Notes, will be allowed to resell the New Notes to the public without
further registration under the Securities Act and without delivering to the
purchasers of the New Notes a prospectus that satisfies the requirements of
Section 10 of the Securities Act. However, if any holder acquires New Notes in
the Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder cannot rely on the position of the
staff of the Commission enunciated in such no-action letters or any similar
interpretive letters, and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage, in the distribution of
the New Notes, (iii) the holder of any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other
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person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, and (v) the holder of any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the New Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the New Notes and cannot rely on those no-action letters. As indicated
above, each Participating Broker-Dealer that receives a New Note for its own
account in exchange for Old Notes must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. For a description of
the procedures for such resales by Participating Broker-Dealers, see "Plan of
Distribution."
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DESCRIPTION OF THE NOTES
The New Notes will be issued under an Indenture, dated as of March 18, 1997
(the "Indenture") among the Company, the Guarantors and Marine Midland Bank, as
trustee (the "Trustee"). The terms of the New Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect on
the date of the Indenture. The form and terms of the New Notes are the same as
the form and terms of the Old Notes (which they replace) except that (i) the New
Notes bear a Series B designation, (ii) the New Notes have been registered under
the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of New Notes will not be entitled to
certain rights under the Registration Rights Agreement, including the provisions
providing for an increase in the interest rate on the Old Notes in certain
circumstances relating to the timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is consummated. The New Notes are subject to
all such terms, and holders of the New Notes are referred to the Indenture and
the Act for a statement of them. The following is a summary of the material
terms and provisions of the New Notes. This summary does not purport to be a
complete description of the New Notes and is subject to the detailed provisions
of, and qualified in its entirety by reference to, the New Notes and the
Indenture (including the definitions contained therein). A copy of the form of
Indenture has been filed as an exhibit to the Exchange Offer Registration
Statement of which this Prospectus is a part. See "Available Information."
Definitions relating to certain capitalized terms are set forth under
"-- Certain Definitions" and throughout this description. Capitalized terms that
are used but not otherwise defined herein have the meanings assigned to them in
the Indenture and such definitions are incorporated herein by reference. The Old
Notes and the New Notes are sometimes referred to herein collectively as the
"Notes."
The Indenture provides for the issuance of additional series of Notes in
aggregate principal amounts of not less than $25.0 million per series, subject
to compliance with the covenant described below under "Limitation on Additional
Indebtedness" and provided that no Default or Event of Default exists under the
Indenture at the time of issuance or would result therefrom and that the
aggregate principal amount of Notes issued under the Indenture does not exceed
$200.0 million. All Notes will be substantially identical in all material
respects other than issuance dates.
GENERAL
The Notes will be general senior unsecured obligations of the Company.
The Notes will be unconditionally guaranteed, on a senior unsecured basis,
as to payment of principal, premium, if any, and interest, jointly and
severally, by all direct and indirect Restricted Subsidiaries of the Company
having either assets or stockholders equity in excess of $20,000 (including each
Restricted Subsidiary which guarantees payment of the Notes pursuant to the
covenant described under "Limitation on Creation of Subsidiaries") (the
"Guarantors").
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on March 15, 2007. The Notes are limited in aggregate
principal amount to $200.0 million. Any Notes issued after the Issue Date (other
than the Notes issuable upon exercise of the Initial Purchaser's option) can
only be issued in compliance with the covenant described under "Limitation on
Additional Indebtedness." The Notes will bear interest at a rate of 12 1/2% per
annum from the date of original issuance until maturity. Interest is payable
semi-annually in arrears on March 15 and September 15 commencing September 15,
1997, to holders of record of the Notes at the close of business on the
immediately preceding March 1 and September 1, respectively.
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<PAGE> 99
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after March 15, 2002 at the following redemption prices
(expressed as a percentage of principal amount), together, in each case, with
accrued interest to the redemption date, if redeemed during the twelve-month
period beginning on March 15, of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- -----------
<S> <C>
2002........................................................ 106.250%
2003........................................................ 104.167%
2004........................................................ 102.083%
2005 and thereafter......................................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to 30% of the original principal amount of Notes at any time and from time to
time prior to March 15, 2000 at a redemption price equal to 112.5% of the
aggregate principal amount so redeemed plus accrued interest to the redemption
date out of the Net Proceeds of one or more Public Equity Offerings; provided
that at least $77.0 million of the principal amount of Notes originally issued
remain outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 90 days following the closing of any such
Public Equity Offering.
In the event of redemption of fewer than all of the Notes, the Trustee
shall select by lot or in such other manner as it shall deem fair and equitable
the Notes to be redeemed. The Notes will be redeemable in whole or in part upon
not less than 30 nor more than 60 days' prior written notice, mailed by first
class mail to a holder's last address as it shall appear on the register
maintained by the Registrar of the Notes. On and after any redemption date,
interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants. Except
as otherwise specified, all of the covenants described below will appear in the
Indenture.
Limitation on Additional Indebtedness
The Company will not, and will not permit any Restricted Subsidiary of the
Company to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the Company's EBITDA to the Company's Consolidated
Interest Expense (determined on a pro forma basis for the last four fiscal
quarters of the Company for which financial statements are available at the date
of determination (the "Specified Period")) is greater than 2.0 to 1 and (b) no
Default or Event of Default shall have occurred and be continuing at the time or
as a consequence of the incurrence of such Indebtedness.
If, during the Specified Period or subsequent thereto and on or prior to
the date of determination, the Company or any of its Restricted Subsidiaries
shall have engaged in any Asset Sale or acquisition or shall have designated any
Restricted Subsidiary to be an Unrestricted Subsidiary or any Unrestricted
Subsidiary to be a Restricted Subsidiary, EBITDA and Consolidated Interest
Expense for the Specified Period shall be calculated on a pro forma basis giving
effect to such Asset Sale or acquisition or designation, as the case may be, and
the application of any proceeds therefrom as if such Asset Sale or acquisition
or designation had occurred on the first day of the Specified Period.
If the Indebtedness which is the subject of a determination under this
provision is Acquired Indebtedness, or Indebtedness incurred in connection with
the simultaneous acquisition of any Person, business, property or assets, or
Indebtedness of an Unrestricted Subsidiary being designated as a Restricted
Subsidiary, then such ratio shall be determined by giving effect (on a pro forma
basis, as if the transaction had occurred at the beginning of the Specified
Period) to both the incurrence or assumption of such Acquired Indebtedness or
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such other Indebtedness by the Company or any of its Restricted Subsidiaries and
the inclusion in EBITDA of the EBITDA of the acquired Person, business, property
or assets or redesignated Subsidiary.
If any Indebtedness outstanding or to be incurred (x) bears a floating rate
of interest, the interest expense on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire Specified Period (taking into account on a pro forma basis any
Interest Rate Agreement applicable to such Indebtedness if such Interest Rate
Agreement has a remaining term as at the date of determination in excess of 12
months), (y) bears, at the option of the Company or a Restricted Subsidiary, a
fixed or floating rate of interest, the interest expense on such Indebtedness
shall be computed by applying, at the option of the Company or such Restricted
Subsidiary, either a fixed or floating rate and (z) was incurred under a
revolving credit facility, the interest expense on such Indebtedness shall be
computed based upon the average daily balance of such Indebtedness during the
applicable period. For purposes of this covenant, EBITDA for the fiscal quarter
ended January 31, 1997 shall be deemed to be $5,002,000, for the fiscal quarter
ended October 31, 1996 shall be deemed to be ($924,000), for the fiscal quarter
ended July 31, 1996 shall be deemed to be ($3,344,000) and for the fiscal
quarter ended April 30, 1996 shall be deemed to be $15,156,000. Consolidated
Interest Expense for each of the four fiscal quarters in the year ended January
31, 1997 shall be deemed to be $3,682,750.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness.
Limitation on Restricted Payments
The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under "Limitation
on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) an amount equal to the excess of (x)
cumulative Adjusted EBITDA of the Company subsequent to the Issue Date
less, (y) 1.75 times cumulative Consolidated Interest Expense of the
Company subsequent to the Issue Date, plus (2) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property received
by the Company from the issue or sale, after the Issue Date, of Capital
Stock (other than Disqualified Capital Stock or Capital Stock of the
Company issued to any Subsidiary of the Company) of the Company or any
Indebtedness or other securities of the Company convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified
Capital Stock) of the Company which has been so converted or exercised or
exchanged, as the case may be, plus (3) 100% of the capital contributions
made by the Parent to the Company after the Issue Date (other than capital
contributions which constitute Indebtedness), plus (4) in the case of the
disposition or repayment of any Investment constituting a Restricted
Payment made after the Issue Date, an amount equal to the lesser of the
cash return of capital with respect to such Investment and the initial
amount of such Investment, in either case, less the cost of disposition of
such Investment, plus (5) $3,500,000. For purposes of determining under
this clause (c) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property other
than cash shall be valued at its fair market value.
The provisions of this covenant shall not prohibit (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture, (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified
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Capital Stock), or out of, the Net Proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of other shares of Capital Stock of
the Company (other than Disqualified Capital Stock), (iii) the redemption or
retirement of Indebtedness of the Company subordinated to the Notes in exchange
for, by conversion into, or out of the Net Proceeds of, a substantially
concurrent sale or incurrence of Indebtedness (other than any Indebtedness owed
to a Subsidiary) of the Company that is contractually subordinated in right of
payment to the Notes to at least the same extent as the subordinated
Indebtedness being redeemed or retired, (iv) the retirement of any shares of
Disqualified Capital Stock by conversion into, or by exchange for, shares of
Disqualified Capital Stock, or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of other shares of
Disqualified Capital Stock, (v) the payment by the Company of cash dividends to
the Parent for the purpose of paying, so long as all proceeds thereof are
promptly used by the Parent to pay, franchise taxes and federal, state and local
income taxes and interest and penalties with respect thereto, if any, payable by
the Parent, provided that any refund shall be promptly returned by the Parent to
the Company, (vi) payments to employees (other than George N. Gillett, Jr. and
Jeffrey J. Joyce) for repurchases of Capital Stock; provided, however, that the
amount of all such payments under this clause (vi) does not exceed $500,000
during any twelve month period; and provided, further, that with respect to this
clause (vi), no Default or Event of Default shall have occurred and be
continuing at the time of any such payment or will occur immediately after
giving effect to any such payment; and provided, further, that, in determining
the aggregate amount of all Restricted Payments made subsequent to the Issue
Date, all payments made pursuant to this clause (vi) shall be included, (vii)
deposits and loans, not to exceed $3,000,000 at any time outstanding, made in
connection with acquisition agreements; provided, however, that if an
acquisition is not consummated within 180 days after the deposit or loan is made
with respect to such acquisition, in determining the aggregate amount of all
Restricted Payments made subsequent to the Issue Date, such deposit or loan
shall be included, or (viii) contingent payments made in accordance with the
terms of the Purchase Agreement dated as of February 11, 1997 relating to the
acquisition of the capital stock of Grand Targhee Incorporated.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Limitation on Restricted Payments" were computed,
which calculations may be based upon the Company's latest available financial
statements, and that no Default or Event of Default exists and is continuing and
no Default or Event of Default will occur immediately after giving effect to any
Restricted Payments.
Limitations on Investments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with the
"Limitation on Restricted Payments" covenant, after the Issue Date.
Limitations on Liens
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is pari
passu with the Notes, then the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligation is no longer
secured by a Lien or (ii) if such Lien secures Indebtedness which is
subordinated to the Notes, any such Lien shall be subordinated to the Lien
granted to the Holders of the Notes to the same extent as such subordinated
Indebtedness is subordinated to the Notes.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the
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sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Company or any of its Restricted
Subsidiaries own a minority interest) or holder of 10% or more of the Company's
Common Stock (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior to the Issue
Date unless (i) such Affiliate Transaction is between or among the Company and
its Wholly-Owned Subsidiaries; or (ii) the terms of such Affiliate Transaction
are fair and reasonable to the Company or such Restricted Subsidiary, as the
case may be, and the terms of such Affiliate Transaction are at least as
favorable as the terms which could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm's-
length basis between unaffiliated parties. In any Affiliate Transaction
involving an amount or having a value in excess of $1,000,000 which is not
permitted under clause (i) above, the Company must obtain a resolution of the
Board of Directors certifying that such Affiliate Transaction complies with
clause (ii) above. In transactions with a value in excess of $3,000,000 which
are not permitted under clause (i) above, the Company must obtain a written
opinion as to the fairness of such a transaction from an independent investment
banking firm or a firm experienced in the subject matter of the Affiliate
Transaction in question.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "Limitations on Restricted
Payments" contained herein, (ii) any transaction, approved by the Board of
Directors of the Company, with an officer or director of the Company or of any
Subsidiary in his or her capacity as officer or director entered into in the
ordinary course of business, including compensation and employee benefit
arrangements with any officer or director of the Company or any of its
Subsidiaries, (iii) capital contributions made by the Parent to the Company or
made by the Company and its Subsidiaries to Subsidiaries of the Company, or (iv)
if no Default or Event of Default has occurred and is continuing, payments by
the Company pursuant to the Gillett Management Agreement as in effect on the
Issue Date in an amount not to exceed $350,000 in any fiscal year.
Limitation on Creation of Subsidiaries
The Company will not create or acquire, nor permit any of its Restricted
Subsidiaries to create or acquire, any Subsidiary other than (i) a Restricted
Subsidiary existing as of the date of the Indenture, (ii) a Restricted
Subsidiary that is created after the date of the Indenture to hold assets or
conduct businesses previously held or conducted by the Company or any of its
other Subsidiaries or that is acquired or created after the date of the
Indenture in connection with the acquisition by the Company of a ski resort
related business or asset, or (iii) an Unrestricted Subsidiary; provided,
however, that each Restricted Subsidiary acquired or created pursuant to clause
(ii) shall at the time it has either assets or stockholders equity in excess of
$20,000 have evidenced its guarantee with such documentation, satisfactory in
form and substance to the Trustee relating thereto as the Trustee shall require,
including, without limitation a supplement or amendment to the Indenture and
opinions of counsel as to the enforceability of such guarantee, pursuant to
which such Restricted Subsidiary shall become a Guarantor. See "Description of
the Notes -- General."
Limitation on Certain Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or its
Restricted Subsidiaries, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Company's board of directors, and
evidenced by a board resolution); (ii) not less than 85% of the consideration
received by the Company or its Subsidiaries, as the case may be, is in the form
of cash or Temporary Cash Investments; and (iii) the Asset Sale Proceeds
received by the Company or such Restricted Subsidiary are applied (a) first, to
the extent the Company elects, or is required, to prepay, repay or purchase debt
of the Company or any Restricted Subsidiary under the Senior Credit Facility
within 180 days following the receipt of the Asset Sale Proceeds from any Asset
Sale, provided that any such repayment shall result in a permanent reduction of
the commitments thereunder in an amount equal to the principal amount so repaid;
(b) second, to the extent of the balance of Asset Sale Proceeds after
application as described above, to the extent the Company elects, to an
investment in the existing businesses of the Company and its Restricted
Subsidiaries or in assets (including Capital Stock or other securities purchased
in connection with the acquisition of Capital Stock or property of another
person) used or useful in businesses similar or ancillary to
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the business of the Company or its Restricted Subsidiaries as conducted at the
time of such Asset Sale, provided that such investment occurs or the Company or
a Restricted Subsidiary enters into contractual commitments to make such
investment, subject only to customary conditions (other than the obtaining of
financing), on or prior to the 181st day following receipt of such Asset Sale
Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 270 days following the receipt of such Asset
Sale Proceeds; and (c) third, if on the Reinvestment Date with respect to any
Asset Sale, the Available Asset Sale Proceeds exceed $5,000,000, the Company
shall apply an amount equal to such Available Asset Sale Proceeds to an offer to
repurchase the Notes, at a purchase price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase (an "Excess Proceeds Offer"). If an Excess Proceeds Offer is not
fully subscribed, the Company may retain the portion of the Available Asset Sale
Proceeds not required to repurchase Notes.
If the Company is required to make an Excess Proceeds Offer, the Company
shall mail, within 30 days following the Reinvestment Date, a notice to the
holders stating, among other things: (1) that such holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date, which shall be no earlier than 30 days and not later than 60
days from the date such notice is mailed; (3) the instructions, determined by
the Company, that each holder must follow in order to have such Notes
repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
Notwithstanding the foregoing, (i) the Company and its Subsidiaries may
sell real property constituting residential or commercial development parcels
and timber provided that (x) the aggregate fair market value of all such
property sold in any period of 365 consecutive days does not exceed $5,000,000
and (y) at the time of such sale and after giving effect thereto, no Default or
Event of Default shall exist and (ii) Ski Lifts, Inc. (or any successor company)
may sell and transfer real property pursuant to the Real Estate Option.
Limitation on Preferred Stock of Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Restricted
Subsidiary) to hold any such Preferred Stock unless the Company or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
the first paragraph of the covenant described under "Limitation on Additional
Indebtedness" in the aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued; provided that the
foregoing covenant shall not apply to Preferred Stock of a Restricted Subsidiary
outstanding on the Issue Date.
Limitation on Capital Stock of Restricted Subsidiaries
The Company will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary (other than under the
Senior Credit Facility or a successor facility) or (ii) permit any of its
Restricted Subsidiaries to issue any Capital Stock, other than to the Company or
a Wholly-Owned Subsidiary of the Company. The foregoing restrictions shall not
apply to an Asset Sale made in compliance with "Limitation on Certain Asset
Sales" or the issuance of Preferred Stock in compliance with the covenant
described under "Limitation on Preferred Stock of Restricted Subsidiaries."
Limitation on Sale and Lease-Back Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined in good faith by the board of
directors of the Company and (ii) the Company could incur the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction in compliance
with the covenant described under "Limitation on Additional Indebtedness."
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Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its Capital stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances or capital contributions to
the Company or any of its Restricted Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (i)
encumbrances or restrictions existing on the Issue Date or under the Senior
Credit Facility, (ii) the Indenture, the Notes and the Guarantees, (iii)
applicable law, (iv) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries or of any
Person that becomes a Restricted Subsidiary as in effect at the time of such
acquisition or such Person becoming a Restricted Subsidiary (except to the
extent such Indebtedness was incurred in connection with or in contemplation of
such acquisition of such Person becoming a Restricted Subsidiary), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person (including any Subsidiary of the Person), so acquired, provided that the
EBITDA of such Person is not taken into account (to the extent of such
restriction) in determining whether any financing or Restricted Payment in
connection with such acquisition was permitted by the terms of the Indenture,
(v) customary non-assignment provisions in leases or other agreements entered
into in the ordinary course of business and consistent with past practices, (vi)
Refinancing Indebtedness, provided that such restrictions are in the aggregate
no more restrictive than those contained in the agreements governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, (viii) customary restrictions in security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements and mortgages, (ix) customary net worth provisions contained in
leases and other agreements entered into by a Restricted Subsidiary in the
ordinary course of business or (x) customary restrictions with respect to a
Restricted Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary.
Payments for Consent
Neither the Company nor any of the Guarantors shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes which so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
CHANGE OF CONTROL OFFER
Within 20 days of the occurrence of a Change of Control, the Company shall
notify the Trustee in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest to the Change of Control Payment Date (as hereinafter defined) (such
applicable purchase price being hereinafter referred to as the "Change of
Control Purchase Price") in accordance with the procedures set forth below.
Within 20 days of the occurrence of a Change of Control, the Company also
shall (i) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (ii) send by first-class mail, postage prepaid, to the Trustee and to
each
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holder of the Notes, at the address appearing in the register maintained by the
Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 business days from the date such
notice is mailed (the "Change of Control Payment Date"));
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Change of Control
Payment Date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of the Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased;
(7) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, provided that each Note purchased and each such new
Note issued shall be in an original principal amount in denominations of
$1,000 and integral multiples thereof;
(8) any other procedures that a holder must follow to accept a Change
of Control Offer or effect withdrawal of such acceptance; and
(9) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent money sufficient
to pay the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted together with
an Officers' Certificate stating the Notes or portions thereof tendered to the
Company. The Paying Agent shall promptly mail to each holder of Notes so
accepted payment in an amount equal to the purchase price for such Notes, and
the Company shall execute and issue, and the Trustee shall promptly authenticate
and mail to such holder, a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered; provided that each such new Note shall be
issued in an original principal amount in denominations of $1,000 and integral
multiples thereof.
The Indenture requires that if the Senior Credit Facility is in effect, or
any amounts are owing thereunder or in respect thereof, at the time of the
occurrence of a Change of Control, prior to the mailing of the notice to holders
described in the preceding paragraph, but in any event within 30 days following
any Change of Control, the Company covenants to (i) repay in full all
obligations under or in respect of the Senior Credit Facility or offer to repay
in full all obligations under or in respect of the Senior Credit Facility and
repay the obligations under or in respect of the Senior Credit Facility of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the Senior Credit Facility to permit the repurchase of the Notes as described
above. The Company must first comply with the covenant described in the
preceding sentence before it shall be required to purchase Notes in the event of
a Change of Control; provided that the Company's failure to comply with the
covenant described in the preceding sentence constitutes an Event of Default
described in clause (iii) under "Events of Default" below if not cured within 30
days after the notice required
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by such clause. As a result of the foregoing, a holder of the Notes may not be
able to compel the Company to purchase the Notes unless the Company is able at
the time to refinance all of the obligations under or in respect of the Senior
Credit Facility or obtain requisite consents under the Senior Credit Facility.
Failure by the Company to make a Change of Control Offer when required by the
Indenture constitutes a default under the Indenture and, if not cured within 30
days after notice, constitutes an Event of Default.
The Indenture provides that, (A) if the Company or any Subsidiary thereof
has issued any outstanding (i) Indebtedness that is subordinated in right of
payment to the Notes or (ii) Preferred Stock, and the Company or such Subsidiary
is required to repurchase, or make an offer to repurchase, such Indebtedness, or
redeem, or make an offer to redeem, such Preferred Stock, in the event of a
Change of Control or to make a distribution with respect to such subordinated
Indebtedness or Preferred Stock in the event of a Change of Control, the Company
shall not consummate any such repurchase, redemption, offer or distribution with
respect to such subordinated Indebtedness or Preferred Stock until such time as
the Company shall have paid the Change of Control Purchase Price in full to the
holders of Notes that have accepted the Company's Change of Control Offer and
shall otherwise have consummated the Change of Control Offer made to holders of
the Notes and (B) the Company will not issue Indebtedness that is subordinated
in right of payment to the Notes or Preferred Stock with change of control
provisions requiring the payment of such Indebtedness or Preferred Stock prior
to the payment of the Notes in the event of a Change in Control under the
Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither the Company nor any Guarantor will consolidate with, merge with or
into, or transfer all or substantially all of its assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions), to any Person unless: (i) the Company or the Guarantor, as the
case may be, shall be the continuing Person, or the Person (if other than the
Company or the Guarantor) formed by such consolidation or into which the Company
or the Guarantor, as the case may be, is merged or to which the properties and
assets of the Company or the Guarantor, as the case may be, are transferred
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, in
form and substance satisfactory to the Trustee, all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes and the Indenture,
and the obligations under the Indenture shall remain in full force and effect;
(ii) immediately before and immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis the Consolidated Net Worth of the Company or the surviving
entity as the case may be is at least equal to the Consolidated Net Worth of the
Company immediately before such transaction or series of transactions; and (iv)
immediately after giving effect to such transaction on a pro forma basis the
Company or the surviving Person could incur at least $1.00 additional
Indebtedness (other than Permitted Indebtedness) under the covenant set forth
under "Limitation on Additional Indebtedness," provided that a Person that is a
Guarantor may consolidate with, merge into or transfer all or substantially all
of its assets to the Company or another Person that is a Guarantor without
complying with this clause (iv).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto, if any, comply with this provision and that all conditions precedent
herein provided for relating to such transaction or transactions have been
complied with.
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GUARANTEES
The Notes are jointly and severally unconditionally guaranteed on a senior
unsecured basis by the Guarantors.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all or substantially all of its assets are sold or all of its
Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "Limitation on Certain Asset Sales," or the Guarantor
merges with or into or consolidates with, or transfers all or substantially all
of its assets to, the Company or another Guarantor in a transaction in
compliance with "Merger, Consolidation or Sale of Assets," and such Guarantor
has delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that all conditions precedent herein provided for relating to such
transaction have been complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any principal of, or premium, if any, on the
Notes;
(ii) default for 30 days in payment of any interest on the Notes;
(iii) default by the Company or any Guarantor in the observance or
performance of any other covenant in the Notes or the Indenture for 30 days
after written notice from the Trustee or the holders of not less than 25%
in aggregate principal amount of the Notes then outstanding;
(iv) failure to pay when due principal, interest or premium in an
aggregate amount of $5,000,000 or more with respect to any Indebtedness of
the Company or any Restricted Subsidiary thereof (other than Indebtedness
owed to the Company or any Subsidiary of the Company), or the acceleration
of any such Indebtedness aggregating $5,000,000 or more, which default
shall not be cured, waived or postponed pursuant to an agreement with the
holders of such Indebtedness within 60 days after written notice as
provided in the Indenture, or such acceleration shall not be rescinded or
annulled within 20 days after written notice as provided in the Indenture;
(v) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $5,000,000 (which are not paid or
covered by third party insurance by financially sound insurers that have
not disclaimed coverage) shall be rendered against the Company or any
Restricted Subsidiary thereof, and shall not be discharged for any period
of 60 consecutive days during which a stay of enforcement shall not be in
effect;
(vi) certain events involving bankruptcy, insolvency or reorganization
of the Company or any Significant Restricted Subsidiary thereof.
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if any,
or interest on the Notes) if the Trustee considers it to be in the best interest
of the holders of the Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, then the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued
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interest to the date of acceleration and (i) such amounts shall become
immediately due and payable or (ii) if there are any amounts outstanding under
or in respect of the Senior Credit Facility, such amounts shall become due and
payable upon the first to occur of an acceleration of amounts outstanding under
or in respect of the Senior Credit Facility or five business days after receipt
by the Company and the Representative of the holders of Indebtedness under or in
respect of the Senior Credit Facility, of notice of the acceleration of the
Notes; provided, however, that after such acceleration but before a judgment or
decree based on acceleration is obtained by the Trustee, the holders of a
majority in aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than nonpayment of accelerated principal, premium or interest that has
come due solely because of such acceleration, have been cured or waived as
provided in the Indenture and if the rescission would not conflict with any
judgment or decree. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization shall occur, the principal, premium and
interest amount with respect to all of the Notes shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or the Notes or for any remedy thereunder, unless such
holder shall have previously given to the Trustee written notice of a continuing
Event of Default and unless also the holders of at least 25% in aggregate
principal amount of the outstanding Notes shall have made written request and
offered reasonable indemnity to the Trustee to institute such proceeding as a
trustee, and unless the Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted on such Note on or after the respective due dates expressed in such
Note.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor shall have any liability for any obligations of the Company or
the Guarantors under the Notes, the Guarantees or the Indenture or for a claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from their obligations with respect to the
Notes under certain covenants contained in the Indenture and described above
under "Covenants" ("covenant defeasance"), upon the deposit with the Trustee (or
other qualifying trustee), in trust for such purpose, of money and/or U.S.
Government Obligations which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient to pay
the principal of, premium, if any, and interest on the Notes, on the scheduled
due dates therefor or on a selected date of redemption in accordance with the
terms of the Indenture. Such a trust may only be established if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel (as
specified in the Indenture) (i) to the effect that neither the trust nor the
Trustee will be required to register as an investment company under the
Investment Company Act of 1940, as amended, and (ii) to the effect that holders
of the Notes or persons in their positions will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount
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and in the same manner and at the same times, as would have been the case if
such deposit, defeasance and discharge had not occurred which, in the case of
defeasance only, must be based upon a private ruling concerning the Notes, a
published ruling of the Internal Revenue Service or a change in applicable
federal income tax law.
MODIFICATION OF INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend or waive provisions of the Indenture
or the Notes or supplement the Indenture for certain specified purposes,
including providing for uncertificated Notes in addition to certificated Notes,
and curing any ambiguity, defect or inconsistency, or making any other change
that does not materially and adversely affect the rights of any holder. The
Indenture contains provisions permitting the Company, the Guarantors and the
Trustee, with the consent of holders of at least a majority in principal amount
of the outstanding Notes, to modify or supplement the Indenture or the Notes,
except that no such modification shall, without the consent of each holder
affected thereby, (i) reduce the principal amount of outstanding Notes whose
holders must consent to an amendment, supplement, or waiver to the Indenture or
the Notes, (ii) reduce the rate of or change the time for payment of interest on
any Note, (iii) reduce the principal of or premium on or change the stated
maturity of any Note, (iv) make any Note payable in money other than that stated
in the Note or change the place of payment from New York, New York, (v) change
the amount or time of any payment required by the Notes or reduce the premium
payable upon any redemption of Notes, or change the time before which no such
redemption may be made, (vi) waive a default in the payment of the principal of,
interest on, or redemption payment with respect to any Note, (vii) take any
other action otherwise prohibited by the Indenture to be taken without the
consent of each holder affected thereby or (viii) affect the ranking of the
Notes or the Guarantee in a manner adverse to the Holders.
The consent of the holders is not necessary to approve the particular form
of any proposed amendment. It is sufficient if such consent approves the
substance of the proposed amendment.
REPORTS TO HOLDERS
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if the Company is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, they will
nonetheless continue to furnish such information to the Commission and holders
of the Notes.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 100 days after the end
of the Company's fiscal year and on or before 50 days after the end of each the
first, second and third fiscal quarters in each year an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
has occurred. If they do, the certificate will describe the Default or Event of
Default and its status.
THE TRUSTEE
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the continuance
of an Event of Default, the Trustee need perform only such duties as are
specifically set forth in the Indenture. During the existence of an Event of
Default actually known to the Trustee, the Trustee will exercise such rights and
powers vested in it under the Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise under the circumstances
in the conduct of such person's own affairs.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among other
things, to furnish appropriate endorsements and
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transfer documents, and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar is not required to transfer or exchange any Note
selected for redemption. Also, the Registrar is not required to transfer or
exchange any Note for a period of 15 days before selection of the Notes to be
redeemed.
The Notes will be issued in a transaction exempt from registration under
the Act and will be subject to the restrictions on transfer described in
"Transfer Restrictions."
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for the
full definition of all such terms as well as any other capitalized terms used
herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Adjusted EBITDA" means EBITDA minus cash taxes actually paid.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee of such Guarantor at such date and
(y) the present fair salable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities and after giving effect to any collection from any Subsidiary of
such Guarantor in respect of the obligations of such Subsidiary under the
Guarantee), excluding Indebtedness in respect of the Guarantee, as they become
absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that neither CIBC nor any of its Affiliates shall be treated
as an Affiliate of the Company or of any Subsidiary of the Company.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions involving assets with a fair market value in
excess of $500,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company, (b) all or substantially all of the assets
of the Company or of any Restricted Subsidiary thereof, (c) real property or (d)
all or substantially all of the assets of any ski resort property, or part
thereof, owned by the Company or any Restricted Subsidiary thereof, or a
division, line of business or comparable business segment of the Company or any
Restricted Subsidiary thereof; provided that Asset Sales shall not include
sales, leases, conveyances, transfers or other dispositions to the Company or to
a Restricted Subsidiary or to any other Person if after giving effect to such
sale, lease, conveyance, transfer or other disposition such other Person becomes
a Restricted Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting and other fees and
expenses related to such Asset Sale, (c) provision for minority interest holders
in any Restricted Subsidiary as a result of such Asset Sale and (d) deduction of
appropriate amounts
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to be provided by the Company or a Restricted Subsidiary as a reserve, in
accordance with GAAP, against any liabilities associated with the assets sold or
disposed of in such Asset Sale and retained by the Company or a Restricted
Subsidiary after such Asset Sale, including, without limitation, pension and
other post employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other noncash consideration received by the Company or any Restricted Subsidiary
from such Asset Sale or other disposition upon the liquidation or conversion of
such notes or noncash consideration into cash.
"Attributable Indebtedness" under the Indenture in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the present value
(discounted at a rate of 10%, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale and Lease-Back Transaction (including any period for which such
lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sales that have not been applied
or committed in accordance with clauses (iii)(a) or (iii)(b), and which has not
yet been the basis for an Excess Proceeds Offer in accordance with clause
(iii)(c), of the first paragraph of "Certain Covenants -- Limitation on Certain
Asset Sales."
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
A "Change of Control" of the Company means the occurrence of one or more of
the following events:
(i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets
of the Company to any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof; (ii) the approval by the holders of Capital Stock of the Company
of any plan or proposal for the liquidation or dissolution of the Company;
(iii) prior to a Qualified IPO, John Hancock Mutual Life Insurance Company
and/or its Affiliates (other than its portfolio companies, including,
without limitation, the Parent and its Subsidiaries) shall cease to
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, Voting Stock representing, or Class B Common Stock
and/or Warrants exercisable for shares of Class B Common Stock representing
upon conversion, at least 50.1% of the total voting power of all Voting
Stock of the Company or Parent on a fully diluted basis; (iv) any Person or
Group (other than the Permitted Holders) shall become the beneficial owner,
directly or indirectly, of Voting Stock representing, or Common Stock or
Warrants exercisable for Common Stock representing upon conversion, more
than 35% of the total voting power of all Voting Stock of the Company or
Parent on a fully diluted basis; (v) prior to a Qualified IPO, Booth Creek
Partners Ltd. II, L.L.L.P. or any Affiliate thereof that is a Permitted
Holder shall cease to have the right to appoint a majority of the Board of
Directors of Parent; (vi) the replacement of a majority of the Board of
Directors of Parent over a two-year period from the directors who
constituted the Board of Directors of Parent at the beginning of such
period, and such replacement shall not have been approved or recommended by
a vote of at least two-thirds of the Board of Directors of Parent then
still in office who either were members of such Board of Directors at the
beginning of such period or whose election as a member of such Board of
Directors was previously so approved; (vii) there shall be consummated any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the Common Stock
of the Company would be converted into cash, securities or other property,
other than a merger or consolidation of the Company in which the holders of
the Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority
of the Common Stock of the surviving corporation immediately after such
consolidation or merger; (viii) George N. Gillett, Jr. ceases, other than
by death or disability,
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to have an executive management position with the Company; or (ix) any
creditor of Parent shall foreclose on any Capital Stock of the Company.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
(including, but not limited to, Redeemable Dividends, whether paid or accrued,
on Preferred Stock of Subsidiaries of such Person (other than Preferred Stock
outstanding on the Issue Date), imputed interest included in Capitalized Lease
Obligations, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, the net costs
associated with hedging obligations, amortization of other financing fees and
expenses, the interest portion of any deferred payment obligation, amortization
of discount or premium, if any, and all other non-cash interest expense (other
than interest amortized to cost of sales)) plus, without duplication, all net
capitalized interest for such period and all interest incurred or paid under any
guarantee of Indebtedness (including a guarantee of principal, interest or any
combination thereof) of any Person, plus the amount of all dividends or
distributions paid on Disqualified Capital Stock (other than dividends paid or
payable in shares of Capital Stock of the Company).
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) the Net Income of any Person (the "other Person") in
which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or its Subsidiaries, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Notes or the Indenture) shall be
excluded to the extent of such restriction or limitation, (c)(i) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (ii) any gain or loss resulting from
an asset sale by the Person in question or any of its Subsidiaries or
abandonments or reserves relating thereto and the related tax effects according
to GAAP other than asset sales in the ordinary course of business shall be
excluded, and (d) extraordinary gains and losses shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at any date, the
consolidated stockholder's equity of such Person less the amount of such
stockholder's equity attributable to Disqualified Capital Stock of such Person
and its Subsidiaries, as determined in accordance with GAAP.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to 180 days after the maturity date of the Notes, for cash or securities
constituting Indebtedness. Without limitation of the foregoing, Disqualified
Capital Stock shall be deemed to include (i) any Preferred Stock of a Restricted
Subsidiary of the Company and (ii) any Preferred Stock of the Company, with
respect to either of which, under the terms of such Preferred Stock, by
agreement or otherwise, such Restricted Subsidiary or the Company is obligated
to pay current dividends or distributions in cash during the period prior to the
maturity date of the Notes; provided, however, that Preferred Stock of the
Company or any Restricted Subsidiary thereof that is issued with the benefit of
provisions requiring a change of control offer to be made for such Preferred
Stock in the event of a change of control of the Company or such Restricted
Subsidiary, which provisions have substantially the same effect as the
provisions of the Indenture described under "Change of Control," and Capital
Stock of the Company or any Restricted
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Subsidiary thereof that is issued to employees (other than George N. Gillett,
Jr. and Jeffrey J. Joyce) in connection with compensation arrangements that is
issued with the benefit of provisions requiring the Company or such Restricted
Subsidiary to redeem such Capital Stock shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the extent
that such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) amortization of any capitalized real estate
development costs, plus (vii) any other non-cash items reducing Consolidated Net
Income for such period, minus (b) all non-cash items increasing Consolidated Net
Income for such period, all for such Person and its Subsidiaries determined in
accordance with GAAP, except that with respect to the Company each of the
foregoing items shall be determined on a consolidated basis with respect to the
Company and its Restricted Subsidiaries only; and provided, however, that, for
purposes of calculating EBITDA during any fiscal quarter, cash income from a
particular Investment of such Person shall be included only (x) if cash income
has been received by such Person with respect to such Investment during each of
the previous four fiscal quarters, or (y) if the cash income derived from such
Investment is attributable to Temporary Cash Investments.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such person (and
"incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a Lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed (provided,
however, that if such obligation or obligations shall not have been assumed, the
amount of such Indebtedness shall be deemed to be the lesser of the principal
amount of the obligation or the fair market value of the pledged property or
assets), (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor), (iv) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (provided that in the case of any such letters of
credit, the items for which such letters of credit provide credit support are
those of other Persons which would be included within this definition for such
other Persons), (v) in the case of the Company, Disqualified Capital Stock of
the Company or any Restricted Subsidiary thereof, and (vi) obligations of any
such Person under any Interest Rate Agreement applicable to any of the foregoing
(if and to the extent such Interest Rate Agreement
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obligations would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP). The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum reasonably anticipated liability upon the occurrence of the contingency
giving rise to the obligation, provided (i) that the amount outstanding at any
time of any Indebtedness issued with original issue discount is the principal
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP and (ii) that Indebtedness shall not include any liability
for federal, state, local or other taxes. Notwithstanding any other provision of
the foregoing definition, any trade payable arising from the purchase of goods
or materials or for services obtained in the ordinary course of business shall
not be deemed to be "Indebtedness" of the Company or any Restricted Subsidiaries
for purposes of this definition. Furthermore, guarantees of (or obligations with
respect to letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Company in connection
with an acquisition of assets which is otherwise permitted by the terms of the
Indenture), loan or capital contribution to (by means of transfers of property
to others, payments for property or services for the account or use of others or
otherwise), the purchase of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of any
investment in any Person. Investments shall exclude (i) extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and (ii) the repurchase of securities of any Person by such Person.
"Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under the Indenture.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company, the aggregate net proceeds received by the Company, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the board of directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Capital Stock of the
Company which is not Disqualified Capital Stock, the net book value of such
outstanding securities on the date of such exchange, exercise, conversion or
surrender (plus any additional amount required to be paid by the holder to the
Company upon such exchange, exercise, conversion or surrender, less any and all
payments made to the holders, e.g., on account of fractional shares and less all
expenses incurred by the Company in connection therewith).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman, Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer, Controller or any Treasurer of such
Person that shall comply with applicable provisions of the Indenture.
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"Permitted Holders" means Booth Creek Partners Limited II, L.L.L.P. as long
as George N. Gillett, Jr. is the managing general partner, Jeffrey J. Joyce,
only with respect to shares he purchases upon exercise of his option to purchase
up to 15% of the shares of Common Stock of Parent held by George N. Gillett, Jr.
and Affiliates of George N. Gillett, Jr., the Parent as long as it is controlled
by another Permitted Holder other than Jeffrey J. Joyce, John Hancock Mutual
Life Insurance Company and/or its Affiliates (other than its portfolio
companies, including without limitation, the Parent and its Subsidiaries), CIBC
WG Argosy Merchant Fund 2, L.L.C. and/or its Affiliates, George N. Gillett, Jr.,
Rose Gillett, any trust solely for the benefit of George N. Gillett, Jr. and
Rose Gillett or their respective immediate family members, or any partnership or
other entity all the ownership interests in which are beneficially owned by any
of the foregoing; provided that with respect to any such trust, partnership or
other entity either George N. Gillett, Jr. or Rose Gillett shall at all times
have the exclusive power to direct, directly or indirectly, the voting of the
shares of Voting Stock of the Company held by such trust, partnership or other
entity.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with the Senior Credit Facility in a principal
amount at any time not to exceed $20,000,000 less each permanent reduction
of commitments to extend credit thereunder as provided for under the
Indenture;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred after the Issue Date to acquire property in the ordinary course of
business which Indebtedness and Capitalized Lease Obligations do not in the
aggregate exceed $2,500,000 at any time outstanding;
(vi) Obligations of the Company or any Restricted Subsidiary under (A)
Interest Rate Agreements designed to protect against fluctuations in
interest rates in respect of Indebtedness of the Company and its Restricted
Subsidiaries permitted to be incurred under the Indenture, which
obligations do not exceed the aggregate principal amount of such
Indebtedness, and (B) Currency Agreements designed to protect the Company
and its Subsidiaries against fluctuations in foreign currency exchange
rates in respect of foreign exchange exposures incurred by the Company and
its Restricted Subsidiaries;
(vii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(viii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the acquisition or disposition of any business, assets or a
Subsidiary;
(ix) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(x) any guarantee by the Company of Indebtedness or other obligations
of any of its Restricted Subsidiaries, and any guarantee by any Restricted
Subsidiary of Indebtedness of the Company or any other Restricted
Subsidiary, so long as the incurrence of such Indebtedness is permitted
under the terms of the Indenture;
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(xi) additional Indebtedness of the Company and its Restricted
Subsidiaries not to exceed $2,500,000 in principal amount outstanding at
any time;
(xii) Refinancing Indebtedness; and
(xiii) Indebtedness assumed and subsequently repaid in connection with
the acquisition of Grand Targhee Incorporated.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of
(i) Investments by the Company, or by a Restricted Subsidiary thereof,
in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company or (b) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary thereof;
(iv) reasonable and customary loans and advances made to employees in
connection with their relocation (including related travel expenses) not to
exceed $500,000 in the aggregate at any one time outstanding;
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under the covenant described under "Certain Covenants --
Limitation on Certain Asset Sales;"
(vi) any Investment existing on the Issue Date;
(vii) any Investment acquired by the Company or any of its Restricted
Subsidiaries (a) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such Investment or accounts receivable or
(b) as the result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of
title with respect to any secured Investment in default;
(viii) Investments the payment for which consists of Capital Stock of
the Company (exclusive of Disqualified Capital Stock);
(ix) Investments by Ski Lifts in the Real Estate LLC pursuant to the
Real Estate Option; and
(x) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (ix)
that are at that time outstanding, not to exceed $1,000,000.
"Permitted Liens" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness that is otherwise permitted under the Indenture, provided that (a)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
sales and excise taxes, installation
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and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of such Property,
(b) the principal amount of the Indebtedness secured by such Lien does not
exceed 100% of such costs, and (c) such Lien does not extend to or cover any
Property other than such item of Property and any improvements on such item,
(vi) statutory liens or landlords', carriers', warehouseman's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which do not secure any Indebtedness and with
respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor, (vii)
other Liens securing obligations incurred in the ordinary course of business
which obligations do not exceed $2,500,000 in the aggregate at any one time
outstanding, (viii) any extensions, substitutions, replacements or renewals of
the foregoing, (ix) Liens for taxes, assessments or governmental charges that
are being contested in good faith by appropriate proceedings, (x) Liens securing
Capital Lease Obligations permitted to be incurred under clause (v) of the
definition of "Permitted Indebtedness," provided that such Lien does not extend
to any property other than that subject to the underlying lease, (xi) easements
or minor defects or irregularities in title and other similar charges or
encumbrances on property not interfering in any material respect with the use of
such property by the Company or any Restricted Subsidiary, (xii) Liens securing
Indebtedness of the Company or any Restricted Subsidiary under the Senior Credit
Facility and (xiii) deposit arrangements entered into in connection with
acquisitions or in the ordinary course of business.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Equity Offering" means a public offering by the Company of shares
of its Common Stock (however designated and whether voting or non-voting) and
any and all rights, warrants or options to acquire such Common Stock.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified IPO" shall mean an underwritten initial offering and sale by the
Company to the public of its Common Stock pursuant to an effective registration
statement filed by the Company under the Securities Act; provided that the
aggregate net proceeds to the Company from such offering and sale is at least
$35,000,000.
"Redeemable Dividend" means, for any dividend or distribution with regard
to Disqualified Capital Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Disqualified Capital Stock.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company or its Restricted Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or its Restricted Subsidiaries pursuant to the terms of the
Indenture, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes to at least the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended, or (b) after the maturity date of the Notes,
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the maturity date of the Notes has a weighted average life
to maturity at the time such Refinancing Indebtedness is incurred that is equal
to or greater than the weighted average life to
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maturity of the portion of the Indebtedness being refunded, refinanced or
extended that is scheduled to mature on or prior to the maturity date of the
Notes, (iv) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of (a) the aggregate principal amount then
outstanding under the Indebtedness being refunded, refinanced or extended, (b)
the amount of accrued and unpaid interest, if any, and premiums owed, if any,
not in excess of preexisting prepayment provisions on such Indebtedness being
refunded, refinanced or extended and (c) the amount of customary fees, expenses
and costs related to the incurrence of such Refinancing Indebtedness, and (v)
such Refinancing Indebtedness is incurred by the same Person that initially
incurred the Indebtedness being refunded, refinanced or extended, except that
the Company may incur Refinancing Indebtedness to refund, refinance or extend
Indebtedness of any Wholly-Owned Subsidiary of the Company; provided, however,
that subclauses (ii) and (iii) of this definition will not apply to any
refunding or refinancing of any Indebtedness under the Senior Credit Facility.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the making of any principal payment on, or
the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated in
right of payment to the Notes other than subordinated Indebtedness acquired in
anticipation of satisfying a scheduled sinking fund obligation, principal
installment or final maturity (in each case due within one year of the date of
acquisition), (iv) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment, (v) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the
Investment by the Company therein and (vi) forgiveness of any Indebtedness of an
Affiliate of the Company (other than a Restricted Subsidiary) to the Company or
a Restricted Subsidiary. For purposes of determining the amount expended for
Restricted Payments, cash distributed or invested shall be valued at the face
amount thereof and property other than cash shall be valued at its fair market
value.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date, except the Real Estate LLC. The Board of
Directors of the Company may designate any Unrestricted Subsidiary or any Person
that is to become a Subsidiary as a Restricted Subsidiary if immediately after
giving effect to such action (and treating any Acquired Indebtedness as having
been incurred at the time of such action), the Company could have incurred at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the "Limitation on Additional Indebtedness" covenant.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal Property, which Property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"Senior Credit Facility" means the Amended and Restated Credit Agreement
among the Company, the Guarantors, the lenders listed therein and The First
National Bank of Boston, as agent, together with the documents related thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including adding Subsidiaries of the
Company as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
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"Significant Restricted Subsidiary" means any Restricted Subsidiary of the
Company that satisfies the criteria for a "significant subsidiary" set forth in
Rule 1.02(v) of Regulation S-X under the Securities Act.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which more
than 50% of the total voting power of the Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of its
Subsidiaries; or (ii) in the case of a partnership, joint venture, association
or other business entity, with respect to which such first-named Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with the first-named Person for
financial statement purposes.
"Temporary Cash Investments" means (i) Investments in marketable, direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase; (ii) Investments in certificates of deposit issued by a
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits at the time of investment totaling more than $500,000,000 and
rated at the time of investment at least A by Standard & Poor's Corporation and
A-2 by Moody's Investors Service, Inc., maturing within 365 days of purchase; or
(iii) Investments not exceeding 365 days in duration in money market funds that
invest substantially all of such funds' assets in the Investments described in
the preceding clauses (i) and (ii).
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified as an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of the
Company; provided that a Subsidiary organized or acquired after the Issue Date
may be so classified as an Unrestricted Subsidiary only if such classification
is in compliance with the covenant set forth under "Limitation on Restricted
Payments." The Trustee shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof to vote
under ordinary circumstances in the election of members of the board of
directors or other governing body of such Person.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes initially will be represented by one or more Notes in
registered, global form without interest coupons (collectively, the "Global
Note"). The Global Note will be deposited upon issuance with the Trustee, as
custodian for DTC, in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant as described below. Notes sold to Accredited Investors (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) may be represented
by the Global Note or, if such an investor may not hold an interest in the
Global Note, a certificated Note.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Notes for Certificated Notes."
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar of the Notes.
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Depository Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global Note, DTC will credit the accounts of
Participants designated by the Exchange Agent with portions of the principal
amount of the Global Note and (ii) ownership of such interests in the Global
Note will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Note).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants and certain banks, the ability of a
person having beneficial interests in the Global Note to pledge such interests
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Notes, see "-- Exchange of Book-Entry Notes for
Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of (and premium, if any) and interest
on the Global Note registered in the name of DTC or its nominee will be payable
to DTC or its nominee in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, the Company and the Trustee will
treat the persons in whose names the Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
the Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect or accuracy of DTC's records or
any Participant's or Indirect Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Note, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Note, or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Note as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or any of the Participants
in identifying the beneficial owners of the Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the Notes for
all purposes.
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Interest in the Global Note will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants. Transfers between Participants in DTC
will be effected in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account will DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-- Exchange of Book Entry Notes
for Certificated Notes" occur, DTC reserves the right to exchange the Global
Note for Notes in certificated form, and to distribute such Notes to the
relevant Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Note among accountholders in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company, the Trustee nor
any agent of the Company or Trustee will have any responsibility for the
performance of DTC, or its respective accountholders, indirect participants or
accountholders of their respective obligations under the rules and procedures
governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
The Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Company that is it unwilling or
unable to continue as depositary for the Global Note and the Company thereupon
fails to appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act; (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be continuing
a Default or an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for the Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures).
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Company recommends that
each holder consult such holder's own tax adviser as to the particular tax
consequences of exchanging such holder's Old Notes for New Notes, including the
applicability and effect of any state, local or foreign tax laws.
The Company believes that the exchange of Old Notes for New Notes pursuant
to the Exchange Offer will not be treated as an "exchange" for federal income
tax purposes because the New Notes will not be considered to differ materially
in kind or extent from the Old Notes. Rather, the New Notes received by a holder
will be treated as a continuation of the Old Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer.
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PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1997 (90 days after the commencement of the Exchange Offer), all
dealers effecting transactions in the New Notes, whether or not participating in
this distribution, may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the New Notes
by Participating Broker Dealers. New Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such New Notes. Any Participating Broker-Dealer that resells the New Notes
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such New Notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
LEGAL MATTERS
The validity of the issuance of the New Notes will be passed upon for the
Company and the Guarantors by Winston & Strawn, New York, New York.
EXPERTS
The balance sheet of the Company as of October 31, 1996, the financial
statements of Waterville Valley Ski Area Ltd., a subsidiary of S-K-I Limited,
for the year ended October 29, 1995 and the period from October 30, 1995 to June
30, 1996, and the financial statements of Waterville Valley Ski Area Ltd., a
subsidiary of American Skiing Company, for the period from July 1, 1996 to
October 27, 1996 appearing in this Prospectus have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The combined balance sheets of the Resort Group of Fibreboard Corporation
as of October 31, 1996, December 31, 1995, and 1994, and the related combined
statements of income and cash flows for the ten months ended October 31, 1996,
and each of the three years in the period ended December 31, 1995, included in
this Prospectus and elsewhere in the registration statement of which this
Prospectus is a part have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The financial statements of Ski Lifts, Inc. as of September 30, 1996, 1995
and 1994 and for each of the three years in the period ended September 30, 1996
included in this Prospectus have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their report thereon, which includes an
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explanatory paragraph describing Ski Lifts, Inc.'s change in method of
accounting for income taxes and an emphasis of a matter paragraph describing an
agreement in principle to sell the stock of Ski Lifts, Inc., and are included
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Grand Targhee Incorporated as of May 31, 1996
and 1995 and for each of the three years in the period ended May 31, 1996
included in this Prospectus have been audited by Feldhake & Associates, P.C.,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
120
<PAGE> 124
BOOTH CREEK SKI HOLDINGS, INC.
INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
BOOTH CREEK SKI HOLDINGS, INC.
Financial Statements -- January 31, 1997 (unaudited)
Consolidated Balance Sheet.................................. F-2
Consolidated Statement of Operations........................ F-3
Consolidated Statement of Shareholder's Equity.............. F-4
Consolidated Statement of Cash Flows........................ F-5
Notes to Consolidated Financial Statements.................. F-6
Financial Statements -- October 31, 1996
Report of Independent Auditors.............................. F-15
Balance Sheet............................................... F-16
Notes to Balance Sheet...................................... F-17
THE RESORT GROUP OF FIBREBOARD CORPORATION
Combined Financial Statements -- December 2, 1996
(unaudited)
Combined Statement of Operations............................ F-18
Combined Statement of Cash Flows............................ F-19
Notes to Combined Financial Statements...................... F-20
Combined Financial Statements -- October 31, 1996 and
December 31, 1995 and 1994
Report of Independent Public Accountants.................... F-21
Combined Balance Sheets..................................... F-22
Combined Statements of Operations........................... F-23
Combined Statements of Cash Flows........................... F-24
Notes to Financial Statements............................... F-25
WATERVILLE VALLEY SKI AREA LTD. (A SUBSIDIARY OF AMERICAN
SKIING COMPANY)
Financial Statements -- November 26, 1996 (unaudited)
Statement of Operations..................................... F-33
Statement of Cash Flows..................................... F-34
Notes to Financial Statements............................... F-35
Financial Statements -- October 27, 1996
Report of Independent Auditors.............................. F-36
Balance Sheet............................................... F-37
Statement of Operations and Accumulated Deficit............. F-38
Statement of Cash Flows..................................... F-39
Notes to Financial Statements............................... F-40
WATERVILLE VALLEY SKI AREA LTD. (A SUBSIDIARY OF S-K-I
LIMITED)
Financial Statements -- June 30, 1996 and October 29, 1995
Report of Independent Auditors.............................. F-45
Balance Sheets.............................................. F-46
Statements of Operations and Retained Earnings (Accumulated
Deficit).................................................. F-47
Statements of Cash Flows.................................... F-48
Notes to Financial Statements............................... F-49
SKI LIFTS, INC.
Financial Statements -- January 15, 1997 and January 31,
1996 (unaudited)
Statements of Operations.................................... F-54
Statements of Cash Flows.................................... F-55
Notes to Financial Statements............................... F-56
Financial Statements -- September 30, 1996 and 1995
Report of Independent Accountants........................... F-57
Balance Sheets.............................................. F-58
Statements of Operations and Retained Earnings.............. F-59
Statements of Cash Flows.................................... F-60
Notes to Financial Statements............................... F-61
GRAND TARGHEE INCORPORATED
Condensed Financial Statements -- January 31, 1997 and 1996
(unaudited)
Condensed Balance Sheets.................................... F-67
Condensed Statements of Operations.......................... F-68
Condensed Statements of Cash Flows.......................... F-69
Notes to Condensed Financial Statements..................... F-70
Financial Statements -- May 31, 1996 and 1995
Independent Auditors' Report................................ F-71
Balance Sheets.............................................. F-72
Statements of Operations.................................... F-73
Statements of Changes in Stockholder's Equity............... F-74
Statements of Cash Flows.................................... F-75
Notes to Financial Statements............................... F-76
</TABLE>
F-1
<PAGE> 125
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
JANUARY 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 5,996
Accounts receivable, net of allowances of $12............. 1,532
Inventories............................................... 3,772
Prepaid expenses and other current assets................. 2,031
--------
Total current assets........................................ 13,331
Property, plant and equipment, net.......................... 123,615
Real estate held for development and sale................... 13,401
Deferred financing costs, net of accumulated amortization of
$602...................................................... 4,504
Other assets................................................ 3,510
Goodwill, net of accumulated amortization of $268........... 25,019
--------
Total assets................................................ $183,380
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt......................... $ 207
Accounts payable and accrued liabilities.................. 18,395
--------
Total current liabilities................................... 18,602
Long-term debt.............................................. 114,980
Deferred income taxes....................................... 4,911
Other long-term liabilities................................. 298
Commitments and contingencies
Preferred stock of subsidiary; 28,000 shares authorized,
issued and outstanding; liquidation preference and
redemption value of $3,515 at January 31, 1997............ 3,500
Shareholder's equity:
Common stock, .01 par value; 1,000 shares authorized,
issued and outstanding................................. --
Additional paid-in capital................................ 40,000
Retained earnings......................................... 1,089
--------
Total shareholder's equity.................................. 41,089
--------
Total liabilities and shareholder's equity.................. $183,380
========
</TABLE>
See accompanying notes.
F-2
<PAGE> 126
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
Revenue:
Resort operations......................................... $23,784
Real estate and other..................................... 140
-------
Total revenue............................................... 23,924
-------
Operating expenses:
Cost of sales -- resort operations........................ 15,370
Cost of sales -- real estate and other.................... 123
Depreciation.............................................. 1,503
Amortization.............................................. 268
Selling, general and administrative expense............... 2,227
Management fee and corporate expenses..................... 306
-------
Total operating expenses.................................... 19,797
-------
Operating income............................................ 4,127
Other income (expense):
Interest expense.......................................... (1,961)
Amortization of deferred financing costs.................. (602)
Interest income........................................... 14
-------
Other income (expense), net............................... (2,549)
-------
Income before income taxes.................................. 1,578
Provision for income taxes.................................. 474
-------
Income before minority interest............................. 1,104
Minority interest........................................... 15
-------
Net income.................................................. $ 1,089
=======
</TABLE>
See accompanying notes.
F-3
<PAGE> 127
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (UNAUDITED)
THREE MONTHS ENDED JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOTE
COMMON STOCK ADDITIONAL RECEIVABLE
---------------- PAID-IN FROM RETAINED
SHARES AMOUNT CAPITAL SHAREHOLDER EARNINGS TOTAL
------ ------ ---------- ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1996........... 1,000 $-- $ 2 $(2) $ -- $ --
Payment received on shareholder note
receivable.......................... -- -- -- 2 -- 2
Capital contribution.................. -- -- 39,998 -- -- 39,998
Net income............................ -- -- -- -- 1,089 1,089
------ --- ------- --- ------ -------
Balance at January 31, 1997........... 1,000 $-- $40,000 $-- $1,089 $41,089
====== === ======= === ====== =======
</TABLE>
See accompanying notes.
F-4
<PAGE> 128
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 1,089
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 1,503
Amortization of goodwill.................................. 268
Noncash cost of real estate sales......................... 99
Amortization of deferred financing costs.................. 602
Minority interest......................................... 15
Deferred income taxes..................................... 474
Changes in operating assets and liabilities:
Accounts receivable.................................... (823)
Inventories............................................ (290)
Prepaid expenses and other current assets.............. (634)
Accounts payable and accrued liabilities............... 4,230
---------
Net cash provided by operating activities................... 6,533
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of ski resorts, net of cash acquired............ (133,498)
Capital expenditures........................................ (211)
Other assets................................................ (772)
---------
Net cash used in investing activities....................... (134,481)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt.................................. 100,000
Principal payments of long-term debt........................ (950)
Deferred financing costs.................................... (5,106)
Payment received on shareholder note receivable............. 2
Capital contribution........................................ 39,998
---------
Net cash provided by financing activities................... 133,944
---------
Increase in cash............................................ 5,996
Cash at beginning of period................................. --
---------
Cash at end of period....................................... $ 5,996
=========
</TABLE>
See accompanying notes.
F-5
<PAGE> 129
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
January 31, 1997
1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Booth Creek Ski Holdings, Inc. ("Booth Creek") was organized on October 8,
1996 in the State of Delaware for the purpose of acquiring and operating various
ski resorts, including Northstar-at-Tahoe ("Northstar"), Sierra-at-Tahoe
("Sierra"), Bear Mountain, Waterville Valley, Mt. Cranmore, Snoqualmie Pass
("Snoqualmie") and Grand Targhee, as described more fully in Note 2.
The consolidated financial statements include the accounts of Booth Creek
and its subsidiaries (collectively referred to as the "Company"), all of which
are wholly-owned except for Snoqualmie as discussed in Note 2. All significant
intercompany transactions and balances have been eliminated.
Booth Creek is a wholly-owned subsidiary of Booth Creek Ski Group, Inc.
("Parent").
The accompanying consolidated financial statements as of January 31, 1997
and for the three months then ended are unaudited, but include all adjustments
(consisting only of normal, recurring adjustments) which, in the opinion of
management of the Company, are considered necessary for a fair presentation of
the Company's financial position at January 31, 1997 and its operating results
and cash flows for the three months then ended. Due to the highly seasonal
nature of the Company's business and the effect of recent acquisitions (Note 2),
the results for the interim period are not necessarily indicative of results for
the entire year. Certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to generally accepted
accounting principles applicable for interim periods. Management believes that
the disclosures made are adequate to make the information presented not
misleading.
REPORTING PERIODS
The Company's reporting periods end on the last Friday of each month.
BUSINESS AND PRINCIPAL MARKETS
Northstar is a year-round destination resort including ski and golf
facilities. Sierra is a day ski area. Both Northstar and Sierra are located near
Lake Tahoe, California. Bear Mountain is a day ski area located approximately
two hours from Los Angeles, California. Waterville Valley, a destination resort,
and Mt. Cranmore, a day ski area, are located in New Hampshire. Snoqualmie is
located in Northwest Washington and is a day ski area. Grand Targhee is a
destination ski resort located in Wyoming.
Operations are highly seasonal at all locations with the majority of
revenues realized during the ski season from late November through early April.
The length of the ski season and the profitability of operations are
significantly impacted by weather conditions. Although Northstar, Bear Mountain,
Waterville Valley and Mt. Cranmore have snowmaking capacity to mitigate some of
the effects of adverse weather conditions, abnormally warm weather or lack of
adequate snowfall can materially affect revenues. Sierra, Snoqualmie and Grand
Targhee lack significant snowmaking capability but generally benefit from higher
annual snowfall.
Other operational risks and uncertainties that face the Company include
competitive pressures affecting the number of skier visits and ticket prices;
the success of marketing efforts to maintain and increase skier visits; the
possibility of equipment failure; and continued access to water supplies for
snowmaking.
CASH
Included in cash at January 31, 1997 is restricted cash of $842,000
relating to advance deposits for lodging and property rentals.
F-6
<PAGE> 130
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or
market. The components of inventories at January 31, 1997 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Retail products............................................. $2,116
Supplies.................................................... 1,168
Food and beverage........................................... 488
------
$3,772
======
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line method based upon the estimated service lives of the
property, which are as follows:
<TABLE>
<S> <C>
Land improvements........................................... 20 years
Buildings and improvements.................................. 20 years
Machinery and equipment..................................... 3 to 15 years
</TABLE>
REAL ESTATE ACTIVITIES
The Company capitalizes as real estate held for development and sale the
original acquisition cost (or appraised value in connection with purchase
business combinations), direct construction and development costs, and other
related costs. Property taxes, insurance and interest incurred on costs related
to real estate under development are capitalized during periods in which
activities necessary to get the property ready for its intended use are in
progress. Land costs and other common costs incurred prior to construction are
allocated to each land parcel benefited. Construction related costs are
allocated to individual units in each development phase using the relative sales
value method. Selling expenses are charged against income in the period
incurred.
Sales and profits on real estate sales are recognized using the full
accrual method at the point that the Company's receivables from land sales are
deemed collectible and the Company has no significant remaining obligations for
construction or development. If such conditions are not met, the recognition of
all or part of the sales and profit is postponed.
REVENUE RECOGNITION
Revenues are generally recognized as services are provided and products are
sold. Sales of season passes are initially deferred in unearned income and
recognized ratably over the ski season.
AMORTIZATION
The excess of the purchase price over the fair values of the net assets
acquired (goodwill) is being amortized using the straight-line method over a
period of 15 years.
Deferred financing costs are being amortized over the lives of the related
obligations.
F-7
<PAGE> 131
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
ADVERTISING COSTS
The cost of advertisements is expensed when the advertisement is initially
released. The cost of professional services for advertisements, sales campaigns,
promotion, and public relations is expensed when the services are rendered. The
cost of brochures is expensed over the ski season. Advertising expenses for the
three months ended January 31, 1997 were approximately $597,000.
INCOME TAXES
Deferred income taxes are provided for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
The Company is included in the federal and state tax returns of Parent. The
provision for federal and state income tax is computed as if the Company filed
separate consolidated tax returns.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. ACQUISITIONS
As described below, Booth Creek consummated the New Hampshire, California
and Snoqualmie acquisitions prior to January 31, 1997, and completed the Grand
Targhee acquisition on March 18, 1997. These acquisitions have been or will be
accounted for using the purchase method of accounting. The results of operations
of the Waterville Valley, Mt. Cranmore, Northstar, Sierra, Bear Mountain and
Snoqualmie resorts have been included in the accompanying statement of
operations since the effective dates of such acquisitions. The potential effects
of the Grand Targhee acquisition have not been reflected in the accompanying
consolidated financial statements, as the proposed transaction was not completed
as of January 31, 1997. The consolidated financial statements reflect the
preliminary allocations of purchase price based on the estimated fair values of
assets acquired and liabilities assumed at the respective dates of acquisition
and are subject to final allocations pursuant to appraisals.
THE NEW HAMPSHIRE ACQUISITIONS
On November 27, 1996, Booth Creek Ski Acquisition Corp., a wholly-owned
subsidiary of Booth Creek, purchased the assets of the Waterville Valley and Mt.
Cranmore resorts from subsidiaries of American Skiing Company for an aggregate
purchase price of $17.5 million. The purchase price was paid with $14.5 million
in cash, before giving effect to certain working capital adjustments, and the
$2.75 million ASC Seller Note (Note 5).
THE CALIFORNIA ACQUISITIONS
On December 3, 1996, Booth Creek purchased from Fibreboard Corporation all
of the issued and outstanding capital stock of Trimont Land Company, which
operates Northstar, Sierra-at-Tahoe, Inc., which operates Sierra, and Bear
Mountain, Inc., which operates Bear Mountain. The aggregate purchase price was
$121.5 million in cash, before giving effect to certain working capital
adjustments.
F-8
<PAGE> 132
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
2. ACQUISITIONS -- (CONTINUED)
THE SNOQUALMIE ACQUISITION
Effective January 15, 1997, Booth Creek purchased all of the issued and
outstanding common stock of Ski Lifts, Inc. ("Ski Lifts"), the owner and
operator of the ski resort assets of Snoqualmie Pass, for an aggregate purchase
price of approximately $14 million, which included the assumption of
approximately $3.6 million of indebtedness, the issuance by Ski Lifts of the
approximately $9.8 million Snoqualmie Seller Note (Note 5), and other
obligations to the selling shareholders of approximately $600,000.
In connection with the consummation of the Snoqualmie acquisition, Ski
Lifts transferred approximately 71 acres of owned real estate held for
development purposes into a Delaware limited liability company (the "Real Estate
LLC"), of which Ski Lifts is a member and 99% equity interest holder and Booth
Creek is the other member and 1% equity interest holder. In addition, Ski Lifts
granted the Real Estate LLC an option (the "Real Estate Option") to purchase an
additional 14 acres of developmental real estate for nominal consideration
exercisable under certain conditions. Ski Lifts also issued 28,000 shares of
non-voting preferred stock (the "Ski Lifts Preferred Stock") to its prior owners
having an aggregate liquidation preference equal to $3.5 million, the aggregate
estimated fair market value of the real estate transferred to the Real Estate
LLC and the real estate subject to the Real Estate Option. Concurrently with
these transactions, the Real Estate LLC entered into an agreement to purchase
(the "Preferred Stock Purchase Agreement") the Ski Lifts Preferred Stock, on a
quarterly basis over the five years following the date of the Snoqualmie
Acquisition, at a purchase price equal to the liquidation preference thereof
plus accrued dividends to the date of purchase. The Company advanced the first
three quarterly payments under the Preferred Stock Purchase Agreement on or
prior to March 18, 1997. The Real Estate LLC's obligations under the Preferred
Stock Purchase Agreement are secured by a first priority lien on the
developmental real estate held by the Real Estate LLC and substantially all of
its other assets. The Ski Lifts Preferred Stock provides for a 9% cumulative
dividend and is redeemable at the option of Ski Lifts without premium. In
addition, pursuant to the terms of the Ski Lifts Preferred Stock, the holders
thereof have no redemption rights and are entitled to receive dividend payments
only when and if declared by the board of directors of Ski Lifts. The amount of
cumulative preferred dividends in arrears at January 31, 1997 was $15,000 or
$.54 per share.
THE GRAND TARGHEE ACQUISITION
On March 18, 1997, Booth Creek acquired all the issued and outstanding
capital stock of Grand Targhee Incorporated, the owner of the ski resort assets
of Grand Targhee, for an aggregate purchase price of approximately $7.9 million
plus contingent payments of up to $2 million based on the performance of Grand
Targhee through the 1998/99 ski season and additional commissions based on the
number of dwelling units developed at the resort through 2012.
F-9
<PAGE> 133
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at January 31, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Land and improvements....................................... $ 30,016
Buildings and improvements.................................. 28,666
Machinery and equipment..................................... 64,280
Construction in progress.................................... 2,156
--------
125,118
Less accumulated depreciation............................... 1,503
--------
$123,615
========
</TABLE>
The allocation of purchase price to and amongst the various categories of
property, plant and equipment was based on preliminary and tentative information
and is subject to change as additional information becomes known.
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following at
January 31, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Accounts payable............................................ $ 7,670
Accrued compensation........................................ 1,302
Taxes other than income..................................... 1,635
Unearned income............................................. 4,073
Interest.................................................... 1,862
Other....................................................... 1,853
-------
$18,395
=======
</TABLE>
5. FINANCING ARRANGEMENTS
SENIOR CREDIT FACILITY
The following is a summary of certain provisions of the Credit Agreement
(the "Senior Credit Facility") dated as of December 3, 1996 and subsequently
amended and restated on March 18, 1997, among Booth Creek, its subsidiaries, the
financial institutions party thereto and The First National Bank of Boston, as
administrative agent ("Agent").
General -- The Senior Credit Facility provides for borrowing
availability of up to $12 million during the period from July 15 through
January 31 and $6 million during the remainder of each year. In
addition, the Company is required to repay all borrowings under the
Senior Credit Facility on or before March 1 of each year and have no
outstanding indebtedness thereunder during the two months thereafter.
From and after July 15, 1998, borrowing availability under the Senior
Credit Facility increases to $20 million upon the Company achieving a
certain level of adjusted consolidated cash flow to total debt service
for any trailing four quarter period ending on or after April 30, 1998.
The Senior Credit Facility requires the Company to escrow $5,820,000 on
or prior to August 1, 1997 to fund the first payment of interest payable
on certain senior notes (see "Long-Term Debt" below) after their
issuance. Pursuant to the terms of the Senior Credit Facility, the
Company may not borrow in excess of $1,430,000 thereunder to fund such
interest payment. The Company expects to fund such interest payment from
an equity contribution, available cash on hand and/or alternative
F-10
<PAGE> 134
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
financing sources. Borrowings under the Senior Credit Facility are
collectively referred to herein as the "Loans." There were no borrowings
outstanding under the Senior Credit Facility at January 31, 1997.
Interest -- For purposes of calculating interest, the Loans can be, at
the election of the Company, Base Rate Loans or LIBOR Rate Loans or a
combination thereof. Subsequent to the offering on March 18, 1997 of
certain senior notes (see "Long-Term Debt" below), Base Rate Loans will
bear interest at the sum of (a) a margin of between 0% and .5%,
depending on the level of consolidated EBITDA of the Company and its
subsidiaries (as determined pursuant to the Senior Credit Facility),
plus (b) the higher of (i) The First National Bank of Boston's base rate
or (ii) the federal funds rate plus .5%. LIBOR Rate Loans will bear
interest at the LIBOR rate plus a margin of between 2% and 3%, depending
on the level of consolidated EBITDA.
Repayment -- Subject to the provisions of the Senior Credit Facility,
the Company may, from time to time, borrow, repay and reborrow under the
Senior Credit Facility. The entire unpaid balance under the Senior
Credit Facility is due and payable on March 18, 1999.
Security -- Borrowings under the Senior Credit Facility are secured by
(i) a pledge of the Agent for the ratable benefit of the financial
institutions party to the Senior Credit Facility of all of the capital
stock of the Booth Creek's principal subsidiaries and (ii) a grant of a
security interest in substantially all of the consolidated assets of
Booth Creek and its subsidiaries (excluding the Real Estate LLC).
Covenants -- The Senior Credit Facility contains financial covenants
relating to the maintenance of (i) ratios of (a) financing debt to
consolidated cash flow, (b) adjusted consolidated cash flow to
consolidated debt service and (c) consolidated cash flow to consolidated
interest expense, (ii) consolidated net worth, and (iii) consolidated
cash flow. The Senior Credit Facility also contains restrictive
covenants pertaining to the management and operation of Booth Creek and
its subsidiaries. The covenants include, among others, significant
limitations on indebtedness, guarantees, mergers, acquisitions,
fundamental corporate changes, capital expenditures, asset sales,
leases, investments, loans and advances, liens, dividends and other
stock payments, transactions with affiliates, optional payments and
modification of debt instruments and issuances of stock.
LONG-TERM DEBT
Long-term debt consists of the following instruments at January 31, 1997,
which are described below:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Bridge Notes................................................ $ 90,000
Intercompany note payable to Parent......................... 10,000
5% Snoqualmie Seller Note................................... 9,818
ASC Seller Note............................................. 2,500
Other debt.................................................. 2,869
--------
115,187
Less current portion........................................ 207
--------
$114,980
========
</TABLE>
On March 18, 1997, the Company consummated the sale of $110 million in
senior debt securities (the "Senior Notes"), and on April 25, 1997 the initial
purchaser of such Senior Notes purchased an additional $6 million aggregate
principal amount of Senior Notes from the Company (collectively, these
transactions are referred to as the "Offering"). The proceeds of the Offering,
along with $6.5 million in additional equity
F-11
<PAGE> 135
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
contributions of Parent and available cash on hand, were used to i) repay the
Bridge Notes, Snoqualmie Seller Note and certain other debt, ii) repay
obligations relating to the $10 million intercompany note payable to Parent,
iii) acquire Grand Targhee, iv) pay certain fees and expenses associated with
the Offering and the Senior Credit Facility and v) for general corporate
purposes. The Company anticipates that existing deferred financing costs of
approximately $3.1 million will be charged off in connection with the planned
extinguishment of debt.
The Senior Notes mature on March 15, 2007, and bear interest at 12.5%
payable semiannually on each March 15 and September 15, commencing September 15,
1997. The Senior Notes will be unconditionally guaranteed, on an unsecured
senior basis, as to the payment of principal, premium, if any, and interest,
jointly and severally (the "Guarantees"), by all Restricted Subsidiaries of the
Company having either assets or stockholders' equity in excess of $20,000 (the
"Guarantors"). As of the date of the Offering, all of the Company's direct and
indirect subsidiaries will be Restricted Subsidiaries, except the Real Estate
LLC. Each Guarantee will be effectively subordinated to all secured indebtedness
of such Guarantor. The Senior Notes will be general senior unsecured obligations
of the Company ranking equally in right of payment with all other existing and
future senior indebtedness of the Company and senior in right of payment to any
subordinated indebtedness of the Company. The Senior Notes will be effectively
subordinated in right of payment to all secured indebtedness of the Company and
the Guarantors, including indebtedness under the Senior Credit Facility. In
addition, the Senior Notes will be structurally subordinated to any indebtedness
of the Company's subsidiaries that are not Guarantors. The indenture for the
Senior Notes contains covenants for the benefit of the holders of the Senior
Notes that, among other things, restrict the ability of the Company and any
Restricted Subsidiaries to: (i) incur additional indebtedness; (ii) pay
dividends and make distributions; (iii) issue stock of subsidiaries; (iv) make
certain investments; (v) repurchase stock; (vi) create liens; (vii) enter into
transactions with affiliates, (viii) enter into sale and leaseback transactions,
(ix) create dividend or other payment restrictions affecting Restricted
Subsidiaries; (x) merge or consolidate the Company or any Guarantors; and (xi)
transfer and sell assets.
The Guarantors are wholly-owned subsidiaries of Booth Creek and have fully
and unconditionally guaranteed the Senior Notes on a joint and several basis. In
addition, the aggregate assets, liabilities, earnings and equity of the
Guarantors are substantially equivalent to the assets, liabilities, earnings and
equity of Booth Creek on a consolidated basis. Accordingly, Booth Creek has not
presented separate financial statements and other disclosures concerning the
Guarantors because management has determined that such information is not
material to investors.
Bridge Notes
The Bridge Notes bear interest at LIBOR plus 5.5% (11.25% at January 31,
1997) which is due on March 1, 1997, and upon any prepayment of the Bridge
Notes.
Intercompany Note Payable to Parent
At January 31, 1997, the Company had a $10 million intercompany note
payable to Parent which had issued certain indebtedness (the "Hancock Option
Notes"). The terms of the Company's loan from Parent mirror the terms of the
Hancock Option Notes. The intercompany note payable to Parent bears interest at
12% per annum. In conjunction with the Offering, the Hancock Option Notes were
reissued to the Company, in satisfaction of the Company's intercompany note
payable to Parent, and repaid with a portion of the net proceeds of the
Offering.
F-12
<PAGE> 136
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
5. FINANCING ARRANGEMENTS (CONTINUED)
ASC Seller Note
As part of the purchase price for the acquisitions of Waterville Valley and
Mt. Cranmore, Booth Creek Ski Acquisition Corp., a wholly-owned subsidiary of
Booth Creek, and Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski
Resort, Inc., wholly-owned subsidiaries of Booth Creek Ski Acquisition Corp. and
the respective owners of the assets of the Waterville Valley and Mt. Cranmore
resorts, jointly and severally issued a promissory note to American Skiing
Company in the aggregate principal amount of $2.75 million, of which $2.5
million is outstanding at January 31, 1997. The ASC Seller Note requires annual
principal payments commencing January 31, 1998 at any initial level of $100,000
per year and increasing to $350,000 by January 31, 2003, with the remaining
principal balance of $1,150,000 due on June 30, 2004. The ASC Seller Note bears
interest at 12% per annum payable semi-annually on each June 30 and December 31
commencing on June 30, 1997.
Other Debt
Other debt of $2,869,000 at January 31, 1997 consists of various credit
agreements, notes payable and capital lease obligations assumed in connection
with the acquisition of Ski Lifts, of which $2,700,000 was retired following the
acquisition and in conjunction with the Offering.
During the three months ended January 31, 1997, the Company paid cash for
interest costs of approximately $99,000.
6. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases certain machinery, equipment and facilities under
operating leases. Aggregate future minimum lease payments as of January 31, 1997
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JANUARY 31,
----------------------- (IN THOUSANDS)
<S> <C>
1998................................................. $1,424
1999................................................. 853
2000................................................. 508
2001................................................. 350
2002................................................. 177
Thereafter........................................... 454
------
$3,766
======
</TABLE>
Total rent expense for all operating leases amounted to $1,452,000 for the
three months ended January 31, 1997.
In addition, the Company leases property from the U.S. Forest Service under
Special Use Permits for all or certain portions of the operations of Sierra,
Bear Mountain, Waterville Valley, Snoqualmie and Grand Targhee. These leases are
effective through 2008, 2020, 2034, 2032, and 2034, respectively. Lease payments
are based on a percentage of revenues, and were $208,000 for the three months
ended January 31, 1997.
LITIGATION
The nature of the ski industry includes the risk of skier injuries.
Generally, the Company has insurance to cover potential claims; in some cases
the amounts of the claims may be substantial. The Company is also involved in a
number of other claims arising from its operations.
F-13
<PAGE> 137
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
6. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
Management, in consultation with legal counsel, believes resolution of
these claims will not have a material adverse impact on the Company's
consolidated financial condition or results of operations.
PLEDGE OF STOCK
The stock of the Company is pledged to secure $30 million of indebtedness
of the Parent.
7. INCOME TAXES
Income taxes recognized for three months ended January 31, 1997 are based
on the Company's estimated effective income tax rate for the year ending October
31, 1997.
Deferred tax liabilities of $4,911,000 at January 31, 1997 relate primarily
to differences between the book and tax bases of certain assets and liabilities
arising as a result of the stock purchase for the Snoqualmie acquisition, as the
underlying net assets of Snoqualmie were not adjusted to their fair values for
tax reporting purposes.
8. MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS
Booth Creek, Inc. (the "Management Company") provides management services
to Booth Creek, the Parent and Booth Creek's subsidiaries pursuant to the
Management Agreement dated November 27, 1996 (the "Management Agreement")
between Booth Creek and the Management Company. The Management Company provides
Booth Creek, the Parent and Booth Creek's subsidiaries with financial advice
with respect to, among other matters, cash management, accounting and data
processing systems and procedures, budgeting, equipment purchases, business
forecasts, treasury functions and investor relations. The Management Company
also provides general supervision and management advice concerning tax, legal
and corporate finance matters, administration and operation, personnel matters,
business insurance and the employment of consultants, contractors and agents.
Under the terms of the Management Agreement, the Company provides customary
indemnification, reimburses certain costs and pays the Management Company an
annual management fee of $350,000 plus an operating bonus, not to exceed
$400,000, equal to 2.5% of the excess of consolidated EBITDA (as defined in the
debt agreements for the Offering) for such year over $25 million. The obligation
of the Company to make payments under the Management Agreement is subject to the
provisions of the debt agreements for the Offering. Management fees during the
three months ended January 31, 1997 were $63,000.
Since the formation of the Company, the Management Company and certain of
its affiliates have made advances and deposits, and have incurred fees and
expenses, in connection with certain of the acquisitions for which they were
later reimbursed by the Company pursuant to the Management Agreement.
Reimbursement amounts did not include any payment of interest.
F-14
<PAGE> 138
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Booth Creek Ski Holdings, Inc.
We have audited the accompanying balance sheet of Booth Creek Ski Holdings,
Inc. (the Company), as of October 31, 1996. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Company at October 31, 1996, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
February 3, 1997
F-15
<PAGE> 139
BOOTH CREEK SKI HOLDINGS, INC.
BALANCE SHEET
October 31, 1996
<TABLE>
<S> <C>
ASSETS
Total Assets................................................ $ --
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Common stock, $.01 par value, 1,000 shares authorized,
issued and outstanding.................................... $ 10
Additional paid-in capital.................................. 2,010
Note receivable from stockholder (Note 2)................... (2,020)
-------
Total Liabilities and Stockholder's Equity.................. $ --
=======
</TABLE>
See accompanying notes.
F-16
<PAGE> 140
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO BALANCE SHEET
October 31, 1996
1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
FORMATION AND OWNERSHIP
Booth Creek Ski Holdings, Inc. (the Company) was formed October 8, 1996 to
acquire and operate ski resort properties located throughout the United States.
Through October 31, 1996, the Company had no operations.
The Company is a wholly owned subsidiary of Booth Creek Ski Group, Inc.
(Group).
ACCOUNTING PERIOD
The Company's fiscal year end is October 31.
2. NOTE RECEIVABLE
In conjunction with the original issuance of 1,000 shares of common stock,
a note due from the original stockholder for $2,020 was issued and has been
presented as a reduction to stockholder's equity.
3. SUBSEQUENT EVENTS -- ACQUISITIONS
On November 27, 1996, the Company completed the acquisition of the assets
of the Waterville Valley and Mt. Cranmore ski resorts from American Skiing
Company for $14.4 million in cash, assumption of certain liabilities ($.3
million), and a promissory note due to the seller of $2.75 million.
On December 3, 1996, the Company completed the acquisition of the assets of
the Northstar-at-Tahoe, Sierra-at-Tahoe and Bear Mountain ski resorts from
Fibreboard Corporation for $119.0 million in cash and assumption of certain
estimated liabilities ($2.5 million).
Both of these acquisitions will be accounted for using the purchase method
and will be included in the results of operations of the Company from their
respective purchase dates. The acquisitions were financed through equity
contributions from Group and various bridge financing facilities.
The Company is also in various stages of negotiation relating to two
additional acquisitions, and expects to complete such acquisitions. These
include the acquisition of the stock of Ski Lifts, Inc., which operates four ski
resorts referred to as the Snoqualmie Pass ski resort complex, for a total
purchase price of approximately $13.9 million, including debt assumption and the
acquisition of the stock of Grand Targhee, Incorporated for a total purchase
price of $7.6 million, including debt assumption.
F-17
<PAGE> 141
THE RESORT GROUP OF FIBREBOARD CORPORATION
COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD FROM NOVEMBER 1, 1996 TO DECEMBER 2, 1996
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<S> <C>
Revenue:
Resort.................................................... $ 1,395
Real estate and other..................................... 304
-------
Total revenue.......................................... 1,699
-------
Cost of sales:
Resort.................................................... 2,890
Real estate and other..................................... 161
-------
Total cost of sales.................................... 3,051
-------
Gross margin................................................ (1,352)
Sales, general and administrative expense................... 1,087
Management fee.............................................. 70
-------
Operating loss.............................................. (2,509)
Interest expense............................................ (86)
Interest and other income................................... 14
Intercompany interest expense, net.......................... (217)
-------
Loss before income taxes.................................... (2,798)
Income tax benefit.......................................... 885
-------
Net loss.................................................... $(1,913)
=======
</TABLE>
See accompanying notes.
F-18
<PAGE> 142
THE RESORT GROUP OF FIBREBOARD CORPORATION
COMBINED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE PERIOD FROM NOVEMBER 1, 1996 TO DECEMBER 2, 1996
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(1,913)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation, amortization and depletion.................. 90
Non-cash cost of real estate sales........................ 133
Gain on sale of assets.................................... (9)
Net changes in assets and liabilities:
Accounts receivable.................................... 56
Inventories............................................ (776)
Prepaid expenses....................................... (308)
Accounts payable and accrued liabilities............... 5,554
-------
Net cash provided by operating activities................... 2,827
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from property and equipment sales.................. 30
Purchase of other assets.................................... (442)
Capital expenditures -- property and equipment.............. (5,531)
Development expenditures -- real estate held for resale..... (192)
Principal payments received on real estate loans............ 115
-------
Net cash used in investing activities....................... (6,020)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in intercompany payable to Fibreboard
Corporation............................................... 1,906
-------
Net cash provided by financing activities................... 1,906
-------
Net decrease in cash and cash equivalents................... (1,287)
Cash and cash equivalents, beginning of period.............. 1,499
-------
Cash and cash equivalents, end of period.................... $ 212
=======
</TABLE>
See accompanying notes.
F-19
<PAGE> 143
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE PERIOD FROM NOVEMBER 1, 1996 TO DECEMBER 2, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
The Resort Group of Fibreboard Corporation (the "Group") includes the
following wholly-owned subsidiaries of Fibreboard Corporation, a Delaware
corporation ("Fibreboard"): Trimont Land Company, d.b.a. Northstar-at-Tahoe,
Sierra-at-Tahoe, Inc., and Bear Mountain, Inc.
The accompanying combined financial statements for the period from November
1, 1996 to December 2, 1996 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of
management of the Group, are considered necessary for a fair presentation of the
Group's operating results and cash flows for the period from November 1, 1996 to
December 2, 1996. Due to the highly seasonal nature of the Group's business, the
results for the interim period are not necessarily indicative of results for the
entire year. Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to generally accepted
accounting principles applicable for interim periods. The unaudited interim
financial statements should be read in conjunction with the following note and
the audited financial statements of the Group as of October 31, 1996 and for the
ten months then ended.
The Group recognizes depreciation expense on substantially all resort
related assets over the course of the operating ski season, which is presumed to
be the months of December through March. Accordingly, depreciation expense of
$7,000 recorded in the period from November 1, 1996 to December 2, 1996 is not
reflective of the Group's annual depreciation charges.
2. SUBSEQUENT EVENT
On December 3, 1996, Booth Creek Ski Holdings, Inc. purchased from
Fibreboard all of the issued and outstanding capital stock of Trimont Land
Company, Sierra-at-Tahoe, Inc. and Bear Mountain, Inc. The aggregate purchase
price was $121.5 million in cash, before giving effect to certain working
capital adjustments.
F-20
<PAGE> 144
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Fibreboard Corporation and Mr. George N. Gillett, Jr.:
We have audited the accompanying combined balance sheets of The Resort
Group of Fibreboard Corporation (wholly-owned subsidiaries of Fibreboard
Corporation, a Delaware corporation) as of October 31, 1996, December 31, 1995,
and 1994, and the related combined statements of income, and cash flows for the
ten months ended October 31, 1996, and each of the three years ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The Resort Group of
Fibreboard Corporation as of October 31, 1996, December 31, 1995, and 1994, and
the results of its operations and its cash flows for the ten months ended
October 31, 1996, and each of the three years ended December 31, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
November 22, 1996
F-21
<PAGE> 145
THE RESORT GROUP OF FIBREBOARD CORPORATION
COMBINED BALANCE SHEETS
AS OF OCTOBER 31, 1996, DECEMBER 31, 1995, AND 1994
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, --------------------
1996 1995 1994
----------- ---- ----
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,499 $ 7,821 $ 3,319
Accounts receivable, net of allowance for doubtful
accounts of $10, $12, and $11, respectively............ 799 853 537
Current portion of notes receivable....................... 350 78 24
Inventories............................................... 2,106 3,267 1,468
Prepaid expenses.......................................... 681 545 502
Current portion of real estate held for resale............ 1,416 1,105 208
-------- -------- --------
Total current assets................................... 6,851 13,669 6,058
-------- -------- --------
Property and equipment, at cost:
Land and improvements..................................... 26,500 26,500 12,469
Buildings................................................. 15,309 14,914 10,907
Machinery and equipment................................... 38,415 38,923 31,820
Construction in progress.................................. 5,384 -- --
-------- -------- --------
85,608 80,337 55,196
Less: Accumulated depreciation............................ (27,285) (23,261) (19,447)
-------- -------- --------
Net property and equipment............................. 58,323 57,076 35,749
Timber rights, net of accumulated depletion of $16.......... 1,484 -- --
Notes receivable, net of current portion.................... 1,368 752 554
Real estate held for resale, net of current portion......... 806 1,162 303
Other assets................................................ 770 657 401
-------- -------- --------
Total assets........................................... $ 69,602 $ 73,316 $ 43,065
======== ======== ========
LIABILITIES AND NET ASSETS
Current liabilities:
Current portion of long-term debt......................... $ -- $ -- $ 1,000
Accounts payable and accrued liabilities.................. 4,323 8,156 7,391
Intercompany payable to Fibreboard Corporation............ 38,715 41,493 4,222
-------- -------- --------
Total current liabilities.............................. 43,038 49,649 12,613
Long-term debt.............................................. -- -- 10,200
Other long-term liabilities................................. -- -- 500
-------- -------- --------
Total liabilities...................................... 43,038 49,649 23,313
Commitments (Note 11)
Net assets................................................ 26,564 23,667 19,752
-------- -------- --------
Total liabilities and net assets.......................... $ 69,602 $ 73,316 $ 43,065
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE> 146
THE RESORT GROUP OF FIBREBOARD CORPORATION
COMBINED STATEMENTS OF OPERATIONS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1996 AND
THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, ---------------------------
1996 1995 1994 1993
----------- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Resort............................................... $36,829 $39,823 $40,810 $25,528
Real estate.......................................... 3,595 5,028 610 --
Timber............................................... 693 185 -- --
------- ------- ------- -------
Total revenue................................... 41,117 45,036 41,420 25,528
------- ------- ------- -------
Cost of Sales:
Resort............................................... 26,950 28,569 26,920 18,117
Real estate (including $1,461, $1,618, $0, and $0,
respectively, of non-cash cost of sales) (Note
3)................................................ 1,739 1,928 280 --
Timber............................................... 403 61 -- --
------- ------- ------- -------
Total cost of sales............................. 29,092 30,558 27,200 18,117
------- ------- ------- -------
Gross margin.................................... 12,025 14,478 14,220 7,411
Sales, General, and Administrative Expense............. 5,220 5,871 5,545 4,579
Management Fee (Note 8)................................ 701 1,247 655 507
------- ------- ------- -------
Operating income................................ 6,104 7,360 8,020 2,325
Interest expense....................................... 100 439 741 326
Interest and other income.............................. (350) (106) (75) (140)
Intercompany interest expense, net..................... 1,439 488 -- --
------- ------- ------- -------
Income before income taxes...................... 4,915 6,539 7,354 2,139
Provision for Income Taxes............................. 2,018 2,624 2,979 876
------- ------- ------- -------
Net income............................................. $ 2,897 $ 3,915 $ 4,375 $ 1,263
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 147
THE RESORT GROUP OF FIBREBOARD CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1996 AND
THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, -------------------------------
1996 1995 1994 1993
----------- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 2,897 $ 3,915 $ 4,375 $ 1,263
Adjustments to reconcile to cash provided by
operating activities --
Depreciation, amortization, and depletion....... 4,354 4,024 3,449 2,514
Non-cash cost of real estate sales (Note 3)..... 1,461 1,618 -- --
Gain on sale of assets.......................... (147) (342) (326) --
Changes in assets and liabilities --
Decrease (increase) in accounts receivable...... 54 (286) (107) (161)
Decrease (increase) in inventories.............. 1,161 (1,427) (9) (308)
(Increase) decrease in prepaid expenses......... (136) 56 106 (479)
(Increase) decrease in notes receivable......... (888) (252) 116 66
(Decrease) increase in accounts payable and
accrued liabilities........................... (3,833) 555 1,878 1,317
------- -------- ------- --------
Net cash provided by operating activities..... 4,923 7,861 9,482 4,212
------- -------- ------- --------
Cash flows from investing activities:
Non-cash assets of acquired operations............. -- (20,604) -- (13,054)
Proceeds from property and equipment sales......... 361 -- -- --
Development expenditures -- real estate held for
resale.......................................... (1,297) (3,374) (198) --
Capital expenditures -- property and equipment..... (5,761) (5,226) (6,199) (4,619)
Capitalized interest............................... (157) -- -- (183)
Acquisition of timber rights....................... (1,500) -- -- --
(Increase) decrease in other assets................ (113) (226) 110 (480)
------- -------- ------- --------
Net cash used by investing activities......... (8,467) (29,430) (6,287) (18,336)
------- -------- ------- --------
Cash flows from financing activities:
New borrowings..................................... -- -- -- 15,000
Repayment of long-term debt........................ -- (11,200) (3,798) (24)
(Decrease) increase in intercompany payable to
Fibreboard Corporation.......................... (2,778) 37,271 1,134 (5,949)
------- -------- ------- --------
Net cash (used) provided by financing
activities................................. (2,778) 26,071 (2,664) 9,027
------- -------- ------- --------
Net increase (decrease) in cash and cash
equivalents........................................ (6,322) 4,502 531 (5,097)
Cash and cash equivalents, beginning of year......... 7,821 3,319 2,788 7,885
------- -------- ------- --------
Cash and cash equivalents, end of year............... $ 1,499 $ 7,821 $ 3,319 $ 2,788
======= ======== ======= ========
Supplemental cash flow information:
Cash paid for interest to third parties............ $ 55 $ 590 $ 810 $ 186
======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 148
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. ORGANIZATION
BASIS OF PRESENTATION
The Resort Group of Fibreboard Corporation (the Group) includes the
following wholly-owned subsidiaries of Fibreboard Corporation, a Delaware
corporation (Fibreboard): Trimont Land Company, d.b.a. Northstar-at-Tahoe
(Northstar), Sierra-at-Tahoe, Inc. (Sierra), and Bear Mountain, Inc. (Bear),
from the date of acquisition by Fibreboard.
Although for presentation purposes the Group's fiscal years and months are
on a calendar basis, these fiscal periods actually end on the last Saturday of
the period. Fiscal year 1995 and 1993 each contained 52 weeks; fiscal year 1994
contained 53 weeks. The impact of the additional week in 1994 resulted in
increased revenue and income as the additional week was a peak holiday week.
BUSINESS
Northstar is a year-round destination resort including ski and golf
facilities. Northstar also has real estate operations. Sierra is a day ski area.
Both Northstar and Sierra are located near Lake Tahoe, California. Bear is a day
ski area located approximately two hours from Los Angeles, California.
Operations are highly seasonal at all locations with more than 75% of
revenues realized during the ski season from late November through early April.
The length of the ski season and the profitability of operations are impacted by
weather. Although Northstar and Bear have snowmaking capacity to mitigate some
of the effects of adverse weather conditions, abnormally warm weather or lack of
adequate snowfall can materially affect revenues. Sierra lacks significant
snowmaking capability but generally benefits from higher annual snowfall.
Depending on the weather and other factors, annual skier visits have varied from
300,000 to 500,000 at Northstar, 230,000 to 350,000 at Sierra and 230,000 to
360,000 at Bear over the last decade.
In 1993 and 1994, Northstar's real estate activities consisted primarily of
property management services for the homeowners at the resort. Beginning in
1995, the Group began also developing and selling residential lots.
Other risks and uncertainties that face the resort group include
competitive pressures affecting the number of skier visits and ticket prices;
the success of marketing efforts to maintain and increase skier visits; the
possibility of equipment failure; and continued access to water for snowmaking.
On August 29, 1996, Fibreboard entered into a letter of intent to sell the
assets of the Group to Booth Creek, Inc., for $121.5 million in cash. The
transaction is expected to close in December 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Group participates in Fibreboard's centralized cash management system
to minimize the amount of cash on deposit with banks and to maximize interest
income. Cash includes cash on hand or in banks available for immediate
disbursal. The Group considers all highly-liquid investments with an original
maturity of three months or less to be cash equivalents.
F-25
<PAGE> 149
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or
market. The components of inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, ---------------
1996 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Retail Products.................................... $1,186 $1,851 $ 756
Supplies........................................... 805 1,141 424
Food and Beverage.................................. 115 275 288
------ ------ ------
Total inventories............................. $2,106 $3,267 $1,468
====== ====== ======
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method based upon the estimated service lives of the property,
ranging from 3 to 20 years. Annual depreciation on most property and equipment
is recognized from December 1 to March 31, consistent with the ski season.
Therefore, the accompanying statement of operations for the ten month period
ended October 31, 1996 includes 75% of annual depreciation. Depreciation expense
for the ten month period ended October 31, 1996 and the years ended December 31,
1995, 1994, and 1993 was $4,338, $4,024, $3,449, and $2,514, respectively.
The Group capitalizes interest on borrowed funds during construction
periods. Capitalized interest is amortized over the lives of the related assets.
Interest capitalized in the ten month period ended October 31, 1996 and the
years ended December 31, 1995, 1994, and 1993 was $64, $0, $0, and $183,
respectively.
ADVERTISING COSTS
The cost of advertising is expensed when the advertisement is released. The
cost of professional services for advertising, sales campaigns, promotion, and
public relations is expensed when the services are rendered. The cost of
brochures is expensed over the ski season.
INCOME TAXES
The Group accounts for income taxes according to the provisions of
Statement of Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
SFAS No. 109 utilizes the liability method and deferred taxes are determined
based on the estimated future tax effects of differences between the financial
statement and tax bases of assets and liabilities given the provisions of the
enacted tax laws. Deferred taxes primarily consist of the basis differences
associated with property and equipment and certain liabilities as of October 31,
1996 and December 31, 1995 and 1994.
The Group is included in the federal and state consolidated tax returns of
Fibreboard. The Group computes its tax liability as if it had filed a separate
tax return and accrues such amount to Fibreboard. Accordingly, all current and
deferred taxes are included in the intercompany payable to Fibreboard
Corporation.
F-26
<PAGE> 150
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The following table summarizes the differences between the statutory
federal and the effective rate:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, ----------------------
1996 1995 1994 1993
----------- ---- ---- ----
<S> <C> <C> <C> <C>
Tax at statutory federal rate................ $1,721 $2,289 $2,574 $749
State taxes, net of federal tax benefit...... 297 395 445 129
Other........................................ -- (60) (40) (2)
------ ------ ------ ----
Tax provision................................ $2,018 $2,624 $2,979 $876
====== ====== ====== ====
</TABLE>
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's financial
statements to be consistent with the current year presentation.
3. REAL ESTATE OPERATIONS:
Revenues and profits on the sales of real estate at Northstar are
recognized in accordance with SFAS No. 66, "Accounting for the Sales of Real
Estate."
Real estate held for resale includes the initial development expenditures
(e.g., roads, sewage systems, engineering fees, and capitalized interest) for a
new residential development at Northstar. The costs have been allocated to the
individual lots based on the development phase in which the lot is located. The
current portion of these costs relates to lots which the Group expects to sell
within one year. These costs are recognized as non-cash cost of sales upon the
sale of the lot.
Effective January 1, 1996, the Group capitalized interest applicable to
real estate development. In the ten months ended October 31, 1996, approximately
$119 was capitalized. Of that amount, $26 was applicable to lots sold in 1996.
Such amount is reflected in cost of sales in the accompanying statement of
operations.
F-27
<PAGE> 151
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. REAL ESTATE OPERATIONS -- (CONTINUED)
Notes receivable relate to these real estate sales and equipment sales and
consist of the following as of October 31, 1996 and December 31, 1995 and 1994:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, ------------
1996 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Secured notes receivable bearing interest at 7.75% to
10.5%; payments of interest and principal are due
monthly and the notes mature between 1997 and
2011................................................ $1,584 $830 $578
Notes receivable for sale of equipment; payable in
full in April 1997.................................. 134 -- --
------ ---- ----
1,718 830 578
Less: current portion................................. (350) (78) (24)
------ ---- ----
Long-term notes receivable............................ $1,368 $752 $554
====== ==== ====
</TABLE>
Future maturities of these notes are as follows:
<TABLE>
<S> <C>
1996 (two months)........................................... $ 11
1997........................................................ 454
1998........................................................ 784
1999........................................................ 29
2000........................................................ 32
2001........................................................ 34
Thereafter.................................................. 374
------
$1,718
======
</TABLE>
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 31, ---------------
1996 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Accounts payable.................................... $1,176 $3,396 $2,885
Payroll related..................................... 1,076 1,640 1,362
Taxes other than income............................. 945 647 541
Unearned income..................................... 880 2,177 2,153
Interest............................................ 50 5 155
Other............................................... 196 291 295
------ ------ ------
$4,323 $8,156 $7,391
====== ====== ======
</TABLE>
Unearned income relates primarily to season ski passes and customer
deposits. Revenue from season passes is recognized ratably over the ski season.
5. EMPLOYEE BENEFIT PLANS
The Group's employees are eligible to participate in a 401(k) plan. The
Group contributed $226, $288, $246, and $207 as a result of these plans in the
ten month period ended October 31, 1996 and the years ended December 31, 1995,
1994, and 1993, respectively. Certain current and former group employees have
vested benefits in Fibreboard's defined benefit plan which was frozen in 1993.
All pension liabilities and expenses are funded directly by Fibreboard.
F-28
<PAGE> 152
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
Certain Group officers and key employees participate in the Fibreboard
stock option, rights, and long-term equity incentive plans. Stock options are
generally granted at the then market value of Fibreboard stock. If the option
price is less than the market price, compensation expense is recognized over the
vesting period. Compensation related to restricted stock awards, rights, and
incentive compensation is recognized over the related term of the award.
6. CREDIT FACILITY
The Group's long-term debt consisted of the following as of December 31,
1994:
<TABLE>
<CAPTION>
1994
----
<S> <C>
Reducing revolving credit facility, interest at LIBOR plus
1.0% to 1.375%, secured by the assets of the Group........ $ 6,700
Term loan, interest at prime plus 0.5%, secured by the
assets of Northstar....................................... 4,500
-------
11,200
Less current portion........................................ (1,000)
-------
$10,200
=======
</TABLE>
The group has a reducing revolving credit facility which provides for
maximum borrowings of $34,686. Maximum availability reduces to $28,657 on April
30, 1997, $22,628 on April 30, 1998, and $16,600 on April 30, 1999, with any
remaining outstanding amounts due on May 31, 2000. Borrowings against the line
are secured by all of the stock and assets of the Group. As of October 31, 1996,
no amounts were borrowed against this facility. The Company pays a fee of 0.375%
of the unused amount; such fees were $81, $85, $33, and $9 for the ten months
ended October 31, 1996, and each of the years ended December 31, 1995, 1994, and
1993, respectively, and are included in interest expense. The amount of credit
available to the Group is reduced by $1,207 of letters of credit outstanding as
of October 31, 1996.
The Group's loan agreements contain various financial covenants, the most
restrictive of which impose limitations on dividends and other distributions and
require the maintenance of minimum levels of net worth and certain coverage
ratios. As of September 30, 1996, the most recent reporting date for the bank,
the Group was not in compliance with certain covenants. The Group obtained a
waiver from the bank and was therefore able to draw on the line of credit
through the next reporting date for the bank, December 31, 1996. At that time,
the compliance with covenants will again be reviewed.
7. ACQUISITIONS
SIERRA-AT-TAHOE
In July 1993, the Group acquired the net assets of Sierra Ski Ranch for
$13,054 in cash. The acquisition was accounted for as a purchase of assets. The
ski area was subsequently renamed Sierra-at-Tahoe.
BEAR MOUNTAIN
In October 1995, the Group acquired the net assets of Bear for $20,604 in
cash. The acquisition was accounted for as a purchase of assets. The Group's
acquisition of Bear was financed by a loan from Fibreboard, which has been
recorded at the Group level and is included in the intercompany payable balance
as of October 31, 1996 and December 31, 1995.
F-29
<PAGE> 153
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. ACQUISITIONS -- (CONTINUED)
The table below presents the unaudited revenues and net income of the Group
as if Sierra and Bear had been a member of the Group since January 1, 1994, and
had been charged intercompany interest from that date.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenue:
Resort........................................... $48,304 $56,891 $44,302
Real estate...................................... 5,028 610 --
Timber........................................... 185 -- --
------- ------- -------
53,517 57,501 44,302
======= ======= =======
Net Income......................................... $ 3,672 $ 5,065 $ 1,737
======= ======= =======
</TABLE>
The pro forma information does not purport to be indicative of results that
actually would have occurred had the acquisitions been made on the dates
indicated or of results which may occur in the future.
8. INTERCOMPANY TRANSACTIONS:
The Group is charged a management fee by Fibreboard based on services
rendered at Fibreboard for the benefit of the Group. These services primarily
relate to legal, accounting, cash management, human resources, tax consultation
and filings, management information systems (MIS), and overall corporate
strategy and direction. The fee for the above services and others is based on a
percentage of income, headcount, and estimated time spent by the legal and MIS
staff on the Group's behalf.
This fee was $701, $1,247, $655, and $507, for the ten month period ended
October 31, 1996 and the years ended December 31, 1995, 1994, and 1993,
respectively.
The Group was charged interest of $1,622, including $183 which was
capitalized by the Group (Notes 2 and 3), and $488 by Fibreboard for the ten
months ended October 31, 1996, and for the year ended December 31, 1995,
respectively, based on outstanding intercompany amounts.
In 1996, Fibreboard transferred timber rights of $1.5 million to the Group.
9. LITIGATION:
The nature of the ski industry includes the risk of skier injuries.
Generally, the Group has insurance to cover potential claims; in some cases the
amounts of the claims are very substantial. Also, a case involving a fatality in
1994 may subject the Group to punitive damages which are not included in the
Group's insurance coverage. The Group is also involved in a number of other
claims arising from its operations.
Management, in consultation with legal counsel, believes resolution of
these claims will not have a material adverse impact on its financial condition
or results of operations.
F-30
<PAGE> 154
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. BUSINESS SEGMENTS
The Company operates is three business segments -- resorts, real estate,
and timber. Data by segment is as follows:
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
----------- ---------------------------
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Resort................................ $36,829 $39,823 $40,810 $25,528
Real estate........................... 3,595 5,028 610 --
Timber................................ 693 185 -- --
------- ------- ------- -------
41,117 45,036 41,420 25,528
======= ======= ======= =======
Operating income:
Resort................................ 5,805 7,002 6,084 2,325
Real estate........................... 116 116 116 --
Timber................................ -- -- -- --
------- ------- ------- -------
6,104 7,360 8,020 2,325
======= ======= ======= =======
Depreciation, amortization, and
depletion:
Resort................................ 4,338 4,024 3,449 2,514
Real estate........................... -- -- -- --
Timber................................ 16 -- -- --
------- ------- ------- -------
4,354 4,024 3,449 2,514
======= ======= ======= =======
Capital expenditures, exclusive of
acquisitions:
Resort................................ 5,761 5,226 6,199 4,619
Real estate........................... 1,297 3,374 198 --
Timber................................ 1,500 -- -- --
------- ------- ------- -------
8,558 8,600 6,397 4,619
======= ======= ======= =======
Identifiable assets:
Resorts............................... 58,323 57,076 35,749
Real estate........................... 3,806 3,097 1,089
Timber................................ 1,484 -- --
------- ------- -------
$63,613 $60,173 $36,838
======= ======= =======
</TABLE>
11. COMMITMENTS:
The Group leases certain machinery and equipment under operating leases.
Minimum lease payments for the remainder of 1996 and the next five years are as
follows:
<TABLE>
<S> <C>
1996 (two months)........................................... $ 307
1997........................................................ 973
1998........................................................ 504
1999........................................................ 224
2000........................................................ 84
2001........................................................ --
------
$2,092
======
</TABLE>
F-31
<PAGE> 155
THE RESORT GROUP OF FIBREBOARD CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
11. COMMITMENTS -- (CONTINUED)
In addition, the Group leases property from the U.S. Forest Service for
Sierra and Bear. These leases are effective through 2008 and 2020, respectively.
Lease payments are based on a percentage of revenues. Total rent expense for all
operating leases amounted to $1,842, $1,411, $1,216, and $550, in the ten months
ended October 31, 1996 and the years ended December 31, 1995, 1994, and 1993,
respectively.
During 1996, the Group entered into a contract to replace certain lift
equipment at Sierra. The total cost of the new equipment is approximately $8.4
million of which the Group will receive a vendor's credit for $2 million related
to the equipment being replaced. As of October 31, 1996, the Group had incurred
approximately $2.3 million toward this commitment.
F-32
<PAGE> 156
WATERVILLE VALLEY SKI AREA LTD.
STATEMENT OF OPERATIONS (UNAUDITED)
For the Period from October 28, 1996 to November 26, 1996
<TABLE>
<S> <C>
Revenue:
Resort services........................................... $ 79,963
Consumer products......................................... 61,711
Rental and other income................................... 49,374
Conference center......................................... 119,212
---------
310,260
Cost of sales:
Resort services........................................... 135,307
Consumer products......................................... 150,962
Rental and other income................................... 57,394
Conference center......................................... 94,712
---------
438,375
---------
Expenses:
Selling, general and administrative....................... 180,738
Utilities................................................. 45,583
Insurance................................................. 9,546
Depreciation and amortization............................. 82,300
---------
318,167
---------
Loss from operations........................................ (446,282)
Interest expense............................................ 9,750
---------
Net loss.................................................... $(456,032)
=========
</TABLE>
See accompanying notes.
F-33
<PAGE> 157
WATERVILLE VALLEY SKI AREA LTD.
STATEMENT OF CASH FLOWS (UNAUDITED)
For the Period from October 28, 1996 to November 26, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(456,032)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 82,300
Changes in operating assets and liabilities:
Accounts receivable.................................... (42,874)
Inventories............................................ 86,607
Prepaid expenses and other assets...................... (18,039)
Accounts payable and accrued expenses.................. 77,220
---------
Net cash used in operating activities....................... (270,818)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................... (156,445)
---------
Net cash used in investing activities....................... (156,445)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to affiliate............................................ 426,141
Principal payments on long-term debt........................ (5,069)
---------
Net cash provided by financing activities................... 421,072
---------
Net decrease in cash........................................ (6,191)
Cash at beginning of period................................. 116,115
---------
Cash at end of period....................................... $ 109,924
=========
</TABLE>
See accompanying notes.
F-34
<PAGE> 158
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the Period from October 28, 1996 to November 26, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Waterville Valley Ski Area Ltd. (the "Company") is a wholly-owned
subsidiary of S-K-I Ltd., which was acquired by American Skiing Company on June
30, 1996. The Company owns and operates the Waterville Valley ski resort and
conference center in Waterville Valley, New Hampshire.
The accompanying combined financial statements for the period from October
28, 1996 to November 26, 1996 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of
management of the Company, are considered necessary for a fair presentation of
the Company's operating results and cash flows for the period from October 28,
1996 to November 26, 1996. Due to the highly seasonal nature of the Company's
business, the results for the interim period are not necessarily indicative of
results for the entire year. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to generally
accepted accounting principles applicable for interim periods. The unaudited
interim financial statements should be read in conjunction with the following
note and the audited financial statements of the Company as of October 27, 1996
and for the period from July 1, 1996 to October 27, 1996.
2. SUBSEQUENT EVENT
On November 27, 1996, Booth Creek Ski Acquisition Corp., a wholly-owned
subsidiary of Booth Creek Ski Holdings, Inc., purchased the assets of the
Company and another resort from subsidiaries of American Skiing Company for an
aggregate purchase price of $17.5 million. The purchase price was paid with
$14.75 million in cash, before giving effect to certain working capital
adjustments, and a $2.75 million note issued to American Skiing Company.
F-35
<PAGE> 159
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Waterville Valley Ski Area Ltd.
We have audited the accompanying balance sheet of Waterville Valley Ski
Area Ltd., as of October 27, 1996 and the related statements of operations and
accumulated deficit and cash flows for the period from July 1, 1996 to October
27, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Waterville Valley Ski Area
Ltd. as of October 27, 1996 and the results of its operations and its cash flows
for the period from July 1, 1996 to October 27, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
January 25, 1997
F-36
<PAGE> 160
WATERVILLE VALLEY SKI AREA LTD.
BALANCE SHEET
October 27, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 116,115
Accounts receivable, net of allowance of $37,236 for
doubtful accounts...................................... 320,972
Inventories............................................... 223,721
Prepaid expenses and other assets......................... 217,044
-----------
Total current assets................................. 877,852
Property, plant and equipment, net.......................... 13,066,931
Goodwill, net............................................... 1,272,650
-----------
Total assets......................................... $15,217,433
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 432,180
Accrued expenses.......................................... 878,581
Advance ticket revenue.................................... 454,946
Due to affiliate.......................................... 557,220
Current portion of notes payable.......................... 21,300
Capital lease obligations................................. 106,256
-----------
Total current liabilities............................ 2,450,483
Notes payable, net of current portion....................... 150,754
Deferred taxes.............................................. 875,000
Commitments and contingencies
Stockholder's equity:
Common stock, no par, 100 shares authorized, issued and
outstanding............................................ 12,940,000
Accumulated deficit....................................... (1,198,804)
-----------
Total stockholder's equity........................... 11,741,196
-----------
Total liabilities and stockholder's equity........... $15,217,433
===========
</TABLE>
See accompanying notes.
F-37
<PAGE> 161
WATERVILLE VALLEY SKI AREA LTD.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
Period from July 1, 1996 to October 27, 1996
<TABLE>
<S> <C>
Revenue:
Resort services........................................... $ 116,506
Consumer products......................................... 76,693
Rental and other income................................... 244,789
Conference center......................................... 516,716
-----------
954,704
Cost of sales:
Resort services........................................... 238,470
Consumer products......................................... 106,080
Rental and other expenses................................. 243,639
Conference center......................................... 344,559
-----------
932,748
-----------
21,956
Expenses:
Selling, general and administrative....................... 704,987
Utilities................................................. 216,090
Insurance................................................. 30,333
Depreciation and amortization............................. 329,350
-----------
1,280,760
-----------
Loss from operations........................................ (1,258,804)
Interest expense............................................ (50,000)
-----------
Loss before income tax benefit.............................. (1,308,804)
Income tax benefit.......................................... 110,000
-----------
Net loss and accumulated deficit at October 27, 1996........ $(1,198,804)
===========
</TABLE>
See accompanying notes.
F-38
<PAGE> 162
WATERVILLE VALLEY SKI AREA LTD.
STATEMENT OF CASH FLOWS
Period from July 1, 1996 to October 27, 1996
<TABLE>
<S> <C>
Operating activities
Net loss.................................................. $(1,198,804)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 329,350
Changes in operating assets and liabilities:
Accounts receivable.................................. 27,380
Inventories.......................................... 33,507
Prepaid expenses..................................... (169,952)
Accounts payable and accrued expenses................ 900,507
-----------
Net cash used in operating activities..................... (78,012)
Investing activity
Purchase of property, plant and equipment................. (366,931)
-----------
Net cash used in investing activity....................... (366,931)
Financing activities
Due to affiliate.......................................... 407,314
Principal payments on long-term debt...................... (5,379)
-----------
Net cash provided by financing activities................. 401,935
-----------
Net decrease in cash........................................ (43,008)
Cash at beginning of period................................. 159,123
-----------
Cash at end of period....................................... $ 116,115
===========
State income taxes paid..................................... $ 15,000
===========
</TABLE>
See accompanying notes.
F-39
<PAGE> 163
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS
October 27, 1996
1. BUSINESS ORGANIZATION
Waterville Valley Ski Area Ltd. (the Company) is a wholly-owned subsidiary
of S-K-I Ltd., which was acquired by American Skiing Company on June 30, 1996
(see Note 3). The Company owns and operates the Waterville Valley ski resort and
conference center located in Waterville Valley, New Hampshire. The Company also
operates a year-round base camp adventure center offering mountain bikers, cross
country skiers and hikers access to 100 kilometers of trails in the White
Mountains National Forest.
Due to the seasonality of the Company's business and the nature of its
operations, which require a significant level of fixed operating costs,
operating results may be significantly affected by the level of revenues, which
depend on, among other things, weather conditions. The seasonality also has a
significant effect on the Company's working capital requirements during the
year, since operating losses are generally incurred from May through October. To
the extent cash flows from operations are not sufficient to meet its working
capital requirements, the Company has been dependent on borrowings from its
affiliates, principally S-K-I Ltd. As discussed in Note 12, Booth Creek Ski
Holdings Inc. purchased the business and net assets of the Waterville Valley ski
resort and conference center effective November 27, 1996 and has represented
that it has the ability and intent to fund its operations for the foreseeable
future until the Company is able to support its own operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUES
Revenues from the sale of lift tickets, ski schools and the repair shop
have been included in the statement of operations in the caption Resort
Services. Revenues from restaurants and retail shop sales have been included in
the caption Consumer Products. Revenues from ski, locker and real estate rentals
have been included in the caption Rental and Other Income. Revenues from use of
the Company's convention center have been included in the caption Convention
Center.
Revenue is recognized at the time services are provided or products are
sold. Sales of season and advance lift tickets prior to the beginning of the
skiing season (November 1) are deferred and recognized in Resort Services during
the ski season, which generally commences in November and extends through April.
INVENTORIES
Inventories, which consist principally of food, beverage and retail
merchandise, are valued at the lower of cost (first-in, first-out) or market.
INCOME TAXES
The Company determines its provision for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires that the liability method be used in accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax basis of
assets and liabilities, and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
The Company is a wholly-owned subsidiary of S-K-I Ltd., which files its
federal return on a consolidated basis. However, the Company, for purposes of
the accompanying financial statements, has provided for income taxes on a
separate-return basis.
F-40
<PAGE> 164
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost with depreciation being
computed ratably on a monthly basis using the straight-line method over the
useful lives of the related assets:
<TABLE>
<S> <C>
Land and trail improvements................................. 20 years
Buildings and improvements.................................. 20 years
Machinery, snow making and other equipment.................. 3-6 years
Lifts and lines............................................. 10-20 years
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheet for cash, accounts
receivable and notes payable approximate their fair values.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for impairment of long-lived assets based on Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of," which provides
criteria for the recognition and measurement of impairment loss associated with
long-lived assets. This standard has had no material impact on the Company's
financial position or results of operations.
GOODWILL
Goodwill represents the excess of cost over the fair value of net assets of
businesses acquired, which is amortized over 20 years. Accumulated amortization
is $29,350 at October 27, 1996.
F-41
<PAGE> 165
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. ACQUISITION
On June 30, 1996, the capital stock of S-K-I Ltd. was acquired by American
Skiing Company, with S-K-I Ltd. becoming the surviving company. The acquisition
was accounted for under the purchase method of accounting. The portion of the
total purchase price allocated to the Company was as follows:
<TABLE>
<S> <C>
Assets
Current assets............................................ $ 812,000
Property, plant and equipment............................. 13,000,000
Goodwill.................................................. 1,302,000
-----------
15,114,000
Liabilities
Current liabilities....................................... 1,143,000
Notes payable............................................. 156,000
Deferred income taxes..................................... 875,000
-----------
2,174,000
-----------
$12,940,000
===========
</TABLE>
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<S> <C>
Retail merchandise.......................................... $ 192,241
Food and beverage........................................... 31,480
-----------
$ 223,721
===========
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<S> <C>
Land........................................................ $ 610,000
Land and trail improvements................................. 2,151,878
Buildings and improvements.................................. 4,620,572
Machinery, snow making and other equipment.................. 3,654,018
Lifts and lines............................................. 1,630,000
Construction in progress.................................... 700,463
-----------
13,366,931
Less accumulated depreciation and amortization.............. (300,000)
-----------
$13,066,931
===========
</TABLE>
F-42
<PAGE> 166
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<S> <C>
Accrued costs in connection with acquired business.......... $200,000
Accrued compensation........................................ 55,135
Deposits.................................................... 50,527
Accrued rentals............................................. 90,082
Accrued utilities and other operating....................... 322,074
Unearned advertising revenue................................ 64,000
Accrued insurance........................................... 96,763
--------
$878,581
========
</TABLE>
7. TRANSACTIONS WITH AFFILIATE
S-K-I Ltd. provides all cash management and working capital financing to
the Company. S-K-I Ltd. also provides certain insurance coverages and management
services for which a corporate charge is allocated to the Company. The corporate
charge covering management services, including staff salaries, payroll taxes,
employee benefits and officers life insurance amounted to $32,096 for the period
from July 1, 1996 to October 27, 1996. The corporate charge included in
insurance expense for insurance coverages, including liability and workers'
compensation, amounted to $25,333 for the period from July 1, 1996 to October
27, 1996.
Interest expense of $36,000 for the period from July 1, 1996 to October 27,
1996 represents interest cost, net of interest income, charged to the Company
from S-K-I Ltd. related to the net amounts due to and from S-K-I Ltd. based on
average monthly balances. These amounts are included in interest expense.
8. NOTES PAYABLE
Notes payable consists of the following:
<TABLE>
<S> <C>
Note payable -- Town of Waterville.......................... $162,271
Other notes payable......................................... 9,783
--------
172,054
Less current portion........................................ 21,300
--------
$150,754
========
</TABLE>
These notes are unsecured and interest rates range from 7% to 14%. Interest
paid on these notes approximated interest expense of $14,000 for the period from
July 1, 1996 to October 27, 1996.
Aggregate annual maturities of long-term debt obligations as of October 27,
1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 21,300
1998........................................................ 15,615
1999........................................................ 15,615
2000........................................................ 15,615
2001........................................................ 15,615
Thereafter.................................................. 88,294
--------
$172,054
========
</TABLE>
F-43
<PAGE> 167
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. LEASES AND PERMITS
The Company operates certain portions of its skiing terrain under special
use permits granted by the U.S. Forest Service. Amounts payable under these
permits are measured based on percentages of revenues from certain activities.
No fees were incurred under these permits for the period from July 1, 1996 to
October 27, 1996.
The Company is committed under operating leases for certain machinery and
equipment which expire at various dates through 2001. Total rent expense under
operating leases amounted to approximately $86,000 for the period from July 1,
1996 to October 27, 1996.
Future minimum rental payments under theses leases as of October 27, 1996
are as follows:
<TABLE>
<S> <C>
1997........................................................ $267,449
1998........................................................ 192,701
1999........................................................ 178,859
2000........................................................ 173,501
2001........................................................ 78,000
--------
$890,510
========
</TABLE>
The Company leases certain machinery and equipment under agreements
classified as capital leases. Assets capitalized under capital leases had a cost
of $200,000 and accumulated amortization of $68,000 at October 27, 1996. Future
minimum lease payments which are paid in installments during the skiing season
under capital leases are as follows:
<TABLE>
<S> <C>
1997........................................................ $185,652
Less amounts representing interest.......................... 79,396
--------
Less current portion........................................ $106,256
========
</TABLE>
10. INCOME TAXES
The income tax benefit of $110,000 for the period from July 1, 1996 to
October 27, 1996 is based on the Company's recovery of its previously provided
current federal taxes payable in 1995 and 1996. The Company includes currently
payable and refundable income taxes in amounts due to an affiliate.
The deferred tax liability of $875,000 is based on the excess of the
financial statement basis of property, plant and equipment over the tax basis
principally related to the difference between the fair market value of property,
plant and equipment at June 30, 1996, the acquisition date described in Note 3,
and the carryover tax basis.
11. MARKETING AGREEMENT
Effective September 1, 1996, the Company entered into a one-year
promotional program with Volvo Cars of North America (Volvo) to promote skiing
and snowboarding in New England.
The Company was provided the use of four Volvo station wagons and $40,000
in cash in exchange for designating Volvo as the official automobile of the
Waterville ski area. The Company accounted for the transaction based upon the
estimated fair value of the services and cash received of $64,000. This amount
has been included as prepaid advertising in prepaid assets and as unearned
advertising revenue included in accrued expenses. These amounts will be
amortized to advertising expense and income, respectively, during the 1997 ski
season.
12. SUBSEQUENT EVENT
On November 27, 1996, the business and net assets of the Waterville Valley
ski resort and conference center, along with another affiliated ski resort, were
acquired by Booth Creek Ski Holdings, Inc. for $17,500,000.
F-44
<PAGE> 168
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Waterville Valley Ski Area Ltd.
We have audited the accompanying balance sheets of Waterville Valley Ski
Area Ltd. as of October 29, 1995 and June 30, 1996, and the related statements
of operations and retained earnings (accumulated deficit), and cash flows for
the year ended October 29, 1995 and the period from October 30, 1995 to June 30,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
Except as discussed in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
We were unable to obtain sufficient documentation supporting the advance
ticket revenue balance as of November 1, 1994 stated at $667,163 which amount
was included in revenue and net loss for the year ended October 29, 1995, as
described in Note 3 to the financial statements; nor were we able to satisfy
ourselves by other auditing procedures as to the stated value of such revenue
included in revenue and net loss for the year ended October 29, 1995.
In our opinion, except for the effects of such adjustment, if any, as might
have been determined to be necessary had we been able to examine evidence
regarding the advance ticket revenue recognized in revenue and net loss for the
year ended October 29, 1995, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of Waterville Valley Ski Area Ltd. as of October 29, 1995 and June 30, 1996, and
the results of its operations and its cash flows for the year ended October 29,
1995 and the period from October 30, 1995 to June 30, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
January 25, 1997
F-45
<PAGE> 169
WATERVILLE VALLEY SKI AREA LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 29, JUNE 30,
1995 1996
----------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 237,160 $ 159,123
Accounts receivable, net of allowance of $11,678 in 1995
and $9,352 in 1996 for doubtful accounts............... 544,767 348,352
Inventories............................................... 272,582 257,228
Prepaid expenses.......................................... 103,585 47,092
----------- -----------
Total current assets........................................ 1,158,094 811,795
Property, plant and equipment, net.......................... 11,660,674 11,903,703
Deferred taxes.............................................. 11,000 --
----------- -----------
Total assets................................................ $12,829,768 $12,715,498
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 607,172 $ 196,335
Accrued expenses.......................................... 262,393 467,946
Advance ticket revenue.................................... 484,605 919
Due to affiliate.......................................... 799,776 150,200
Current portion of notes payable.......................... 26,986 21,050
Capital lease obligations................................. -- 106,256
----------- -----------
Total current liabilities................................... 2,180,932 942,706
Notes payable, net of current portion....................... 173,349 156,383
Deferred taxes.............................................. -- 379,000
Commitments and contingencies
Stockholder's equity:
Common stock, no par, 100 shares authorized, issued and
outstanding............................................ 10,491,417 10,491,417
Retained earnings (accumulated deficit)................... (15,930) 745,992
----------- -----------
Total stockholder's equity.................................. 10,475,487 11,237,409
----------- -----------
Total liabilities and stockholder's equity.................. $12,829,768 $12,715,498
=========== ===========
</TABLE>
See accompanying notes.
F-46
<PAGE> 170
WATERVILLE VALLEY SKI AREA LTD.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 30,
OCTOBER 29, 1995 TO
1995 JUNE 30, 1996
----------- -------------
<S> <C> <C>
Revenue:
Resort services........................................... $5,528,249 $ 6,141,127
Consumer products......................................... 1,278,170 2,607,329
Rental and other income................................... 1,501,038 1,509,125
Conference center......................................... 1,345,349 521,146
---------- -----------
9,652,806 10,778,727
Cost of sales:
Resort services........................................... 2,140,755 2,006,867
Consumer products......................................... 720,780 1,854,198
Rental and other expenses................................. 945,950 491,251
Conference center......................................... 857,169 476,037
---------- -----------
4,664,654 4,828,353
---------- -----------
4,988,152 5,950,374
Expenses:
Selling, general and administrative....................... 2,754,344 2,329,963
Utilities................................................. 753,287 962,209
Insurance................................................. 321,459 297,357
Depreciation and amortization............................. 1,090,992 900,408
---------- -----------
4,920,082 4,489,937
---------- -----------
Income from operations...................................... 68,070 1,460,437
Interest expense............................................ (95,000) (50,000)
---------- -----------
Income (loss) before income taxes........................... (26,930) 1,410,437
Income taxes (benefit)...................................... (11,000) 565,000
---------- -----------
Net income (loss)........................................... (15,930) 845,437
Accumulated deficit, beginning of period.................... -- (15,930)
Dividends declared.......................................... -- (83,515)
---------- -----------
Retained earnings (accumulated deficit), end of period...... $ (15,930) $ 745,992
========== ===========
</TABLE>
See accompanying notes.
F-47
<PAGE> 171
WATERVILLE VALLEY SKI AREA LTD.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 30,
OCTOBER 29, 1995 TO
1995 JUNE 30, 1996
----------- -------------
<S> <C> <C>
Operating activities
Net income (loss)......................................... $ (15,930) $ 845,437
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 1,090,992 900,408
Deferred taxes......................................... (11,000) 390,000
Changes in operating assets and liabilities:
Accounts receivable.................................. (544,767) 196,415
Inventories.......................................... (222,140) 15,354
Prepaid expenses..................................... (103,585) 56,493
Advance ticket revenue............................... (182,558) (483,686)
Accounts payable and accrued expenses................ 758,271 (205,284)
----------- ----------
Net cash provided by operating activities................. 769,283 1,715,137
Investing activities
Purchase of property, plant and equipment................. (1,248,814) (808,513)
----------- ----------
Net cash used in investing activities..................... (1,248,814) (808,513)
Financing activities
Principal payments on notes payable and capital leases.... (85,085) (251,570)
Due to affiliate.......................................... 799,776 (649,576)
Dividends paid............................................ -- (83,515)
----------- ----------
Net cash provided by (used in) financing activities....... 714,691 (984,661)
----------- ----------
Net increase (decrease) in cash............................. 235,160 (78,037)
Cash at beginning of period................................. 2,000 237,160
----------- ----------
Cash at end of period....................................... $ 237,160 $ 159,123
=========== ==========
State income taxes paid..................................... $ 35,000
==========
Non-cash investing activities:
Equipment acquired under lease obligations................ $ 334,924
==========
</TABLE>
See accompanying notes.
F-48
<PAGE> 172
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
1. BUSINESS
Waterville Valley Ski Area Ltd. (the Company), a wholly-owned subsidiary of
S-K-I Ltd., owns and operates the Waterville Valley ski resort and conference
center located in Waterville Valley, New Hampshire. The Company also operates a
year-round base camp adventure center offering mountain bikers, cross country
skiers and hikers access to 100 kilometers of trails in the White Mountains
National Forest.
Due to the seasonality of the Company's business and the nature of its
operations, which require a significant level of fixed operating costs,
operating results may be significantly affected by the level of revenues which
depend on, among other things, weather conditions. The seasonality also has a
significant effect on the Company's working capital requirements during the
year, since operating losses are generally incurred from May through October. To
the extent cash flows from operations are not sufficient to meet its working
capital requirements, the Company is dependent on borrowings from its
affiliates, principally S-K-I Ltd. and its successor (see Note 11), which have
represented that they have the ability and intent to fund the Company's
operations for the foreseeable future or until the Company is able to support
its own operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUES
Revenues from the sale of lift tickets, ski schools and repair shop have
been included in the statement of operations in the caption Resort Services.
Revenues from restaurants and retail shop sales have been included in the
caption Consumer Products. Revenues from ski, locker and real estate rentals
have been included in the caption Rental and Other Income. Revenues from use of
the Company's convention center have been included in the caption Convention
Center.
Revenue is recognized at the time services are provided or products are
sold. Sales of season and advance lift tickets prior to the beginning of the
skiing season (November 1) are deferred and recognized in Resort Services during
the skiing season, which generally commences in November and extends through
April.
INVENTORIES
Inventories, which consist principally of food, beverage and retail
merchandise, are valued at the lower of cost (first-in, first-out) or market.
INCOME TAXES
The Company determines its provision for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires that the liability method be used in accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax basis of
assets and liabilities, and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
The Company is a wholly-owned subsidiary of S-K-I Ltd., which files its
federal return on a consolidated basis using a tax year end of July 31. However,
for purposes of the accompanying financial statements, the Company has recorded
its tax provision on a separate-return basis.
F-49
<PAGE> 173
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost with depreciation being
computed ratably on a monthly basis using the straight-line method over the
useful lives of the related assets:
<TABLE>
<S> <C>
Land and trail improvements................................. 20 years
Buildings and improvements.................................. 20 years
Machinery, snow making and other equipment.................. 3-6 years
Lifts and lines............................................. 10-20 years
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheet for cash, accounts
receivable and notes payable approximate their fair values.
ACCOUNTING PRONOUNCEMENT
In March 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of", which establishes
criteria for the recognition and measurement of impairment loss associated with
long-lived assets. The Company adopted this standard effective October 30, 1995
and its adoption did not have a material impact on the Company's financial
position or results of operations.
3. ADVANCE TICKET REVENUES
In connection with the acquisition of certain assets and the assumption of
certain liabilities of the Company by S-K-I Ltd. on October 31, 1994, the amount
of $667,123 stated in the purchase and sale agreement as season and advance lift
ticket revenue was recognized as of November 1, 1994 as an obligation of the
Company. The Company subsequently recognized $667,123 as revenue during the year
ended October 31, 1995.
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
OCTOBER 29, JUNE 30,
1995 1996
----------- --------
<S> <C> <C>
Retail merchandise....................................... $241,102 $224,715
Food and beverage........................................ 31,480 32,513
-------- --------
$272,582 $257,228
======== ========
</TABLE>
F-50
<PAGE> 174
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
OCTOBER 29, JUNE 30,
1995 1996
----------- --------
<S> <C> <C>
Land................................................ $ 576,719 $ 576,719
Land and trail improvements......................... 2,802,998 2,820,209
Buildings and improvements.......................... 3,742,613 3,895,776
Machinery, snow making and other equipment.......... 3,137,919 4,025,896
Lifts and lines..................................... 2,058,242 2,108,471
Construction in progress............................ 377,444 363,691
----------- -----------
12,695,935 13,790,762
Less accumulated depreciation and amortization...... 1,035,261 1,887,059
----------- -----------
$11,660,674 $11,903,703
=========== ===========
</TABLE>
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
OCTOBER 29, JUNE 30,
1995 1996
----------- --------
<S> <C> <C>
Accrued compensation..................................... $ 44,531 $ 49,762
Deposits................................................. 54,627 52,532
Accrued rentals.......................................... 31,826 95,864
Accrued utilities and other operating.................... 66,683 78,486
Accrued insurance........................................ 64,726 191,302
-------- --------
$262,393 $467,946
======== ========
</TABLE>
7. TRANSACTIONS WITH AFFILIATES
S-K-I Ltd. provides all cash management and working capital financing to
the Company. S-K-I Ltd. also provides certain insurance coverages and management
services for which a corporate charge is allocated to the Company. The corporate
charge covering management services, including staff salaries, payroll taxes,
employee benefits, officers life insurance and professional fees amounted to
$227,783 in fiscal 1995 and $554,892 for the period from October 30, 1995 to
June 30, 1996. The corporate charge included in insurance expense for insurance
coverages, including liability and workers compensation amounted to $226,357 in
fiscal 1995 and $261,459 for the period from October 30, 1995 to June 30, 1996.
Interest expense of $48,000 in fiscal 1995 and $31,000 for the period from
October 30, 1995 to June 30, 1996 represents interest cost, net of interest
income, charged to the Company related to the net amounts due to and from S-K-I
Ltd. based on average monthly balances. These amounts are included in interest
expense.
F-51
<PAGE> 175
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. NOTES PAYABLE
Notes payable consists of the following:
<TABLE>
<CAPTION>
OCTOBER 29, JUNE 30,
1995 1996
----------- --------
<S> <C> <C>
Note payable -- Town of Waterville....................... $176,145 $163,502
Other.................................................... 24,190 13,931
-------- --------
200,335 177,433
Less current portion..................................... 26,986 21,050
-------- --------
$173,349 $156,383
======== ========
</TABLE>
These notes are unsecured and interest rates range from 7% to 14%. Interest
paid on these notes approximated interest expense of $47,000 and $19,000 in
fiscal 1995 and for the period from October 30, 1995 to June 30, 1996,
respectively.
Aggregate annual maturities of long-term debt obligations as of June 30,
1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 21,050
1998........................................................ 21,605
1999........................................................ 15,615
2000........................................................ 15,615
2001........................................................ 15,615
Thereafter.................................................. 87,933
--------
$177,433
========
</TABLE>
9. LEASES AND PERMITS
The Company operates certain portions of its skiing terrain under special
use permits granted by the U.S. Forest Service. Amounts payable under these
permits are measured based on percentages of revenues from certain activities.
Fees for these permits amounted to $145,422 in fiscal 1995 and $165,214 for the
period from October 30, 1995 to June 30, 1996 and are included in cost of resort
services.
The Company is committed under operating leases for certain machinery and
equipment which expire at various dates through 2001. Total rent expense under
operating leases for the year ended October 29, 1995 and the period from October
30, 1995 to June 30, 1996 were $235,000 and $213,000, respectively.
Future minimum rental payments under these leases as of June 30, 1996 are
as follows:
<TABLE>
<S> <C>
1997........................................................ $258,944
1998........................................................ 215,489
1999........................................................ 173,894
2000........................................................ 163,894
2001........................................................ 163,894
--------
$976,115
========
</TABLE>
The Company leases certain machinery and equipment under agreements
classified as capital leases. Assets capitalized under capital leases had a cost
of $334,924 and accumulated amortization of $136,184 at
F-52
<PAGE> 176
WATERVILLE VALLEY SKI AREA LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. LEASES AND PERMITS -- (CONTINUED)
June 30, 1996. Future minimum lease payments which are made in installments
during the ski season are as follows:
<TABLE>
<S> <C>
1997........................................................ $185,652
Less amounts representing interest.......................... 79,396
--------
$106,256
========
</TABLE>
10. INCOME TAXES
The provisions (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 30,
OCTOBER 25, 1995 TO
1995 JUNE 30, 1996
----------- -------------
<S> <C> <C>
Current:
Federal............................................. $ 110,000
State............................................... 65,000
---------
175,000
Deferred:
Federal............................................. $ (9,000) 295,000
State............................................... (2,000) 95,000
--------- ---------
(11,000) 390,000
--------- ---------
$ (11,000) $ 565,000
========= =========
</TABLE>
Income taxes currently payable are included in amounts due to an affiliate.
The tax effects of temporary differences that give rise to significant
portions of net deferred tax assets and liabilities are presented below:
<TABLE>
<CAPTION>
OCTOBER 29,
1995 JUNE 30, 1996
----------- -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward..................... $ 219,000
Deferred tax liabilities:
Depreciation........................................ (208,000) $(379,000)
--------- ---------
Net deferred tax assets (liabilities)................. $ 11,000 $(379,000)
========= =========
</TABLE>
At October 29, 1995, the Company had a federal net operating loss
carryforward of approximately $547,000, available to reduce future taxable
income, which was fully utilized in the period from October 30, 1995 to June 30,
1996.
11. SUBSEQUENT EVENT
On July 1, 1996, the capital stock of S-K-I Ltd. was acquired by American
Skiing Company with S-K-I Ltd. becoming the surviving company. S-K-I Ltd.
continued to own and operate Waterville Valley Ski Area Ltd. until November 27,
1996, at which date the business and net assets of the Waterville Valley ski
resort and conference center were acquired by Booth Creek Ski Holdings, Inc.
F-53
<PAGE> 177
SKI LIFTS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
OCTOBER 1, 1996 OCTOBER 1, 1995
TO JANUARY 15, TO JANUARY 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Lifts..................................................... $2,268,458 $3,137,639
Ski rentals............................................... 322,580 457,500
Ski school lessons........................................ 66,518 141,385
Service and other sales................................... 123,489 140,130
Building lease income..................................... 38,488 37,065
Restaurant sales.......................................... 459,798 547,667
Beer, wine and liquor..................................... 126,862 183,003
Ski shop.................................................. 104,500 132,899
---------- ----------
Total revenues.............................................. 3,510,693 4,777,288
---------- ----------
Costs and expenses:
Operating salaries, wages and other employee costs........ 1,755,257 1,849,023
General, administrative and other operating expenses...... 1,225,208 1,387,450
Depreciation and amortization............................. 277,478 385,016
Cost of restaurant, liquor and ski shop sales............. 263,900 285,600
---------- ----------
Total costs and expenses.................................... 3,521,843 3,907,089
---------- ----------
Operating income............................................ (11,150) 870,199
---------- ----------
Other income (expense):
Interest income........................................... 5,917 7,635
Interest expense.......................................... (118,839) (132,576)
Gain (loss) on disposal of equipment...................... 8,165 (21,459)
Miscellaneous, net........................................ 12,012 21,988
---------- ----------
(92,745) (124,412)
---------- ----------
Net income (loss)........................................... $ (103,895) $ 745,787
========== ==========
</TABLE>
See accompanying notes.
F-54
<PAGE> 178
SKI LIFTS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
OCTOBER 1, 1996 OCTOBER 1, 1995
TO JANUARY 15, TO JANUARY 31,
1997 1996
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ (103,895) $ 745,787
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 277,478 385,016
(Gain) loss on disposal of equipment...................... (8,165) 21,459
Gain on sale of investment................................ -- (18,890)
Other..................................................... 31,920 25,051
Changes in:
Receivables............................................ (8,040) 59,042
Inventories............................................ (69,514) (109,052)
Prepaid expenses and other............................. 44,272 5,907
Unearned revenue....................................... 1,203,254 894,248
Accounts payable and other............................. 789,043 316,336
Accrued interest, wages and taxes...................... 311,226 638,239
Insurance claims....................................... 24,003 7,144
----------- -----------
Net cash provided by operating activities................... 2,491,582 2,970,287
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment......................... (379,269) (1,141,385)
Proceeds from sale of equipment............................. 8,001 --
Proceeds from sale of investment............................ -- 118,358
----------- -----------
Net cash used in investing activities....................... (371,268) (1,023,027)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Line of credit borrowings and repayments, net............... (1,405,000) (1,971,000)
Additions to long-term debt................................. 150,000 580,000
Payments on long-term debt and capital leases............... (679,771) (355,980)
Distributions to shareholders............................... (55,141) --
----------- -----------
Net cash used in financing activities....................... (1,989,912) (1,746,980)
----------- -----------
Net increase in cash and cash equivalents................... 130,402 200,280
Cash and cash equivalents:
Beginning of year......................................... 84,965 92,607
----------- -----------
End of year............................................... $ 215,367 $ 292,887
=========== ===========
</TABLE>
See accompanying notes.
F-55
<PAGE> 179
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FOR THE PERIODS FROM OCTOBER 1, 1996 TO JANUARY 15, 1997 AND FROM
OCTOBER 1, 1995 TO JANUARY 31, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Ski Lifts, Inc. (the "Company") operates alpine and cross-country ski
resorts at Snoqualmie Summit, Ski Acres, Alpental and Hyak in the western
Cascade mountains of Washington State.
The accompanying financial statements for the periods from October 1, 1996
to January 15, 1997 and from October 1, 1995 to January 31, 1996 are unaudited,
but include all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of management of the Company, are considered necessary for
a fair presentation of the Company's operating results and cash flows for the
periods from October 1, 1996 to January 15, 1997 and from October 1, 1995 to
January 31, 1996. Due to the highly seasonal nature of the Company's business,
the results for the interim periods are not necessarily indicative of results
for the entire year. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to generally accepted
accounting principles applicable for interim periods. The unaudited interim
financial statements should be read in conjunction with the following note and
the audited financial statements of the Company as of September 30, 1996 and for
the year then ended.
2. SUBSEQUENT EVENT
Effective January 15, 1997, Booth Creek Ski Holdings, Inc. ("Booth Creek")
purchased all of the issued and outstanding common stock of the Company for an
aggregate purchase price of approximately $14.0 million, which included the
assumption of approximately $3.6 million of indebtedness, the issuance by the
Company of a note in the amount of approximately $9.8 million to the selling
shareholders, and other obligations to the selling shareholders of approximately
$600,000.
In connection with the consummation of the acquisition, the Company
transferred approximately 71 acres of owned real estate held for development
purposes into a Delaware limited liability company (the "Real Estate LLC"), of
which the Company is a member and 99% equity interest holder and Booth Creek is
the other member and 1% equity interest holder. In addition, the Company granted
the Real Estate LLC an option (the "Real Estate Option") to purchase an
additional 14 acres of development real estate for nominal consideration,
exercisable under certain conditions. The Company also issued 28,000 shares of
non-voting preferred stock (the "Preferred Stock") to its prior owners having an
aggregate liquidation preference equal to $3.5 million, the aggregate estimated
fair market value of the real estate transferred to the Real Estate LLC and the
real estate subject to the Real Estate Option. Concurrently with these
transactions, the Real Estate LLC entered into an agreement to purchase (the
"Preferred Stock Purchase Agreement") the Preferred Stock, on a quarterly basis
over the five years following the date of the acquisition, at a purchase price
equal to the liquidation preference thereof plus accrued dividends to the date
of purchase. Booth Creek advanced the first three quarterly installments under
the Preferred Stock Purchase Agreement on or prior to March 18, 1997. The Real
Estate LLC's obligations under the Preferred Stock Purchase Agreement are
secured by a first priority lien on the developmental real estate held by the
Real Estate LLC and substantially all of its other assets. The Preferred Stock
provides for a 9% cumulative dividend and is redeemable at the option of the
Company without premium. In addition, pursuant to the terms of the Preferred
Stock, the holders thereof have no redemption rights and are entitled to receive
dividend payments only when and if declared by the board of directors of the
Company.
F-56
<PAGE> 180
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Ski Lifts, Inc.
We have audited the accompanying balance sheets of Ski Lifts, Inc. as of
September 30, 1996 and 1995, and the related statements of operations and
retained earnings and cash flows for each of the three years in the period ended
September 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ski Lifts, Inc. as of
September 30, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note 13 to the financial statements, in December 1996, the
stockholders of the Company reached an agreement in principle to sell the stock
of the Company to a third party.
As reported in Note 8 to the financial statements, Ski Lifts, Inc. changed
its method of accounting for income taxes effective October 1, 1993.
COOPERS & LYBRAND L.L.P.
Seattle, Washington
December 9, 1996, except for Note 13 to the
financial statements as to which the date is
December 19, 1996
F-57
<PAGE> 181
SKI LIFTS, INC.
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 84,965 $ 92,607
Receivables............................................... 77,881 170,596
Inventories............................................... 208,620 211,401
Prepaid expenses and other................................ 44,272 42,832
---------- ----------
Total current assets................................... 415,738 517,436
---------- ----------
Property and equipment, net................................. 8,697,089 8,278,770
---------- ----------
Other assets:
Self insurance deposit.................................... 360,000 360,000
Investments, at cost...................................... 125,327 243,685
Equity in real estate partnership......................... 3,771 5,674
Other..................................................... 120,633 128,898
---------- ----------
609,731 738,257
---------- ----------
Total assets........................................... $9,722,558 $9,534,463
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit........................... $3,500,000 $3,395,000
Current portion of long-term debt......................... 80,115 73,708
Obligation under capital lease............................ 27,215 25,038
Notes payable to affiliate................................ 1,305,205 1,313,178
Unearned revenue.......................................... 151,563 121,212
Accounts payable and other................................ 308,600 490,048
Accrued interest, wages and business taxes................ 234,424 77,510
Insurance claims.......................................... 191,626 284,351
---------- ----------
Total current liabilities.............................. 5,798,748 5,780,045
Long-term debt, less current portion........................ 553,956 139,071
Obligation under capital lease, less current portion........ 37,659 64,873
Deferred income taxes....................................... 28,120 28,120
---------- ----------
Total liabilities...................................... 6,418,483 6,012,109
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock (1,000 shares authorized and outstanding, no
par value)............................................. 36,720 36,720
Retained earnings......................................... 3,267,355 3,485,634
---------- ----------
Total stockholders' equity............................. 3,304,075 3,522,354
---------- ----------
Total liabilities and stockholders' equity............. $9,722,558 $9,534,463
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-58
<PAGE> 182
SKI LIFTS, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues:
Lifts................................................ $6,155,890 $7,077,779 $6,606,408
Ski rentals.......................................... 934,708 1,057,518 1,094,285
Ski school lessons................................... 250,345 246,040 223,575
Service and other sales.............................. 230,042 250,867 229,980
Building lease income................................ 173,727 202,733 210,412
Restaurant sales..................................... 1,117,254 1,216,973 1,210,660
Beer, wine and liquor................................ 349,605 380,214 404,313
Ski shop............................................. 239,521 237,587 261,024
---------- ---------- ----------
Total revenues.................................... 9,451,092 10,669,711 10,240,657
---------- ---------- ----------
Costs and expenses:
Operating salaries, wages and other employee costs... 4,594,629 5,119,558 4,803,428
General, administrative and other operating
expenses.......................................... 3,035,147 3,252,677 3,007,780
Depreciation and amortization........................ 976,578 1,032,579 963,843
Cost of restaurant, liquor and ski shop sales........ 570,138 668,278 652,289
---------- ---------- ----------
Total costs and expenses.......................... 9,176,492 10,073,092 9,427,340
---------- ---------- ----------
Operating income.................................. 274,600 596,619 813,317
---------- ---------- ----------
Other income (expense):
Interest income...................................... 30,732 22,348 19,591
Interest expense..................................... (327,178) (289,657) (304,428)
Loss on abandonment of capitalized construction
costs............................................. -- (107,155) --
Gain (loss) on sales of equipment.................... (48,268) 928 21,957
Miscellaneous, net................................... 58,301 31,099 29,821
---------- ---------- ----------
(286,413) (342,437) (233,059)
---------- ---------- ----------
Income (loss) before income taxes and cumulative
effect of accounting change..................... (11,813) 254,182 580,258
---------- ---------- ----------
Income taxes:
Current.............................................. -- (10,551) (161,726)
Deferred............................................. -- 408,285 (35,718)
---------- ---------- ----------
Total income tax expense (benefit)................ -- 397,734 (197,444)
---------- ---------- ----------
Net income (loss) before cumulative effect of
accounting change.................................... (11,813) 651,916 382,814
Cumulative effect of change in method of accounting for
income taxes......................................... -- -- (171,023)
---------- ---------- ----------
Net income (loss).................................... (11,813) 651,916 211,791
Retained earnings:
Beginning of year.................................... 3,485,634 2,833,718 2,621,927
Stockholder distributions............................ (206,466) -- --
---------- ---------- ----------
End of year.......................................... $3,267,355 $3,485,634 $2,833,718
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-59
<PAGE> 183
SKI LIFTS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net income (loss).................................... $ (11,813) $ 651,916 $ 211,791
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................... 976,578 1,032,579 963,843
Deferred Federal income taxes................... -- (408,285) 206,741
(Gain) loss on sale of equipment................ 48,268 2,209 (12,778)
Loss on abandonment of capitalized construction
costs........................................ -- 107,155 --
Gain on sale of investment...................... (18,890) -- --
Other........................................... 10,168 (22,629) 10,276
Changes in:
Receivables.................................. 92,715 (98,163) 46,481
Inventories.................................. 2,781 (101,398) (28,708)
Prepaid expenses and other................... (1,440) (104,785) (570)
Income taxes receivable...................... -- 23,042 197,388
Self-insurance deposit....................... -- (35,000) --
Unearned revenue............................. 30,351 (34,764) (58,640)
Accounts payable and other................... (181,448) 194,743 (51,730)
Accrued interest, wages and taxes............ 156,914 (9,008) (270,500)
Insurance claims............................. (92,725) (11,869) 44,851
----------- ----------- ----------
Net cash provided by operating
activities.............................. 1,011,459 1,185,743 1,258,445
----------- ----------- ----------
Investing activities:
Purchases of property and equipment.................. (1,465,647) (1,158,802) (346,290)
Proceeds from sale of equipment...................... 22,482 7,711 12,778
Proceeds from sale of investment..................... 137,248 -- --
Purchases of investment.............................. -- (84,096) (13,386)
Other................................................ -- -- 17,957
----------- ----------- ----------
Net cash used in investing activities...... (1,305,917) (1,235,187) (328,941)
----------- ----------- ----------
Financing activities:
Line of credit borrowings and repayments, net........ 105,000 1,113,624 (374,924)
Additions to long-term debt.......................... 2,650,000 410,000 86,053
Payments on long-term debt and capital leases........ (2,253,745) (1,457,704) (556,886)
Payments on notes payable to affiliate............... (7,973) (14,465) (11,236)
Distributions to stockholders........................ (206,466) -- --
----------- ----------- ----------
Net cash provided by (used in) financing
activities.............................. 286,816 51,455 (856,993)
----------- ----------- ----------
Net increase (decrease) in cash and cash equivalents... (7,642) 2,011 72,511
Cash and cash equivalents:
Beginning of year.................................... 92,607 90,596 18,085
----------- ----------- ----------
End of year.......................................... $ 84,965 $ 92,607 $ 90,596
=========== =========== ==========
- ---------------------------------------------------------------------------------------------------
Supplemental information:
Cash paid for:
Interest, net of amounts capitalized.............. $ 301,359 $ 299,196 $ 383,402
Income taxes...................................... $ -- $ 74,723 $ 114,538
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-60
<PAGE> 184
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DESCRIPTION OF BUSINESS
Ski Lifts, Inc. (the "Company"), operates alpine and cross-country ski
resorts at Snoqualmie Summit, Ski Acres, Alpental and Hyak in the western
Cascade mountains of Washington State.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Construction in progress
consists of costs incurred related to the construction of various buildings at
the ski resorts including interest costs of $30,000 in 1996. Depreciation is
computed using the straight-line method over estimated useful lives as follows:
<TABLE>
<CAPTION>
DESCRIPTION YEARS
----------- -----
<S> <C>
Buildings and land improvements............................. 15 - 40
Lifts, tows and hill lighting............................... 5 - 30
Vehicles and equipment...................................... 4 - 15
</TABLE>
Gains or losses are recognized in the year of retirement or disposition.
Expenditures for additions and betterments are capitalized and expenditures for
maintenance are charged to expense as incurred.
INVENTORIES
Inventories include ski accessories, food and liquor and are stated at the
lower of first-in, first-out cost or market.
EQUITY IN REAL ESTATE PARTNERSHIP
The investment in real estate partnership is accounted for using the equity
method.
LIFT REVENUE AND UNEARNED REVENUE
The Company records lift ticket revenue from season pass and scrip sales
during the ski season in which passes and scrip are used. Unearned revenue is
recorded for unused season passes, coupons, scrip and other items.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
initial maturity of three months or less to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Accordingly, actual results could differ from those estimates
and assumptions.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist of the Company's line of credit and long-term
debt. Information about the fair value of these financial instruments is
included in Note 6.
F-61
<PAGE> 185
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. PROPERTY AND EQUIPMENT:
Property and equipment at September 30 consists of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land and land improvements........................ $ 2,913,165 $ 2,893,603
Buildings......................................... 6,166,183 5,267,535
Lifts, tows and hill lighting..................... 4,244,025 4,262,588
Vehicles and equipment............................ 6,192,877 6,036,959
Construction in process........................... 626,788 652,092
------------ ------------
20,143,038 19,112,777
Less accumulated depreciation and amortization.... (11,445,949) (10,834,007)
------------ ------------
Property and equipment, net..................... $ 8,697,089 $ 8,278,770
============ ============
</TABLE>
During 1994, equipment with a cost of $129,000 was acquired pursuant to a
capital lease. Accumulated amortization on this equipment totaled $73,100 and
$47,300 at September 30, 1996 and 1995, respectively.
3. SELF-INSURANCE DEPOSIT:
The Company is self insured for worker's compensation (see Note 12).
Amounts required to be held in trust as a security deposit by the Department of
Labor and Industries totaled $360,000 at September 30, 1996 and 1995. This
deposit may be adjusted annually. The deposit was invested in a certificate of
deposit which bore interest at 5.42% and 6.00% at September 30, 1996 and 1995,
respectively.
4. EQUITY IN REAL ESTATE PARTNERSHIP:
On March 15, 1991, the Company formed a general partnership with certain
other partners (who are stockholders and officers of the Company) to purchase a
building. The Company paid $75,000 for its 25% general partner's interest. The
Company is allocated operating profits and losses in proportion to its
partnership interest (profits of $5,598, $5,720 and $8,030 in 1996, 1995 and
1994, respectively, are included in miscellaneous income in the Statements of
Operations). The Company and a stockholder of the Company have provided a
$250,000 subordinated line of credit to the partnership with interest payable
monthly at 9%. At September 30, 1996 and 1995 the Company had no amount
outstanding under this agreement. The Company leases a portion of the building
for its headquarters under the terms described in Note 11.
F-62
<PAGE> 186
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. EQUITY IN REAL ESTATE PARTNERSHIP -- (CONTINUED):
Summary balance sheets (unaudited) of the partnership at September 30, 1996
and 1995 and statements of operations (unaudited) for the years then ended, are
as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets:
Land and building................................... $2,885,338 $2,965,783
Other assets........................................ 47,608 10,419
---------- ----------
Total............................................ $2,932,946 $2,976,202
========== ==========
Liabilities and Partners' Capital:
Notes payable....................................... $2,815,210 $2,852,308
Other liabilities................................... 27,223 25,772
Partners' capital................................... 90,513 98,122
---------- ----------
Total............................................ $2,932,946 $2,976,202
========== ==========
Revenues.............................................. $ 651,495 $ 615,694
Expenses.............................................. (629,104) (592,815)
---------- ----------
Net income....................................... $ 22,391 $ 22,879
========== ==========
</TABLE>
5. INVESTMENTS:
During 1990, the Company paid $100,000 for an investment in 2,223 shares of
Class E preferred stock of Arlberg Holding Company, ("Arlberg") an insurance
corporation owned by various ski resorts. In December, 1995 these shares were
redeemed by Arlberg resulting in a gain of $18,890 for the year ended September
30, 1996. The Company also holds 17,033 shares of common stock of Arlberg with a
cost of $75,327 and $50,000 of convertible debentures of Arlberg at September
30, 1996 and 1995. These debentures, which bear interest at 9%, mature on June
30, 2000, and are convertible, under certain conditions, into common stock. A
stockholder of the Company serves as a director of Arlberg.
6. LINE OF CREDIT AND LONG-TERM DEBT:
At September 30, 1996, the Company had a $3,500,000 revolving line of
credit agreement with a bank expiring on April 1, 1998. Borrowings under the
agreement, which are payable on demand and are collateralized by substantially
all assets except real estate, bear interest at the bank's prime rate plus .75%
(9.0% and 9.5% at September 30, 1996 and 1995, respectively).
F-63
<PAGE> 187
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. LINE OF CREDIT AND LONG-TERM DEBT -- (CONTINUED):
Long-term debt consists of the following at September 30:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Note payable with monthly payments of $7,393 including
interest at 8.25%, collateralized by certain equipment,
due May, 1998............................................. $139,071 $212,779
Revolving loan facility with maximum borrowings of
$2,132,000; maximum borrowings reduced by $164,000
annually; interest payable monthly at prime plus 1.15%,
(9.4% and 9.9% at September 30, 1996 and 1995,
respectively), collateralized by personal and real
property; total unpaid principal and interest is due
September, 2004........................................... 495,000 --
-------- --------
634,071 212,779
Less current portion........................................ (80,115) (73,708)
-------- --------
$553,956 $139,071
======== ========
</TABLE>
The aggregate amount of scheduled principal payments on the above notes as
of September 30 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 80,115
1998........................................................ 58,956
Thereafter (2004)........................................... 495,000
--------
$634,071
========
</TABLE>
The carrying amounts reported in the balance sheet approximate fair values
based upon interest rates that are currently available to the Company for
issuance of similar debt with similar terms and maturities.
The Company's debt agreements limit capital expenditures, and require that
the Company meet certain financial ratios including maintenance of minimum
tangible net worth and a minimum debt to net worth ratio. As of September 30,
1996 and 1995, the Company had obtained a waiver of rights from creditors with
respect to occurrences of noncompliance with these provisions.
7. RELATED PARTY TRANSACTIONS:
The Company borrows money for operating purposes from W. W. Moffett, Inc.,
which is an affiliated company through common stockholders. The notes payable
from W. W. Moffett, Inc. totaled $1,305,205 and $1,313,178 at September 30, 1996
and 1995, respectively, bear interest at 5.93% and 5.84%, respectively, are
subordinated to the line of credit and long-term debt, and are due on demand.
Interest expense on these notes payable for 1996, 1995 and 1994 was
approximately $76,000, $77,000 and $48,000, respectively.
8. INCOME TAXES:
As of October 1, 1994, an election to be taxed as an S Corporation under
Section 1362 of the Internal Revenue Code became effective. This Section
provides that, in lieu of corporate income taxes, the stockholders pay taxes on
the Company's taxable income.
Effective October 1, 1993, the Company adopted the liability method of
accounting for income taxes under Financial Accounting Standards Board Statement
No. 109, Accounting for Income Taxes ("Statement No. 109"), and the cumulative
effect of this change is reported in the 1994 statement of operations. Under
Statement No. 109, the differences between the tax bases of assets and
liabilities and their financial statement
F-64
<PAGE> 188
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES -- (CONTINUED):
amounts are reflected as deferred income taxes using enacted tax rates. Deferred
Federal income taxes are provided for temporary differences which result
principally from use of accelerated depreciation methods for certain assets, and
from reporting certain other items in different periods for financial reporting
and Federal income tax purposes.
In addition, the S Corporation rules provide that a tax be payable by the
Company if assets acquired on or before September 30, 1994, are sold or disposed
of prior to October 1, 2004. This tax is payable on the resultant gains to the
extent of the excess of the fair market value of the assets over their tax bases
on September 30, 1994. Accordingly, the Company continues to record deferred
taxes on its balance sheet with respect to assets for which sale or disposition
may result in built-in gain taxes.
The S Corporation election resulted in recognition of a deferred tax
benefit of $408,285 in the 1995 statements of operations and retained earnings.
Total gross deferred tax liabilities at September 30, 1996 and 1995 were
approximately $28,000.
At September 30, 1996 and 1995, the Company has alternative minimum tax
credits of approximately $150,000 which can be utilized against regular taxes.
9. SPECIAL USE PERMITS AND PROPERTY LEASES:
The Company operates on approximately 3,821 acres of land of which 1,864
acres are covered by a Special Use Permit issued by the United States Department
of Agriculture's Forest Service (the "Forest Service"). This permit expires
December 31, 2032 and is generally renewable. Special Use Permit fees are based
on revenues for 1996 and are based on fixed assets and revenues for 1995 and
1994. Total Special Use Permit fees for 1996, 1995 and 1994 were approximately
$120,000, $188,600 and $180,300, respectively.
The remaining 1,957 acres are owned by the Company or leased from a private
company. The lease payments are based primarily on skier visits. Total lease
expense for 1996, 1995 and 1994 was $8,810, $7,096 and $10,316, respectively.
10. EMPLOYEE BENEFIT PLANS:
The Ski Lifts, Inc. Profit Sharing Retirement Plan (the "Plan") provides
for both a 401(k) defined contribution plan and a unilateral profit sharing plan
for all employees who have worked over 1,000 hours and are over 21 years of age.
During 1996, 1995 and 1994, the Company contributed $56,887, $55,810 and
$51,499, respectively, under the defined contribution provisions of the Plan.
The Company has accrued discretionary contributions as of September 30, 1996 of
approximately $162,000 under the unilateral profit sharing provisions of the
Plan.
11. LEASE COMMITMENTS AND SUBLEASE AGREEMENTS:
The Company leases its office space from a partnership in which the Company
is a general partner (see Note 4). On November 1, 1995, this lease was amended
to extend the expiration date to March 31, 2006. Rental expense approximated
$105,000, $90,000 and $90,000 in 1996, 1995 and 1994, respectively.
A portion of the office space is subleased to third parties under six to
thirty-six month noncancelable operating leases. Sublease income received in
1996, 1995 and 1994 was $68,210, $59,667 and $55,913, respectively.
F-65
<PAGE> 189
SKI LIFTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
11. LEASE COMMITMENTS AND SUBLEASE AGREEMENTS -- (CONTINUED):
At September 30, 1996, future minimum lease payments and income under
noncancelable operating subleases are as follows:
<TABLE>
<CAPTION>
RENT SUBLEASE NET
PAYMENTS PAYMENTS PAYMENTS
-------- -------- --------
<S> <C> <C> <C>
1997.......................................... $ 108,908 $14,375 $ 94,533
1998.......................................... 108,908 -- 108,908
1999.......................................... 108,908 -- 108,908
2000.......................................... 108,908 -- 108,908
2001.......................................... 108,908 -- 108,908
2002 and thereafter........................... 490,084 -- 490,084
---------- ------- ----------
$1,034,624 $14,375 $1,020,249
========== ======= ==========
</TABLE>
In addition, the Company leases snow grooming and maintenance equipment
under a capital lease. The following is a schedule of future minimum lease
payments under capital leases together with the present value of net minimum
lease payments as of September 30, 1996:
<TABLE>
<S> <C>
FOR THE FISCAL YEARS:
1997...................................................... $ 31,610
1998...................................................... 31,610
1999...................................................... 7,903
--------
Net minimum lease payments................................ 71,123
Less amount representing interest......................... (6,249)
--------
Present value of net minimum lease payments............... 64,874
Less current portion...................................... (27,215)
--------
Long-term obligation...................................... $ 37,659
========
</TABLE>
12. CONTINGENCIES:
The Company is party to various claims arising in the normal course of
business related to alleged injuries which, in the opinion of management, will
not have a material effect on the Company's business. The Company's insurance
limits its risk of loss on such claims to the amounts of the deductible under
the related insurance policies. At September 30, 1996 and 1995, $142,124 and
$240,240, respectively, were accrued related to such claims (primarily
deductible amounts).
The Company is self-insured with the State of Washington for workers'
compensation (see Note 3). Provision is made in the financial statements for the
estimated cost of claims. The accrued liability at September 30, 1996 and 1995
was $49,502 and $44,111, respectively.
The Company is currently undergoing an examination by the Forest Service
for fiscal years 1991 through 1995 in connection with the Company's use of land
under a special use permit. Although the Company has not yet received the final
report, the Forest Service has indicated that the assessment will be
approximately $100,000. This amount has been accrued for at September 30, 1996,
however, the Company intends to vigorously challenge the proposed assessment of
additional use fees.
13. SUBSEQUENT EVENT:
In December 1996, the stockholders of the Company reached an agreement in
principle to sell the stock of the Company to a third party. The proposed
transaction is expected to be completed in January 1997.
F-66
<PAGE> 190
GRAND TARGHEE INCORPORATED
CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 31,
-------------------------
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 32,144 $ 47,913
Receivables from related parties.......................... 39,475 4,164
Trade accounts receivable................................. 96,627 152,554
Inventories............................................... 489,535 460,750
Refundable income taxes................................... 174,688 --
Prepaid expenses.......................................... 256,217 146,566
----------- ----------
Total current assets........................................ 1,088,686 811,947
----------- ----------
Property and equipment, at cost............................. 13,179,293 9,571,562
Less accumulated depreciation and amortization.............. 5,113,236 4,523,386
----------- ----------
8,066,057 5,048,176
----------- ----------
Other assets................................................ 7,811 57,563
----------- ----------
Total assets................................................ $ 9,162,554 $5,917,686
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 560,549 $ 407,691
Accrued liabilities....................................... 617,395 477,104
Advance deposits and unearned income...................... 541,024 573,087
Lift construction obligations expected to be financed on a
long-term basis........................................ 1,695,626 --
Current portion of notes payable and obligations under
capital leases......................................... 708,910 355,569
----------- ----------
Total current liabilities................................... 4,123,504 1,813,451
----------- ----------
Long-term debt.............................................. 2,279,064 835,783
----------- ----------
Deferred income taxes....................................... 113,359 182,000
----------- ----------
Stockholder's equity:
Common stock, $.01 par value
Authorized -- 600,000 shares
Issued and outstanding -- 450,000 shares............... 4,500 4,500
Capital in excess of par value............................ 1,887,942 1,887,942
Retained earnings......................................... 754,185 1,194,010
----------- ----------
Total stockholder's equity.................................. 2,646,627 3,086,452
----------- ----------
Total liabilities and stockholder's equity.................. $ 9,162,554 $5,917,686
=========== ==========
</TABLE>
See notes to condensed financial statements.
F-67
<PAGE> 191
GRAND TARGHEE INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED JANUARY 31,
-------------------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
Sales..................................................... $3,466,632 $4,186,037
---------- ----------
Direct expenses:
Labor, taxes and benefits................................. 1,366,549 1,331,587
Cost of goods sold........................................ 458,612 557,201
Other direct costs........................................ 715,744 569,428
---------- ----------
2,540,905 2,458,216
---------- ----------
Gross margin................................................ 925,727 1,727,821
---------- ----------
Operating costs and expenses:
General and administrative................................ 526,723 550,307
Marketing................................................. 379,521 330,556
Insurance................................................. 128,677 183,835
Forest service lease...................................... 83,068 102,390
Other leased property..................................... 41,750 45,100
Property maintenance...................................... 175,493 150,737
Depreciation and amortization............................. 411,000 386,000
---------- ----------
1,746,232 1,748,925
---------- ----------
Loss from operations........................................ (820,505) (21,104)
Other expense:
Interest expense.......................................... (71,823) (96,753)
Abandonment of land swap costs............................ (53,669) --
---------- ----------
Loss before income tax benefit.............................. (945,997) (117,857)
Income tax benefit.......................................... 191,327 29,464
---------- ----------
Net loss.................................................... $ (754,670) $ (88,393)
========== ==========
</TABLE>
See notes to condensed financial statements.
F-68
<PAGE> 192
GRAND TARGHEE INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
JANUARY 31,
------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $ (754,670) $ (88,393)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization............................. 439,000 398,326
Changes in assets and liabilities:
Trade accounts receivable.............................. (71,585) (130,691)
Inventories............................................ (191,015) (183,787)
Prepaid expenses....................................... (120,909) (45,860)
Accounts payable....................................... 394,720 296,221
Accrued liabilities, advance deposits and unearned
income................................................ 740,145 488,595
Current and deferred income taxes...................... (210,327) (136,464)
Due to/from related parties............................ (107) 21,683
----------- ---------
225,252 619,630
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.......................... (1,433,235) (326,510)
Other assets................................................ 17,799 5,919
----------- ---------
(1,415,436) (320,591)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing on new notes and capital leases................... 1,055,000 66,862
Net borrowings (payments) on line of credit................. 315,500 (300,000)
Payments on long-term debt and capital lease obligations.... (189,383) (81,665)
----------- ---------
1,181,117 (314,803)
----------- ---------
Net decrease in cash........................................ (9,067) (15,764)
Cash at beginning of period................................. 41,211 63,677
----------- ---------
Cash at end of period....................................... $ 32,144 $ 47,913
=========== =========
</TABLE>
See notes to condensed financial statements.
F-69
<PAGE> 193
GRAND TARGHEE INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 31, 1997 AND 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Grand Targhee Incorporated (the "Company"), a Delaware corporation, owns
and operates the Grand Targhee ski and summer resort.
The accompanying financial statements as of January 31, 1997 and 1996 and
for the periods from June 1, 1996 to January 31, 1997 and from June 1, 1995 to
January 31, 1996 are unaudited, but include all adjustments (consisting only of
normal recurring adjustments and a charge for abandoned land swap costs of
$53,669 in the period from June 1, 1996 to January 31, 1997) which, in the
opinion of management of the Company, are considered necessary for a fair
presentation of the Company's financial position at January 31, 1997 and 1996,
and its operating results and cash flows for the periods from June 1, 1996 to
January 31, 1997 and from June 1, 1995 to January 31, 1996. Due to the highly
seasonal nature of the Company's business, the results for the interim periods
are not necessarily indicative of results for the entire year. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to generally accepted accounting principles
applicable for interim periods. The unaudited interim financial statements
should be read in conjunction with the following notes and the audited financial
statements of the Company as of May 31, 1996 and for the year then ended.
2. CONSTRUCTION OF NEW LIFTS AND RELATED FINANCING
During the period from June 1, 1996 to January 31, 1997, the Company
constructed two new lifts. The cost of the lifts was approximately $3,313,000
(including capitalized interest of $62,000), which was financed in part with the
proceeds of a $400,000 loan from a stockholder and a $655,000 loan from a third
party.
3. SUBSEQUENT EVENT
On March 18, 1997, Booth Creek Ski Holdings, Inc. ("Booth Creek") acquired
all of the issued and outstanding capital stock of the Company. The aggregate
purchase price for the acquisition was approximately $7.9 million plus
contingent payments of up to $2 million based on the performance of the resort
through the 1998/99 ski season and additional commissions based on the number of
dwelling units developed at the resort through 2012.
In conjunction with the acquisition, Booth Creek utilized a portion of the
proceeds of a long-term debt offering to retire existing debt of the Company.
Accordingly, $800,000 of current debt of the Company has been classified as
long-term debt in the accompanying balance sheet at January 31, 1997.
F-70
<PAGE> 194
INDEPENDENT AUDITORS' REPORT
Board of Directors
Grand Targhee Incorporated
Alta, Wyoming
We have audited the accompanying balance sheets of Grand Targhee
Incorporated as of May 31, 1996 and 1995 and the related statements of
operations, changes in stockholder's equity and cash flows for the years ended
May 31, 1996, 1995 and 1994. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Grand Targhee Incorporated
as of May 31, 1996 and 1995, and the results of its operations and its cash
flows for the years ended May 31, 1996, 1995 and 1994 in conformity with
generally accepted accounting principles.
FELDHAKE & ASSOCIATES, P.C.
Englewood, Colorado
June 20, 1996, except for Note 11 for
which the date is January 27, 1997
F-71
<PAGE> 195
GRAND TARGHEE INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31,
------------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 41,211 $ 63,677
Receivables from related parties.......................... 44,045 23,923
Trade accounts receivable................................. 25,042 21,863
Inventories............................................... 298,520 276,963
Prepaid expenses.......................................... 135,308 100,705
---------- ----------
Total current assets................................... 544,126 487,131
---------- ----------
Property and equipment, at cost:
Buildings and improvements................................ 5,119,403 5,067,537
Ski lift facilities....................................... 927,851 949,120
Snow cats and hill grooming equipment..................... 574,361 573,423
Furniture and fixtures.................................... 959,008 888,465
Land improvements......................................... 222,021 222,021
Other equipment........................................... 1,312,395 1,219,995
Transportation equipment.................................. 183,454 160,454
Construction in process................................... 67,439 64,037
---------- ----------
9,365,932 9,145,052
Less accumulated depreciation and amortization............ 4,674,236 4,125,060
---------- ----------
4,691,696 5,019,992
---------- ----------
Other assets:
Deposits -- ski lifts..................................... 684,500 100,000
Other..................................................... 25,610 63,482
---------- ----------
710,110 163,482
---------- ----------
Total assets........................................... $5,945,932 $5,670,605
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 165,829 $ 111,470
Accrued liabilities....................................... 270,405 411,104
Advanced deposits......................................... 147,867 179,956
Income taxes currently payable............................ 19,000 107,000
Line of credit with bank.................................. 334,500 300,000
Current portion of notes payable.......................... 219,274 288,906
Current portion of obligations under capital leases....... 59,821 69,571
---------- ----------
Total current liabilities.............................. 1,216,696 1,468,007
---------- ----------
Long term debt:
Notes payable............................................. 725,439 358,388
Obligations under capital leases.......................... 56,284 26,747
Due to related parties.................................... 416,216 460,618
---------- ----------
1,197,939 845,753
---------- ----------
Deferred income taxes....................................... 130,000 182,000
---------- ----------
Stockholder's equity:
Common stock, $.01 par value
Authorized -- 600,000 shares
Issued and outstanding -- 450,000 shares............... 4,500 4,500
Capital in excess of par value............................ 1,887,942 1,887,942
Retained earnings......................................... 1,508,855 1,282,403
---------- ----------
Total stockholder's equity............................. 3,401,297 3,174,845
---------- ----------
Total liabilities and stockholder's equity $5,945,932 $5,670,605
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-72
<PAGE> 196
GRAND TARGHEE INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenue:
Sales.................................................. $7,364,363 $6,736,459 $6,241,285
Concessions............................................ 11,896 25,350 44,089
---------- ---------- ----------
7,376,259 6,761,809 6,285,374
---------- ---------- ----------
Direct expenses:
Labor, taxes and benefits.............................. 2,245,472 1,915,790 1,764,753
Cost of goods sold..................................... 982,957 912,930 843,431
Other direct costs..................................... 930,238 899,083 852,193
---------- ---------- ----------
4,158,667 3,727,803 3,460,377
---------- ---------- ----------
Gross margin............................................. 3,217,592 3,034,006 2,824,997
---------- ---------- ----------
Operating costs and expenses:
General and administrative............................. 892,745 876,697 801,207
Marketing.............................................. 482,854 475,848 342,266
Insurance.............................................. 218,362 198,424 199,987
Forest service lease................................... 171,436 164,015 154,194
Other leased property.................................. 66,100 104,750 102,000
Property maintenance................................... 210,415 194,653 179,382
Depreciation and amortization.......................... 583,282 576,802 566,397
Impairment of long-lived assets........................ 42,619 -- --
---------- ---------- ----------
2,667,813 2,591,189 2,345,433
---------- ---------- ----------
Income from operations................................... 549,779 442,817 479,564
---------- ---------- ----------
Other income (expenses):
Abandonment of land exchange costs..................... (99,259) -- --
Gain (loss) on disposition of assets................... (42,799) 9,732 (1,000)
Interest income........................................ 9,595 2,206 1,872
Interest expense....................................... (117,864) (171,812) (204,604)
---------- ---------- ----------
(250,327) (159,874) (203,732)
---------- ---------- ----------
Income before income taxes............................... 299,452 282,943 275,832
Income tax expense....................................... 73,000 79,098 113,371
---------- ---------- ----------
Net income............................................... $ 226,452 $ 203,845 $ 162,461
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-73
<PAGE> 197
GRAND TARGHEE INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
years ended May 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
CAPITAL
IN EXCESS TOTAL
COMMON OF PAR RETAINED STOCKHOLDER'S
STOCK VALUE EARNINGS EQUITY
------ --------- -------- -------------
<S> <C> <C> <C> <C>
Balance at
June 1, 1993................................... $4,500 $1,887,942 $ 916,097 $2,808,539
Net income....................................... -- -- 162,461 162,461
------ ---------- ---------- ----------
Balance at
May 31, 1994................................... 4,500 1,887,942 1,078,558 2,971,000
Net income....................................... -- -- 203,845 203,845
------ ---------- ---------- ----------
Balance at
May 31, 1995................................... 4,500 1,887,942 1,282,403 3,174,845
Net income....................................... -- -- 226,452 226,452
------ ---------- ---------- ----------
Balance at
May 31, 1996................................... $4,500 $1,887,942 $1,508,855 $3,401,297
====== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-74
<PAGE> 198
GRAND TARGHEE INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 226,452 $ 203,845 $ 162,461
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 632,935 622,739 618,597
Impairment of long-lived asset....................... 42,619 -- --
Loss (gain) on disposal of assets.................... 42,799 (9,732) 1,000
Changes in assets and liabilities:
Trade receivables.................................. (3,179) 17,900 (31,264)
Inventory.......................................... (21,557) (5,295) (34,535)
Prepaid expenses................................... (34,603) (10,442) (20,213)
Net deferred taxes................................. (52,000) (28,000) 17,373
Accounts payable and accrued liabilities........... (189,428) 252,326 (82,766)
Due to/from related parties........................ 23,003 (27,112) 9,776
--------- ---------- ---------
667,041 1,016,229 640,429
--------- ---------- ---------
Cash flows from investing activities:
Proceeds from sale of fixed assets...................... 1,000 20,650 --
Purchase of property and equipment...................... (236,454) (472,527) (169,665)
Deposits and other assets............................... 2,002 (10,944) (22,463)
Related party receivable................................ (30,000) -- --
--------- ---------- ---------
(263,452) (462,821) (192,128)
--------- ---------- ---------
Cash flows from financing activities:
Borrowing on new notes.................................. 400,000 276,537 4,590
Borrowings from related parties......................... -- -- 188,100
Payments on debt to related parties..................... (77,915) -- --
Net borrowing on line of credit......................... (300,000) (152,547) (199,955)
Payments on long-term debt and capital lease
obligations.......................................... (448,140) (650,790) (662,255)
--------- ---------- ---------
(426,055) (526,800) (669,520)
--------- ---------- ---------
Net increase (decrease) in cash........................... (22,466) 26,608 (221,219)
Cash at beginning year.................................... 63,677 37,069 258,288
--------- ---------- ---------
Cash at end of year....................................... $ 41,211 $ 63,677 $ 37,069
========= ========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-75
<PAGE> 199
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Grand Targhee
Incorporated (the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are representations of
the Company's management, which is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted accounting
principles and have been consistently applied.
HISTORY OF ORGANIZATION
In October 1992, in connection with a tax-free reorganization pursuant to
Section 368 (a)(1)(F) of the Internal Revenue Code of 1986, as amended, Big
Valley Corporation, a Wyoming corporation, merged with Grand Targhee
Incorporated, a Delaware corporation. Grand Targhee Incorporated was formed just
prior to the merger and had no prior operations. Prior to this merger, Big
Valley Corporation operated the Grand Targhee Resort. As part of the merger
agreement, the outstanding stock of Big Valley Corporation common stock was
exchanged for 450,000 shares of common stock of Grand Targhee Incorporated. The
purpose of this merger was to establish Delaware as the State of domicile and
change the name of the corporation.
BUSINESS ACTIVITIES
The Company operates the Grand Targhee Ski and Summer Resort (the Resort).
The Resort offers downhill skiing and related activities such as cross-country
skiing, ski lessons and other winter and summer activities. In addition, the
Company operates lodging facilities, restaurants and retail shops.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out method.
DEPRECIATION
The cost of buildings, improvements and equipment is depreciated over the
lesser of the length of the lease with the Forest Service or the estimated
useful lives of the assets. Depreciation is computed on the straight-line method
over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 12 - 30
Ski lift facilities......................................... 11 - 30
Snow cats and hill grooming equipment....................... 5
Furniture and fixtures...................................... 5 - 7
Land improvements........................................... 3 - 30
Ski rental equipment........................................ 3
Other equipment............................................. 3 - 10
Transportation equipment.................................... 3 - 7
</TABLE>
CASH FLOWS
For purposes of the statement of cash flows, the Company considers
short-term cash investments with a maturity of three months or less as cash. The
Company considers the line of credit with the bank to be short-term and presents
transactions net for purposes of the statement of cash flows.
Interest paid for the years ended May 31, 1996, 1995 and 1994 was $187,424,
$158,469 and $233,795, respectively.
F-76
<PAGE> 200
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The Company acquired certain equipment totaling $132,364 and $47,698
through capital leases and purchase contracts during the years ended May 31,
1996 and 1995. respectively.
The Company made deposits on the new chair lifts (Note 8) through advances
of $334,500 from its line of credit and $250,000 from its term loan during the
year ended May 31, 1996. These advances were non-cash transactions for the
Company and therefore are not presented in the statements of cash flows.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect certain reported amounts and disclosures. Actual results
could differ from those estimates.
RECLASSIFICATION
Certain reclassifications have been made to the 1994 and 1995 financial
statements in order to conform to the 1996 presentation.
2. INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
MAY 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Retail goods............................................. $250,688 $248,941
Lounge -- beverage and supplies.......................... 6,792 9,923
Restaurant -- food and supplies.......................... 28,910 14,843
Sundries................................................. 12,130 3,256
-------- --------
$298,520 $276,963
======== ========
</TABLE>
3. LINE OF CREDIT
The Company has a line of credit in the amount of $850,000 with a bank
which is subject to renewal annually in April. As of May 31, 1996 the company
has an outstanding balance of $334,500. This line of credit is secured under a
general blanket collateral agreement which includes a security interest in the
Company's stock, buildings, inventory, equipment, furnishings, the forest
service lease and receivables. Additionally, this line of credit is personally
guaranteed by the stockholder and an officer of the Company. Interest is at 2%
above Chase Manhattan Bank's prime rate. Interest only payments are due monthly
beginning on April 30, 1996. Monthly principal payments of the lesser of
$200,000 or the entire principal balance then outstanding are due December 1996
through March 1997 with remaining balance due April 30, 1997.
F-77
<PAGE> 201
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
MAY 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Notes payable to the Farmers Home Administration, payable in
annual installments of $53,214 including interest at 5%,
balance due August, 1999, collateralized by buildings and
equipment................................................. $202,715 $243,743
Note payable to a bank, payable in five monthly principal
payments of $12,500 each year, December through April,
plus monthly interest payments at 3% above the bank's
index rate, due December 15, 1998, collateralized by
virtually all assets of the Company. ..................... -- 189,518
Note payable to a bank, payable in five monthly installments
equal to one thirty-fifth of the principal balance of the
note, December through April, plus monthly interest
payments at prime plus 2% as published by Chase Manhattan
Bank, due April 30, 2003, collateralized by virtually all
assets of the company, this loan is cross-collateralized
with the bank line of credit, see Note 3. ................ 650,000 --
Equipment purchase contract, payable in four monthly
installments of $1,381 each year, January through April,
including interest at 7.9% due April 1998, collateralized
by certain equipment...................................... 9,983 --
Notes payable -- individuals(1)............................. -- 100,000
Note payable to a related party, payable in monthly
installments of $2,046, including interest at 10.48%,
balance due August 1, 1997, unsecured..................... 28,645 49,033
Notes payable with interest ranging from 9% to 10%, due
January 26, 1997, guaranteed by the stockholder and an
officer of the Company, unsecured......................... 53,370 50,000
Short-term note payable with interest at a rate of 3.5%,
guaranteed by the stockholder and an officer of the
Company, unsecured........................................ -- 15,000
-------- --------
944,713 647,294
Less current portion........................................ 219,274 288,906
-------- --------
$725,439 $358,388
======== ========
</TABLE>
- -------------------------
(1) Notes payable -- individuals represent notes to individuals in the amounts
ranging from $10,000 to $25,000, at an interest rate of 13% due within 60
days of the date the note holder demands payment.
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31,
----------
<S> <C>
1997........................................................ $216,721
1998........................................................ 149,302
1999........................................................ 157,184
2000........................................................ 142,934
2001........................................................ 92,857
Thereafter.................................................. 185,715
--------
$944,713
========
</TABLE>
F-78
<PAGE> 202
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. RELATED PARTY TRANSACTIONS
Transactions with related parties are as follows:
<TABLE>
<CAPTION>
MAY 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
CURRENT RECEIVABLE (PAYABLE):
High Mountain Travel................................... $ -- $ 154
Grand Teton Furniture Company.......................... -- (39,250)
Targhee Institute...................................... 14,045 23,769
Moritz Bergmeyer....................................... 30,000 --
------- --------
44,045 (15,327)
Portion included in accounts payable..................... -- 39,250
------- --------
$44,045 $ 23,923
======= ========
</TABLE>
The receivable from Moritz Bergmeyer is non-interest bearing and is due on
demand. The remaining related party accounts are non-interest bearing and result
from operating activities.
<TABLE>
<S> <C> <C>
LONG-TERM PAYABLE:
Notes payable and accrued interest..................... $154,609 $212,136
Leases payable......................................... 261,607 248,482
-------- --------
$416,216 $460,618
======== ========
</TABLE>
Targhee Institute was formed with the assistance of the Company as a
not-for-profit entity. Targhee Institute's purpose is to provide educational
programs on science, nature, and cultural related topics. The Company received
$102,522, $39,775 and $61,180 during the years ended May 31, 1996, 1995 and 1994
from Targhee Institute for room, board, and site fees related to its educational
and cultural programs. High Mountain Travel is a for-profit travel agency formed
by the shareholder to provide bus transportation to the ski resort area. The
Company accrued commissions totaling $31,879, $37,485 and $40,020 to High
Mountain Travel for the years ended May 31, 1996, 1995 and 1994, respectively.
During the years ended May 31, 1996, 1995 and 1994, the Company incurred
interest expense of $9,064, $22,596 and $6,169, respectively, with related
parties. The Company incurred lease expense of $63,000, $99,000 and $96,000 with
related parties during the years ended May 31, 1996, 1995 and 1994,
respectively. See also Notes 7 and 8.
During the year ended May 31, 1994, the Company acquired furniture and
fixtures from Grand Teton Furniture totaling $41,230. Grand Teton Furniture is
related to the Company through common ownership and management.
6. INCOME TAXES
At May 31, 1996, the Company has for tax purposes unused Alternative
Minimum Tax (AMT) credits of approximately $60,000 which can be carried forward
indefinitely. The Company has established a valuation allowance of $60,000
because of limitations on the usage of this credit. As a result, the Company has
used $0 of its AMT tax credit carryovers to reduce deferred income taxes
payable.
Deferred income taxes arise primarily because of temporary differences
related to recognition of the gain on the disposal of the building and equipment
destroyed in a fire. For tax purposes, the gain is treated as a reduction of the
cost of the replacement property and is recognized ratably over the life of the
property as a
F-79
<PAGE> 203
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES -- (CONTINUED)
reduction of depreciation. The resulting deferred taxes are allocated between
current and non-current liabilities based on the expected reversal period.
Income tax expense for the years ended May 31, 1996, 1995 and 1994 vary
from Federal statutory rates because of the impact of the Alternative Minimum
Tax and use of the Alternative Minimum Tax Credit. Income tax expense includes
the following components:
<TABLE>
<CAPTION>
PAYABLE
--------------------
EXPENSE CURRENT DEFERRED
------- ------- --------
<S> <C> <C> <C>
Balance June 1, 1993........................................ $ 33,206 $192,627
Payments.................................................... (33,204) --
Expense..................................................... $113,371 95,998 17,373
======== --------- --------
Balance May 31, 1994........................................ 96,000 210,000
Payments.................................................... (96,098) --
Expense..................................................... $ 79,098 107,098 (28,000)
======== --------- --------
Balance May 31, 1995........................................ 107,000 182,000
Payments.................................................... (213,000) --
Expense..................................................... $ 73,000 125,000 (52,000)
======== --------- --------
Balance May 31, 1996........................................ $ 19,000 $130,000
========= ========
</TABLE>
7. LEASING ARRANGEMENTS
The Company leases certain furniture, fixtures, and equipment under leases
which expire at various times over the next three years. In addition, the
Company leases a building from its stockholder as more fully described in Note
8.
The following is a yearly schedule of future minimum lease payments under
long-term capital and operating leases:
<TABLE>
<CAPTION>
YEAR ENDED CAPITAL OPERATING
MAY 31, LEASES LEASES
---------- ------- ---------
<S> <C> <C>
1997...................................................... $ 68,276 $ 59,000
1998...................................................... 46,673 59,000
1999...................................................... 18,261 59,000
2000...................................................... -- 59,000
2001...................................................... -- --
-------- --------
Total minimum lease payments................................ 133,210 $236,000
========
Less amounts representing interest.......................... 17,105
Less portion included in current liabilities................ 59,821
--------
$ 56,284
========
</TABLE>
Substantially all of the operating leases are with the stockholder.
Management expects, as part of normal operations, to renew its operating leases
after the current lease term. In addition to these long-term operating leases,
minimum payments for short-term renewable leases with related parties in effect
at May 31, 1996 was approximately $250 per month.
F-80
<PAGE> 204
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. LEASING ARRANGEMENTS -- (CONTINUED)
Equipment under capital leases of approximately $165,000, is included in
snow cats and hill grooming equipment, furniture and fixtures, other equipment
and transportation equipment. At the conclusion of these leases, title will
transfer to the Company or the Company will have the option to acquire the asset
at a bargain price. Amortization associated with the equipment under capital
leases is included in depreciation expense.
8. COMMITMENTS AND CONTINGENCIES
FOREST SERVICE LEASE
The Company has an agreement with the United States Department of
Agriculture whereby the Forest Service has granted the Company a permit for use
at the Resort. The permit, expiring on December 31, 2034, is a special use
permit covering approximately 2,400 acres for the purposes of constructing,
operating and maintaining a ski and summer resort including food service, retail
sales and other facilities.
A further reissuance of the National Forest special use permit may be
granted provided the holder shall comply with the then existing laws and
regulations governing the occupancy and use of National Forest lands.
The fee for this use is based on a graduated rate fee system using the cost
of certain "gross fixed assets" and annual sales to determine the rate applied
to sales. This fee was $171,436, $164,015 and $154,194 for the years ended May
31, 1996, 1995 and 1994, respectively. The Company is required to have minimum
public liability and bodily injury insurance in force. All installations and
improvements made on the property must be incompliance with the terms of the
permits. The Resort is subject to inspection by the Forest Service and must be
maintained to meet the applicable safety standards. The Company may sublease the
use of land and improvements covered under these permits and the operation of
concessions and facilities upon prior written notice to the authorized officer.
LEASE WITH RELATED PARTY
The Company has a sub-lease with its stockholder extending through May,
2000, allowing the stockholder the right to use and occupy a portion of the
Forest Service lease. The lease term requires payment of $1,000 per year.
The Company has a five year lease with the stockholder extending through
May, 2000, allowing the Company the use of the Teewinot Lodge, located on the
sub-lease with the stockholder described above. The lease agreement calls for
annual payments of $60,000 payable in equal monthly installments of $5,000. The
Company is to maintain the premises and pay insurance and taxes thereon. During
the years ended May 31, 1996, 1995 and 1994, rent under this lease was $60,000.
CONCENTRATION OF CREDIT RISK
The Company's revenues are earned from the general public. The nature of
operations are such that credit is not generally extended to its customers.
Goods and services purchased are supplied by a variety of vendors. The Company
is, however, dependent upon a permit from the U.S. Forest Service because the
Resort is located in the Targhee National Forest.
The Company maintains its bank accounts in a Federally insured financial
institution. Amounts are insured up to $100,000. At times during the year,
amounts in excess of $100,000 are on deposit with the financial institution.
F-81
<PAGE> 205
GRAND TARGHEE INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
CONSTRUCTION OF NEW LIFTS
At May 31, 1996, the Company has committed to the construction of two new
lifts. One is a stealth detachable quad and the second is a fixed grip quad.
These lifts will replace the current Bannock and Shoshone lifts. The Bannock
lift will continue to operate until its replacement is fully operational. The
Shoshone lift is being abandoned and impairment of its net carrying value at May
31, 1996 has been recognized (Note 9).
The contract calls for the new Bannock detachable quad to cost $2,371,865
and the Shoshone fixed grip quad to cost $437,750. The price is a "turnkey"
price but does not include removal of existing equipment nor taxes.
Financing for these lifts is provided in part by the existing term loan
from the Company's bank. The balance of the financing is to be provided through
loans arranged by the potential purchaser of the Company (Note 11). At May 31,
1996, the Company has made deposits of $684,500. Of this amount, $100,000 was
deposited as of May 31, 1995 and the balance was paid with $334,500 advanced
from the line of credit and $250,000 advanced from the term loan.
9. IMPAIRMENT OF LONG-LIVED ASSETS
At May 31, 1996, the Company has contracted to construct two new ski lifts
to be operational for the 1996-1997 ski season (Note 8). As part of this
process, the existing Shoshone lift with a net book value of $42,619 will be
abandoned. Fair market value of the abandoned lift, estimated by management
based on published advertisements for lifts with similar characteristics, is
$25,000. Cost to salvage this lift is also estimated at $25,000. A loss of
$42,619 is included in the statements of operations for the year ended May 31,
1996. The impairment is included in accumulated depreciation and amortization in
the balance sheet.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of funds in financial institutions, which includes
checking accounts and operating money markets, are equal to their carrying
value.
The estimated fair values of amounts due to/from related parties are equal
to their carrying value because terms of these rights and obligation have been
recently established or have recently been subject to remodification.
The established fair values of capitalized lease obligations and notes
payable are equal to their carrying value because all material obligations of
their nature have been negotiated recently with the exception of the note
payable to the U.S. Department of Agriculture, F.H.A. Department. The carrying
amount of this loan is $202,715 and the estimated fair value is not determinable
because notes of this nature are no longer issued.
11. SUBSEQUENT EVENT
On November 15, 1996, Mr. Moritz O. Bergmeyer and Ms. Carol Mann Bergmeyer
executed a letter of intent with Booth Creek, Inc. pursuant to which Booth Creek
proposes to acquire all of the issued and outstanding capital stock of the
Company.
F-82
<PAGE> 206
===============================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information........................ 4
Certain Definitions and Market and Industry
Data....................................... 5
Prospectus Summary........................... 7
Risk Factors................................. 26
The Transactions............................. 33
Capitalization............................... 35
Pro Forma Financial Information.............. 36
Selected Combined Financial Data............. 45
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 47
Business..................................... 60
Management................................... 79
Certain Transactions......................... 81
Ownership and Control........................ 84
Description of Certain Indebtedness.......... 85
The Exchange Offer........................... 87
Description of the Notes..................... 96
Certain U.S. Federal Income Tax
Considerations............................. 119
Plan of Distribution......................... 120
Legal Matters................................ 120
Experts...................................... 121
Index of Financial Statements................ F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE
OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
===============================================================
===============================================================
$116,000,000
[BOOTH CREEK LOGO]
BOOTH CREEK
SKI HOLDINGS, INC.
OFFER TO EXCHANGE $1,000
IN PRINCIPAL AMOUNT OF ITS
SERIES B 12 1/2% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR EACH $1,000
IN PRINCIPAL AMOUNT OF ITS OUTSTANDING
12 1/2% SENIOR NOTES DUE 2007
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
MARINE MIDLAND BANK
BY FACSIMILE:
(212) 658-2292
CONFIRMATION BY TELEPHONE:
(212) 658-5931
BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
140 BROADWAY -- LEVEL A
NEW YORK, NEW YORK 10005-1180
ATTENTION: CORPORATE TRUST SERVICES
-----------------
PROSPECTUS
-----------------
, 1997
---------------------------------------------------------------
---------------------------------------------------------------
<PAGE> 207
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus contained in this Registration Statement.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Booth Creek Ski Holdings, Inc. and its subsidiaries, Sierra-at-Tahoe, Inc.,
Bear Mountain, Inc., Booth Creek Ski Acquisition Corp., Waterville Valley Ski
Resort, Inc., Mount Cranmore Ski Resort, Inc., Grand Targhee Incorporated,
Targhee Company and Targhee Ski Corp. (collectively, the "Delaware
Subsidiaries"), are Delaware corporations. Section 145 ("Section 145") of the
General Corporation Law of the State of Delaware (the "DGCL") provides that a
Delaware corporation may indemnify any persons who were, are or are threatened
to be made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, were or are threatened
to be made, a party to any threatened, pending or completed action or suit by or
in the right of the corporation by reasons of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, provided that no indemnification is
permitted without judicial approval if the officer, director, employee or agent
is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
The Certificate of Incorporation and/or Bylaws of each of Booth Creek and the
Delaware Subsidiaries provide for the indemnification of persons under the
circumstances described in Section 145 of the DGCL.
Trimont Land Company is a California corporation and its Articles of
Incorporation and Bylaws provide for indemnification of its officers and
directors to the fullest extent permitted by law. Section 204(10) of the
California General Corporation Law (the "CGCL") eliminates the liability of a
corporation's directors for monetary damages to the fullest extent permissible
under California law. Pursuant to Section 204(11) of the CGCL, a California
corporation may indemnify Agents (as defined in Section 317 of the CGCL),
subject only to the applicable limits set forth in Section 204 of the CGCL with
respect to actions for breach of duty to the corporation and its shareholders.
As permitted by Section 317 of the CGCL, indemnification may be provided by
a California corporation of its Agents (as defined in Section 317 of the CGCL),
to the maximum extent permitted by the CGCL, in connection with any proceeding
arising by reason of the fact that such person is or was such a director or
officer, against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in any such proceeding.
Ski Lifts, Inc. is a Washington corporation and its Articles of
Incorporation provide for indemnification of its officers and directors in
accordance with Section 23B.08.510 of the Revised Code of Washington, which
authorizes Washington corporations to indemnify their officers and directors
under certain circumstances against expenses and liabilities incurred in legal
proceedings involving such persons because of their being or having been an
officer or director.
II-1
<PAGE> 208
Under Washington law, the indemnification provision of Ski Lifts' Articles
of Incorporation eliminates the liability of a director for breach of fiduciary
duty but does not eliminate the personal liability of any director for (i) acts
of omissions of a director that involve intentional misconduct or a knowing
violation of law, (ii) conduct in violation of Section 23B.08.310 of the Revised
Code of Washington (which section relates to unlawful distributions) or (iii)
any transaction from which a director personally received a benefit in money,
property or services to which the director was not legally entitled.
B-V Corporation is a Wyoming corporation and its Bylaws provide for
indemnification of its officers and directors to the fullest extent permitted by
the Wyoming Business Corporation Act, Wyoming Statutes 17-16-850 et seq., which
provides for indemnification by a corporation of costs incurred by directors,
employees, and agents in connection with an action, suit, or proceeding brought
by reason of their position as a director, employee, or agent. The person being
indemnified must have acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
3.1 Certificate of Incorporation of Booth Creek Ski Holdings,
Inc.
3.2 Bylaws of Booth Creek Ski Holdings, Inc.
3.3 Restated Articles of Incorporation of Trimont Land Company.
3.4 Bylaws of Trimont Land Company.
3.5 Certificate of Incorporation of Sierra-at-Tahoe, Inc.
3.6 Bylaws of Sierra-at-Tahoe, Inc.
3.7 Certificate of Incorporation of Bear Mountain, Inc.
3.8 Bylaws of Bear Mountain, Inc.
3.9 Certificate of Incorporation of Booth Creek Ski Acquisition
Corp.
3.10 Bylaws of Booth Creek Ski Acquisition Corp.
3.11 Amended and Restated Certificate of Incorporation of
Waterville Valley Ski Resort, Inc.
3.12 Bylaws of Waterville Valley Ski Resort, Inc.
3.13 Amended and Restated Certificate of Incorporation of Mount
Cranmore Ski Resort, Inc.
3.14 Bylaws of Mount Cranmore Ski Resort, Inc.
3.15 Amended and Restated Articles of Incorporation of Ski Lifts,
Inc.
3.16 Bylaws of Ski Lifts, Inc.
3.17 Certificate of Incorporation of Grand Targhee Incorporated.
3.18 Bylaws of Grand Targhee Incorporated.
3.19 Articles of Incorporation of B-V Corporation.
3.20 Bylaws of B-V Corporation.
3.21 Certificate of Incorporation of Targhee Company.
3.22 Bylaws of Targhee Company.
3.23 Certificate of Incorporation of Targhee Ski Corp.
3.24 Bylaws of Targhee Ski Corp.
4.1 Indenture dated as of March 18, 1997 by and among Booth
Creek Ski Holdings, Inc., as Issuer, Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Booth Creek Ski Acquisition Corp., Ski Lifts, Inc., Grand
Targhee Incorporated, B-V Corporation, Targhee Company and
Targhee Ski Corp., as Subsidiary Guarantors, and Marine
Midland Bank, as trustee (including the form of 12 1/2%
Senior Note due 2007 and the form of Guarantee).
II-2
<PAGE> 209
4.2 Supplemental Indenture No. 1 to Indenture dated as of April
25, 1997 by and among Booth Creek Ski Holdings, Inc., as
Issuer, Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Booth Creek Ski Acquisition
Corp., Ski Lifts, Inc., Grand Targhee Incorporated, B-V
Corporation, Targhee Company and Targhee Ski Corp., as
Subsidiary Guarantors, and Marine Midland Bank, as trustee.
4.3 Registration Rights Agreement dated as of March 18, 1997 by
and among Booth Creek Ski Holdings, Inc., as Issuer, Trimont
Land Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Booth Creek Ski Acquisition Corp., Ski Lifts,
Inc., Grand Targhee Incorporated, B-V Corporation, Targhee
Company and Targhee Ski Corp., as Subsidiary Guarantors, and
CIBC Wood Gundy Securities Corp.
4.4 Securities Purchase Agreement dated as of March 13, 1997, by
and among Booth Creek Ski Holdings, Inc., Trimont Land
Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Booth Creek Ski Acquisition Corp. and Ski
Lifts, Inc. and CIBC Wood Gundy Securities Corp.
*5.1 Opinion of Winston & Strawn.
10.1 Amended and Restated Credit Agreement dated as of March 18,
1997 among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated and The First National Bank of
Boston.
10.2 Purchase and Sale Agreement dated as of August 30, 1996 by
and between Waterville Valley Ski Area, Ltd., Cranmore,
Inc., American Skiing Company and Booth Creek Ski
Acquisition Corp.
10.3 Subordinated Promissory Note dated November 27, 1996 issued
by Booth Creek Ski Acquisition Corp.,Waterville Valley Ski
Resort, Inc. and Mount Cranmore Ski Resort, Inc. to American
Skiing Company.
10.4 Stock Purchase and Indemnification Agreement dated as of
November 26, 1996 among Booth Creek Ski Holdings, Inc.,
Fibreboard Corporation, Trimont Land Company,
Sierra-at-Tahoe, Inc. and Bear Mountain, Inc.
10.5 Escrow Agreement dated December 3, 1996 by and among
Fibreboard Corporation, Booth Creek Ski Holdings, Inc. and
First Trust of California.
10.6 Purchase Agreement dated February 11, 1997 among Booth Creek
Ski Holdings, Inc., Grand Targhee Incorporated, Moritz O.
Bergmeyer and Carol Mann Bergmeyer.
10.7 Promissory Note dated February 11, 1997 issued by Grand
Targhee Incorporated to Booth Creek Ski Holdings, Inc.
10.8 Stock Purchase Agreement dated as of February 21, 1997 by
and between Booth Creek Ski Holdings, Inc., William W.
Moffett, Jr., David R. Moffett, Laurie M. Padden,
individually and as custodian for Christina Padden, Jennifer
Padden and Mary M. Padden, Stephen R. Moffett, Katharine E.
Moffett, Frances J. DeBruler, individually and as
representative of the Estate of Jean S. DeBruler, Jr.,
deceased, and Peggy Westerlund, and David R. Moffett, as
representative.
10.9 Preferred Stock Purchase Agreement dated as of February 21,
1997 by and between DRE, L.L.C., William W. Moffett, Jr.,
David R. Moffett, Laurie M. Padden, individually and as
custodian for Christina Padden, Jennifer Padden and Mary M.
Padden, Stephen R. Moffett, Katharine E. Moffett, Frances J.
DeBruler, individually and as representative of the Estate
of Jean S. DeBruler, Jr., deceased, and Peggy Westerlund and
David R. Moffett, as representative.
10.10 Management Agreement dated as of November 27, 1996 by and
between Booth Creek Ski Holdings, Inc. and Booth Creek, Inc.
10.11 Letter Agreement dated December 3, 1996 between Booth Creek
Ski Holdings, Inc. and Nanci N. Northway.
10.12 Ski Area Term Special Use Permit No. 4002/01 issued by the
United States Forest Service to Waterville Valley Ski
Resort, Inc.
10.13 Ski Area Term Special Use Permit No. 5123/01 issued by the
United States Forest Service to Bear Mountain, Inc.
II-3
<PAGE> 210
<TABLE>
<C> <S>
10.14 Ski Area Term Special Use Permit No. 4186/01 issued by the
United States Forest Service to Sierra-at-Tahoe, Inc.
10.15 Ski Area Term Special Use Permit No. 4033/01 issued by the
United States Forest Service to Grand Targhee Incorporated.
10.16 Ski Area Term Special Use Permit No. 4127/09 issued by the
United States Forest Service to Ski Lifts, Inc.
10.17 Annual Special Use Permit Nos. 4127/19 & 4127/19 issued by
the United States Forest Service to Ski Lifts, Inc.
12.1 Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
21.1 Subsidiaries of the Registrants.
23.1 Consents of Ernst & Young LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Feldhake & Associates, P.C.
24.1 Powers of Attorney (included on signature pages hereto).
25.1 Statement of Eligibility of Trustee.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
- ---------------
* To be filed by amendment.
(b) Financial Statement Schedules:
None.
ITEM 22. UNDERTAKINGS.
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time
shall be deemed to be the initial bonafide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) Each undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
II-4
<PAGE> 211
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the registrant
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form;
(5) Each registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrants pursuant to the provisions
described under Item 20 or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, each
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue;
(7) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective;
(8) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(9) Each undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request; and
(10) Each undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
II-5
<PAGE> 212
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
BOOTH CREEK SKI HOLDINGS, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 213
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
TRIMONT LAND COMPANY
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 214
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
SIERRA-AT-TAHOE, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 215
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
BEAR MOUNTAIN, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 216
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
BOOTH CREEK SKI ACQUISITION CORP.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 217
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
WATERVILLE VALLEY SKI RESORT, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 218
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
MOUNT CRANMORE SKI RESORT, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 219
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
SKI LIFTS, INC.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 220
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
GRAND TARGHEE INCORPORATED
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 221
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
B-V CORPORATION
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
/s/ JEFFREY J. JOYCE Director April 29, 1997
- ---------------------------------------------
Jeffrey J. Joyce
</TABLE>
<PAGE> 222
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
TARGHEE COMPANY
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 223
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Truckee,
State of California, as of April 29, 1997.
TARGHEE SKI CORP.
By: /s/ GEORGE N. GILLETT, JR.
------------------------------------
George N. Gillett, Jr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George N. Gillett, Jr. and Nanci N. Northway, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------------- Chief Executive Officer
George N. Gillett, Jr.
/s/ NANCI N. NORTHWAY Vice President and Chief Financial April 29, 1997
- --------------------------------------------- Officer
Nanci N. Northway
</TABLE>
<PAGE> 224
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.1 Articles of Incorporation of Booth Creek Ski Holdings, Inc.
3.2 Bylaws of Booth Creek Ski Holdings, Inc.
3.3 Articles of Incorporation of Trimont Land Company.
3.4 Bylaws of Trimont Land Company.
3.5 Articles of Incorporation of Sierra-at-Tahoe, Inc.
3.6 Bylaws of Sierra-at-Tahoe, Inc.
3.7 Articles of Incorporation of Bear Mountain, Inc.
3.8 Bylaws of Bear Mountain, Inc.
3.9 Articles of Incorporation of Booth Creek Ski Acquisition
Corp.
3.10 Bylaws of Booth Creek Ski Acquisition Corp.
3.11 Articles of Incorporation of Waterville Valley Ski Resort,
Inc.
3.12 Bylaws of Waterville Valley Ski Resort, Inc.
3.13 Articles of Incorporation of Mount Cranmore Ski Resort, Inc.
3.14 Bylaws of Mount Cranmore Ski Resort, Inc.
3.15 Articles of Incorporation of Ski Lifts, Inc.
3.16 Bylaws of Ski Lifts, Inc.
3.17 Articles of Incorporation of Grand Targhee Incorporated.
3.18 Bylaws of Grand Targhee Incorporated.
3.19 Articles of Incorporation of B-V Corporation.
3.20 Bylaws of B-V Corporation.
3.21 Articles of Incorporation of Targhee Company.
3.22 Bylaws of Targhee Company.
3.23 Articles of Incorporation of Targhee Ski Corp.
3.24 Bylaws of Targhee Ski Corp.
4.1 Indenture dated as of March 18, 1997 by and among Booth
Creek Ski Holdings, Inc., as Issuer, Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Booth Creek Ski Acquisition Corp., Ski Lifts, Inc., Grand
Targhee Incorporated, B-V Corporation, Targhee Company and
Targhee Ski Corp., as Subsidiary Guarantors, and Marine
Midland Bank, as trustee (including the form of 12 1/2%
Senior Note due 2007).
4.2 Supplemental Indenture No. 1 to Indenture dated as of April
25, 1997 by and among Booth Creek Ski Holdings, Inc., as
Issuer, Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Booth Creek Ski Acquisition
Corp., Ski Lifts, Inc., Grand Targhee Incorporated, B-V
Corporation, Targhee Company and Targhee Ski Corp., as
Subsidiary Guarantors, and Marine Midland Bank, as trustee.
4.3 Registration Rights Agreement dated as of March 18, 1997 by
and among Booth Creek Ski Holdings, Inc., as Issuer, Trimont
Land Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Booth Creek Ski Acquisition Corp., Ski Lifts,
Inc., Grand Targhee Incorporated, B-V Corporation, Targhee
Company and Targhee Ski Corp. as Subsidiary Guarantors and
CIBC Wood Gundy Securities Corp.
</TABLE>
<PAGE> 225
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.4 Securities Purchase Agreement dated as of March 13, 1997, by
and among Booth Creek Ski Holdings, Inc., Trimont Land
Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Booth Creek Ski Acquisition Corp. and Ski
Lifts, Inc. and CIBC Wood Gundy Securities Corp., as
amended.
*5.1 Opinion of Winston & Strawn
10.1 Amended and Restated Credit Agreement dated as of March 18,
1997 among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated and The First National Bank of
Boston.
10.2 Purchase and Sale Agreement dated as of August 30, 1996 by
and between Waterville Valley Ski Area, Ltd., Cranmore,
Inc., American Skiing Company and Acquisition.
10.3 Subordinated Promissory Note dated November 26, 1996 by
Booth Creek Ski Acquisition Corp.,Waterville Valley Ski
Resort, Inc. and Mount Cranmore Ski Resort, Inc. to American
Skiing Company.
10.4 Stock Purchase and Indemnification Agreement dated as of
November 26, 1996 among Booth Creek Ski Holdings, Inc.,
Fibreboard Corporation, Trimont Land Company,
Sierra-at-Tahoe, Inc. and Bear Mountain, Inc.
10.5 Escrow Agreement dated December 3, 1996 by and among
Fibreboard Corporation, Booth Creek Ski Holdings, Inc. and
First Trust of California.
10.6 Purchase Agreement dated February 11, 1997 among Booth Creek
Ski Holdings, Inc., Grand Targhee Incorporated, Moritz O.
Bergmeyer and Carol Mann Bergmeyer.
10.7 Promissory Note dated February 11, 1997 by Grand Targhee
Incorporated to Booth Creek Ski Holdings, Inc.
10.8 Stock Purchase Agreement dated as of February 21, 1997 by
and between Booth Creek Ski Holdings, Inc., William W.
Moffett, Jr., David R. Moffett, Laurie M. Padden,
individually and as custodian for Christina Padden, Jennifer
Padden and Mary M. Padden, Stephen R. Moffett, Katharine E.
Moffett, Frances J. DeBruler, individually and as
representative of the Estate of Jean S. DeBruler, Jr.,
deceased, and Peggy Westerlund, and David R. Moffett, as
representative.
10.9 Preferred Stock Purchase Agreement dated as of February 21,
1997 by and between DRE, L.L.C., William W. Moffett, Jr.,
David R. Moffett, Laurie M. Padden, individually and as
custodian for Christina Padden, Jennifer Padden and Mary M.
Padden, Stephen R. Moffett, Katharine E. Moffett, Frances J.
DeBruler, individually and as representative of the Estate
of Jean S. DeBruler, Jr., deceased, and Peggy Westerlund and
David R. Moffett, as representative.
10.10 Management Agreement dated as of November 27, 1996 by and
between Booth Creek Ski Holdings, Inc. and Booth Creek, Inc.
10.11 Letter Agreement dated December 3, 1996 between Booth Creek
Ski Holdings, Inc. and Nanci N. Northway.
10.12 Ski Area Term Special Use Permit No. 4002/01 issued by the
United States Forest Service to Waterville Valley Ski
Resort, Inc.
10.13 Ski Area Term Special Use Permit No. 5123/01 issued by the
United States Forest Service to Bear Mountain, Inc.
10.14 Ski Area Term Special Use Permit No. 4186/01 issued by the
United States Forest Service to Sierra-at-Tahoe, Inc.
10.15 Ski Area Term Special Use Permit No. 4033/01 issued by the
United States Forest Service to Grand Targhee Incorporated.
10.16 Ski Area Term Special Use Permit No. 4127/09 issued by the
United States Forest Service to Ski Lifts, Inc.
</TABLE>
<PAGE> 226
<TABLE>
<C> <S>
10.17 Annual Special Use Permit Nos. 4127/19 & 4127/19 issued by the United States Forest Service to Ski Lifts,
Inc.
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of the Registrants.
23.1 Consents of Ernst & Young LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Feldhake & Associates, P.C.
24.1 Powers of Attorney (included on signature pages hereto).
25.1 Statement of Eligibility of Trustee.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
</TABLE>
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* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
BOOTH CREEK SKI HOLDINGS, INC.,
A DELAWARE CORPORATION
FIRST. The name of the corporation is BOOTH CREEK SKI HOLDINGS, INC.
(hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal
or modification of the first sentence of this Article SEVENTH shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
[signature page follows]
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this 7th day of October, 1996.
/s/ Oscar A. David
------------------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
BOOTH CREEK SKI HOLDINGS, INC.
A DELAWARE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of
stockholders shall be held each year for the election of directors at such
date, time and place either within or without the State of Delaware as shall be
designated by the Board of Directors. Any other proper business may be
transacted at the annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders
may be called at any time by the Board of Directors, the Chairman (as
hereinafter defined), if any, the Vice Chairman, if any, or the President.
Each special meeting shall be held at such date, time and place either within
or without the State of Delaware as shall be designated by the person or
persons calling such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law,
whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the
certificate of incorporation, at each meeting of stockholders, the presence in
person or by proxy of the holders of a majority in voting power of the
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. For purposes of the foregoing, two or
more classes or series of capital stock shall be considered a single class if
the holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum, the stockholders so present and
represented may, by vote of the holders of a majority of the shares of capital
stock of the Corporation so present and represented, adjourn the meeting from
time to time until a quorum shall attend, and the provisions of Section 2.4 of
these By-laws shall apply to each such adjournment. Shares of its own capital
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited to
its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be
presided over by the Chairman, if any, or in his absence by the Vice Chairman,
if any, or in his absence by the President, or in the absence of the foregoing
persons by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary shall
act as secretary of the meeting, but in his absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be by written ballot.
Voting of stockholders for all other matters need not be
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<PAGE> 3
by written ballot unless so determined at a stockholders meeting by the vote of
the holders of a majority of the outstanding shares of each class of capital
sock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter submitted to a vote at the meeting. Unless
otherwise provided by law or the certificate of incorporation, the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at a meeting at which a quorum is present and
entitled to vote on the subject matter submitted to a vote at the meeting shall
be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
more than ten days after the date upon which the resolution fixing the record
date with respect to the taking of corporate action by written consent without
a meeting is adopted by the Board of Directors, nor more than sixty days prior
to any other action. If no record date is fixed: (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; (c) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when prior action by
the Board of Directors is required, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (d) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary
shall make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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<PAGE> 4
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided by law or by the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise
provided by law or the certificate of incorporation, the business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors. Unless otherwise provided by the certificate of
incorporation, the Board of Directors shall initially consist of one (1)
director and thereafter shall consist of such number of directors as the Board
of Directors shall from time to time designate. Unless otherwise provided by
the certificate of incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Corporation directed to the Board of
Directors or the Secretary. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of a majority of shares of capital stock then entitled to vote at
an election of directors. Whenever the holders of shares of any class or
series of capital stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series of capital stock and not to the vote of the holders of the
outstanding shares of capital stock as a whole. Unless otherwise provided by
the certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having a right to vote as a single class may be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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<PAGE> 5
directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such dates, times and places either within or
without the State of Delaware as the Board of Directors shall from time to time
determine.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman, the President or by any
member of the Board of Directors. Each special meeting shall be held at such
date, time and place either within or without the State of Delaware as shall be
fixed by the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting
of the Board of Directors shall be given which shall state the date, time and
place of the meeting. The written notice of any meeting shall be given at
least twenty-four hours in advance of the meeting to each director. Notice may
be given by letter, telegram, telex or facsimile and shall be deemed to have
been given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board
of Directors or any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or of such committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting pursuant to this by-law shall constitute presence
in person at such meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise
required by law, at each meeting of the Board of Directors, the presence of
one-third of the total number of directors shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors, unless the vote of a greater number is required by law or the
certificate of incorporation. In case at any meeting of the Board of Directors
a quorum shall not be present, the members of the Board of Directors present
may by majority vote to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman, or in his absence by the President, or
in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless
otherwise provided by the certificate of incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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<PAGE> 6
writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided
by the certificate of incorporation, the Board of Directors shall have the
authority to fix the compensation of directors, which compensation may include
the reimbursement of expenses incurred in connection with meetings of the Board
of Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member of such committee at any meeting thereof. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by the
Board of Directors, to the extent provided in a resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority to take any action which by law may only be taken by the Board of
Directors or to take any action with reference to: amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending these By-laws; and,
unless a resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the General Corporation Law of the State of
Delaware.
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<PAGE> 7
Section 4.3 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
adopt, amend and repeal rules for the conduct of its business. In the absence
of a resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable
after the annual meeting of stockholders in each year, the Board of Directors
shall elect from its membership or outside thereof a President and a Secretary.
The Board of Directors may also elect from its membership a Chairman and a Vice
Chairman, and from its membership or outside thereof one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers or agents as it may determine. Unless otherwise provided by the
certificate of incorporation, any number of offices may be held by the same
person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies.
Except as otherwise provided by the Board of Directors when electing any
officer, each officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his
election, or until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in these By-laws or in a resolution of the Board of Directors which
is not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer.
The Chairman of the Board and Chief Executive Officer (the "Chairman") shall be
the chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or she shall
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<PAGE> 8
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the powers
of the Board of Directors and the Chairman, shall have general charge of the
business, affairs and property of the Corporation and control over its
officers, agents and employees; and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, if any, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The President shall have such other powers and perform such
other duties as may be prescribed by the Chairman or the Board of Directors or
as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The
Secretary shall attend all meetings of the Board of Directors, all meetings of
the committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if
any, of the Corporation shall have such duties and powers as generally pertain
to their respective offices and such other duties and powers as the Board of
Directors shall from time to time delegate to each such officer. The Board of
Directors may require any officer, agent or employee to give security, by bond
or otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of each
officer shall be fixed by the Board of Directors and no officer shall be
prevented from receiving such compensation by virtue of his also being a
director.
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<PAGE> 9
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of
capital stock of the Corporation shall be entitled to have a certificate signed
by or in the name of the Corporation by the Chairman or Vice Chairman, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, if any, or the Secretary or an Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation
shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay
the expenses (including attorneys' fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
-9-
<PAGE> 10
by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director of officer is not entitled to be
indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on
any person by this Article VII shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation,
if any, to indemnify or to advance expenses to any person who was or is serving
at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of
the foregoing provisions of this Article VII shall not adversely affect any
right or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law, the
certificate of incorporation or these By-laws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business
-10-
<PAGE> 11
because the meeting is not lawfully called or convened. Unless otherwise
provided by the certificate of incorporation, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the
Corporation may be kept within or without the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs or any other information storage device provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended
or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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<PAGE> 1
EXHIBIT 3.3
RESTATED
ARTICLES OF INCORPORATION
Henry C. Schwarz and Michael R. Douglas certify that:
1. They are the president and the secretary, respectively, of TRIMONT LAND
COMPANY, a California corporation.
2. The articles of incorporation of this corporation are amended and restated
to read as follows:
ARTICLE I
The name of this corporation is TRIMONT LAND COMPANY.
ARTICLE II
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the
trust company business or the practice of a profession permitted to
be incorporated by the California Corporations Code.
ARTICLE III
This corporation is authorized to issue only one class of shares
of stock, of the total number of 10,000 shares, of the aggregate par
value of $1,000,000 and of the par value of $100 per share.
ARTICLE IV
Section 1. The liability of the directors of this corporation
for monetary damages shall be eliminated to the fullest extent
permissible under California law.
1.
<PAGE> 2
Section 2. The corporation is authorized to provide
indemnification of agents (as defined in Section 317 of the
California corporations Code) through bylaw provisions, agreements
with agents, vote of shareholders or disinterested directors or
otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to
applicable limits set forth in Section 204 of the California
Corporations Code with respect to actions for breach of duty to the
corporation and its shareholders.
3. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the board of directors.
4. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the required vote of shareholders in
accordance with Section 902 of the Corporations Code. The total
number of outstanding shares of the corporation is 250. The number
of shares voting in favor of the amendment equaled or exceeded the
vote required. The percentage vote required was more than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
DATE: December 17, 1991
/s/ Henry C. Schwarz
----------------------------------
Henry C. Schwarz, President
/s/ Michael R. Douglas, Secretary
-----------------------------------
Michael R. Douglas, Secretary
2.
<PAGE> 1
EXHIBIT 3.4
BYLAWS OF
TRIMONT LAND COMPANY
ARTICLE I. OFFICES
The principal office of the corporation in the state of California
shall be located in the county of San Francisco. The corporation may have such
other offices, either within or without the state of California, as the board
of directors may designate or as the business of the corporation may require
from time to time.
ARTICLE II. SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
shall be held on the fourth Friday in April at 1:00 p.m. commencing in 1979,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the annual meeting shall not be
held within 60 days of said time, or if no date has been designated for a
period of 15 months after the last annual meeting of the corporation, any
shareholder may apply to the superior court of the proper county for an order
mandating the holding of an annual meeting. The shares represented at such
meeting, either in person or by proxy, and entitled to vote thereat shall
constitute a quorum for the purpose of such meeting.
Section 2. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, may be called by the board, the chairman of the
board, the president or at the request of the holders of not less than ten
percent of all the outstanding shares of the corporation entitled to vote at
the meeting.
Section 3. Place of Meeting. The board of directors shall determine
the place of meeting for all annual and special meetings of the shareholders.
In the absence of any such determination, all meetings of shareholders shall be
held at the corporate offices of Trimont Land Company, 55 Francisco Street, San
Francisco, California.
<PAGE> 2
Section 4. Notice of Meeting. Written notice of each shareholders'
meeting shall be given not less than 10 nor more than 60 days before the date
of the meeting to each shareholder entitled to vote thereat. Such notice shall
state the place, date and hour of the meeting and (1) in the case of a special
meeting, the general nature of the business to be transacted, and no other
business may be transacted, or (2) in the case of the annual meeting, those
matters which the board, at the time of the mailing of the notice, intends to
present for action by the shareholders. The notice of any meeting at which
directors are to be elected shall include the names of nominees intended at the
time of the notice to be presented by management for election.
Notice of a shareholders' meeting or any report shall be given either
personally or by mail or other means of written communication, addressed to the
shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice; or if no such address appears or is given, at the place where the
principal executive office of the corporation is located or by publication at
least once in a newspaper of general circulation in the county in which the
principal executive office is located. The notice or report shall be deemed to
have been given at the time when delivered personally or deposited in the mail
or sent by other means of written communication. An affidavit of mailing of any
notice or report in accordance with the provisions of this section, executed by
the secretary, assistant secretary or any transfer agent, shall be prima facie
evidence of the giving of the notice or report.
If any notice or report addressed to the shareholder at the address
of such shareholder appearing on the books of the corporation is returned to
the corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice or report to the
shareholder at such address, all future notices or reports shall be deemed to
have been duly given
<PAGE> 3
without further mailing if the same shall be available for the shareholder upon
written demand of the shareholder at the principal executive office of the
corporation for a period of one year from the date of the giving of the notice
or report to all other shareholders.
Upon request in writing to the chairman of the board, president, vice
president or secretary by any person (other than the board) entitled to call a
special meeting of shareholders, the officer forthwith shall cause notice to be
given to the shareholders entitled to vote that a meeting will be held at a
time requested by the person or persons calling the meeting, not less than 35
nor more than 60 days after the receipt of the request. If the notice is not
given within 20 days after receipt of the request, the persons entitled to call
the meeting may give the notice or the superior court of the proper county
shall summarily order the giving of the notice, after notice to the corporation
giving it an opportunity to be heard.
When a shareholders' meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
45 days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
The transactions of any meeting of shareholders, however called and
noticed, and wherever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before or after the meeting, each of the persons entitled
to vote, not present in person or by proxy, signs a written waiver of notice or
a consent to the holding of the meeting or an approval of the minutes thereof.
All such waivers, consents and approvals shall be filed with the corporate
records or made a part of the minutes of the meeting. Attendance of
<PAGE> 4
a person at a meeting shall constitute a waiver of notice of and presence at
such meeting, except when the person objects, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened and except that attendance at a meeting is not a waiver of any
right to object to the consideration of matters required by this section to be
included in the notice but not so included, if such objection is expressly made
at the meeting. Neither the business to be transacted at nor the purpose of
any regular or special meeting of shareholders need be specified in any written
waiver of notice, consent to the holding of the meeting or approval of the
minutes thereof. However, any shareholder approval at a meeting, other than
unanimous approval by those entitled to vote, shall be valid only if the
general nature of the proposal so approved was stated in the notice of meeting
or in any written waiver of notice.
Section 5. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of less than one-third of the shares entitled to vote at the
meeting. In the absence of a quorum, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum, if any action taken (other
than adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 6. Proxies. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of
the corporation before or at the time of the
<PAGE> 5
meeting. No proxy shall be valid after 11 months from the date of its
execution, unless otherwise provided in the proxy.
Section 7. Voting of Shares. Each outstanding share of the
corporation's common stock shall be entitled to one vote upon each matter
submitted to a vote at a meeting of the shareholders.
Section 8. Voting of Shares by Certain Holders. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxyholder as the bylaws of such other corporation may
prescribe or, in the absence of such provision, as the board of such other
corporation may determine or, in the absence of such determination, by the
chairman of the board, president or any vice president of such other
corporation, or by any other person authorized to do so by the chairman of the
board, president or any vice president of such other corporation.
Shares held by an administrator, executor, guardian, conservator or
custodian may be voted by him, either in person or by proxy, without a transfer
of such shares into his name. Shares standing in the name of a trustee may be
voted by him, either in person or by proxy, but no trustee shall be entitled to
vote shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the nonage, unless a guardian of
<PAGE> 6
the minor's property has been appointed and written notice of such appointment
given to the corporation.
Shares of its own stock belonging to the corporation or held for its
benefit by another corporation in a fiduciary capacity or held by a corporation
in which the corporation holds a majority of the voting shares shall not be
voted at any meeting or counted in determining the total number of outstanding
shares at any given time.
Section 9. Informal Action by Shareholders. Any action required to
be taken at a meeting of the shareholders, or any other action which may be
taken at a meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its board of directors.
Section 2. Number, Tenure and Qualifications. The number of
directors of the corporation shall be three. Each director shall hold office
until the next annual meeting of the shareholders and until his successor shall
have been elected and qualified, unless sooner removed from office as
hereinafter provided. Directors need not be residents of the state of
California or shareholders of the corporation.
Section 3. Regular Meetings. Regular meetings of the board of
directors may be called by or at the request of the chairman, the president,
any vice president, the secretary or any two directors. A regular meeting of
the board of directors shall be held without other notice than as provided by
Section 5 of this Article, and at the same place as, the annual meeting of
shareholders. The board of directors may provide by resolution the time and
place, either within or without the state of California, for the holding of
additional regular meetings without other notice than such resolution.
<PAGE> 7
Section 4. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman, the president,
any vice president, the secretary or any two directors. The person or persons
authorized to call special meetings of the board of directors may fix any
place, either within or without the state of California, as the place for
holding any special meeting of the board of directors called by them.
Section 5. Notice. Notice of any special meeting shall be given at
least four days previously thereto by written notice mailed to each director or
48 hours previously thereto by notice delivered personally or mailed to each
director at his business or by telephone or telegraph. If mailed, such notice
shall be deemed to be delivered 48 hours after it is deposited in the United
States mail so addressed, with postage thereon prepaid. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawful1y called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting. The transactions of any meeting of the board of
directors, however called and noticed or wherever held, are as valid as though
made at a meeting duly held after regular call and notice, if a quorum is
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, a consent to holding the meeting, or
an approval of the minutes thereof. All such waivers, consents, or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 6. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting to another time and
<PAGE> 8
place. If the meeting is adjourned for more than 24 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
Section 7. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors.
Section 8. Vacancies. Any vacancy occurring in the board of
directors may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the board of directors, or by a sole
remaining director. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office and until a successor has been
elected and qualified.
The shareholders may elect a director at any time to fill any vacancy
not filled by the directors. Any such election by written consent other than
to fill a vacancy created by removal requires the consent of a majority of the
outstanding shares entitled to vote.
If, after the filling of any vacancy by the directors, the directors
then in office who have been elected by the shareholders shall constitute less
than a majority of the directors then in office, any holder or holders of an
aggregate of five percent or more of the total number of shares at the time
outstanding having the right to vote for such directors may call a special
meeting of shareholders, or such shareholders may apply to the superior court
of the proper county for an order mandating a special meeting of the
shareholders.
Any director may resign effective upon giving written notice to the
chairman of the board, the president, the secretary or the board of directors of
the corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes effective.
Section 9. Removal of Directors. Any or all of the directors may be
removed without cause if such removal is approved by a
<PAGE> 9
majority of the outstanding shares entitled to vote, except that no director
may be removed (unless the entire board is removed) when the votes cast against
removal, or not consenting in writing to such removal, would be sufficient to
elect such director if voted cumulatively at an election at which the same
total number of votes were cast (or, if such action is taken by written
consent, all shares entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent election were
then being elected.
Section 10. Informal Action by Directors. Any action required or
permitted to be taken at a meeting of the board of directors, may be taken
without a meeting if all members of the board shall individually or
collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the board of
directors. Such action by written consent shall have the same force and effect
as a unanimous vote of such directors.
ARTICLE IV. OFFICERS
Section 1. Number. The officers of the corporation shall be a
chairman or a president or both, one or more vice presidents (the number
thereof to be determined by the board of directors), a secretary and a chief
financial officer, each of whom shall be elected by the board of directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the board of directors. Any two or more offices may be
held by the same person, except the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the
corporation to be elected by the board of directors shall be elected annually
at the first meeting of the board of directors held after each annual meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall
<PAGE> 10
hold office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by
the board of directors may be removed by the board of directors whenever in its
judgment the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Chairman. The chairman shall be the chief executive
officer of the corporation, and under the direction of the board of directors,
shall have general direction of its business, policies and affairs. He shall
preside, when present, at all meetings of the shareholders and of the board of
directors. He and the president shall each have general power to execute
bonds, deeds and contracts in the name of the corporation and to affix the
corporate seal; to sign stock certificates; and to remove or suspend such
employees or agents as shall not have been appointed by the board of directors.
In the absence or disability of the chairman, his duties shall be performed and
his powers may be exercised by such other officer as shall be designated by the
board of directors.
Section 6. President. The president shall be the chief operation
officer of the corporation and, subject to the direction of the chairman and
the board of directors, shall have general management of its business,
properties and affairs.
Section 7. Vice Presidents. The several vice presidents shall
perform all such duties and services as shall be assigned to or required of
them, from time to time, by the board of directors, the chairman or the
president, respectively, and unless their authority be expressly limited shall
act in the order of their election in the
<PAGE> 11
place of the president, exercising all his powers and performing his duties,
during his absence or disability. The board of directors, however, may from
time to time designate the relative positions of the vice presidents of the
corporation and assign to any one or more of them such particular duties as the
board of directors may think proper.
Section 8. Secretary. The secretary shall: (a) keep the minutes of
the shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
a register of the post office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) sign with the chairman or
the president, or a vice president, certificates for shares of the corporation
the issuance of which shall have been authorized by resolution of the board of
directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the chairman, the president or by the board of directors.
Section 9. Chief Financial Officer. The chief financial officer
shall have the care and custody of all moneys, funds and securities of the
corporation, and shall deposit or cause to be deposited all funds of the
corporation in and with such depositaries as shall, from time to time, be
designated by the board of directors or by such officers of the corporation as
may be authorized by the board of directors to make such designation. He shall
have power to sign stock certificates; to endorse for deposit or collection, or
otherwise, all checks, drafts, notes, bills of exchange or other commercial
paper payable to the corporation, and to give proper receipts or discharges
therefor. He shall keep all books of account relating to the business
<PAGE> 12
of the corporation, and shall render a statement of the corporation's
financial condition whenever required so to do by the board of directors, the
chairman or the president. In the absence of the chief financial officer, the
board of directors shall appoint an assistant financial officer to perform his
duties.
Section 10. Assistant Secretaries and Assistant Financial Officers.
The assistant secretaries, when authorized by the board of directors, may sign
with the chairman or the president or a vice president, certificates for shares
of the corporation, the issuance of which shall have been authorized by a
resolution of the board of directors. The assistant financial officers shall,
respectively, if required by the board of directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
board of directors shall determine. The assistant secretaries and assistant
financial officers, in general, shall perform such duties as shall be assigned
to them by the secretary or the chief financial officer, respectively, or by
the chairman or the president or the board of directors.
Section 11. Salaries. The salaries of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
<PAGE> 13
Section 3. Checks, Drafts and Similar Instruments. All checks,
drafts or other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall be signed by such
officer or officers, agent or agents of the corporation and in such manner as
shall from time to time be determined by resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as the board of directors
may select.
ARTICLE VI. CERTIFICATES FOR SHARES
AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
board of directors. Such certificates shall be signed by the chairman or the
president or a vice president and by the chief financial officer or an
assistant financial officer or the secretary or an assistant secretary. Any or
all of the signatures on the certificate may be facsimile. All certificates
for shares shall be consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented thereby are issued,
with the number of shares and date of issue, shall be entered on the stock
transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or mutilated
certificate a new one may be issued therefor on such terms and indemnity to the
corporation as the board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the corporation
by the holder of record thereof or by his legal representatives, who shall
furnish proper evidence to authority to transfer, or
<PAGE> 14
by his attorney thereunto authorized by power of attorney duly executed and
filed with the secretary of the corporation, and on surrender for cancellation
of the certificate for such shares. The person in whose name shares stand on
the books of the corporation shall be deemed by the corporation to be the owner
thereof for all purposes.
ARTICLE VII. INDEMNIFICATION OF
DIRECTORS AND OFFICERS
Section 1. Definitions. For the purposes of this Article VII,
"agent" means any person who is or was a director, officer, employee or other
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise, or
was a director, officer, employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation; "proceeding" means any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under Section 4 or paragraph 3 of Section 5 of this Article.
Section 2. Indemnification Other Than Derivative Action. The
corporation shall have power to indemnify any person who was or is a party or
is threatened to be made a party to any proceeding (other than an action by or
in the right of the corporation to procure a judgment in its favor) by reason
of the fact that such person is or was an agent of the corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. The
termination of any proceeding by judgment, order,
<PAGE> 15
settlement, conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in the best
interests of the corporation or that the person had reasonable cause to believe
that the person's conduct was unlawful.
Section 3. Indemnification: Derivative Action. The corporation
shall have power to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that such person is or was an agent of the corporation, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of such action if such person acted in good faith, in a manner
such person believed to be in the best interests of the corporation and with
such care, including reasonably inquiry, as an ordinarily prudent person in a
like position would use under similar circumstances. No indemnification shall
be made under this section:
(1) In respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation in
the performance of such person's duty to the corporation, unless and
only to the extent that the court in which such proceeding is or was
pending shall determine upon application that, in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for the expenses which such court shall
determine;
(2) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval.
<PAGE> 16
Section 4. Indemnification as a Matter of Right. To the extent that
an agent of the corporation has been successful on the merits in defense of any
proceeding referred to in Sections 2 or 3 of this Article, or in defense of any
claim, issue or matter therein, the agent shall be indemnified against expenses
actually and reasonably incurred by the agent in connection therewith.
Section 5. Indemnification Other Than as a Matter of Right. Except
as provided in Section 4 of this Article, any indemnification under this
section shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in Sections 2 or 3 of this Article by:
(1) A majority vote of a quorum consisting of directors who are
not parties to such proceeding;
(2) Approval of the shareholders, with the shares owned by the
person to be indemnified not being entitled to vote thereon; or
(3) The court in which such proceeding is or was pending upon
application made by the corporation or the agent or the attorney or
other person rendering services in connection with the defense,
whether or not such application by the agent, attorney or other
person is opposed by the corporation.
Section 6. Payment of Expenses in Advance. Expenses incurred in
defending any proceeding may be advanced by the corporation prior to the final
disposition of such proceeding upon receipt of an undertaking by or on behalf
of the agent to repay such amount unless it shall be determined ultimately that
the agent is entitled to be indemnified as authorized in this Article. No
indemnification or advance shall be made under this Article, except as provided
in Section 4 or paragraph 3 of Section 5, in any circumstance where it appears:
<PAGE> 17
(1) That it would be inconsistent with a resolution of the
shareholders or an agreement in effect at the time of the accrual of
the alleged cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 7. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation has the power to indemnify
him against such liability under the provisions of this Article.
Section 8. Indemnification of Fiduciaries of Employee Benefit Plans.
The corporation shall have the power to indemnify and purchase and maintain
insurance on behalf of any fiduciary of any corporate pension, profit sharing,
share bonus, share purchase, share option, savings, thrift plan, and/or any
other retirement, incentive and benefit plans and trusts.
Section 9. Right of Indemnification Not Exclusive. The foregoing
right of indemnification shall be in addition to and not exclusive of any and
all other rights as to which any such director or officer may he entitled under
any provision of the corporation's articles of incorporation, agreement,
statute, vote of shareholders or otherwise.
ARTICLE VIII. SEAL
The seal, the impression of which appears in the margin opposite this
Article, is hereby adopted as the official seal of this corporation.
<PAGE> 18
ARTICLE IX. AMENDMENTS
These bylaws or any portion hereof may be amended by the board of
directors.
<PAGE> 19
AMENDMENT TO THE BYLAWS
OF TRIMONT LAND COMPANY
DOING BUSINESS AS NORTHSTAR-AT-TAHOE
By unanimous written consent dated December 3, 1996, the Board of
Directors of Trimont Land Company, a California corporation doing business as
Northstar-at-Tahoe (the "Corporation"), amended and restated the following
Articles of the bylaws of the Corporation as follows:
I. Section 2 of Article 3 of the bylaws of the Corporation is amended
and restated in its entirety as follows:
"Section 2. Number, Tenure and Qualifications. The number of
directors shall be not less than one (1) nor more than seven (7), with the
exact number of directors to be filled by a resolution adopted by a majority of
the board of directors or by the stockholders at a meeting. Each director
shall hold office until the next annual meeting of the shareholders and until
his successor shall have been elected and qualified, unless sooner removed from
office as hereinafter provided. Directors need not be residents of the state
of California or shareholders of the corporation."
II. Section 5 of Article 4 of the bylaws of the Corporation is amended
and restated in its entirety as follows:
"Section 5. Chairman. The Chairman of the board of directors
("Chairman") , if such an officer be elected, shall, if present, perform such
other powers and duties as may be assigned to him or her from time to time by
the board of directors. If there is no President, the Chairman shall also be
the Chief Executive Officer of the corporation and shall have the powers and
duties prescribed in Section 6 of this Article 4.
III. Section 6 of Article 4 of the bylaws of the Corporation is amended
and restated in its entirety as follows:
"Section 6. President. Subject to such supervisory powers, if any,
as may be given by the board of directors to the Chairman, if there be such an
officer, the President shall be the Chief Executive Officer of the corporation,
shall preside at all meetings of the board of directors, shall have general and
active management of the business of the corporation and shall see that all
orders and resolutions of the board of directors are carried into effect. He
or she shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation."
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
SIERRA-AT-TAHOE, INC.
ARTICLE I
The name of the corporation is Sierra-at-Tahoe, Inc. (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue one class of shares to be
designated Common Stock ("Common Stock"). The total number of shares of stock
which the Corporation shall have authority to issue is one thousand (1,000)
shares of Common Stock, and the par value of each share is One Cent ($.01),
amounting in the aggregate to Ten Dollars ($10.00).
ARTICLE V
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware:
(A) The Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the Bylaws of the corporation.
(B) Elections of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.
(C) The books of the Corporation may be kept at such place within or
without the State of Delaware as the Bylaws of the Corporation may provide or
as may be designated from time to time by the Board of Directors of the
Corporation.
<PAGE> 2
ARTICLE VI
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
hereafter amended to authorize, with the approval of a corporation's
stockholders, further reductions in the liability of the corporation's
directors for breach of fiduciary duty, then a director of the Corporation
shall not be liable for any such breach to the fullest extent permitted by the
Delaware General Corporation Law as so amended.
ARTICLE VII
(A) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director, officer, employee or agent, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection herewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (B) of this Article VII, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
(B) If a claim under paragraph (A) of this Article VII is not paid
in full by the Corporation within 30 days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to
2
<PAGE> 3
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant or the amount
claimed.
(C) The right to indemnification conferred in this Article VII shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
Bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
(D) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
ARTICLE VIII
The Corporation is to have perpetual existence.
ARTICLE IX
The name and mailing address of the Incorporator is: Vinella I. Sido,
1000 Burnett Avenue, Suite 410, Concord, CA 94520.
ARTICLE X
The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon a stockholder herein are
granted subject to this reservation. Notwithstanding the foregoing, the
provisions set forth in Articles VI and VII may not be amended or repealed in
any respect unless such amendment or repeal is approved by the affirmative vote
of not less than sixty-six and sixty-seven hundredths percent (66.67%) of the
total voting power of all outstanding shares of stock in this Corporation
entitled to vote thereon. Any repeal or modification of the provisions of
Articles VI or VII by the stockholders of the Corporation shall not adversely
affect any right or protection of a director, officer, employee or agent of the
Corporation existing at the time of such repeal or modification.
3
<PAGE> 4
I, the undersigned, being the Incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 20th day of May, 1993.
/s/ Vinella I. Sido
-----------------------
Vinella I. Sido
Incorporator
4
<PAGE> 1
EXHIBIT 3.6
B Y - L A W S
OF
SIERRA-AT-TAHOE, INC.
(a Delaware corporation)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 - Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Registered Office . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Offices . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - Meeting of Stockholders . . . . . . . . . . . . . . . . . . . 1
2.1 Place of Meeting . . . . . . . . . . . . . . . . . . . . 1
2.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . 1
2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . 1
2.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . 2
2.5 Business Matter of a Special Meeting . . . . . . . . . . 2
2.6 List of Stockholders . . . . . . . . . . . . . . . . . . 2
2.7 Organization and Conduct of Business . . . . . . . . . . 3
2.8 Quorum and Adjournments . . . . . . . . . . . . . . . . 3
2.9 Voting Rights . . . . . . . . . . . . . . . . . . . . . 3
2.10 Majority Vote . . . . . . . . . . . . . . . . . . . . . 3
2.11 Record Date for Stockholder Notice and Voting . . . . . 3
2.12 Proxies . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Inspectors of Election . . . . . . . . . . . . . . . . . 4
2.14 Action Without a Meeting . . . . . . . . . . . . . . . . 4
ARTICLE 3 - Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Number; Qualifications . . . . . . . . . . . . . . . . . 5
3.2 Resignation and Vacancies . . . . . . . . . . . . . . . 5
3.3 Removal of Directors . . . . . . . . . . . . . . . . . . 5
3.4 Powers . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Place of Meetings . . . . . . . . . . . . . . . . . . . 6
3.6 Annual Meetings . . . . . . . . . . . . . . . . . . . . 6
3.7 Regular Meetings . . . . . . . . . . . . . . . . . . . . 6
3.8 Special Meetings . . . . . . . . . . . . . . . . . . . . 6
3.9 Quorum and Adjournments . . . . . . . . . . . . . . . . 7
3.10 Action Without a Meeting . . . . . . . . . . . . . . . . 7
3.11 Telephone Meetings . . . . . . . . . . . . . . . . . . . 7
3.12 Waiver of Notice . . . . . . . . . . . . . . . . . . . . 7
3.13 Fees and Compensation of Directors . . . . . . . . . . . 7
3.14 Rights of Inspection . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 - Committees of Directors . . . . . . . . . . . . . . . . . . . 8
4.1 Selection . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Power . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Committee Minutes . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Officers Designated . . . . . . . . . . . . . . . . . . 9
5.2 Appointment of Officers . . . . . . . . . . . . . . . . 9
5.3 Subordinate Officers . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5.4 Removal and Resignation of Officers . . . . . . . . . . 9
5.5 Vacancies in Offices . . . . . . . . . . . . . . . . . . 9
5.6 Compensation . . . . . . . . . . . . . . . . . . . . . . 9
5.7 The Chairman of the Board . . . . . . . . . . . . . . . 10
5.8 The President . . . . . . . . . . . . . . . . . . . . . 10
5.9 The Vice President . . . . . . . . . . . . . . . . . . . 10
5.10 The Secretary . . . . . . . . . . . . . . . . . . . . . 10
5.11 The Assistant Secretary . . . . . . . . . . . . . . . . 11
5.12 The Treasurer . . . . . . . . . . . . . . . . . . . . . 11
5.13 The Assistant Treasurer . . . . . . . . . . . . . . . . 11
ARTICLE 6 - Stock Certificates . . . . . . . . . . . . . . . . . . . . . 11
6.1 Certificates for Shares . . . . . . . . . . . . . . . . 11
6.2 Signatures on Certificates . . . . . . . . . . . . . . . 12
6.3 Transfer of Stock . . . . . . . . . . . . . . . . . . . 12
6.4 Registered Stockholders . . . . . . . . . . . . . . . . 12
6.5 Record Date. . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Lost, Stolen or Destroyed Certificates . . . . . . . . . 12
ARTICLE 7 - Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8 - General Provisions . . . . . . . . . . . . . . . . . . . . . 13
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . 13
8.2 Dividend Reserve . . . . . . . . . . . . . . . . . . . . 13
8.3 Annual Statement . . . . . . . . . . . . . . . . . . . . 14
8.4 Checks . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.5 Corporate Seal . . . . . . . . . . . . . . . . . . . . . 14
8.6 Execution of Corporate Contracts and Instruments . . . . 14
ARTICLE 9 - Indemnification . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Actions Other than by or in the Right of
the Corporation . . . . . . . . . . . . . . . . . . . . 14
9.2 Actions by or in the Right of the Corporation . . . . . 15
9.3 Success on the Merits . . . . . . . . . . . . . . . . . 15
9.4 Specific Authorization . . . . . . . . . . . . . . . . . 15
9.5 Advance Payment . . . . . . . . . . . . . . . . . . . . 15
9.6 Non-Exclusivity . . . . . . . . . . . . . . . . . . . . 16
9.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . 16
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . 16
9.9 Intent of Article . . . . . . . . . . . . . . . . . . . 16
ARTICLE 10 - Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
B Y - L A W S
OF
SIERRA-AT-TAHOE, INC.
(a Delaware corporation)
ARTICLE 1
Offices
1.1 Registered Office. The registered office of the Corporation
shall be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, and
the name of the registered agent in charge thereof is The Corporation Trust
Company.
1.2 Additional Offices. The Corporation may also have offices at
such other places, either within or without the State of Delaware, as the Board
of Directors (the "Board") may from time to time designate or the business of
the Corporation may require.
ARTICLE 2
Meeting of Stockholders
2.1 Place of Meeting. All meetings of the stockholders for the
election of directors shall be held at the principal office of the Corporation,
at such place as may be fixed from time to time by the Board or at such other
place either within or without the State of Delaware as shall be designated
from time to time by the Board and stated in the notice of the meeting.
Meetings of stockholders for any purpose may be held at such time and place
within or without the State of Delaware as the Board may fix from time to time
and as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
2.2 Annual Meeting. Annual meetings of stockholders shall be held
each year at such date and time as shall be designated from time to time by the
Board and stated in the notice of the meeting. At such annual meetings, the
stockholders shall elect a Board and transact such other business as may
properly be brought before the meetings.
2.3 Special Meetings. Special meetings of the stockholders may be
called for any purpose or purposes, unless otherwise prescribed by the statute
or by the Certificate of Incorporation, at the request of the Chairman of the
Board, the
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President or the Board. Such request shall state the purpose or purposes of
the proposed meeting.
2.4 Notice of Meetings. Written notice of stockholders' meetings,
stating the place, date and time of the meeting and the purpose or purposes for
which the meeting is called, shall be given to each stockholder entitled to
vote at such meeting not less than ten (10) nor more than sixty (60) days prior
to the meeting.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
2.5 Business Matter of a Special Meeting. Business transacted at
any special meeting of stockholders shall be limited to the purposes stated in
the notice.
2.6 List of Stockholders. The officer in charge of the stock
ledger of the Corporation or the transfer agent shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meting arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, at a place
within the city where the meeting is to be held, which place, if other than the
place of meeting, shall be specified in the notice of the meeting. The list
shall also be produced and kept at the place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present in person
thereat.
2.7 Organization and Conduct of Business. The Chairman of the
Board or, in his or her absence, the President of the Corporation or, in their
absence, such person as the Board may have designated or, in the absence of such
a person, such person as may be chosen by the holders of a majority of the
shares entitled to vote who are present, in person or by proxy, shall call to
order any meeting of the stockholders and act as Chairman of the meeting. In
the absence of the Secretary of the Corporation, the Secretary of the meeting
shall be such person as the Chairman appoints.
The Chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seems to him or her in order.
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2.8 Quorum and Adjournments. Except where otherwise provided by
law or the Certificate of Incorporation or these By-Laws, the holders of a
majority of the stock issued and outstanding and entitled to vote, present in
person or represented in proxy, shall constitute a quorum at all meetings of the
stockholders. The stockholders present at a duly called or held meeting at
which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to have less than a quorum
if any action taken (other than adjournment) is approved by at least a majority
of the shares required to constitute a quorum. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If, however,
a quorum shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat who are present in person or
represented by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented.
2.9 Voting Rights. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder.
2.10 Majority Vote. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation or of these By-Laws, a
different vote is required in which case such express provision shall govern
and control the decision of such question.
2.11 Record Date for Stockholder Notice and Voting. For purposes of
determining the stockholders entitled to notice of any meeting or to vote, or
entitled to receive payment of any dividend or other distribution, or entitled
to exercise any right in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting nor more than' sixty (60) days
before any other action.
If the Board does not so fix a record date, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
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2.12 Proxies. Every person entitled to vote for directors or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
Secretary of the Corporation. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by
a writing delivered to the Corporation stating that the proxy is revoked or by
a subsequent proxy executed by, or attendance at the meeting and voting in
person by, the person executing the proxy; or (ii) written notice of the death
or incapacity of the maker of that proxy is received by the Corporation before
the vote pursuant to that proxy is counted; provided, however, that no proxy
shall be valid after the expiration of eleven months from the date of the
proxy, unless otherwise provided in the proxy.
2.13 Inspectors of Election. Before any meeting of stockholders,
the Board may appoint any person other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chairman of the meeting may, and on the request
of any stockholder or a stockholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3) If inspectors are appointed at a meeting on the request of one or
more stockholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon
the request of any stockholder or a stockholder's proxy shall, appoint a person
to fill that vacancy.
2.14 Action Without a Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
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ARTICLE 3
Directors
3.1 Number; Qualifications. The number of directors which shall
constitute the whole board shall not be less than three (3) nor more than seven
(7), with the exact number of directors to be filled by a resolution adopted by
a majority of the board of directors or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.2 of this Article, and each
director elected shall hold office until his or her successor is elected and
qualified. Directors need not be stockholders.
3.2 Resignation and Vacancies. A vacancy or vacancies in the Board
shall be deemed to exist in the case of the death, resignation or removal of
any director, or if the authorized number of directors be increased. Vacancies
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director, unless otherwise provided in the
Certificate of Incorporation. The stockholders may elect a director or
directors at any time to fill any vacancy or vacancies not filled by the
directors. If the Board accepts the resignation of a director tendered to take
effect at a future time, the Board shall have power to elect a successor to
take office when the resignation is to become effective. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
3.3 Removal of Directors. Unless otherwise restricted by statute,
the Certificate of Incorporation or these By-Laws, any director or the entire
Board may be removed, with or without cause, by the holders of at least a
majority of the shares entitled to vote at an election of directors.
3.4 Powers. The business of the Corporation shall be managed by or
under the direction of the Board which may exercise all such powers of the
Corporation and do all such lawful acts and things which are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
Without prejudice to these general powers, and subject to the same
limitations, the directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the
Corporation; prescribe any powers and duties for them that are consistent with
law, with the Certificate of Incorporation, and with these By-Laws; fix their
compensation; and require from them security for faithful service;
(b) Confer upon any office the power to appoint, remove and
suspend subordinate officers, employees and agents;
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(c) Change the registered office or the principal business office in
the State of Delaware or any other state from one location to another; cause
the Corporation to be qualified to do business in any other state, territory,
dependency or country and conduct business within or without the State of
Delaware; and designate any place within or without the State of Delaware for
the holding of any stockholders meeting, or meetings, including annual
meetings;
(d) Adopt, make, and use a corporate seal; prescribe the forms of
certificates of stock; and alter the form of the seal and certificates;
(e) Authorize the issuance of shares of stock of the Corporation on
any lawful terms, in consideration of money paid, labor done, services actually
rendered, debts or securities cancelled, tangible or intangible property
actually received;
(f) Borrow money and incur indebtedness on behalf of the
Corporation, and cause to be executed and delivered for the Corporation's
purposes, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations and other evidences of debt and
securities;
(g) Declare dividends from time to time in accordance with law;
(h) Adopt from time to time such stock option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine; and
(i) Adopt from time to time regulations not inconsistent with
these By-Laws for the management of the Corporation's business and affairs.
3.5 Place of Meetings. The Board may hold meetings, both regular
and special, either within or without the State of Delaware.
3.6 Annual Meetings. The annual meetings of the Board shall be
held immediately following the annual meeting of stockholders, and no notice of
such meeting shall be necessary to the Board, provided a quorum shall be
present. The annual meetings shall be for the purposes of organization, and an
election of officers and the transaction of other business.
3.7 Regular Meetings. Regular meetings of the Board may be held
without notice at such time and place as may be determined from time to time by
the Board.
3.8 Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, the President, a Vice
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President or a majority of the Board upon one (1) days' notice to each
director.
3.9 Quorum and Adjournments. At all meetings of the Board, a
majority of the directors then in office shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board, except as
may otherwise be specifically provided by law or the Certificate of
Incorporation. If a quorum is not present at any meeting of the Board, the
directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting at which the adjournment is taken, until
a quorum shall be present. A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved of by at least a majority of the required
quorum for that meeting.
3.10 Action Without a Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be
taken without a meeting, if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
3.11 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any member of the Board or any
committee may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
3.12 Waiver of Notice. Notice of a meeting need not be given to
any director who signs a waiver of notice or a consent to holding the meeting
or an approval of the minutes thereof, whether before or after the meeting, or
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such director. All such waivers, consents
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
3.13 Fees and Compensation of Directors. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, the Board
shall have the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting of the Board
and may be paid a fixed sum for attendance at each meeting of the Board or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
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3.14 Rights of Inspection. Every director shall have the absolute
right at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
ARTICLE 4
Committees of Directors
4.1 Selection. The Board may, by resolution passed by a majority
of the entire Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board to act at the meeting in the place of any
such absent or disqualified member.
4.2 Power. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board as provided
in Section 151(a) of the General Corporation Law of Delaware, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending the By-Laws of the Corporation; and, unless
the resolution or the Certificate of Incorporation expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board.
4.3 Committee Minutes. Each committee shall keep
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regular minutes of its meetings and report the same to the Board when required.
ARTICLE 5
Officers
5.1 Officers Designated. The officers of the Corporation shall be
chosen by the Board and shall be a President, a Secretary and a Treasurer. The
Board may also choose a Chairman of the Board, one or more Vice Presidents, and
one or more assistant Secretaries and assistant Treasurers. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
or these By-Laws otherwise provide.
5.2 Appointment of Officers. The officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Section 5.3 or 5.5 of this Article 5, shall be appointed by the Board, and each
shall serve at the pleasure of the Board, subject to the rights, if any, of an
officer under any contract of employment.
5.3 Subordinate Officers. The Board may appoint, and may empower
the President to appoint, such other officers and agents as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the By-Laws or as the
Board may from time to time determine.
5.4 Removal and Resignation of Officers. Subject to the rights,
if any, or an officer under any contract of employment, any officer may be
removed, either with or without cause, by an affirmative vote of the majority
of the Board, at any regular or special meeting of the Board, or, except in
case of an officer chosen by the Board, by any officer upon whom such power of
removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.
5.5 Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be
filled in the manner prescribed in these By-Laws for regular appointment to
that office.
5.6 Compensation. The salaries of all officers of the
Corporation shall be fixed from time to time by the Board and no officer shall
be prevented from receiving a salary because he or she is also a director of
the Corporation.
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5.7 The Chairman of the Board. The Chairman of the Board, if such
an officer be elected, shall, if present, perform such other powers and duties
as may be assigned to him or her from time to time by the Board. If there is
no President, the Chairman of the Board shall also be the Chief Executive
Officer of the Corporation and shall have the powers and duties prescribed in
Section 5.8 of this Article 5.
5.8 The President. Subject to such supervisory powers, if any, as
may be given by the Board to the Chairman of the Board, if there be such an
officer, the President shall be the Chief Executive Officer of the Corporation,
shall preside at all meetings of the stockholders and in the absence of the
Chairman of the Board, or if there be none, at all meetings of the Board, shall
have general and active management of the business of the Corporation and shall
see that all orders and resolutions of the Board are carried into effect. He
or she shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board to some other officer or
agent of the Corporation.
5.9 The Vice President. The Vice President (or in the event there
be more than one, the Vice Presidents in the order designated by the directors,
or in the absence of any designation, in the order of their election), shall,
in the absence of the President or in the event of his or her disability or
refusal to act, perform the duties of the President, and when so acting, shall
have the powers of and subject to all the restrictions upon the President. The
Vice President(s) shall perform such other duties and have such other powers as
may from time to time be prescribed for them by the Board, the President, the
Chairman of the Board or these By-Laws.
5.10 The Secretary. The Secretary shall attend all meetings of the
Board and the stockholders and record all votes and the proceedings of the
meetings in a book to be kept for that purpose and shall perform like duties
for the standing committees, when required. The Secretary shall give, or cause
to be given, notice of all meetings of stockholders and special meetings of the
Board, and shall perform such other duties as may from time to time be
prescribed by the Board, the Chairman of the Board or the President, under
whose supervision he or she shall act. The Secretary shall have custody of the
seal of the Corporation, and the Secretary, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and, when so
affixed, the seal may be attested by his or her signature or by the signature
of such Assistant Secretary. The Board may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing thereof
by his or her signature. The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation's transfer agent
or registrar, as determined by resolution of the Board, a share register, or a
duplicate share register, showing the names of
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all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same and the number
and date of cancellation of every certificate surrendered for cancellation.
5.11 The Assistant Secretary. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order designated by the
Board (or in the absence of any designation, in the order of their election)
shall, in the absence of the Secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as may from time
to time be prescribed by the Board.
5.12 The Treasurer. The Treasurer shall have the custody of the
Corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board. The
Treasurer shall disburse the funds of the Corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and the Board, at its regular meetings, or when the Board so
requires, an account of all his or her transactions as Treasurer and of the
financial condition of the Corporation.
5.13 The Assistant Treasurer. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order designated by the
Board (or in the absence of any designation, in the order of their election)
shall, in the absence of the Treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as may from time
to time be prescribed by the Board.
ARTICLE 6
Stock Certificates
6.1 Certificates for Shares. The shares of the Corporation shall
be represented by certificates or shall be uncertificated. Certificates shall
be signed by, or in the name of the Corporation by, the Chairman of the Board,
or the President or a Vice President and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation.
Within a reasonable time after the issuance or transfer of uncertified
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required by the General Corporation Law of
the State of Delaware or a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of
each class of stock or series thereof and the qualifications,
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limitations or restrictions of such preferences and/or rights.
6.2 Signatures on Certificates. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
6.3 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate of shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated share, such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or
certificated shares shall be made to the person entitled thereto and the
transaction shall be recorded upon the books of the Corporation.
6.4 Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a percent registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
6.5 Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to receive notice of, or to vote at,
any meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or to
exercise any rights in respect of any change, conversion, or exchange of stock
or for the purpose of any lawful action, the Board may fix, in advance, a
record date which shall not be more than sixty (60) nor less than ten (10) days
prior to the date of such meeting, nor more than sixty (60) days prior to the
date of any other action. A determination of stockholders of record entitled
to notice or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
6.6 Lost, Stolen or Destroyed Certificates. The Board may direct
that a new certificate or certificates be issued to
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replace any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing the issue of a new certificate or certificates,
the Board may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of the lost, stolen or destroyed certificate or
certificates, or his or her legal representative, to advertise the same in such
manner as it shall require, and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
ARTICLE 7
Notices
7.1 Notice. Whenever, under the provision of the statutes or of
the Certificate of Incorporation or of these By-Laws, notice is required to be
given to any director or stockholder it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his or her address as it appears on the records of
the Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram or telephone.
7.2 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE 8
General Provisions
8.1 Dividends. Dividends upon the capital stock of the
Corporation, subject to any restrictions contained in the General Corporation
Laws of Delaware or the provisions of the Certificate of Incorporation, if any,
may be declared by the Board at any regular or special meeting. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation.
8.2 Dividend Reserve. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the
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<PAGE> 17
interest of the Corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
8.3 Annual Statement. The Board shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition
of the Corporation.
8.4 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
8.5 Corporate Seal. The Board may provide a suitable seal,
containing the name of the Corporation, which seal shall be in charge of the
Secretary. If and when so directed by the Board or a committee thereof,
duplicates of the seal may be kept and used by the Treasurer or by an Assistant
Secretary or Assistant Treasurer.
8.6 Execution of Corporate Contracts and Instruments. The Board,
except as otherwise provided in these By-Laws, may authorize any officer or
officers, or agent or agents, to enter into any contract or execute any
instrument in the name of an on behalf of the Corporation; such authority may
be general or confined to specific instances. Unless so authorized or ratified
by the Board or within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
ARTICLE 9
Indemnification
9.1 Actions Other than by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceedings, had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its
14
<PAGE> 18
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
9.2 Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him or her in connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
9.3 Success on the Merits. To the extent that any person
described in Sections 9.1 or 9.2 of this Article 9 has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
said Sections, or in defense of any claim, issue or matter therein, he or she
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
9.4 Specific Authorization. Any indemnification under Sections
9.1 or 9.2 of this Article 9 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of any person described in said Sections is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in said Sections. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the Corporation.
9.5 Advance Payment. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action,
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<PAGE> 19
suit or proceeding as authorized by the board of directors in the manner
provided for in Section 4 of this Article 9 upon receipt of an undertaking by
or on behalf of any person described in said Section to repay such amount
unless it shall ultimately be determined that he is entitled to indemnification
by the Corporation as authorized in this Article 9.
9.6 Non-Exclusivity. The indemnification provided for in this
Article (i) shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
shall continue as to a person who has ceased to be a director, officer or
trustee and (iii) shall inure to the benefit of the heirs, executors and
administrators of such a person.
9.7 Insurance. The board of directors may authorize, by a vote of
the majority of the full board, the Corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability under the
provisions of this Article 9.
9.8 Severability. If any word, clause or provision of this
Article 9 or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but
shall remain in full force and effect.
9.9 Intent of Article. The intent of this Article 9 is to provide
for indemnification to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware. To the extent that such section or any
successor section may be amended or supplemented from time to time, this
Article 9 shall be amended automatically and construed so as to permit
indemnification to the fullest extent from time to time permitted by law.
ARTICLE 10
Amendments
These By-Laws may be altered, amended or repealed or new By-Laws may be
adopted as provided for in the Certificate of Incorporation.
16
<PAGE> 20
AMENDMENT TO THE BY-LAWS
OF SIERRA-AT-TAHOE, INC.
By unanimous written consent dated December 3, 1996, the Board of
Directors of Sierra-at-Tahoe, Inc., a Delaware corporation (the "Corporation")
amended and restated in its entirety Section 3.1 of Article 3 of the By-Laws of
the Corporation as follows:
"3.1 Number: Qualifications. The number of directors which shall
constitute the whole board shall not be less than one (1) nor more than
seven(7), with the exact number of directors to be filled by a resolution
adopted by a majority of the board of directors or by the stockholders at the
annual meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.2 of this Article, and each
director elected shall hold office until his or her successor is elected and
qualified. Directors need not be stockholders."
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
BEAR MOUNTAIN, INC.
ARTICLE I
The name of the corporation is Bear Mountain, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue one class of shares to be
designated Common Stock ("Common Stock"). The total number of shares of stock
which the Corporation shall have authority to issue is one thousand (1,000)
shares of Common Stock, and the par value of each share is One Cent ($.01),
amounting in the aggregate to Ten Dollars ($10.00).
ARTICLE V
In furtherance and not in limitation of the powers conferred by the laws
of the State of Delaware:
(A) The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the Bylaws of the Corporation.
(B) Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
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<PAGE> 2
(C) The books of the Corporation may be kept at such place within or
without the State of Delaware as the Bylaws of the Corporation may provide or
as may be designated from time to time by the Board of Directors of the
Corporation.
ARTICLE VI
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
hereafter amended to authorize, with the approval of a corporation's
stockholders, further reductions in the liability of the corporation's
directors for breach of fiduciary duty, then a director of the Corporation
shall not be liable for any such breach to the fullest extent permitted by the
Delaware General Corporation Law as so amended.
ARTICLE VII
(A) Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director, officer, employee or agent, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection herewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (B) of this Article VII, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
(B) If a claim under paragraph (A) of this Article VII is not paid in full
by the Corporation within 30 days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
2
<PAGE> 3
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant or the
amount claimed.
(C) The right to indemnification conferred in this Article VII shall not
be exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
(D) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
ARTICLE VIII
The Corporation is to have perpetual existence.
ARTICLE IX
The name and mailing address of the Incorporator is: Vinella I. Sido, 2121
N. California Blvd., #560, Walnut Creek, CA 94596.
ARTICLE X
The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon a stockholder herein are
granted subject to this reservation. Notwithstanding the foregoing, the
provisions set forth in Articles VI and VII may not be amended or repealed in
any respect unless such amendment or repeal is approved by the affirmative vote
of not less than sixty-six and sixty-seven hundredths percent (66.67%) of the
total voting power of all outstanding shares of stock in this Corporation
entitled to vote thereon. Any repeal or modification of the provisions of
Articles VI or VII by the stockholders of the Corporation shall not adversely
affect any right or protection of a director, officer, employee or agent of the
Corporation existing at the time of such repeal or modification.
3
<PAGE> 4
I, the undersigned, being the Incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 11th day of September, 1995.
/s/ Vinella I. Sido
---------------------------------
Vinella I. Sido
Incorporator
4
<PAGE> 1
EXHIBIT 3.8
B Y - L A W S
OF
BEAR MOUNTAIN, INC.
(a Delaware corporation)
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1 - Offices. . . . . . . . . . . . . . . . . . . . . . .1
1.1 Registered Office. . . . . . . . . . . . . . . . . . .1
1.2 Additional Offices . . . . . . . . . . . . . . . . . .1
ARTICLE 2 - Meeting of Stockholders. . . . . . . . . . . . . . .1
2.1 Place of Meeting . . . . . . . . . . . . . . . . . . .1
2.2 Annual Meeting . . . . . . . . . . . . . . . . . . . .1
2.3 Special Meetings . . . . . . . . . . . . . . . . . . .1
2.4 Notice of Meetings . . . . . . . . . . . . . . . . . .1
2.5 Business Matter of a Special Meeting . . . . . . . . .2
2.6 List of Stockholders . . . . . . . . . . . . . . . . .2
2.7 Organization and Conduct of Business . . . . . . . . .2
2.8 Quorum and Adjournments. . . . . . . . . . . . . . . .2
2.9 Voting Rights. . . . . . . . . . . . . . . . . . . . .3
2.10 Majority Vote. . . . . . . . . . . . . . . . . . . . .3
2.11 Record Date for Stockholder Notice and Voting. . . . .3
2.12 Proxies. . . . . . . . . . . . . . . . . . . . . . . .3
2.13 Inspectors of Election . . . . . . . . . . . . . . . .4
2.14 Action Without a Meeting . . . . . . . . . . . . . . .4
ARTICLE 3 - Directors. . . . . . . . . . . . . . . . . . . . . .4
3.1 Number; Qualifications . . . . . . . . . . . . . . . .4
3.2 Resignation and Vacancies. . . . . . . . . . . . . . .4
3.3 Removal of Directors . . . . . . . . . . . . . . . . .5
3.4 Powers . . . . . . . . . . . . . . . . . . . . . . . .5
3.5 Place of Meetings. . . . . . . . . . . . . . . . . . .6
3.6 Annual Meetings. . . . . . . . . . . . . . . . . . . .6
3.7 Regular Meetings . . . . . . . . . . . . . . . . . . .6
3.8 Special Meetings . . . . . . . . . . . . . . . . . . .6
3.9 Quorum and Adjournments. . . . . . . . . . . . . . . .6
3.10 Action Without a Meeting . . . . . . . . . . . . . . .6
3.11 Telephone Meetings . . . . . . . . . . . . . . . . . .6
3.12 Waiver of Notice . . . . . . . . . . . . . . . . . . .6
3.13 Fees and Compensation of Directors . . . . . . . . . .7
3.14 Rights of Inspection . . . . . . . . . . . . . . . . .7
ARTICLE 4 - Committees of Directors. . . . . . . . . . . . . . .7
<PAGE> 3
4.1 Selection. . . . . . . . . . . . . . . . . . . . . . .7
4.2 Power. . . . . . . . . . . . . . . . . . . . . . . . .7
4.3 Committee Minutes. . . . . . . . . . . . . . . . . . .8
ARTICLE 5 - Officers . . . . . . . . . . . . . . . . . . . . . .8
5.1 Officers Designated. . . . . . . . . . . . . . . . . .8
5.2 Appointment of Officers. . . . . . . . . . . . . . . .8
5.3 Subordinate Officers . . . . . . . . . . . . . . . . .8
5.4 Removal and Resignation of Officers. . . . . . . . . .8
5.5 Vacancies in Office. . . . . . . . . . . . . . . . . .9
5.6 Compensation . . . . . . . . . . . . . . . . . . . . .9
5.7 The Chairman of the Board. . . . . . . . . . . . . . .9
5.8 The President. . . . . . . . . . . . . . . . . . . . .9
5.9 The Vice President . . . . . . . . . . . . . . . . . .9
5.10 The Secretary. . . . . . . . . . . . . . . . . . . . .9
5.11 The Assistant Secretary. . . . . . . . . . . . . . . 10
5.12 The Treasurer. . . . . . . . . . . . . . . . . . . . 10
5.13 The Assistant Treasurer. . . . . . . . . . . . . . . 10
ARTICLE 6 - Stock Certificates. . . . . . . . . . . . . . . . 10
6.1 Certificates for Shares. . . . . . . . . . . . . . . 10
6.2 Signatures on Certificates . . . . . . . . . . . . . 11
6.3 Transfer of Stock. . . . . . . . . . . . . . . . . . 11
6.4 Registered Stockholders. . . . . . . . . . . . . . . 11
6.5 Record Date. . . . . . . . . . . . . . . . . . . . . 11
6.6 Lost, Stolen or Destroyed Certificates . . . . . . . 11
ARTICLE 7 - Notice . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Notices . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 8 - General Provisions . . . . . . . . . . . . . . . . 12
8.1 Dividends. . . . . . . . . . . . . . . . . . . . . . 12
8.2 Dividend Reserve . . . . . . . . . . . . . . . . . . 12
8.3 Annual Statement . . . . . . . . . . . . . . . . . . 12
8.4 Checks . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 Corporate Seal . . . . . . . . . . . . . . . . . . . 13
8.6 Execution of Corporate Contracts and Instruments . . 13
ARTICLE 9 - Indemnification. . . . . . . . . . . . . . . . . . 13
<PAGE> 4
9.1 Actions Other than by or in the Right of the
Corporation . . . . . . . . . . . . . . . . . . . . 13
9.2 Actions by or in the Right of the Corporation. . . . 13
9.3 Success on the Merits. . . . . . . . . . . . . . . . 14
9.4 Specific Authorization . . . . . . . . . . . . . . . 14
9.5 Advance Payment. . . . . . . . . . . . . . . . . . . 14
9.6 Non-Exclusivity. . . . . . . . . . . . . . . . . . . 14
9.7 Insurance. . . . . . . . . . . . . . . . . . . . . . 14
9.8 Severability . . . . . . . . . . . . . . . . . . . . 15
9.9 Intent of Article. . . . . . . . . . . . . . . . . . 15
ARTICLE 10 - Amendments. . . . . . . . . . . . . . . . . . . . 15
<PAGE> 5
BYLAWS
OF
BEAR MOUNTAIN, INC.
(a Delaware corporation)
ARTICLE 1
Offices
1.1 Registered Office. The registered office of the Corporation shall
be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, and the
name of the registered agent in charge thereof is The Corporation Trust
Company.
1.2 Additional Offices. The Corporation may also have offices at such
other places, either within or without the State of Delaware, as the Board of
Directors (the "Board") may from time to time designate or the business of the
Corporation may require.
ARTICLE 2
Meeting of Stockholders
2.1 Place of Meeting. All meetings of the stockholders for the
election of directors shall be held at the principal office of the Corporation,
at such place as may be fixed from time to time by the Board or at such other
place either within or without the State of Delaware as shall be designated
from time to time by the Board and stated in the notice of the meeting.
Meetings of stockholders for any purpose may be held at such time and place
within or without the State of Delaware as the Board may fix from time to time
and as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
2.2 Annual Meeting. Annual meetings of stockholders shall be held
each year at such date and time as shall be designated from time to time by the
Board and stated in the notice of the meeting. At such annual meetings, the
stockholders shall elect a Board and transact such other business as may
properly be brought before the meetings.
2.3 Special Meetings. Special meetings of the stockholders may be
called for any purpose or purposes, unless otherwise prescribed by the statute
or by the Certificate of Incorporation, at the request of the Chairman of the
Board, the President or the Board. Such request shall state the purpose or
purposes of the proposed meeting.
2.4 Notice of Meetings. Written notice of stockholders' meetings,
stating the place, date and time of the meeting and the purpose or purposes for
which the meeting is called,
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<PAGE> 6
shall be given to each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days prior to the meeting.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
2.5 Business Matter of a Special Meeting. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
2.6 List of Stockholders. The officer in charge of the stock ledger
of the Corporation or the transfer agent shall prepare and make, at least ten
(10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting, at
a place within the city where the meeting is to be held, which place, if other
than the place of meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present in
person thereat.
2.7 Organization and Conduct of Business. The Chairman of the Board
or, in his or her absence, the President of the Corporation or, in their
absence, such person as the Board may have designated or, in the absence of
such a person, such person as may be chosen by the holders of a majority of the
shares entitled to vote who are present, in person or by proxy, shall call to
order any meeting of the stockholders and act as Chairman of the meeting. In
the absence of the Secretary of the Corporation, the Secretary of the meeting
shall be such person as the Chairman appoints.
The Chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seems to him or her in order.
2.8 Quorum and Adjournments. Except where otherwise provided by law
or the Certificate of Incorporation or these By-Laws, the holders of a majority
of the stock issued and outstanding and entitled to vote, present in person or
represented in proxy, shall constitute a quorum at all meetings of the
stockholders. The stockholders present at a duly called or held meeting at
which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to have less than a
quorum if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum. At such adjourned
meeting at which a quorum is present or represented, any
2
<PAGE> 7
business may be transacted which might have been transacted at the meeting as
originally notified. If, however, a quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat who are present in person or represented by proxy shall have the
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
2.9 Voting Rights. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder.
2.10 Majority Vote. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the Certificate of Incorporation or of these By-Laws, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
2.11 Record Date for Stockholder Notice and Voting. For purposes of
determining the stockholders entitled to notice of any meeting or to vote, or
entitled to receive payment of any dividend or other distribution, or entitled
to exercise any right in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting nor more than sixty (60) days
before any other action.
If the Board does not so fix a record date, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
2.12 Proxies. Every person entitled to vote for directors or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
Secretary of the Corporation. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by
a writing delivered to the Corporation stating that the proxy is revoked or by
a subsequent proxy executed by, or attendance at the meeting and voting in
person by, the person executing the proxy; or (ii) written notice of the death
or incapacity of the maker of that proxy is received by the Corporation before
the vote pursuant to that proxy is counted; provided, however, that no proxy
shall be valid after the expiration of eleven months from the date of the
proxy, unless otherwise provided in the proxy.
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2.13 Inspectors of Election. Before any meeting of the stockholders,
the Board may appoint any person other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chairman of the meeting may, and on the request
of any stockholder or a stockholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3). If inspectors are appointed at a meeting on the request of one or
more stockholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon
the request of any stockholder or a stockholder's proxy shall, appoint a person
to fill that vacancy.
2.14 Action Without a Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 3
Directors
3.1 Number; Qualifications. The number of directors which shall
constitute the whole board shall not be less than three (3) nor more than seven
(7), with the exact number of directors to be filled by a resolution adopted by
a majority of the board of directors or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.2 of this Article, and each
director elected shall hold office until his or her successor is elected and
qualified. Directors need not be stockholders.
3.2 Resignation and Vacancies. A vacancy or vacancies in the Board
shall be deemed to exist in the case of the death, resignation or removal of
any director, or if the authorized number of directors be increased. Vacancies
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director, unless otherwise provided in the
Certificate of Incorporation. The stockholders may elect a director or
directors at any time to fill any vacancy or vacancies not filled by the
directors. If the Board accepts the resignation of a director tendered to take
effect at a future time, the Board shall have power to elect a successor to
take office when the resignation is to become effective. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
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3.3 Removal of Directors. Unless otherwise restricted by statute, the
Certificate of Incorporation or these By-Laws, any director or the entire Board
may be removed, with or without cause, by the holders of at least a majority of
the shares entitled to vote at an election of directors.
3.4 Powers. The business of the Corporation shall be managed by or
under the direction of the Board which may exercise all such powers of the
Corporation and do all such lawful acts and things which are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
Without prejudice to these general powers, and subject to the same
limitations, the directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the
Corporation; prescribe any powers and duties for them that are consistent
with law, with the Certificate of Incorporation, and with these By-Laws;
fix their compensation; and require from them security for faithful
service;
(b) Confer upon any office the power to appoint, remove and suspend
subordinate officers, employees and agents;
(c) Change the registered office or the principal business office in
the State of Delaware or any other state from one location to another;
cause the Corporation to be qualified to do business in any other state,
territory, dependency or country and conduct business within or without
the State of Delaware; and designate any place within or without the State
of Delaware for the holding of any stockholders meeting, or meetings,
including annual meetings;
(d) Adopt, make, and use a corporate seal; prescribe the forms of
certificates of stock; and alter the form of the seal and certificates;
(e) Authorize the issuance of shares of stock of the Corporation on
any lawful terms, in consideration of money paid, labor done, services
actually rendered, debts or securities cancelled, tangible or intangible
property actually received;
(f) Borrow money and incur indebtedness on behalf of the
Corporation, and cause to be executed and delivered for the Corporation's
purposes, in the corporate name, promissory notes, bonds, debentures,
deeds of trust, mortgages, pledges, hypothecations and other evidences of
debt and securities;
(g) Declare dividends from time to time in accordance with law;
(h) Adopt from time to time such stock option, stock purchase, bonus
or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries is it may determine; and
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(i) Adopt from time to time regulations not inconsistent with these
By-Laws for the management of the Corporation's business and affairs.
3.5 Place of Meetings. The Board may hold meetings, both regular and
special, either within or without the State of Delaware.
3.6 Annual Meetings. The annual meetings of the Board shall be held
immediately following the annual meeting of stockholders, and no notice of such
meeting shall be necessary to the Board, provided a quorum shall be present.
The annual meetings shall be for the purposes of organization, and an election
of officers and the transaction of other business.
3.7 Regular Meetings. Regular meetings of the Board may be held
without notice at such time and place as may be determined from time to time by
the Board.
3.8 Special Meetings. Special meetings of the Board may be called by
the Chairman of the Board, the President, a Vice President or a majority of the
Board upon one (1) days' notice to each director.
3.9 Quorum and Adjournments. At all meetings of the Board, a majority
of the directors then in office shall constitute a quorum for the transaction
of business, and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board, except as may
otherwise be specifically provided by law or the Certificate of Incorporation.
If a quorum is not present at any meeting of the Board, the directors present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting at which the adjournment is taken, until a quorum
shall be present. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved of by at least a majority of the required quorum
for that meeting.
3.10 Action Without a Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
3.11 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any member of the Board or any
committee may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
3.12 Waiver of Notice. Notice of a meeting need not be given to any
director who signs a waiver of notice or a consent to holding the meeting or an
approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such director. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
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3.13 Fees and Compensation of Directors. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, the Board shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board and may be
paid a fixed sum for attendance at each meeting of the Board or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for
attending committee meetings.
3.14 Rights of Inspection. Every director shall have the absolute
right at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
ARTICLE 4
Committees of Directors
4.1 Selection. The Board may, by resolution passed by a majority of
the entire Board, designate one or more committees, each committee to consist
of one or more of the directors of the Corporation. The Board may designate
one or more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board to act at the meeting in the place of any
such absent or disqualified member.
4.2 Power. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board as provided
in Section 151(a) of the General Corporation Law of Delaware, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending the
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By-Laws of the Corporation; and, unless the resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board.
4.3 Committee Minutes. Each committee shall keep regular minutes of
its meetings and report the same to the Board when required.
ARTICLE 5
Officers
5.1 Officers Designated. The officers of the Corporation shall be
chosen by the Board and shall be a President, a Secretary and a Treasurer. The
Board may also choose a Chairman of the Board, one or more Vice Presidents, and
one or more assistant Secretaries and assistant Treasurers. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
or these By-Laws otherwise provide.
5.2 Appointment of Officers. The officers of the Corporation, except
such officers as may be appointed in accordance with the provisions of Section
5.3 or 5.5 of this Article 5, shall be appointed by the Board, and each shall
serve at the pleasure of the Board, subject to the rights, if any, of an
officer under any contract of employment.
5.3 Subordinate Officers. The Board may appoint, and may empower the
President to appoint, such other officers and agents as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the By-Laws or as the
Board may from time to time determine.
5.4 Removal and Resignation of Officers. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by an affirmative vote of the majority
of the Board, at any regular or special meeting of the Board, or, except in
case of an officer chosen by the Board, by any officer upon whom such power of
removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall
not be necessary to make it effective. Any resignation is without prejudice to
the rights, if any, of the Corporation under any contract to which the officer
is a party.
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5.5 Vacancies in Office. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to that office.
5.6 Compensation. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board and no officer shall be prevented
from receiving a salary because he or she is also a director of the
Corporation.
5.7 The Chairman of the Board. The Chairman of the Board, if such an
officer be elected, shall, if present, perform such other powers and duties as
may be assigned to him or her from time to time by the Board. If there is no
President, the Chairman of the Board shall also be the Chief Executive Officer
of the Corporation and shall have the powers and duties prescribed in Section
5.8 of this Article 5.
5.8 The President. Subject to such supervisory powers, if any, as may
be given by the Board to the Chairman of the Board, if there be such an
officer, the President shall be the Chief Executive Officer of the Corporation,
shall preside at all meetings of the stockholders and in the absence of the
Chairman of the Board, or if there be none, at all meetings of the Board, shall
have general and active management of the business of the Corporation and shall
see that all orders and resolutions of the Board are carried into effect. He
or she shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board to some other officer or
agent of the Corporation.
5.9 The Vice President. The Vice President (or in the event there be
more than one, the Vice Presidents in the order designated by the directors, or
in the absence of any designation, in the order of their election), shall, in
the absence of the President or in the event of his or her disability or
refusal to act, perform the duties of the President, and when so acting, shall
have the powers of and subject to all the restrictions upon the President. The
Vice President(s) shall perform such other duties and have such other powers as
may from time to time be prescribed for them by the Board, the President, the
Chairman of the Board or these By-Laws.
5.10 The Secretary. The Secretary shall attend all meetings of the
Board and the stockholders and record all votes and the proceedings of the
meetings in a book to be kept for that purpose and shall perform like duties
for the standing committees, when required. The Secretary shall give, or cause
to be given, notice of all meetings of stockholders and special meetings of the
Board, and shall perform such other duties as may from time to time be
prescribed by the Board, the Chairman of the Board or the President, under
whose supervision he or she shall act. The Secretary shall have custody of the
seal of the Corporation, and the Secretary, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and, when so
affixed, the seal may be attested by his or her signature or by the signature
of such Assistant Secretary. The Board may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing thereof
by his or her signature. The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation's transfer
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agent or registrar, as determined by resolution of the Board, a share register,
or a duplicate share register, showing the names of all stockholders and their
addresses, the number and classes of shares held by each, the number and date
of certificates issued for the same and the number and date of cancellation of
every certificate surrendered for cancellation.
5.11 The Assistant Secretary. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order designated by the Board
(or in the absence of any designation, in the order of their election) shall,
in the absence of the Secretary or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board.
5.12 The Treasurer. The Treasurer shall have the custody of the
Corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board. The
Treasurer shall disburse the funds of the Corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and the Board, at its regular meetings, or when the Board so
requires, an account of all his or her transactions as Treasurer and of the
financial condition of the Corporation.
5.13 The Assistant Treasurer. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order designated by the
Board (or in the absence of any designation, in the order of their election)
shall, in the absence of the Treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as may from time
to time be prescribed by the Board.
ARTICLE 6
Stock Certificates
6.1 Certificates for Shares. The shares of the Corporation shall be
represented by certificates or shall be uncertificated. Certificates shall be
signed by, or in the name of the Corporation by, the Chairman of the Board, or
the President or a Vice President and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation.
Within a reasonable time after the issuance or transfer of uncertified
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required by the General Corporation Law of
the State of Delaware or a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of
each class
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of stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.
6.2 Signatures on Certificates. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
6.3 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate of shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated share, such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or
certificated shares shall be made to the person entitled thereto and the
transaction shall be recorded upon the books of the Corporation.
6.4 Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a percent registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
6.5 Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to receive notice of, or to vote at,
any meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or to
exercise any rights in respect of any change, conversion, or exchange of stock
or for the purpose of any lawful action, the Board may fix, in advance, a
record date which shall not be more than sixty (60) nor less than ten (10) days
prior to the date of such meeting, nor more than sixty (60) days prior to the
date of any other action. A determination of stockholders of record entitled
to notice or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
6.6 Lost, Stolen or Destroyed Certificates. The Board may direct that
a new certificate or certificates be issued to replace any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing the issue of a new certificate or certificates, the Board may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of the lost, stolen or destroyed certificate or certificates, or his
or her legal representative, to advertise the same in such manner as it shall
require, and/or to give the Corporation a bond in such sum as it may direct as
indemnity
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against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
ARTICLE 7
Notices
7.1 Notice. Whenever, under the provision of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be
given to any director or stockholder it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his or her address as it appears on the records of
the Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram or telephone.
7.2 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE 8
General Provisions
8.1 Dividends. Dividends upon the capital stock of the Corporation,
subject to any restrictions contained in the General Corporation Laws of
Delaware or the provisions of the Certificate of Incorporation, if any, may be
declared by the Board at any regular or special meeting. Dividends may be paid
in cash, in property or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation.
8.2 Dividend Reserve. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest
of the Corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
8.3 Annual Statement. The Board shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
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8.4 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
8.5 Corporate Seal. The Board may provide a suitable seal, containing
the name of the Corporation, which seal shall be in charge of the Secretary.
If and when so directed by the Board or a committee thereof, duplicates of the
seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
8.6 Execution of Corporate Contracts and Instruments. The Board,
except as otherwise provided in these By-Laws, may authorize any officer or
officers, or agent or agents, to enter into any contract or execute any
instrument in the name of an on behalf of the Corporation; such authority may
be general or confined to specific instances. Unless so authorized or ratified
by the Board or within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
ARTICLE 9
INDEMNIFICATION
9.1 Actions Other than by or in the Right of the Corporation. The
Corporation shall identify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceedings, had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
9.2 Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation, or is or was serving
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at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him or her in connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
9.3 Success on the Merits. To the extent that any person described in
Sections 9.1 or 9.2 of this Article 9 has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in said
Sections, or in defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
9.4 Specific Authorization. Any indemnification under Sections 9.1 or
9.2 of this Article 9 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of any person described in said Sections is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in said Sections. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the Corporation.
9.5 Advance Payment. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by
the board of directors in the manner provided for in Section 4 of this Article
9 upon receipt of an undertaking by or on behalf of any person described in
said Section to repay such amount unless it shall ultimately be determined that
he is entitled to indemnification by the Corporation as authorized in this
Article 9.
9.6 Non-Exclusivity. The indemnification provided for in this Article
(i) shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
shall continue as to a person who has ceased to be a director, officer or
trustee and (iii) shall inure to the benefit of the heirs, executors and
administrators of such a person.
9.7 Insurance. The board of directors may authorize, by a vote of the
majority of the full board, the Corporation to purchase and maintain insurance
on behalf of any person who
14
<PAGE> 19
is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his or her status
as such, whether or not the Corporation would have the power to indemnify him
or her against such liability under the provisions of this Article 9.
9.8 Severability. If any word, clause or provision of this Article 9
or any award made hereunder shall for any reason be determined to be invalid,
the provisions hereof shall not otherwise be affected thereby but shall remain
in full force and effect.
9.9 Intent of Article. The intent of this Article 9 is to provide for
indemnification to the fullest extent permitted by Section 145 of the General
Corporation Law of Delaware. To the extent that such section or any successor
section may be amended or supplemented from time to time, this Article 9 shall
be amended automatically and construed so as to permit indemnification to the
fullest extent from time to time permitted by law.
ARTICLE 10
Amendments
These By-Laws may be altered, amended or repealed or new By-Laws may be
adopted as provided for in the Certificate of Incorporation.
15
<PAGE> 20
AMENDMENT TO THE BY-LAWS
OF BEAR MOUNTAIN, INC.
By unanimous written consent dated December 3, 1996, the Board of
Directors of Bear Mountain, Inc., a Delaware corporation (the "Corporation")
amended and restated in its entirety Section 3.1 of Article 3 of the By-Laws of
the Corporation as follows:
"3.1 Number: Qualifications. The number of directors which shall
constitute the whole board shall not be less than one (1) nor more than seven
(7), with the exact number of directors to be filled by a resolution adopted by
a majority of the board of directors or by the stockholders at the annual
meeting of the stockholders, except as provided in Section 3.2 of this Article,
and each director elected shall hold office until his or her successor is
elected and qualified. Directors need not be stockholders."
<PAGE> 1
EXHIBIT 3.9
CERTIFICATE OF INCORPORATION
OF
BOOTH CREEK SKI ACQUISITION CORP.,
a Delaware corporation
FIRST. The name of the corporation is BOOTH CREEK SKI ACQUISITION
CORP. (hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal
or modification of the first sentence of this Article SEVENTH shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
[signature page follows]
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
29th day of August, 1996.
/s/ Oscar A. David
--------------------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.10
BY-LAWS
OF
BOOTH CREEK SKI ACQUISITION CORP.,
a Delaware corporation
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the Corporation
in the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware, County of New Castle. The name of the Corporation's registered agent
at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of stockholders
shall be held each year for the election of directors at such date, time and
place either within or without the State of Delaware as shall be designated by
the Board of Directors. Any other proper business may be transacted at the
annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders may be
called at any time by the Board of Directors, the Chairman (as hereinafter
defined), if any, the Vice Chairman, if any, or the President. Each special
meeting shall be held at such date, time and place either within or without the
State of Delaware as shall be designated by the person or persons calling such
meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law,
whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the certificate
of incorporation, at each meeting of stockholders, the presence in person or by
proxy of the holders of a majority in voting power of the outstanding shares of
stock entitled to vote at the meeting shall be necessary and sufficient to
constitute a quorum. For purposes of the foregoing, two or more classes or
series of capital stock shall be considered a single class if the holders
thereof are entitled to vote together as a single class at the meeting. In the
absence of a quorum, the stockholders so present and represented may, by vote
of the holders of a majority of the shares of capital stock of the Corporation
so present and represented, adjourn the meeting from time to time until a
quorum shall attend, and the provisions of Section 2.4 of these By-laws shall
apply to each such adjournment. Shares of its own capital stock belonging on
the record date for the meeting to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of the Corporation to
vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be presided
over by the Chairman, if any, or in his absence by the Vice Chairman, if any,
or in his absence by the President, or in the absence of the foregoing persons
by a chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be by written ballot.
Voting of stockholders for all other matters need not be
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<PAGE> 3
by written ballot unless so determined at a stockholders meeting by the vote of
the holders of a majority of the outstanding shares of each class of capital
stock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter submitted to a vote at the meeting. Unless
otherwise provided by law or the certificate of incorporation, the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at a meeting at which a quorum is present and
entitled to vote on the subject matter submitted to a vote at the meeting shall
be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof or to
express consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting, more than ten
days after the date upon which the resolution fixing the record date with
respect to the taking of corporate action by written consent without a meeting
is adopted by the Board of Directors, nor more than sixty days prior to any
other action. If no record date is fixed: (a) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; (b) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action;
(c) the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when prior action by the Board
of Directors is required, shall be at the close of business on the day on which
the Board of Directors adopts the resolution taking such prior action; and (d)
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary shall
make, at least ten days before every meeting of stockholders, a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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<PAGE> 4
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided by law or by the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise
provided by law or the certificate of incorporation, the business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the certificate of incorporation, the
Board of Directors shall initially consist of one (1) director and thereafter
shall consist of such number of directors as the Board of Directors shall from
time to time designate. Unless otherwise provided by the certificate of
incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any director may resign at any time
upon written notice to the Corporation directed to the Board of Directors or
the Secretary. Such resignation shall take effect at the time specified
therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of a majority of shares of capital stock then entitled to vote at
an election of directors. Whenever the holders of shares of any class or
series of capital stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series of capital stock and not to the vote of the holders of the
outstanding shares of capital stock as a whole. Unless otherwise provided by
the certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having a right to vote as a single class may be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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<PAGE> 5
directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such dates, times and places either within or without the
State of Delaware as the Board of Directors shall from time to time determine.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, the President or by any member of
the Board of Directors. Each special meeting shall be held at such date, time
and place either within or without the State of Delaware as shall be fixed by
the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting of the
Board of Directors shall be given which shall state the date, time and place of
the meeting. The written notice of any meeting shall be given at least
twenty-four hours in advance of the meeting to each director. Notice may be
given by letter, telegram, telex or facsimile and shall be deemed to have been
given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board of
Directors or any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and participation in
the meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise required
by law, at each meeting of the Board of Directors, the presence of one-third of
the total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors, unless
the vote of a greater number is required by law or the certificate of
incorporation. In case at any meeting of the Board of Directors a quorum shall
not be present, the members of the Board of Directors present may by majority
vote to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless otherwise
provided by the certificate of incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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<PAGE> 6
writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided by the
certificate of incorporation, the Board of Directors shall have the authority
to fix the compensation of directors, which compensation may include the
reimbursement of expenses incurred in connection with meetings of the Board of
Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member of such committee at any meeting thereof. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by the Board
of Directors, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority to take any
action which by law may only be taken by the Board of Directors or to take any
action with reference to: amending the certificate of incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors, fix the designation and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of dissolution,
removing or indemnifying directors or amending these By-laws; and, unless a
resolution of the Board of Directors expressly so provides, no such committee
shall have the power or authority to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation Law of the State of Delaware.
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<PAGE> 7
Section 4.3 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a
resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall elect
from its membership or outside thereof a President and a Secretary. The Board
of Directors may also elect from its membership a Chairman and a Vice Chairman,
and from its membership or outside thereof one or more Vice Presidents, one or
more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer
and one or more Assistant Treasurers and such other officers or agents as it
may determine. Unless otherwise provided by the certificate of incorporation,
any number of offices may be held by the same person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided by the Board of Directors when electing any officer, each
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his election, or until
his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as shall be
stated in these By-laws or in a resolution of the Board of Directors which is
not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer. The
Chairman of the Board and Chief Executive Officer (the "Chairman") shall be the
chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or she shall
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<PAGE> 8
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the powers of the
Board of Directors and the Chairman, shall have general charge of the business,
affairs and property of the Corporation and control over its officers, agents
and employees; and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, if any, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The President shall have such other powers and perform such
other duties as may be prescribed by the Chairman or the Board of Directors or
as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The Secretary
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if any, of the
Corporation shall have such duties and powers as generally pertain to their
respective offices and such other duties and powers as the Board of Directors
shall from time to time delegate to each such officer. The Board of Directors
may require any officer, agent or employee to give security, by bond or
otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of each officer
shall be fixed by the Board of Directors and no officer shall be prevented from
receiving such compensation by virtue of his also being a director.
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ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of capital
stock of the Corporation shall be entitled to have a certificate signed by or
in the name of the Corporation by the Chairman or Vice Chairman, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
if any, or the Secretary or an Assistant Secretary, certifying the number of
shares owned by him in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay the
expenses (including attorneys' fees) incurred by an indemnitee in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
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by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director of officer is not entitled to be
indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on any person
by this Article VII shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation, if any,
to indemnify or to advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever notice is required to be given by law, the certificate of
incorporation or these By-laws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business
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because the meeting is not lawfully called or convened. Unless otherwise
provided by the certificate of incorporation, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the Corporation
may be kept within or without the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors. Any records
maintained by the Corporation in the regular course of its business, including
its stock ledger, books of account and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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EXHIBIT 3.11
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WATERVILLE VALLEY SKI RESORT COMPANY,
(Name to be amended to WATERVILLE VALLEY SKI RESORT, INC.)
a Delaware corporation
WATERVILLE VALLEY SKI RESORT COMPANY, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies that the date of
filing its original Certificate of Incorporation with the Secretary of State
was September 25, 1996. This Amended and Restated Certificate of Incorporation
restates and integrates and further amends the Certificate of Incorporation in
accordance with Sections 241 and 245 of the General Corporation Law of the
State of Delaware prior ro receipt of payment for stock.
FIRST. The name of the corporation is WATERVILLE VALLEY SKI RESORT, INC.
(hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the Corporation
shall have authority to issue is 1,000 shares of common stock, par value $.01
per share.
FIFTH. The Board of Directors is authorized to make, alter or repeal the
By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal or
modification of the first sentence of this Article SEVENTH shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal or
modification.
<PAGE> 2
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this 2nd
day of October, 1996.
/s/ Oscar A. David
--------------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.12
BY-LAWS
OF
WATERVILLE VALLEY SKI RESORT, INC.,
A DELAWARE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of stockholders
shall be held each year for the election of directors at such date, time and
place either within or without the State of Delaware as shall be designated by
the Board of Directors. Any other proper business may be transacted at the
annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders
may be called at any time by the Board of Directors, the Chairman (as
hereinafter defined), if any, the Vice Chairman, if any, or the President.
Each special meeting shall be held at such date, time and place either within
or without the State of Delaware as shall be designated by the person or
persons calling such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law,
whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the
certificate of incorporation, at each meeting of stockholders, the presence in
person or by proxy of the holders of a majority in voting power of the
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. For purposes of the foregoing, two or
more classes or series of capital stock shall be considered a single class if
the holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum, the stockholders so present and
represented may, by vote of the holders of a majority of the shares of capital
stock of the Corporation so present and represented, adjourn the meeting from
time to time until a quorum shall attend, and the provisions of Section 2.4 of
these By- laws shall apply to each such adjournment. Shares of its own capital
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited to
its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be
presided over by the Chairman, if any, or in his absence by the Vice Chairman,
if any, or in his absence by the President, or in the absence of the foregoing
persons by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary shall
act as secretary of the meeting, but in his absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be
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by written ballot. Voting of stockholders for all other matters need not be by
written ballot unless so determined at a stockholders meeting by the vote of
the holders of a majority of the outstanding shares of each class of capital
sock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter submitted to a vote at the meeting. Unless
otherwise provided by law or the certificate of incorporation, the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at a meeting at which a quorum is present and
entitled to vote on the subject matter submitted to a vote at the meeting shall
be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
more than ten days after the date upon which the resolution fixing the record
date with respect to the taking of corporate action by written consent without
a meeting is adopted by the Board of Directors, nor more than sixty days prior
to any other action. If no record date is fixed: (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; (c) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when prior action by
the Board of Directors is required, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (d) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary
shall make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided by law or by the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise
provided by law or the certificate of incorporation, the business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the certificate of incorporation, the
Board of Directors shall initially consist of one (1) director and thereafter
shall consist of such number of directors as the Board of Directors shall from
time to time designate. Unless otherwise provided by the certificate of
incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Corporation directed to the Board of
Directors or the Secretary. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of a majority of shares of capital stock then entitled to vote at
an election of directors. Whenever the holders of shares of any class or
series of capital stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series of capital stock and not to the vote of the holders of the
outstanding shares of capital stock as a whole. Unless otherwise provided by
the certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having a right to vote as a single class may be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such dates, times and places either within or
without the State of Delaware as the Board of Directors shall from time to time
determine.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman, the President or by any
member of the Board of Directors. Each special meeting shall be held at such
date, time and place either within or without the State of Delaware as shall be
fixed by the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting
of the Board of Directors shall be given which shall state the date, time and
place of the meeting. The written notice of any meeting shall be given at
least twenty-four hours in advance of the meeting to each director. Notice may
be given by letter, telegram, telex or facsimile and shall be deemed to have
been given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board
of Directors or any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or of such committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting pursuant to this by- law shall constitute presence
in person at such meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise
required by law, at each meeting of the Board of Directors, the presence of
one-third of the total number of directors shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors, unless the vote of a greater number is required by law or the
certificate of incorporation. In case at any meeting of the Board of Directors
a quorum shall not be present, the members of the Board of Directors present
may by majority vote to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman, or in his absence by the President, or
in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless
otherwise provided by the certificate of incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided
by the certificate of incorporation, the Board of Directors shall have the
authority to fix the compensation of directors, which compensation may include
the reimbursement of expenses incurred in connection with meetings of the Board
of Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member of such committee at any meeting thereof. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by the
Board of Directors, to the extent provided in a resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority to take any action which by law may only be taken by the Board of
Directors or to take any action with reference to: amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending these By-laws; and,
unless a resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the General Corporation Law of the State of
Delaware.
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Section 4.3 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
adopt, amend and repeal rules for the conduct of its business. In the absence
of a resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable
after the annual meeting of stockholders in each year, the Board of Directors
shall elect from its membership or outside thereof a President and a Secretary.
The Board of Directors may also elect from its membership a Chairman and a Vice
Chairman, and from its membership or outside thereof one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers or agents as it may determine. Unless otherwise provided by the
certificate of incorporation, any number of offices may be held by the same
person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies.
Except as otherwise provided by the Board of Directors when electing any
officer, each officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his
election, or until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in these By-laws or in a resolution of the Board of Directors which
is not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer.
The Chairman of the Board and Chief Executive Officer (the "Chairman") shall be
the chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or she shall
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preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the powers
of the Board of Directors and the Chairman, shall have general charge of the
business, affairs and property of the Corporation and control over its
officers, agents and employees; and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, if any, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The President shall have such other powers and perform such
other duties as may be prescribed by the Chairman or the Board of Directors or
as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The
Secretary shall attend all meetings of the Board of Directors, all meetings of
the committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if
any, of the Corporation shall have such duties and powers as generally pertain
to their respective offices and such other duties and powers as the Board of
Directors shall from time to time delegate to each such officer. The Board of
Directors may require any officer, agent or employee to give security, by bond
or otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of
each officer shall be fixed by the Board of Directors and no officer shall be
prevented from receiving such compensation by virtue of his also being a
director.
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ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of
capital stock of the Corporation shall be entitled to have a certificate signed
by or in the name of the Corporation by the Chairman or Vice Chairman, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, if any, or the Secretary or an Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation
shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay
the expenses (including attorneys' fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in
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advance of the final disposition of the proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the director of officer is
not entitled to be indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on
any person by this Article VII shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation,
if any, to indemnify or to advance expenses to any person who was or is serving
at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of
the foregoing provisions of this Article VII shall not adversely affect any
right or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the
Corporation shall be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law, the
certificate of incorporation or these By-laws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the
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express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Unless otherwise provided by the certificate of incorporation,
neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors or members of a committee of
directors need be specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the
Corporation may be kept within or without the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs or any other information storage device provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended
or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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EXHIBIT 3.13
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MOUNT CRANMORE SKI RESORT COMPANY,
(Name to be amended to MOUNT CRANMORE SKI RESORT, INC.)
a Delaware corporation
MOUNT CRANMORE SKI RESORT COMPANY, a corporation organized and
existing under the laws of the State of Delaware, hereby certifies that the
date of filing its original Certificate of Incorporation with the Secretary of
State was September 25, 1996. This Amended and Restated Certificate of
Incorporation restates and integrates and further amends the Certificate of
Incorporation in accordance with Sections 241 and 245 of the General
Corporation Law of the State of Delaware prior to receipt of payment for stock.
FIRST. The name of the corporation is MOUNT CRANMORE SKI
RESORT, INC. (hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle, State of Delaware 19801. The name
of its registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be
conducted or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors is authorized to make, alter or
repeal the By-Laws of the Corporation. Election of directors need not be by
written ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator
is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended.
Any repeal or modification of the first sentence of this Article SEVENTH shall
not adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
<PAGE> 2
EIGHTH. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation
in the manner now or hereafter prescribed herein and by the General Corporation
Law, and all rights conferred upon stockholders herein are granted subject to
this reservation.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this 2nd day of October, 1996.
/s/ Oscar A. David
----------------------------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.14
BY-LAWS
OF
MOUNT CRANMORE SKI RESORT, INC.,
a Delaware corporation
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the Corporation
in the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware, County of New Castle. The name of the Corporation's registered agent
at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of stockholders
shall be held each year for the election of directors at such date, time and
place either within or without the State of Delaware as shall be designated by
the Board of Directors. Any other proper business may be transacted at the
annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders may be
called at any time by the Board of Directors, the Chairman (as hereinafter
defined), if any, the Vice Chairman, if any, or the President. Each special
meeting shall be held at such date, time and place either within or without the
State of Delaware as shall be designated by the person or persons calling such
meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law,
whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the certificate
of incorporation, at each meeting of stockholders, the presence in person or by
proxy of the holders of a majority in voting power of the outstanding shares of
stock entitled to vote at the meeting shall be necessary and sufficient to
constitute a quorum. For purposes of the foregoing, two or more classes or
series of capital stock shall be considered a single class if the holders
thereof are entitled to vote together as a single class at the meeting. In the
absence of a quorum, the stockholders so present and represented may, by vote
of the holders of a majority of the shares of capital stock of the Corporation
so present and represented, adjourn the meeting from time to time until a
quorum shall attend, and the provisions of Section 2.4 of these By-laws shall
apply to each such adjournment. Shares of its own capital stock belonging on
the record date for the meeting to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of the Corporation to
vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be presided
over by the Chairman, if any, or in his absence by the Vice Chairman, if any,
or in his absence by the President, or in the absence of the foregoing persons
by a chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be by written ballot.
Voting of stockholders for all other matters need not be
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by written ballot unless so determined at a stockholders meeting by the vote of
the holders of a majority of the outstanding shares of each class of capital
stock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter submitted to a vote at the meeting. Unless
otherwise provided by law or the certificate of incorporation, the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at a meeting at which a quorum is present and
entitled to vote on the subject matter submitted to a vote at the meeting shall
be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof or to
express consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting, more than ten
days after the date upon which the resolution fixing the record date with
respect to the taking of corporate action by written consent without a meeting
is adopted by the Board of Directors, nor more than sixty days prior to any
other action. If no record date is fixed: (a) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; (b) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action;
(c) the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when prior action by the Board
of Directors is required, shall be at the close of business on the day on which
the Board of Directors adopts the resolution taking such prior action; and (d)
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary shall
make, at least ten days before every meeting of stockholders, a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided by law or by the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise
provided by law or the certificate of incorporation, the business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the certificate of incorporation, the
Board of Directors shall initially consist of one (1) director and thereafter
shall consist of such number of directors as the Board of Directors shall from
time to time designate. Unless otherwise provided by the certificate of
incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any director may resign at any time
upon written notice to the Corporation directed to the Board of Directors or
the Secretary. Such resignation shall take effect at the time specified
therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of a majority of shares of capital stock then entitled to vote at
an election of directors. Whenever the holders of shares of any class or
series of capital stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series of capital stock and not to the vote of the holders of the
outstanding shares of capital stock as a whole. Unless otherwise provided by
the certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having a right to vote as a single class may be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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<PAGE> 5
directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such dates, times and places either within or without the
State of Delaware as the Board of Directors shall from time to time determine.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, the President or by any member of
the Board of Directors. Each special meeting shall be held at such date, time
and place either within or without the State of Delaware as shall be fixed by
the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting of the
Board of Directors shall be given which shall state the date, time and place of
the meeting. The written notice of any meeting shall be given at least
twenty-four hours in advance of the meeting to each director. Notice may be
given by letter, telegram, telex or facsimile and shall be deemed to have been
given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board of
Directors or any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and participation in
the meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise required
by law, at each meeting of the Board of Directors, the presence of one-third of
the total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors, unless
the vote of a greater number is required by law or the certificate of
incorporation. In case at any meeting of the Board of Directors a quorum shall
not be present, the members of the Board of Directors present may by majority
vote to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless otherwise
provided by the certificate of incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided by the
certificate of incorporation, the Board of Directors shall have the authority
to fix the compensation of directors, which compensation may include the
reimbursement of expenses incurred in connection with meetings of the Board of
Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member of such committee at any meeting thereof. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by the Board
of Directors, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority to take any
action which by law may only be taken by the Board of Directors or to take any
action with reference to: amending the certificate of incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors, fix the designation and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of dissolution,
removing or indemnifying directors or amending these By-laws; and, unless a
resolution of the Board of Directors expressly so provides, no such committee
shall have the power or authority to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation Law of the State of Delaware.
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<PAGE> 7
Section 4.3 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a
resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall elect
from its membership or outside thereof a President and a Secretary. The Board
of Directors may also elect from its membership a Chairman and a Vice Chairman,
and from its membership or outside thereof one or more Vice Presidents, one or
more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer
and one or more Assistant Treasurers and such other officers or agents as it
may determine. Unless otherwise provided by the certificate of incorporation,
any number of offices may be held by the same person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided by the Board of Directors when electing any officer, each
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his election, or until
his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as shall be
stated in these By-laws or in a resolution of the Board of Directors which is
not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer. The
Chairman of the Board and Chief Executive Officer (the "Chairman") shall be the
chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or she shall
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<PAGE> 8
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the powers of the
Board of Directors and the Chairman, shall have general charge of the business,
affairs and property of the Corporation and control over its officers, agents
and employees; and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, if any, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The President shall have such other powers and perform such
other duties as may be prescribed by the Chairman or the Board of Directors or
as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The Secretary
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if any, of the
Corporation shall have such duties and powers as generally pertain to their
respective offices and such other duties and powers as the Board of Directors
shall from time to time delegate to each such officer. The Board of Directors
may require any officer, agent or employee to give security, by bond or
otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of each officer
shall be fixed by the Board of Directors and no officer shall be prevented from
receiving such compensation by virtue of his also being a director.
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<PAGE> 9
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of capital
stock of the Corporation shall be entitled to have a certificate signed by or
in the name of the Corporation by the Chairman or Vice Chairman, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
if any, or the Secretary or an Assistant Secretary, certifying the number of
shares owned by him in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay the
expenses (including attorneys' fees) incurred by an indemnitee in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
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<PAGE> 10
by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director of officer is not entitled to be
indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on any person
by this Article VII shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation, if any,
to indemnify or to advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever notice is required to be given by law, the certificate of
incorporation or these By-laws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business
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<PAGE> 11
because the meeting is not lawfully called or convened. Unless otherwise
provided by the certificate of incorporation, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the Corporation
may be kept within or without the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors. Any records
maintained by the Corporation in the regular course of its business, including
its stock ledger, books of account and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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EXHIBIT 3.15
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SKI LIFTS, INC.
It is hereby certified that Ski Lifts, Inc. (the "Corporation ")
existing pursuant to the provisions of the Washington Business Corporation Act,
as from time to time amended (the "Act"), hereby is amending and restating its
Articles of Incorporation, as previously amended, in their entirety, and further
certified as follows:
The original Articles of Incorporation were filed on August 4, 1937.
The exact text of the entire Articles of Incorporation, as amended and restated
hereby (the "Certificate"), is set forth in its entirety below:
ARTICLE 1
The name of the Corporation is Ski Lifts, Inc.
ARTICLE 2
This Corporation is organized for the following purposes:
To engage in any business, trade or activity which may be conducted
lawfully by a corporation organized under the Act.
ARTICLE 3
The address of the Corporation's registered office in the State of
Washington is 520 Pike Street, Suite 2610, in the City of Seattle, County of
King. The name of the Corporation's registered agent at that address is CT
Corporation.
ARTICLE 4
4.1 The total number of shares of capital stock which the
Corporation shall have authority to issue is 29,000 shares of capital stock
consisting of (i) 1,000 shares of Common Stock, having no par value (the "Common
Stock"), and (ii) 28,000 shares of Preferred Stock, having no par value (the
"Preferred Stock"). Upon effectiveness of these Amended and Restated Articles
of Incorporation, each share of Common Stock heretofore authorized, issued and
outstanding shall be reclassified into (A) one (1) share of Common Stock, and
(B) twenty-eight (28) shares of Preferred Stock. Each share of Common Stock
heretofore authorized, issued and
<PAGE> 2
outstanding shall hereafter cease to be authorized, issued and outstanding. The
Common Stock and the Preferred Stock shall be identical in all respects and
shall have equal rights and privileges, except as otherwise provided in this
Article 4. The Corporation may issue fractional shares.
4.2 The relative rights, privileges and restrictions of the
shares of Common Stock and Preferred Stock are as follows:
(a) Dividend Rights. Dividends may be paid in cash or
otherwise upon Common Stock and Preferred Stock in the relationship and upon the
terms provided for below:
(i) Dividends on Common Stock. Dividends on Common
Stock may be declared and paid only to the extent of the assets of the
Corporation legally available therefor excluding such assets directly
attributable to the LLC (as hereafter defined). Dividends declared and paid with
respect to shares of Common Stock shall be charged to the amounts legally
available for the payment of dividends on Common Stock. Subject to the
foregoing, the declaration and payment of dividends on Common Stock, and the
amount thereof, shall at all times be solely in the discretion of the Board of
Directors of the Corporation.
(ii) Dividends on Preferred Stock. Dividends on
Preferred Stock may be declared and paid only to the extent of the assets of the
Corporation legally available therefor directly attributable to DRE, L.L.C., a
Delaware limited liability company (the "LLC"). Dividends on Preferred Stock
shall accrue on a daily basis at the rate of 9% per annum of the Liquidation
Value (as hereafter defined) thereof. Dividends declared and paid with respect
to shares of Preferred Stock shall be charged to the amounts legally available
for the payment of dividends on Preferred Stock. Such dividends shall accrue
whether or not they have been declared and whether or not there are funds of the
Corporation legally available for the payment of dividends. The "Liquidation
Value" with respect to each share of Preferred Stock shall equal $125 plus all
accumulated and unpaid dividends thereon as of the immediately preceding
Dividend Reference Date (as hereafter defined). Subject to the foregoing, the
declaration and payment of dividends on Preferred Stock, and the amount thereof,
shall at all times be solely in the discretion of the Board of Directors of the
Corporation.
(iii) Dividend Reference Date. To the extent not paid on
the last day of each of March, June, September and December beginning March 31,
1997 (each, a "Dividend Reference Date"), all dividends which have accrued on
each share of Preferred Stock outstanding during the three month period (or
shorter period in the case of the initial Dividend Reference Date) ending upon
each such Dividend Reference Date shall be accumulated and shall remain
accumulated dividends with respect to such share of Preferred Stock until paid.
2
<PAGE> 3
(iv) Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Corporation pays less than the
total amount of dividends then accrued with respect to the Preferred Stock, such
payment shall be distributed ratably among the holders of the Preferred Stock
based upon the number of shares of Preferred Stock held by each such holder and
such payment shall be applied to reduce any accumulated dividends with respect
to such shares of Preferred Stock in the order of maturity of such dividends.
(b) Voting Rights. Each holder of record of shares of Common
Stock shall be entitled to vote at all meetings of the shareholders and shall
have one (1) vote for each share of Common Stock held by him of record. The
holders of record of shares of Preferred Stock shall not have any voting power
whatsoever.
(c) Liquidation Rights. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
(i) the holders of Common Stock shall be entitled, after payment or provision
for payment of the debts and liabilities of the Corporation, to share ratably in
the remaining net assets of the Corporation excluding such assets directly
attributable to the LLC and (ii) the holders of Preferred Stock shall be
entitled, after payment or provision for payment of the debts and liabilities of
the Corporation, to share ratably in the remaining net assets of the Corporation
directly attributable to the LLC up to an amount not to exceed the Liquidation
Value of each share of Preferred Stock plus accrued and unpaid dividends
thereon. Neither the consolidation or merger of the Corporation into or with
any other corporation, nor the sale or transfer by the Corporation of all or any
part of its assets, will be deemed to be a liquidation, dissolution or winding
up of the Corporation under this paragraph (c).
(d) Optional Redemption. The Corporation may at any time
redeem all or any portion of the Preferred Stock then outstanding, provided that
any such redemption is made ratably among the holders of the Preferred Stock
based upon the number of shares of Preferred Stock held by each such holder.
For any such redemption, the Corporation shall pay a price per share of
Preferred Stock equal to the Liquidation Value.
ARTICLE 5
Except as may otherwise be provided by the Board of Directors of the
Corporation, no preemptive rights shall exist with respect to shares of capital
stock or securities convertible into shares of capital stock of the Corporation.
3
<PAGE> 4
ARTICLE 6
The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and shareholders:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) The directors shall have concurrent power with the
shareholders to make, alter, amend, change, add to or repeal the Bylaws of the
Corporation.
(c) The number of directors of the Corporation shall be
fixed in accordance with the Bylaws of the Corporation. Election of directors
need not be by written ballot unless the Bylaws so provide.
(d) Any vacancy on the Board of Directors that results from
an increase in the number of directors may be filled by a majority of the Board
of Directors then in office, provided that a quorum is present, and any other
vacancy occurring in the Board of Directors may be filled by a majority of the
directors then in office, even if less than a quorum. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his predecessor.
(e) A director shall have no liability to the Corporation or
its shareholders for monetary damages for conduct as a director, except for acts
or omissions that involve intentional misconduct by the director, or a knowing
violation of law by the director, or for conduct violating Section 23B.08.310 of
the Act, or for any transaction from which the director will personally receive
a benefit in money, property or services to which the director is not legally
entitled. If the Act is hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of the directors, then the
liability of a director shall be eliminated or limited to the full extent
permitted by the Act, as so amended. Any repeal or modification of this Article
shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification for or with
respect to an act or omission of such director occurring prior to such repeal or
modification.
(f) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the Act,
these Amended and Restated Articles of Incorporation, and any Bylaws adopted by
the shareholders; provided, however, that no Bylaws hereafter adopted by the
shareholders shall invalidate any prior act of the directors which would have
been valid if such Bylaws had not been adopted.
4
<PAGE> 5
ARTICLE 7
At each election for directors, every shareholder entitled to vote at
such election has the right to vote in person or by proxy the number of shares
held by such shareholder for as many persons as there are directors to be
elected. No cumulative voting for directors shall be permitted.
ARTICLE 8
The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an officer or employee of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually or reasonably incurred by such person in respect thereof, provided,
however, that the Corporation shall not be obligated to indemnify any such
person: (i) with respect to proceedings, claims or actions initiated or brought
voluntarily without the authorization or consent of the Corporation by such
person and not by way of defense; or (ii) for any amounts paid in settlement of
an action effected without the prior written consent of the Corporation to such
settlement. Such indemnification is not exclusive of any other right of
indemnification provided by law, agreement or otherwise.
ARTICLE 9
No amendment to or repeal of Articles 6(e) or 8 of this Amended and
Restated Articles of Incorporation shall apply to or have any effect on the
rights of any individual referred to in Articles 6(e) or 8 for or with respect
to acts or omissions of such individual occurring prior to such amendment or
repeal.
ARTICLE 10
Meetings of shareholders may be held within or without the State of
Washington, as the Bylaws may provide. The books of the Corporation may be kept
outside the State of Washington at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.
Election of directors need not be by written ballot unless the Bylaws of the
Corporation shall so provide. Any action to be taken by the directors or
shareholders of the Corporation may be taken by written consent.
5
<PAGE> 6
ARTICLE 11
The Bylaws may be altered, amended or repealed or new Bylaws may be
adopted by the Board of Directors, at any regular meeting of the shareholders or
the Board of Directors, or at any special meeting of the shareholders or the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new Bylaws be contained in the notice of such special meeting.
ARTICLE 12
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Amended and Restated Articles of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon shareholders herein are granted subject to this reservation; provided, so
long as the Sellers hold shares of Preferred Stock, the Corporation and the
shareholders shall not, without the written consent of a majority of the
Sellers holding such shares, amend, restate, or otherwise modify the terms and
conditions of Section 4.2 hereto if such amendment, restatement or modification
affects the rights, privileges, preferences and restrictions of the holders of
Preferred Stock.
6
<PAGE> 7
This Certificate has been duly adopted in accordance with the
provisions of the Act.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the undersigned duly authorized officer of the Corporation on this
21 day of February, 1997.
SKI LIFTS, INC.
By: /s/ David R. Moffett
---------------------------
Name: David R. Moffett
-------------------------
Title: President
------------------------
7
<PAGE> 1
EXHIBIT 3.16
AMENDED AND RESTATED
FEBRUARY 21, 1997
BY-LAWS
OF
SKI LIFTS, INC.
SHAREHOLDERS
Section 1. The first annual meeting of the shareholders of the
corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the 17th day
of November, 1937, at 2:00 o'clock P.M., at the registered office of the
corporation in Tacoma, Pierce County, Washington. Thereafter the annual
meeting of the shareholders of the corporation shall be held on the third
Wednesday in November of each year at the hour of 2:00 o'clock P.M. at the
registered office of the corporation or such other place as the directors may
fix in accordance with law, unless such day be a legal holiday in which case
such meeting shall be held on the day following.
Section 2. Special meetings of the shareholders may be called at any time
by the board of directors.
Section 3. Special meetings of the shareholders shall be called by
causing written notice of the time, place and purpose of the meeting to be
given to all shareholders entitled to vote at such meeting at least ten days
prior to the date named for the meeting. If such written notice be placed in
the United States mails, postage prepaid, and addressed to a shareholder at his
last known post-office address, notice shall be deemed to have been given him.
Notice of any shareholders' meeting may be waived in writing by any shareholder
at any time. In the election of directors, every shareholder of record shall
have
<PAGE> 2
the right to multiply the number of votes to which he may be entitled by
the number of directors to be elected, and he may cast all such votes for any
one candidate or he may distribute them among any two or more candidates.
DIRECTORS
Section 4. The business of the corporation shall be managed by a board
consisting of not less than one member. The number of directors may be
increased to any number not exceeding seven at any regular meeting of the board
of directors or any special meeting of the board of directors called for that
purpose. From and after the first annual meeting of the corporation, directors
shall be elected for a term of one year and until their successors are duly
elected and qualified.
Section 5. Regular or special meetings of the board of directors may be
held at the time and place fixed by a majority of the board of directors either
within or without the state. A special meeting of the board of directors may
be held at any time and place upon call of the president or any two directors,
upon two days' written or telegraphic notice to the remaining directors. A
meeting of the directors shall be held without notice immediately after the
annual meeting of the shareholders. Meetings of the directors without notice
may be held at any time upon the filing of a waiver of notice by the director
or directors not present. A majority of the board of directors shall be
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the directors present at a meeting at which a quorum is
present shall be the acts of the board of directors.
OFFICERS
Section 6. The board of directors shall each year at their first annual
meeting following the annual meeting of the shareholders and their election as
directors elect a president, vice-president, treasurer and secretary. No one
of said officers except the president need be a director, but a vice-president
who is not a director cannot succeed to or fill the office of president. Any
two of the offices of vice-president, secretary and treasurer may be combined
in one person.
Section 7. The board of directors may appoint such officers and agents as
may be necessary for the business of the corporation and may appoint a general
manager of the
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<PAGE> 3
corporation to hold office at the pleasure of the board of directors and
to receive such compensation as the directors may determine. Unless otherwise
provided by the board of directors, such general manager shall have full power
and authority to do and transact, supervise and direct all of the usual and
ordinary business of the corporation, subject only to the general supervision
and direction of the board of directors; and in the transaction of such
business the general manager shall have full power and authority to do whatever
may be proper and necessary for the convenient operation thereof, including the
written execution of bids, offers, agreements, contracts, bonds, obligations or
other instruments on behalf of the corporation and in its name, and such
manager shall be removable at the pleasure of the board unless otherwise
specifically provided in writing in his contract of employment.
Section 8. Any officer or agent may be removed by the board of directors
whenever in their judgment the best interests of the corporation will be served
thereby. Such removal, however, shall be without prejudice to the contract
rights of the person so removed.
MISCELLANEOUS
Section 9. Certificates of stock shall be in the usual form and device
subject to change and alteration by the board of directors in the manner
provided by law. Shares of stock of the corporation shall be transferable on
the books of the corporation by the holders in person or by attorney on
surrender of the certificates therefor. The books and transfer of stock of the
corporation may be closed before the holding of any meeting of shareholders for
a period of forty days if the board of directors shall by resolution so
provide.
Section 10. Dividends upon the capital stock of the corporation, when
earned, may be declared by the board of directors at any regular or special
meeting. The board of directors shall have the sole discretion in the
declaration of all dividends.
Section 11. The corporation shall have a seal consisting of a circle
having in its circumference the words "SKI LIFTS, INC., WASHINGTON" and in the
center the words "Corporate Seal, 1937".
3
<PAGE> 1
EXHIBIT 3.17
CERTIFICATE OF INCORPORATION
OF
GRAND TARGHEE INCORPORATED
FIRST. The name of the Corporation is:
Grand Targhee Incorporated
SECOND. The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is 600,000 shares of Common Stock, $.01 par value
per share.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.
FIFTH. The name and mailing address of the sole incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Moritz O. Bergmeyer Route 1, Box 3630
Alta, Wyoming 83422
SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
<PAGE> 2
2. The Board of Directors is expressly authorized to adopt, amend
or repeal the By-Laws of the Corporation.
SEVENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH. Except to the extent that the General Corporation Law of
Delaware prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability. No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
NINTH. The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or
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<PAGE> 3
has agreed to serve, at the request of the Corporation, as a director, officer
or trustee of, or in a similar capacity with, another corporation, partnership,
joint venture, trust or other enterprise (including any employee benefit plan),
or by reason of any action alleged to have been taken or omitted in such
capacity, against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom.
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayment.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of
Directors of the Corporation.
The indemnification rights provided in this Article (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than,
those set forth in this Article.
TENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
EXECUTED at Alta, Wyoming, on October 30, 1992.
/s/ Moritz O. Bergmeyer
------------------------------
Moritz O. Bergmeyer
Sole Incorporator
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<PAGE> 1
EXHIBIT 3.18
BY-LAWS
OF
GRAND TARGHEE INCORPORATED
<PAGE> 2
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 - Stockholders ............................................. 1
Section 1.1 Place of Meetings ........................... 1
Section 1.2 Annual Meeting .............................. 1
Section 1.3 Special Meetings ............................ 1
Section 1.4 Notice of Meetings .......................... 1
Section 1.5 Voting List ................................. 2
Section 1.6 Quorum ...................................... 2
Section 1.7 Adjournments ................................ 2
Section 1.8 Voting and Proxies .......................... 2
Section 1.9 Action at Meeting ........................... 3
Section 1.10 Action without Meeting ...................... 3
ARTICLE 2 - Directors ................................................ 3
Section 2.1 General Powers .............................. 3
Section 2.2 Number; Election and Qualification .......... 4
Section 2.3 Enlargement of the Board .................... 4
Section 2.4 Tenure ...................................... 4
Section 2.5 Vacancies.................................... 4
Section 2.6 Resignation ................................. 4
Section 2.7 Regular Meetings ............................ 4
Section 2.8 Special Meetings ............................ 5
Section 2.9 Notice of Special Meetings .................. 5
Section 2.10 Meetings by Telephone Conference Calls ...... 5
Section 2.11 Quorum ...................................... 5
Section 2.12 Action at Meeting ........................... 5
Section 2.13 Action by Consent ........................... 5
Section 2.14 Removal ..................................... 6
Section 2.15 Committees .................................. 6
Section 2.16 Compensation of Directors ................... 6
ARTICLE 3 - Officers ................................................. 7
Section 3.1 Enumeration ................................. 7
Section 3.2 Election .................................... 7
Section 3.3 Qualification ............................... 7
Section 3.4 Tenure ...................................... 7
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.5. Resignation and Removal ..................... 7
Section 3.6. Vacancies ................................... 8
Section 3.7. Chairman of the Board and Vice-
Chairman of the Board ..................... 8
Section 3.8. President ................................... 8
Section 3.9. Vice Presidents ............................. 8
Section 3.10. Secretary and Assistant Secretaries ......... 8
Section 3.11. Treasurer and Assistant Treasurers .......... 9
Section 3.12. Salaries .................................... 9
ARTICLE 4 - Capital Stock ............................................ 10
Section 4.1. Issuance of Stock ........................... 10
Section 4.2. Certificates of Stock ....................... 10
Section 4.3. Transfers ................................... 10
Section 4.4. Lost, Stolen or Destroyed
Certificates .............................. 11
Section 4.5. Record Date ................................. 11
ARTICLE 5 - General Provisions ....................................... 12
Section 5.1. Fiscal Year ................................. 12
Section 5.2. Corporate Seal .............................. 12
Section 5.3. Waiver of Notice ............................ 12
Section 5.4. Voting of Securities ........................ 12
Section 5.5. Evidence of Authority ....................... 12
Section 5.6. Certificate of Incorporation ................ 12
Section 5.7. Transactions with Interested Parties ........ 12
Section 5.8. Severability ................................ 13
Section 5.9. Pronouns .................................... 13
ARTICLE 6 - Amendments ............................................... 13
Section 6.1. By the Board of Directors ................... 13
Section 6.2. By the Stockholders ......................... 14
</TABLE>
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<PAGE> 4
BY-LAWS
OF
GRAND TARGHEE INCORPORATED
ARTICLE 1 - Stockholders
1.1 Place of Meetings. All meetings of stockholders shall be held at such
place within or without the State of Delaware as may be designated from time to
time by the Board of Directors or the President or, if not so designated, at
the registered office of the corporation.
1.2 Annual Meeting. The annual meeting of stockholders for the election
of directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors or the President (which date shall not be a legal holiday in the
place where the meeting is to be held) at the time and place to be fixed by the
Board of Directors or the President and stated in the notice of the meeting.
If no annual meeting is held in accordance with the foregoing provisions, the
Board of Directors shall cause the meeting to be held as soon thereafter as
convenient. If no annual meeting is held in accordance with the foregoing
provisions, a special meeting may be held in lieu of the annual meeting, and
any action taken at that special meeting shall have the same effect as if it
had been taken at the annual meeting, and in such case all references in these
By-Laws to the annual meeting of the stockholders shall be deemed to refer to
such special meeting.
1.3 Special Meetings. Special meetings of stockholders may be called at
any time by the President or by the Board of Directors. Business transacted at
any special meeting of stockholders shall be limited to matters relating to the
purpose or purposes stated in the notice of meeting.
1.4 Notice of Meetings. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
<PAGE> 5
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the corporation.
1.5 Voting List. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, at a place within the city
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time of the meeting, and may
be inspected by any stockholder who is present.
1.6 Quorum. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 Adjournments. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be
held under these By-Laws by the stockholders present or represented at the
meeting and entitled to vote, although less than a quorum, or, if no
stockholder is present, by any officer entitled to preside at or to act as
Secretary of such meeting. It shall not be necessary to notify any stockholder
of any adjournment of less than 30 days if the time and place of the adjourned
meeting are announced at the meeting at which adjournment is taken, unless
after the adjournment a new record date is fixed for the adjourned meeting. At
the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting.
1.8 Voting and Proxies. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
in the Certificate of Incorporation. Each stockholder of record entitled to
vote at a meeting of stockholders, or to express consent or dissent to
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<PAGE> 6
corporate action in writing without a meeting, may vote or express such consent
or dissent in person or may authorize another person or persons to vote or act
for him by written proxy executed by the stockholder or his authorized agent
and delivered to the Secretary of the corporation. No such proxy shall be
voted or acted upon after three years from the date of its execution, unless
the proxy expressly provides for a longer period.
1.9 Action at Meeting. When a quorum is present at any meeting, the
holders of a majority of the stock present or represented and voting on a
matter (or if there are two or more classes of stock entitled to vote as
separate classes, then in the case of each such class, the holders of a
majority of the stock of that class present or represented and voting on a
matter) shall decide any matter to be voted upon by the stockholders at such
meeting, except when a different vote is required by express provision of law,
the Certificate of Incorporation or these By-Laws. Any election by
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at the election.
1.10 Action without Meeting. Any action required or permitted to be taken
at any annual or special meeting of stockholders of the corporation may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote on such action were present and voted. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 2 - Directors
2.1 General Powers. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors, who may exercise all
of the powers of the corporation except as otherwise provided by law or the
Certificate of Incorporation. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
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<PAGE> 7
2.2 Number; Election and Qualification. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the stockholders or the Board of Directors, but in no event shall be less
than one. The number of directors may be decreased at any time and from time
to time either by the stockholders or by a majority of the directors then in
office, but only to eliminate vacancies existing by reason of the death,
resignation, removal or expiration of the term of one or more directors. The
directors shall be elected at the annual meeting of stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the corporation.
2.3 Enlargement of the Board. The number of directors may be increased at
any time and from time to time by the stockholders or by a majority of the
directors then in office.
2.4 Tenure. Each director shall hold office until the next annual meeting
and until his successor is elected and qualified, or until his earlier death,
resignation or removal.
2.5 Vacancies. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting
from an enlargement of the Board, may be filled by vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, and a director chosen to fill a
position resulting from an increase in the number of directors shall hold
office until the next annual meeting of stockholders and until his successor is
elected and qualified, or until his earlier death, resignation or removal.
2.6 Resignation. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some
other event.
2.7 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of
Directors; provided that any director who is absent when such a determination
is made shall be given notice of the determination. A regular meeting of the
Board of Directors may be held without notice immediately after and at the same
place as the annual meeting of stockholders.
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<PAGE> 8
2.8 Special Meetings. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
2.9 Notice of Special Meetings. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in person or by telephone at
least 48 hours in advance of the meeting, (ii) by sending a telegram or telex,
or delivering written notice by hand, to his last known business or home
address at least 48 hours in advance of the meeting, or (iii) by mailing
written notice to his last known business or home address at least 72 hours in
advance of the meeting. A notice or waiver of notice of a meeting of the Board
of Directors need not specify the purposes of the meeting.
2.10 Meetings by Telephone Conference Calls. Directors or any members of
any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall
constitute presence in person at such meeting.
2.11 Quorum. A majority of the total number of the whole Board of
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such
director so disqualified; provided, however, that in no case shall less than
one-third (1/3) of the number so fixed constitute a quorum. In the absence of
a quorum at any such meeting, a majority of the directors present may adjourn
the meeting from time to time without further notice other than announcement at
the meeting, until a quorum shall be present.
2.12 Action at Meeting. At any meeting of the Board of Directors at which
a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law, the
Certificate of Incorporation or these By-Laws.
2.13 Action by Consent. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting,
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<PAGE> 9
if all members of the Board or committee, as the case may be, consent to the
action in writing, and the written consents are filed with the minutes of
proceedings of the Board or committee.
2.14 Removal. Except as otherwise provided by the General Corporation Law
of Delaware, any one or more or all of the directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors, except that the directors elected by the holders
of a particular class or series of stock may be removed without cause only by
vote of the holders of a majority of the outstanding shares of such class or
series.
2.15 Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of the State of Delaware, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation and may authorize the
seal of the corporation to be affixed to all papers which may require it. Each
such committee shall keep minutes and make such reports as the Board of
Directors may from time to time request. Except as the Board of Directors may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by the directors or in such rules, its
business shall be conducted as nearly as possible in the same manner as is
provided in these By-Laws for the Board of Directors.
2.16 Compensation of Directors. Directors may be paid such compensation
for their services and such reimbursement for expenses of attendance at
meetings as the Board of Directors may from time to time determine. No such
payment shall preclude any director from serving the corporation or any of its
parent or subsidiary corporations in any other capacity and receiving
compensation for such service.
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<PAGE> 10
ARTICLE 3 - Officers
3.1 Enumeration. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 Election. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 Qualification. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 Resignation and Removal. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon the happening
of some other event.
Any officer may be removed at any time, with or without cause, by vote of a
majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who
resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the
year or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
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<PAGE> 11
3.6 Vacancies. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 Chairman of the Board and Vice-Chairman of the Board. The Board of
Directors may appoint a Chairman of the Board and may designate the Chairman of
the Board as Chief Executive Officer. If the Board of Directors appoints a
Chairman of the Board, he shall perform such duties and possess such powers as
are assigned to him by the Board of Directors. If the Board of Directors
appoints a Vice-Chairman of the Board, he shall, in the absence or disability
of the Chairman of the Board, perform the duties and exercise the powers of the
Chairman of the Board and shall perform such other duties and possess such
other powers as may from time to time be vested in him by the Board of
Directors.
3.8 President. The President shall, subject to the direction of the Board
of Directors, have general charge and supervision of the business of the
corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has
designated the Chairman of the Board or another officer as Chief Executive
Officer, the President shall be the Chief Executive Officer of the corporation.
The President shall perform such other duties and shall have such other powers
as the Board of Directors may from time to time prescribe.
3.9 Vice Presidents. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the President may from time to
time prescribe. In the event of the absence, inability or refusal to act of
the President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
3.10 Secretary and Assistant Secretaries. The Secretary shall perform such
duties and shall have such powers as the Board of Directors or the President
may from time to time prescribe. In addition, the Secretary shall perform such
duties and have such
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<PAGE> 12
powers as are incident to the office of the secretary, including without
limitation the duty and power to give notices of all meetings of stockholders
and special meetings of the Board of Directors, to attend all meetings of
stockholders and the Board of Directors and keep a record of the proceedings,
to maintain a stock ledger and prepare lists of stockholders and their
addresses as required, to be custodian of corporate records and the corporate
seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers
as the Board of Directors, the President or the Secretary may from time to time
prescribe. In the event of the absence, inability or refusal to act of the
Secretary, the Assistant Secretary, (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting
of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer and Assistant Treasurers. The Treasurer shall perform such
duties and shall have such powers as may from time to time be assigned to him
by the Board of Directors or the President. In addition, the Treasurer shall
perform such duties and have such powers as are incident to the office of
treasurer, including without limitation the duty and power to keep and be
responsible for all funds and securities of the corporation, to deposit funds
of the corporation in depositories selected in accordance with these By-Laws,
to disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such powers
as the Board of Directors, the President or the Treasurer may from time to time
prescribe. In the event of the absence, inability or refusal to act of the
Treasurer, the Assistant Treasurer, (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 Salaries. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
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ARTICLE 4 - Capital Stock
4.1 Issuance of Stock. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital
stock of the corporation held in its treasury may be issued, sold, transferred
or otherwise disposed of by vote of the Board of Directors in such manner, for
such consideration and on such terms as the Board of Directors may determine.
4.2 Certificates of Stock. Every holder of stock of the corporation shall
be entitled to have a certificate, in such form as may be prescribed by law and
by the Board of Directors, certifying the number and class of shares owned by
him in the corporation. Each such certificate shall be signed by, or in the
name of the corporation by, the Chairman or Vice-Chairman, if any, of the Board
of Directors, or the President or a Vice President, and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a
facsimile.
Each certificate for shares of stock which are subject to any restriction
on transfer pursuant to the Certificate of Incorporation, the By-Laws,
applicable securities laws or any agreement among any number of shareholders or
among such holders and the corporation shall have conspicuously noted on the
face or back of the certificate either the full text of the restriction or a
statement of the existence of such restriction.
4.3 Transfers. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to
the corporation or its transfer agent of the certificate representing such
shares properly endorsed or accompanied by a written assignment or power of
attorney properly executed, and with such proof of authority or the
authenticity of signature as the corporation or its transfer agent may
reasonably require. Except as may be otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the
right to vote
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<PAGE> 14
with respect to such stock, regardless of any transfer, pledge or other
disposition of such stock until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-Laws.
4.4 Lost, Stolen or Destroyed Certificates. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
4.5 Record Date. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent (or dissent) to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action. Such record date shall not be more than 60 nor less than 10
days before the date of such meeting, nor more than 60 days prior to any other
action to which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
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<PAGE> 15
ARTICLE 5 - General Provisions
5.1 Fiscal Year. Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the corporation shall begin on the first
day of January in each year and end on the last day of December in each year.
5.2 Corporate Seal. The corporate seal shall be in such form as shall be
approved by the Board of Directors.
5.3 Waiver of Notice. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a waiver
of such notice either in writing signed by the person entitled to such notice
or such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver,
or the appearance of such person or persons at such meeting in person or by
proxy, shall be deemed equivalent to such notice.
5.4 Voting of Securities. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at, any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
5.5 Evidence of Authority. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith
be conclusive evidence of such action.
5.6 Certificate of Incorporation. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
5.7 Transactions with Interested Parties. No contract or transaction
between the corporation and one or more of the directors or officers, or
between the corporation and any other corporation, partnership, association, or
other organization in which one or more of the directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board of
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<PAGE> 16
Directors or a committee of the Board of Directors which authorizes the
contract or transaction or solely because his or their votes are counted for
such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum;
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
5.8 Severability. Any determination that any provision of these By-Laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.
5.9 Pronouns. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of
the person or persons may require.
ARTICLE 6 - Amendments
6.1 By the Board of Directors. These By-Laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
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<PAGE> 17
6.2 By the Stockholders. These By-Laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of the holders
of a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.
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<PAGE> 1
EXHIBIT 3.19
AMENDMENT TO ARTICLES
OF INCORPORATION OF
GRAND TARGHEE RESORT, INC.
The undersigned, being the President and Secretary of Grand Targhee
Resort, Inc. respectively, hereby certify pursuant to the Wyoming Business
Corporation Act that the Articles of Incorporation of Grand Targhee, Inc. have
been amended as follows:
I. The action taken by the shareholders amends Article I of the Articles
of Incorporation to read as follows: "The name of the Corporation is B-V
Corporation."
II. The date of the adoption of the amendment by the shareholders is
September 5, 1984.
III. The number of shares of Grand Targhee Resort, Inc. outstanding at the
time of the adoption of the amendment is five hundred (500), and the number of
shares entitled to vote on the adoption of the amendment is five hundred (500).
IV. The number of shares voted for the adoption of the amendment is five
hundred (500) and the number of shares voted against the adoption of the
amendment is zero (0).
Signed at Alta, Wyoming this 5th day of September, 1984.
/s/ Larry H. Williamson
---------------------------
Larry Williamson, President
/s/ Alice Williamson
---------------------------
Alice Williamson, Secretary
<PAGE> 2
ARTICLES OF AMENDMENT
OF
B-V CORPORATION
The undersigned, being the President and Secretary of B-V Corporation
respectively, execute the following amendment of the Articles of Incorporation
of B-V Corporation as required by the Wyoming Business Corporation Act.
I.
The name of the Corporation is B-V Corporation.
II.
The amendment adopted by the Shareholders reads as follows: "The name
of the Corporation is Grand Targhee Resort, Inc."
III.
The date of the adoption of the amendment by the Shareholders is
October 9, 1973.
IV.
The number of shares outstanding in B-V Corporation at the time of the
adoption of the amendment is five hundred (500) shares, and the number of
shares entitled to vote on the adoption of the amendment is five hundred (500)
shares.
V.
The number of shares voted for the adoption of the amendment is five
hundred (500) shares and the number of shares voted against the adoption of the
amendment is zero (0) shares.
DATED at Cheyenne, Wyoming, this 12th day of October, 1973.
/s/ William J. Thomson II
------------------------------
President
/s/ John D. Callen
------------------------------
Secretary
<PAGE> 3
ARTICLES OF INCORPORATION
OF
B-V CORPORATION
The undersigned, natural person, of the age of 21 years or more, acting
as the incorporator of the incorporation under the Wyoming Business Corporation
Act adopts the following Articles of Incorporation for such Corporation.
I.
The name of the Corporation is B-V Corporation.
II.
The period of its duration is perpetual.
III.
The purpose or purposes for which the Corporation is organized are to
engage in and do any lawful acts concerning any and all lawful businesses for
which Corporation may be organized.
IV.
The aggregate number of Shares which the corporation shall have
authority to issue is 1,000 shares at a par value of $1.00 per share.
V.
The Corporation shall not commence business until consideration of the
value of at least $500.00 has been received for the issuance of shares.
VI.
Provisions limiting or denying to shareholders the preemptive right to
acquire additional or treasury shares of the Corporation are none.
VII.
Provisions for the regulation of the internal affairs of the
Corporation shall be provided for by the Bylaws adopted by the Board of
Directors; provided, however, that the power to alter, amend or repeal the
Bylaws or adopt new Bylaws shall be reserved to the shareholders.
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<PAGE> 4
VIII.
The address of the initial registered office of the Corporation is 1600
Van Lennen Avenue, P. O. Box 1586, Cheyenne, Wyoming 82001; and the name of the
initial registered agent thereof at this address is William J. Thomson II.
IX.
The number of directors constituting the initial Board of Directors of
the corporation is two and the names and addresses of the persons who are to
serve as Directors until the first annual meeting of shareholders or until
their successors are elected and shall qualify are: William J. Thomson II, 1600
Van Lennen Avenue, Cheyenne, Wyoming 82001 and John D. Callen, 515 East 22nd
Street, Cheyenne, Wyoming 82001. The number of directors to be elected at the
annual meeting of shareholders next following the time when the shares of the
corporation become owned beneficially or of record by more than two
shareholders or at a special meeting called for the election of Directors after
such time shall be three.
X.
Any action which may be taken, authorized, ratified, or approved at a
meeting of shareholders or at a meeting of directors may be taken, authorized,
ratified, or approved without a meeting by unanimous consent, authorization,
approval or ratification of the shareholders or of the directors, in a writing
or writings, signed by all the shareholders who would have been entitled to
notice of a meeting of the shareholders held for such purpose or by all of the
directors as the case may be, and filed with the record of the proceedings of
the corporation.
XI.
The name and address of each incorporator is: William J. Thomson II,
1600 Van Lennen, Cheyenne, Wyoming 82001.
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<PAGE> 1
EXHIBIT 3.20
BYLAWS
OF B-V CORPORATION
ARTICLE I
NAME, SEAL AND OFFICES
1.1 NAME. The name of this corporation is B-V Corporation
("Corporation").
1.2 SEAL. The seal of this Corporation shall be circular in form
and shall have inscribed thereon the name of the Corporation and the words,
"Corporate Seal, Wyoming". The Board of Directors may change the form of the
seal or the inscription thereon at its pleasure.
1.3 OFFICES. The principal office of the Corporation shall be
located in Alta, Wyoming. The Corporation may have such other offices, as the
Board of Directors may from time to time appoint, as the purposes of the
Corporation may require.
ARTICLE II
SHAREHOLDERS
2.1 ANNUAL MEETING. The annual meeting of the Shareholders shall
be held once in every calendar year at such time and place as may be determined
by the Board of Directors for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday, such meeting shall be
held on the next succeeding business day. If the election of Directors shall
not be held on the day designated herein for any annual meeting, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the Shareholders as soon thereafter as conveniently may
be.
2.2 SPECIAL MEETINGS. Special meetings of the Shareholders may be
called by the Board of Directors or by the Shareholders holding at least ten
percent (10%) of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting by signing, either manually or in
facsimile, dating and delivering to the Corporation's secretary one (1) or more
written demands for the meeting describing the purpose or purposes for which it
is to be held.
2.3 PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Wyoming as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all Shareholders may designate any
place, either within or without the State of Wyoming as the place for the
holding of such meeting. If no designation is made, or if
<PAGE> 2
a special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation.
2.4 NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting, to each Shareholder
of record entitled to vote at such meeting; except that if the authorized
shares are to be increased, not less than thirty (30) days notice shall be
given, and if sale of all or substantially all assets are to be voted upon, at
least twenty (20) days' notice shall be given. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail in a sealed
envelope addressed to the Shareholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid.
2.5 MEETING OF ALL SHAREHOLDERS. If all of the Shareholders shall
meet at any time and place, either within or without the State of Wyoming and
consent to the holding of a meeting, such meeting shall be valid without call
or notice, and at such meeting any corporate action may be taken.
2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board
of Directors of the Corporation may close its stock transfer books for a period
not exceeding sixty (60) and not less than thirty-five (35) days prior to the
date of any meeting of Shareholders, or the date for the payment of any
dividend or for the allotment of rights, or the date when any exchange or
reclassification of shares shall be effective; or, in lieu thereof, may fix in
advance a date, not exceeding sixty (60) and not less than thirty-five (35)
days prior to the date of any meeting of Shareholders, or to the date for the
payment of any dividend or for the allotment of rights, or to the date when any
exchange or reclassification of shares shall be effective, as the record date
for the determination of Shareholders entitled to notice of, or to vote at,
such meeting, or Shareholders entitled to receive payment of any such dividend
or to receive any such allotment of rights, or to exercise rights in respect of
any exchange or reclassification of shares; and the Shareholders of record on
such date shall be the Shareholders entitled to notice of and to vote at, such
meeting, or to receive payment of such dividend or to receive such allotment of
rights, or to exercise such rights in the event of an exchange or
reclassification of shares, as the case may be. If the transfer books are not
closed and no record date is fixed by the Board of Directors, the date on which
notice of the meeting is mailed shall be deemed to be the record date for the
determination of Shareholders entitled to vote at such meeting. Transferees of
shares which are transferred after the record date shall not be entitled to
notice of or to vote at such meeting.
2.7 VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the Corporation shall prepare, at least two (2)
days after notice of the meeting is given for which the list was prepared, a
complete list of the Shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list shall be kept on file at the principal office of the Corporation and
shall be subject to inspection by any Shareholder at any time during
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<PAGE> 3
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept at the Corporation's principal
office, shall be prima facie evidence as to who are the Shareholders entitled
to examine such list or share ledger or transfer book or to vote at any meeting
of Shareholders.
2.8 QUORUM. A majority of the outstanding shares of the
Corporation, represented in person or by proxy, shall constitute a quorum at
any meeting of Shareholders, except as otherwise provided by the Wyoming
Business Corporation Act and the Articles of Incorporation. In the absence of
a quorum at any such meeting, a majority of the shares so represented may
adjourn the meeting for a period not to exceed sixty (60) days at any one
adjournment without further notice. The Shareholders present at a duly
organized meeting may continue to transact business until adjournment
notwithstanding the withdrawal of enough Shareholders to leave less than a
quorum.
2.9 MANNER OF ACTING. At any Shareholder meeting at which a
quorum is present, the affirmative vote of a majority of the shares represented
at the meeting and entitled to vote shall be the act of the Shareholders;
provided, however, the affirmative vote of holders of sixty-six and two-thirds
percent (66 2/3%) of the outstanding shares entitled to vote shall be necessary
for the following corporate actions:
(i) Amendment to the Articles of Incorporation;
(ii) Merger, consolidation or exchange of the Corporation;
(iii) Sale or lease, exchange or other disposition of all
or substantially all of the property or assets of the Corporation; and
(iv) Dissolution by act of the Corporation.
2.10 PROXIES. At all meetings of Shareholders, a Shareholder may
vote by proxy executed in writing by the Shareholder or by his or her duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. Unless otherwise
provided in the proxy, a proxy may be revoked at any time before it is voted,
either by written notice filed with the Secretary or the Acting Secretary of
the meeting or by oral notice given by the Shareholder to the presiding officer
during the meeting. The presence of a Shareholder who has filed his or her
proxy shall not of itself constitute a revocation. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
2.11 VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one (1) vote upon each matter submitted to a vote
at a meeting of Shareholders.
2.12 VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent,
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<PAGE> 4
or proxy as the bylaws of such corporation may prescribe, or, in the absence of
such provision, as the board of directors of such corporation may determine.
Shares standing in the name of a deceased person may be voted by his or
her administrator or personal representative, either in person or by proxy.
Shares standing in the name of a guardian, conservator, or trustee may be voted
by such fiduciary, either in person or by proxy, but no guardian, conservator,
or trustee shall be entitled, as such fiduciary, to vote shares held by him or
her without a transfer of such shares into his or her name.
Shares held by a minor or incompetent may be voted by the minor or
incompetent in person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to the vote the Secretary of the
Corporation has actual knowledge that the Shareholder is a minor, or that the
Shareholder has been adjudicated an incompetent or that judicial proceedings
have been started for the appointment of a guardian.
As to shares held in the names of two or more persons whether
fiduciaries, members of a partnership, tenants in common, tenants by the
entireties, joint tenants or otherwise or if two or more persons have the same
fiduciary relationship respecting the same shares, voting with respect to the
shares shall have the following effect:
(i) If only one person votes, his or her act binds all;
(ii) If two or more persons vote, the act of the majority
so voting binds all; or
(iii) If two or more persons vote, but the vote is evenly
split on any particular matter, each faction may vote the securities in
question proportionately, or any person voting the shares of a beneficiary, if
any, may apply to any court of competent jurisdiction in the State of Wyoming
to appoint an additional person to act with the persons so voting the shares.
The shares shall then be voted as determined by a majority of such persons and
the person appointed by the court. If a tenancy is held in unequal interests,
a majority or even split for the purpose of this subparagraph (iii) shall be a
majority or even split in interest.
The effects of voting stated above shall not be applicable if the
Secretary of the Corporation is given written notice of alternative voting
provisions and is furnished with a copy of the instrument or order wherein the
alternate voting provisions are stated.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority so
to do be contained in an appropriate order of the court by which such receiver
was appointed.
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<PAGE> 5
A Shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Corporation, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
Corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on
and after the date on which written notice of redemption has been mailed to
Shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
2.13 VOTING BY BALLOT. Voting on any question or in any election
may be by voice vote unless the presiding officer shall order or any
Shareholder shall demand that voting be by ballot.
2.14 INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the Shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Shareholders entitled to vote with respect to the subject
matter thereof. The action shall be evidenced by one (1) or more written
consents describing the action taken, signed, either manually or in facsimile,
by the holders of the requisite number of shares entitled to vote on the
action, and delivered to the Corporation for inclusion in the minutes or filing
with the corporate records.
2.15 PARTICIPATION BY ELECTRONIC MEANS. The Shareholders may
participate in any meeting of Shareholders by means of telephone conference or
similar communications equipment by which all persons participating in the
meeting can hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
ARTICLE III
DIRECTORS
3.1 GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors.
3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of Directors
shall be fixed from time to time by resolution of the Board of Directors.
There may not be less than one (1) Director. Each Director shall hold office
until the next annual meeting of Shareholders or until his or her successor
shall have been elected and qualified.
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<PAGE> 6
Directors shall be natural persons, eighteen (18) years of age or older, but
need not be residents of Wyoming or Shareholders of the Corporation.
3.3 REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw, immediately after, and at
the same place as, the annual meeting of Shareholders for the purpose of
organization, election of corporate officers, election or appointment of other
officers, agents or employees and for any other proper business. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Wyoming, for the holding of additional regular meetings
without other notice than such resolution.
3.4 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any two Directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Wyoming, as the place
for holding any special meeting of the Board of Directors called by them.
3.5 NOTICE. Notice of any special meeting shall be given at least
two (2) days previously thereto by written notice delivered personally or
mailed to each Director at his or her business address, telex or by telegram.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail in a sealed envelope so addressed, with postage thereon
prepaid. If notice be given by telex or telegram, such notice shall be deemed
to be delivered when the telegram is delivered to the telegraph company. Any
Director may waive notice of any meeting. The attendance of a Director at any
meeting shall constitute a waiver of notice of such meeting, except where a
Director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.6 QUORUM. A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors, provided, that if less than a majority of the Directors are present
at said meeting, a majority of the Directors present may adjourn the meeting
for a period not to exceed sixty (60) days without further notice.
3.7 MANNER OF ACTING. Except as otherwise required by law or by
the Articles of Incorporation, the act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
3.8 COMPENSATION. Directors as such shall not receive any stated
salaries for their services, but by resolution of the Board of Directors, a
fixed sum and expense of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board of Directors; provided that
nothing herein contained shall be construed to preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
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<PAGE> 7
3.9 INFORMAL ACTION BY DIRECTORS. Any action required to be taken
at a meeting of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
of the Directors. Such consent shall have the same force and effect as a
unanimous vote of the Directors.
3.10 PARTICIPATION BY ELECTRONIC MEANS. Any members of the Board
of Directors or any committee designated by such Board may participate in a
meeting of the Board of Directors or committee by means of telephone conference
or similar communications equipment by which all persons participating in the
meeting can hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
3.11 VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors. A Director elected to
fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office. Any directorship to be filled by reason of an increase
in the number of directors may be filled by the affirmative vote of a majority
of the Directors then in office or by an election at an annual meeting or at a
special meeting called for that purpose. A Director chosen to fill a position
resulting from an increase in the number of directors shall hold office until
the next election of Directors by the Shareholders and until his or her
successor shall have been elected and qualified.
3.12 RESIGNATION. Any Director of the Corporation may resign at
any time by giving written notice to the President or the Secretary of the
Corporation. The resignation of any Director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective. When one or more Directors shall resign
from the Board, effective at a future date, a majority of the Directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the results of the vote thereon to take effect when such
resignation or resignations shall become effective.
3.13 REMOVAL OF DIRECTORS. At a meeting called expressly for the
purpose of removal of Directors, the Shareholders may remove the entire Board
of Directors or any lesser number with or without cause, by a vote of the
holders of the majority of the shares then entitled to vote at an election of
Directors.
3.14 PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a Director who voted in favor of such action.
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ARTICLE IV
COMMITTEES
4.1 DESIGNATION AND AUTHORITY. The Board of Directors may adopt a
resolution designating from among its members an Executive Committee and one or
more other committees each of which, to the extent provided in the resolution,
shall have all the authority of the Board of Directors; except no committee
shall have the authority of the Board of Directors in reference to amending the
Articles of Incorporation, adopting a plan of merger or consolidation,
recommending to the Shareholders the sale, lease, exchange, or other
disposition of all or substantially all of the property and assets of the
Corporation otherwise than in the usual and regular course of its business,
recommending to the Shareholders a voluntary dissolution of the Corporation or
a revocation thereof, or amending the Bylaws of the Corporation. The
designation of such committees and the delegation thereto of authority shall
not operate to relieve the Board of Directors, or any member thereof, of any
responsibility Imposed by law.
4.2 COMPENSATION. The members of any committee shall not receive
any stated salary for their services as such, but by resolution of the Board of
Directors a fixed reasonable sum or expenses of attendance, if any, or both,
may be allowed for attendance at each regular or special meeting of such
committee. The Board of Directors shall have power in its discretion to
contract for and to pay to any member of any committee, rendering usual or
exceptional services to the Corporation, special compensation appropriate to
the value of such services.
ARTICLE V
OFFICERS
5.1 NUMBER. The Officers of the Corporation shall be at least a
President and a Vice President, each of whom shall be elected by the Board of
Directors. Such other officers, including without limitation a Secretary and a
Treasurer and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices may be held by
the same person, except the offices of President and Secretary. The Officers
of a Corporation shall be natural persons of the age of eighteen (18) years or
older.
5.2 ELECTION AND TERM OF OFFICE. The Officers cf the Corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of Shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. Each
Officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
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5.3 REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
5.4 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
5.5 PRESIDENT. The President shall be the principal executive
officer of the Corporation and shall in general supervise and control all of
the business and affairs of the Corporation. He or she shall preside at all
meetings of the Shareholders and of the Board of Directors. The President
shall have general supervision of all other officers, agents and employees of
the Corporation, and in any case when the duties of the officers, agents or
employees of the Corporation are not specifically prescribed by the Bylaws or
by Board resolution, they shall be supervised by the President. He or she may
sign, with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts, or other instruments,
which the Board of Directors have authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed;
and in general shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of Directors from time to
time.
5.6 THE VICE PRESIDENTS. The Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall, in the absence of the President or
in the event of his or her death, inability or refusal to act, perform all
duties of the President, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the President. Any Vice President may
sign, with the Secretary or an Assistant Secretary, certificates for shares of
the Corporation; and shall perform such other duties as from time to time may be
assigned to him or her by the President or by the Board of Directors.
5.7 THE TREASURER. if a Treasurer is appointed by the Board of
Directors, and if required by the Board of Directors, the Treasurer shall give
a bond for the faithful discharge of his or her duties in such sum and with
such surety or sureties as the Board of Directors shall determine. He or she
shall:
(a) Have charge and custody of and be responsible for all
funds and securities of the Corporation from any source whatsoever, and deposit
all such monies in the name of the Corporation in such banks, trust companies
or other depositories as shall be selected in accordance with the provisions of
Article VI of these Bylaws; and
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(b) In general perform all the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the Board of Directors.
5.8 THE SECRETARY. If appointed by the Board of Directors, the
Secretary shall:
(a) Keep the Minutes of the Shareholders' and of the
Board of Directors' meetings in one or more books provided for that purpose;
(b) See that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law;
(c) Be custodian of the corporate records and of the seal
of the Corporation and see that the seal of the Corporation is affixed to all
certificates for shares prior to the issue thereof and to all documents, and
execution of which on behalf of the Corporation under its seal is duly
authorized in accordance with the provisions of these Bylaws;
(d) Keep a register of the post office address of each
Shareholder which shall be furnished to the Secretary by such Shareholder;
(e) Sign with the President, or a Vice President,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors;
(f) Have general charge of the stock transfer books of
the Corporation; and
(g) In general perform all duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
or her by the President or by the Board of Directors.
5.9 ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers if any shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with
such sureties as the Board of Directors shall determine. The Assistant
Secretaries as thereunto authorized by the Board of Directors may sign with the
President or a Vice President certificates for shares of the Corporation, the
issue of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers and Assistant Secretaries, in general,
shall perform such duties as shall be assigned to them by the Treasurer or the
Secretary, respectively, or by the President or the Board of Directors.
5.10 SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no Officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a Director
of the Corporation.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
6.1 CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
6.2 LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from lime to time be
determined by resolution of the Board of Directors.
6.4 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
7.1 REGULATION. The Board of Directors may make such rules and
regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates for shares of the Corporation, including the
appointment of transfer agents and registrars.
7.2 CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be respectively numbered serially for each class of
shares, or series thereof, as they are issued, may be impressed with the
corporate seal, if any, or a facsimile thereof, and shall be signed by the
President and Vice President; provided that such signatures may be facsimile if
the certificate is countersigned by a transfer agent, or registered by a
registrar other than the Corporation itself or its employee. Each Certificate
shall state the name of the Corporation, the fact that the Corporation is
organized or incorporated under the laws of the State of Wyoming, the name of
the person to whom issued, the date of issue, the class (or series of any
class), the number of shares reprinted thereby and the par value of the shares
represented thereby or a statement that such shares are without par value. A
statement of the designations, preferences, qualifications, limitations,
restrictions and special or relative rights of the shares of each class shall
be set forth in full or summarized on the face or back of the certificates
which the Corporation shall issue, or in lieu thereof, the certificate may set
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forth that such a statement or summary will be furnished to any Shareholder
upon request without charge. Each certificate shall be otherwise in such form
as may be prescribed by the Board of Directors and as shall conform to the
rules of any stock exchange on which the shares may be listed.
The Corporation shall not issue certificates representing
fractional shares and shall not be obligated to make any transfers creating a
fractional interest in a share of stock. The Corporation may, but shall not be
obligated to, issue scrip in lieu of any fractional shares, such scrip to have
terms and conditions specified by the Board of Directors.
7.3 CANCELLATION OF CERTIFICATES. All certificates surrendered to
the Corporation for transfer shall be cancelled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and cancelled, except as herein provided with
respect to lost, stolen or destroyed certificates.
7.4 LOST, STOLEN OR DESTROYED CERTIFICATES. Any Shareholder
claiming that his or her certificate for shares is lost, stolen or destroyed
may make an affidavit or affirmation of that fact and lodge the same with the
Secretary of the Corporation, accompanied by a written request for a new
certificate. Thereupon, such Shareholder shall give a satisfactory bond of
indemnity to the Corporation not exceeding an amount double the value of the
shares as represented by such certificate (but only if such bond is expressly
required by the President of the Corporation) and a new certificate may be
issued of the same tenor and representing the same number, class and series of
shares as were represented by the certificate alleged to be lost, stolen or
destroyed.
7.5 TRANSFER OF SHARES. Subject to the terms of any shareholder
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or these Bylaws, shares of the
Corporation shall be transferable on the books of the Corporation by the holder
thereof in person or by his or her duly authorized attorney, upon the surrender
and cancellation of a certificate or certificates for a like number of shares.
Upon presentation and surrender of a certificate for shares properly endorsed
and payment of all taxes therefor, the transferee shall be entitled to a new
certificate or certificates in lieu thereof. As against the Corporation, a
transfer of shares can be made only on the books of the Corporation and in the
manner hereinabove provided, and the Corporation shall be entitled to treat the
holder of record of any share as the owner thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the statutes of the State of Wyoming.
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ARTICLE VIII
VOTING UPON SHARES OF OTHER CORPORATIONS
Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to vote either
in person or by proxy at any meeting of shareholders, and at any such meeting
may possess and exercise all of the rights and powers incident to the ownership
of such shares which, as the owner thereof, this Corporation might have
possessed and exercised if present. The Board of Directors may confer like
powers upon any other person and may revoke any such powers as granted at its
pleasure.
ARTICLE IX
INDEMNIFICATION AND EXPENSES OF SUIT
9.1 GENERAL. The Corporation shall indemnity an individual made a
party to any proceeding because he or she is a director, officer, employee or
agent of this Corporation against liability incurred in the proceeding if:
(a) He or she conducted himself or herself in good faith;
and
(b) He or she reasonably believed that his or her conduct
was in or at least not opposed to the best interest of this Corporation; and
(c) In the case of any criminal proceeding, he or she had
no reasonable cause to believe his or her conduct was unlawful.
9.2 BENEFIT PLANS. Indemnification shall also be provided for an
individual's conduct with respect to an employee benefit plan if the individual
reasonably believed his or her conduct to be in the best interests of the
participants in and beneficiaries of the plan.
9.3 ADVANCE PAYMENTS. The Corporation shall pay for or reimburse
the reasonable expenses incurred by a director, officer, employee or agent of
the Corporation who is a party to a proceeding in advance of final disposition
of the proceeding if:
(a) The individual furnishes the Corporation with a
written affirmation of his or her good faith belief that he or she has met the
standards of conduct described herein;
(b) The individual furnishes this Corporation with a
written undertaking executed personally or on his or her behalf to repay the
advance if it is ultimately determined that he or she did not meet the standard
of conduct; and
(c) A determination is made that the facts then known to
those making the determination would not preclude indemnification under the
law.
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The undertaking required by this paragraph shall be an unlimited
general obligation but need not be secured and may be accepted without
reference to financial ability to make repayment.
9.4 NONEXCLUSIVE RIGHT. The indemnification and advance of
expenses authorized herein shall not be exclusive to any other rights to which
any director, officer, employee or agent may be entitled under any other
agreement, vote of the Corporation's Shareholders or disinterested members of
the Board of Directors, or otherwise. These Bylaws shall not be interpreted to
limit in any manner the indemnification or right to advancement for expenses of
an individual who would otherwise be entitled thereto. These Bylaws shall be
interpreted as mandating indemnification and advancement of expenses to the
extent permitted by law.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be such twelve-month period
as determined by the Board of Directors after consultation with the
Corporation's independent accountant.
ARTICLE XI
DIVIDENDS
The Board of Directors may from time to time, declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these Bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the law under which this Corporation
is organized, waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XIII
AMENDMENTS
The power to alter, amend or repeal Bylaws and to adopt new Bylaws is
reserved to the Board of Directors, to be exercised by majority vote of the
Board of Directors.
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EXHIBIT 3.21
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SIERRA SKI ACQUISITION CORP.,
a Delaware corporation
SIERRA SKI ACQUISITION CORP., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(hereinafter, the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That in lieu of a meeting, the sole director of the Corporation
has given written consent in accordance with the provisions of Section 141 of
the General Corporation Law of the State of Delaware, proposing and declaring
advisable that Article FIRST of the Certificate of Incorporation of the
Corporation be hereby deleted in its entirety and replaced with the following:
"FIRST: The name of the corporation is TARGHEE COMPANY (hereinafter,
the "Corporation")."
SECOND: That in lieu of a meeting, the sole stockholder of the
Corporation has given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment duly adopted in accordance with
the applicable provisions of Sections 141, 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment to the Certificate of Incorporation this 14th day of March, 1997.
SIERRA SKI ACQUISITION CORP.
By: /s/ George N. Gillett, Jr.
-------------------------------
George N. Gillett, Jr., Chairman
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
SIERRA SKI ACQUISITION CORP.,
a Delaware corporation
FIRST. The name of the corporation is SIERRA SKI ACQUISITION CORP.
(hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal
or modification of the first sentence of this Article SEVENTH shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
7th day of October, 1996.
/s/ Oscar A. David
-----------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.22
BY-LAWS
OF
TARGHEE COMPANY,
A DELAWARE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of
stockholders shall be held each year for the election of directors at such
date, time and place either within or without the State of Delaware as shall be
designated by the Board of Directors. Any other proper business may be
transacted at the annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders
may be called at any time by the Board of Directors, the Chairman (as
hereinafter defined), if any, the Vice Chairman, if any, or the President.
Each special meeting shall be held at such date, time and place either within
or without the State of Delaware as shall be designated by the person or
persons calling such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by
law, whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders,
annual or special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of any such adjourned meeting
if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Corporation may transact
any business which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the
certificate of incorporation, at each meeting of stockholders, the presence in
person or by proxy of the holders of a majority in voting power of the
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. For purposes of the foregoing, two or
more classes or series of capital stock shall be considered a single class if
the holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum, the stockholders so present and
represented may, by vote of the holders of a majority of the shares of capital
stock of the Corporation so present and represented, adjourn the meeting from
time to time until a quorum shall attend, and the provisions of Section 2.4 of
these By-laws shall apply to each such adjournment. Shares of its own capital
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited to
its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be
presided over by the Chairman, if any, or in his absence by the Vice Chairman,
if any, or in his absence by the President, or in the absence of the foregoing
persons by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary shall
act as secretary of the meeting, but in his absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be by written ballot.
Voting of stockholders for all other matters need not be
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by written ballot unless so determined at a stockholders meeting by the
vote of the holders of a majority of the outstanding shares of each class of
capital stock present in person or represented by proxy at the meeting and
entitled to vote on the subject matter submitted to a vote at the meeting.
Unless otherwise provided by law or the certificate of incorporation, the vote
of the holders of a majority of the shares of capital stock of the Corporation
present in person or represented by proxy at a meeting at which a quorum is
present and entitled to vote on the subject matter submitted to a vote at the
meeting shall be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
more than ten days after the date upon which the resolution fixing the record
date with respect to the taking of corporate action by written consent without
a meeting is adopted by the Board of Directors, nor more than sixty days prior
to any other action. If no record date is fixed: (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; (c) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when prior action by
the Board of Directors is required, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (d) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 2.9 List of Stockholders Entitled to Vote. The
Secretary shall make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided by law or by the certificate of incorporation, any
action required by law to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless
otherwise provided by law or the certificate of incorporation, the business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors. Unless otherwise provided by the certificate of
incorporation, the Board of Directors shall initially consist of one (1)
director and thereafter shall consist of such number of directors as the Board
of Directors shall from time to time designate. Unless otherwise provided by
the certificate of incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Corporation directed to the Board of
Directors or the Secretary. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of a majority of shares of capital stock then entitled to vote at
an election of directors. Whenever the holders of shares of any class or
series of capital stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series of capital stock and not to the vote of the holders of the
outstanding shares of capital stock as a whole. Unless otherwise provided by
the certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having a right to vote as a single class may be filled
by the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such dates, times and places either within or
without the State of Delaware as the Board of Directors shall from time to time
determine.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman, the President or by any
member of the Board of Directors. Each special meeting shall be held at such
date, time and place either within or without the State of Delaware as shall be
fixed by the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting
of the Board of Directors shall be given which shall state the date, time and
place of the meeting. The written notice of any meeting shall be given at
least twenty-four hours in advance of the meeting to each director. Notice may
be given by letter, telegram, telex or facsimile and shall be deemed to have
been given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the
Board of Directors or any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or of such committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting pursuant to this by-law shall constitute presence
in person at such meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise
required by law, at each meeting of the Board of Directors, the presence of
one-third of the total number of directors shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors, unless the vote of a greater number is required by law or the
certificate of incorporation. In case at any meeting of the Board of Directors
a quorum shall not be present, the members of the Board of Directors present
may by majority vote to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman, or in his absence by the President, or
in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless
otherwise provided by the certificate of incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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writing or writings are filed with the minutes of proceedings
of the Board of Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise
provided by the certificate of incorporation, the Board of Directors
shall have the authority to fix the compensation of directors, which
compensation may include the reimbursement of expenses incurred in connection
with meetings of the Board of Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member of such committee at any meeting thereof. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by
the Board of Directors, to the extent provided in a resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority to take any action which by law may only be taken by the Board of
Directors or to take any action with reference to: amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending these By-laws; and,
unless a resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the General Corporation Law of the State of
Delaware.
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Section 4.3 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
adopt, amend and repeal rules for the conduct of its business. In the absence
of a resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after
the annual meeting of stockholders in each year, the Board of Directors
shall elect from its membership or outside thereof a President and a Secretary.
The Board of Directors may also elect from its membership a Chairman and a Vice
Chairman, and from its membership or outside thereof one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers or agents as it may determine. Unless otherwise provided by the
certificate of incorporation, any number of offices may be held by the same
person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies.
Except as otherwise provided by the Board of Directors when electing any
officer, each officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his
election, or until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in these By-laws or in a resolution of the Board of Directors which
is not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer.
The Chairman of the Board and Chief Executive Officer (the "Chairman") shall be
the chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or shall
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preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the
powers of the Board of Directors and the Chairman, shall have general
charge of the business, affairs and property of the Corporation and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, if any, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation. The President shall have such other
powers and perform such other duties as may be prescribed by the Chairman or
the Board of Directors or as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The
Secretary shall attend all meetings of the Board of Directors, all meetings of
the committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if
any, of the Corporation shall have such duties and powers as generally pertain
to their respective offices and such other duties and powers as the Board of
Directors shall from time to time delegate to each such officer. The Board of
Directors may require any officer, agent or employee to give security, by bond
or otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of each
officer shall be fixed by the Board of Directors and no officer shall be
prevented from receiving such compensation by virtue of his also being a
director.
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ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares
of capital stock of the Corporation shall be entitled to have a certificate
signed by or in the name of the Corporation by the Chairman or Vice Chairman,
if any, or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, if any, or the Secretary or an Assistant Secretary,
certifying the number of shares owned by him in the Corporation. Any or all
of the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation
shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay
the expenses (including attorneys' fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
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<PAGE> 10
by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director of officer is not entitled to be
indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on
any person by this Article VII shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation,
if any, to indemnify or to advance expenses to any person who was or is serving
at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of
the foregoing provisions of this Article VII shall not adversely affect any
right or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the
Corporation shall be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law, the
certificate of incorporation or these By-laws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business
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because the meeting is not lawfully called or convened. Unless
otherwise provided by the certificate of incorporation, neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No
contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the Board
of Directors or committee thereof which authorizes the contract or transaction,
or solely because his or their votes are counted for such purpose, if: (a)
the material facts as to his relationship or interest and as to the contract
or transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors constitute
less than a quorum; or (b) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (c) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee
thereof or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the
Corporation may be kept within or without the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs or any other information storage device provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended
or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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EXHIBIT 3.23
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BEAR MOUNTAIN SKI ACQUISITION CORP.,
a Delaware corporation
BEAR MOUNTAIN SKI ACQUISITION CORP., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (hereinafter, the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That in lieu of a meeting, the sole director of the Corporation
has given written consent in accordance with the provisions of Section 141 of
the General Corporation Law of the State of Delaware, proposing and declaring
advisable that Article FIRST of the Certificate of Incorporation of the
Corporation be hereby deleted in its entirety and replaced with the following:
"FIRST: The name of the corporation is TARGHEE SKI CORP. (hereinafter,
the "Corporation")."
SECOND: That in lieu of a meeting, the sole stockholder of the
Corporation has given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment duly adopted in accordance with
the applicable provisions of Sections 141, 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment to the Certificate of Incorporation this 14th day of March, 1997.
BEAR MOUNTAIN SKI ACQUISITION CORP.
By: /s/ George N. Gillett, Jr.
-----------------------------------
George N. Gillett, Jr., Chairman
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
BEAR MOUNTAIN SKI ACQUISITION CORP.,
a Delaware corporation
FIRST. The name of the corporation is BEAR MOUNTAIN SKI ACQUISITION
CORP. (hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole incorporator is:
Name Mailing Address
---- ---------------
Oscar A. David Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal
or modification of the first sentence of this Article SEVENTH shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
7th day of October, 1996.
/s/ Oscar A. David
-----------------
Oscar A. David
Sole Incorporator
<PAGE> 1
EXHIBIT 3.24
BY-LAWS
OF
TARGHEE SKI CORP.,
A DELAWARE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be The Corporation Trust Company.
Section 1.2 Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of
stockholders shall be held each year for the election of directors at such
date, time and place either within or without the State of Delaware as shall be
designated by the Board of Directors. Any other proper business may be
transacted at the annual meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders
may be called at any time by the Board of Directors, the Chairman (as
hereinafter defined), if any, the Vice Chairman, if any, or the President.
Each special meeting shall be held at such date, time and place either within
or without the State of Delaware as shall be designated by the person or
persons calling such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law,
whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the
certificate of incorporation, at each meeting of stockholders, the presence in
person or by proxy of the holders of a majority in voting power of the
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. For purposes of the foregoing, two or
more classes or series of capital stock shall be considered a single class if
the holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum, the stockholders so present and
represented may, by vote of the holders of a majority of the shares of capital
stock of the Corporation so present and represented, adjourn the meeting from
time to time until a quorum shall attend, and the provisions of Section 2.4 of
these By-laws shall apply to each such adjournment. Shares of its own capital
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited to
its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be
presided over by the Chairman, if any, or in his absence by the Vice Chairman,
if any, or in his absence by the President, or in the absence of the foregoing
persons by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary shall
act as secretary of the meeting, but in his absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of capital stock
held by him which has voting power on the subject matter submitted to a vote at
the meeting. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary
before the proxy is voted. Unless otherwise required by law, voting of
stockholders for the election of directors need not be
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<PAGE> 3
by written ballot. Voting of stockholders for all other matters need not be by
written ballot unless so determined at a stockholders meeting by the vote of
the holders of a majority of the outstanding shares of each class of capital
sock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter submitted to a vote at the meeting. Unless
otherwise provided by law or the certificate of incorporation, the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at a meeting at which a quorum is present and
entitled to vote on the subject matter submitted to a vote at the meeting shall
be the act of the stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
more than ten days after the date upon which the resolution fixing the record
date with respect to the taking of corporate action by written consent without
a meeting is adopted by the Board of Directors, nor more than sixty days prior
to any other action. If no record date is fixed: (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (b) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; (c) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when prior action by
the Board of Directors is required, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (d) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary
shall make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at
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<PAGE> 4
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided by law or by the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless
otherwise provided by law or the certificate of incorporation, the business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors. Unless otherwise provided by the certificate of
incorporation, the Board of Directors shall initially consist of one (1)
director and thereafter shall consist of such number of directors as the Board
of Directors shall from time to time designate. Unless otherwise provided by
the certificate of incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Corporation directed to the Board of
Directors or the Secretary. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the entire
Board of Directors may be removed, with or without cause, by the vote of the
holders of a majority of shares of capital stock then entitled to vote at an
election of directors. Whenever the holders of shares of any class or series of
capital stock are entitled to elect one or more directors by the provisions of
the certificate of incorporation, the provisions of the preceding sentence shall
apply, in respect to the removal without cause of a director or directors so
elected, to the vote of the holders of the outstanding shares of that class or
series of capital stock and not to the vote of the holders of the outstanding
shares of capital stock as a whole. Unless otherwise provided by the
certificate of incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all
of the stockholders having a right to vote as a single class may be filled by
the vote of a majority of the directors then in office, although less than a
quorum, or by the vote of the sole remaining director. Whenever the holders of
shares of any class or classes of capital stock or series thereof are entitled
to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series thereof may be filled by the vote of a majority of the
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<PAGE> 5
directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such dates, times and places either within or
without the State of Delaware as the Board of Directors shall from time to time
determine.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman, the President or by any
member of the Board of Directors. Each special meeting shall be held at such
date, time and place either within or without the State of Delaware as shall be
fixed by the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting
of the Board of Directors shall be given which shall state the date, time and
place of the meeting. The written notice of any meeting shall be given at
least twenty-four hours in advance of the meeting to each director. Notice may
be given by letter, telegram, telex or facsimile and shall be deemed to have
been given when deposited in the United States mail, delivered to the telegraph
company or transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board
of Directors or any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or of such committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting pursuant to this by- law shall constitute presence
in person at such meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise
required by law, at each meeting of the Board of Directors, the presence of
one-third of the total number of directors shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors, unless the vote of a greater number is required by law or the
certificate of incorporation. In case at any meeting of the Board of Directors
a quorum shall not be present, the members of the Board of Directors present
may by majority vote to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman, or in his absence by the President, or
in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless
otherwise provided by the certificate of incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if all
members of the Board of Directors or of such committee consent thereto in
writing, and the
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<PAGE> 6
writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided
by the certificate of incorporation, the Board of Directors shall have the
authority to fix the compensation of directors, which compensation may include
the reimbursement of expenses incurred in connection with meetings of the Board
of Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member of such committee at any meeting thereof. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member.
Section 4.2 Power of Committees. Any committee designated by the
Board of Directors, to the extent provided in a resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority to take any action which by law may only be taken by the Board of
Directors or to take any action with reference to: amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending these By-laws; and,
unless a resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the General Corporation Law of the State of
Delaware.
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<PAGE> 7
Section 4.3 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
adopt, amend and repeal rules for the conduct of its business. In the absence
of a resolution by the Board of Directors or a provision in the rules of such
committee to the contrary, the presence of a majority of the total number of
members of such committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable
after the annual meeting of stockholders in each year, the Board of Directors
shall elect from its membership or outside thereof a President and a Secretary.
The Board of Directors may also elect from its membership a Chairman and a Vice
Chairman, and from its membership or outside thereof one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers or agents as it may determine. Unless otherwise provided by the
certificate of incorporation, any number of offices may be held by the same
person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies.
Except as otherwise provided by the Board of Directors when electing any
officer, each officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his
election, or until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in these By-laws or in a resolution of the Board of Directors which
is not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer.
The Chairman of the Board and Chief Executive Officer (the "Chairman") shall be
the chief executive officer of the Corporation and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in the general and active charge of the
entire business and affairs of the Corporation and shall be its chief policy
making officer. He or she shall
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<PAGE> 8
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by
the Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman
shall perform all the duties and responsibilities and exercise all the powers
of the President.
Section 5.5 The President. The President, subject to the powers
of the Board of Directors and the Chairman, shall have general charge of the
business, affairs and property of the Corporation and control over its
officers, agents and employees; and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, if any, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The President shall have such other powers and perform such
other duties as may be prescribed by the Chairman or the Board of Directors or
as may be provided in these By-laws.
Section 5.6 The Secretary and the Assistant Secretaries. The
Secretary shall attend all meetings of the Board of Directors, all meetings of
the committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman,
the President or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal, if any, of the Corporation. The
Secretary, or an Assistant Secretary, shall have authority to affix the
corporate seal, if any, to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the corporate seal, if any, and to attest the affixing by his
or her signature. The Assistant Secretary shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board of
Directors, the Chairman, the President or Secretary may, from time to time,
prescribe.
Section 5.7 Other Officers; Security. The other officers, if
any, of the Corporation shall have such duties and powers as generally pertain
to their respective offices and such other duties and powers as the Board of
Directors shall from time to time delegate to each such officer. The Board of
Directors may require any officer, agent or employee to give security, by bond
or otherwise, for the faithful performance of his duties.
Section 5.8 Compensation of Officers. The compensation of each
officer shall be fixed by the Board of Directors and no officer shall be
prevented from receiving such compensation by virtue of his also being a
director.
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<PAGE> 9
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of
capital stock of the Corporation shall be entitled to have a certificate signed
by or in the name of the Corporation by the Chairman or Vice Chairman, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, if any, or the Secretary or an Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. The Corporation
shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans (an "indemnitee"), against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. The Corporation shall be required to indemnify an
indemnitee in connection with a proceeding (or part thereof) commenced by such
indemnitee only if the commencement of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Corporation.
Section 7.2 Prepayment of Expenses. The Corporation shall pay
the expenses (including attorneys' fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
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<PAGE> 10
by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director of officer is not entitled to be
indemnified under this Article VII or otherwise.
Section 7.3 Claims. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the Corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 7.4 Nonexclusivity of Rights. The rights conferred on
any person by this Article VII shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation,
if any, to indemnify or to advance expenses to any person who was or is serving
at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of
the foregoing provisions of this Article VII shall not adversely affect any
right or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the
Corporation shall be determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law, the
certificate of incorporation or these By-laws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business
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<PAGE> 11
because the meeting is not lawfully called or convened. Unless otherwise
provided by the certificate of incorporation, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 8.5 Books and Records. The books and records of the
Corporation may be kept within or without the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs or any other information storage device provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
Section 8.6 Amendment of By-laws. These By-laws may be amended
or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
* * * * * * *
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<PAGE> 1
EXHIBIT 4.1
================================================================================
BOOTH CREEK SKI HOLDINGS, INC.
THE GUARANTORS named herein
and
MARINE MIDLAND BANK, as Trustee
-------------------
INDENTURE
Dated as of March 18, 1997
-------------------
Up to $200,000,000
12 1/2% Senior Notes due 2007
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10;
11.02
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.04
11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04; 11.05
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04; 11.05
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01; 7.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05; 7.01;
7.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.06
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
N.A. means Not Applicable
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NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 1.03. Incorporation by Reference of
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.02. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.03. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.04. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.05. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . 29
Section 2.06. Noteholder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.07. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.08. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.09. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.10. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.11. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.12. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.13. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.14. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.15. Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.16. Book-Entry Provisions for Global Notes . . . . . . . . . . . . . . . . . 34
Section 2.17. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.18. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 3
REDEMPTION
Section 3.01. Election to Redeem; Notices to Trustee . . . . . . . . . . . . . . . . . 39
Section 3.02. Selection by Trustee of Notes
To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 41
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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Section 4.03. Waiver of Stay, Extension or
Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.06. Limitation on Additional
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.07. Limitation on Preferred Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.08. Limitation on Capital Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.09. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . 48
Section 4.10. Limitation on Certain Asset Sales . . . . . . . . . . . . . . . . . . . 50
Section 4.11. Limitation on Transactions with
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.12. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.13. Limitations on Investments . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.14. Limitation on Creation of Subsidiaries . . . . . . . . . . . . . . . . . 55
Section 4.15. Limitation on Sale and Lease-Back
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.16. Limitation on Dividend and
Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.17. Payments for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.18. Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.19. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 4.20. Maintenance of Properties; Insurance;
Books and Records; Compliance with
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 4.21. Further Assurance to the Trustee . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation,
Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.02. Successor Person Substituted . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.04. Waiver of Past Defaults and
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.07. No Personal Liability of Directors,
Officers, Employees and Stockholders . . . . . . . . . . . . . . . . . 66
</TABLE>
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Section 6.08. Rights of Holders To Receive
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.09. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.10. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 67
Section 6.11. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.12. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.13. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 69
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . 72
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.09. Successor Trustee by Consolidation,
Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . 75
Section 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.12. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 76
Section 8.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . 78
Section 8.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . 78
Section 8.05. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . 79
Section 8.06. Trustee To Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.02. Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.04. Conditions to Defeasance or
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.05. Deposited Money and U.S.
Government Obligations To Be
Held in Trust; Other
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . 84
Section 9.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
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Section 9.07. Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.08. Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 10.02. Execution and Delivery of
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.03. Limitation of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.04. Additional Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.05. Release of Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . 89
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.03. Communications by Holders
with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.04. Certificate and Opinion as
to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.05. Statements Required in
Certificate and Opinion . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.07. Business Days; Legal Holidays . . . . . . . . . . . . . . . . . . . . . 91
Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.09. No Adverse Interpretation of
Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.12. Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.13. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . 93
Section 11.14. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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EXHIBITS
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Exhibit A. Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B. Form of Legend and Assignment for
144A Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C. Form of Legend and Assignment
for Regulation S Note . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D. Form of Legend for Global Note . . . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E. Form of Certificate to Be Delivered
in Connection with Transfers to
Non-QIB Accredited Investors . . . . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F. Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit G. Form of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
</TABLE>
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<PAGE> 8
INDENTURE, dated as of March 18, 1997, among BOOTH CREEK SKI
HOLDINGS, INC., a Delaware corporation (the "Company"), the Guarantors (as
hereinafter defined) and MARINE MIDLAND BANK, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Adjusted EBITDA" means EBITDA minus cash taxes actually paid.
"Additional Interest" means additional interest on the Notes
which the Company and the Guarantors, jointly and severally, agree to pay to
the Holders pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Net Assets" of a Guarantor at any date means the
lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities), but excluding liabilities under the Guarantee of such
Guarantor at such date and (y) the present fair salable value of the assets of
such Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any
collection from any Subsidiary of such Guarantor in respect of the obligations
of such Subsidiary under the Guarantee) excluding Indebtedness in respect of
the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control
<PAGE> 9
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with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that neither CIBC nor any of its Affiliates
shall be treated as an Affiliate of the Company or of any Subsidiary of the
Company.
"Agent" means any Registrar, Paying Agent, or agent for
service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions involving assets with a fair
market value in excess of $500,000 of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Company, (b) all or substantially
all of the assets of the Company or of any Restricted Subsidiary thereof, (c)
real property or (d) all or substantially all of the assets of any ski resort
property, or part thereof, owned by the Company or any Restricted Subsidiary
thereof, or a division, line of business or comparable business segment of the
Company or any Restricted Subsidiary thereof; provided that Asset Sales shall
not include sales, leases, conveyances, transfers or other dispositions to the
Company or to a Restricted Subsidiary or to any other Person if after giving
effect to such sale, lease, conveyance, transfer or other disposition such
other Person becomes a Restricted Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Company or any Restricted Subsidiary from such Asset
Sale (including cash received as consideration for the assumption of
liabilities incurred in connection with or in anticipation of such Asset Sale),
after (a) provision for all income or other taxes measured by or resulting from
such Asset Sale, (b) payment of all brokerage commissions, underwriting and
other fees and expenses related to such Asset Sale, (c) provision for minority
interest holders in any Restricted Subsidiary as a result of such Asset Sale
and (d) deduction of appropriate amounts to be provided by the Company or a
Restricted Subsidiary as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by the Company or a Restricted Subsidiary after such Asset Sale,
including, without limitation, pension and other post employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such Asset Sale, and
<PAGE> 10
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(ii) promissory notes and other noncash consideration received by the Company
or any Restricted Subsidiary from such Asset Sale or other disposition upon the
liquidation or conversion of such notes or noncash consideration into cash.
"Attributable Indebtedness" under this Indenture in respect of
a Sale and Lease-Back Transaction means, as at the time of determination, the
present value (discounted at a rate of 10%, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period
for which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have
not been applied or committed in accordance with clauses (iii)(a) or (iii)(b),
and which has not yet been the basis for an Excess Proceeds Offer in accordance
with clause (iii)(c), of the first paragraph of Section 4.10.
"Board of Directors" with respect to any Person means, (i) at
any time such Person is a limited liability company, the board of directors of
its managing member or, if such managing member is a limited liability company,
the board of directors of such managing member's managing member, and (ii)
otherwise the board of directors of such Person or any committee authorized to
act therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Guarantor, as appropriate, and to be in full
force and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
<PAGE> 11
-4-
"Cash Equivalents" means (i) direct obligations of the United
States of America or any agency thereof, or obligations guaranteed or insured
by the United States of America, provided that in each case such obligations
mature within one year from the date of acquisition thereof, (ii) certificates
of deposit maturing within one year from the date of creation thereof issued by
any U.S. national or state banking institution having capital, surplus and
undivided profits aggregating at least $250,000,000 and at the time of
investment rated at least A-1 by S&P and P-1 by Moody's, (iii) commercial paper
with a maturity of 180 days or less issued by a corporation (except an
Affiliate of the Company) organized under the laws of any state of the United
States or the District of Columbia and at the time of investment rated at least
A-1 by S&P or at least P-1 by Moody's and (iv) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or issued by an
agency thereof and backed by the full faith and credit of the United States of
America, in each case maturing within one year from the date of acquisition;
provided that the terms of such agreements comply with the guidelines set forth
in the Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency and (v)
tax-exempt auction rate securities and municipal preferred stock, in each case,
subject to reset no more than 35 days after the date of acquisition and having
a rating of at least AA by S&P or AA by Moody's at the time of investment.
A "Change of Control" of the Company means the occurrence of
one or more of the following events: (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or group of
related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"),
together with any Affiliates thereof; (ii) the approval by the holders of
Capital Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (iii) prior to a Qualified IPO, John Hancock Mutual
Life Insurance Company and/or its Affiliates (other than its portfolio
companies, including without limitation, the Parent and its Subsidiaries) shall
cease to beneficially own (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, Voting Stock representing, or Class B Common
Stock and/or warrants exercisable for shares of Class B Common Stock
representing upon conversion, at least 50.1% of the total voting power of all
Voting Stock of the Company or Parent on a fully diluted basis; (iv) any Person
or Group (other than the Permitted Holders) shall become the beneficial owner,
directly or indirectly, of Voting Stock
<PAGE> 12
-5-
representing, or Common Stock or Warrants exercisable for Common Stock
representing upon conversion, more than 35% of the total voting power of all
Voting Stock of the Company or Parent on a fully diluted basis; (v) prior to a
Qualified IPO, Booth Creek Partners Ltd. II, L.L.L.P. or any Affiliate thereof
that is a Permitted Holder shall cease to have the right to appoint a majority
of the Board of Directors of Parent; (vi) the replacement of a majority of the
Board of Directors of Parent over a two-year period from the directors who
constituted the Board of Directors of Parent at the beginning of such period,
and such replacement shall not have been approved or recommended by a vote of
at least two-thirds of the Board of Directors of Parent then still in office
who either were members of such Board of Directors at the beginning of such
period or whose election as a member of such Board of Directors was previously
so approved; (vii) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which the Common Stock of the Company would be converted into
cash, securities or other property, other than a merger or consolidation of the
Company in which the holders of the Common Stock of the Company outstanding
immediately prior to the consolidation or merger hold, directly or indirectly,
at least a majority of the Common Stock of the surviving corporation
immediately after such consolidation or merger; (viii) George N. Gillet, Jr.
ceases, other than by death or disability, to have an executive management
position with the Company; or (ix) any creditor of Parent shall foreclose on
any Capital Stock of the Company.
"Class B Common Stock" means the Class B Common Stock, $.001
par value, of Parent.
"Commodity Hedge Agreement" means any option, hedge or other
similar agreement or arrangement designed to protect against fluctuations in
commodity or materials prices.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or
others that will control the management and policies of such Person.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5
of this Indenture and thereafter means the successor.
<PAGE> 13
-6-
"Company Request" means any written request signed in the name
of the Company by the Chairman of the Board of Directors, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer or the
Treasurer of the Company and attested to by the Secretary or any Assistant
Secretary of the Company.
"Consolidated Interest Expense" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Subsidiaries on a
consolidated basis (including, but not limited to, Redeemable Dividends,
whether paid or accrued, on Preferred Stock of Subsidiaries of such Person
(other than Preferred Stock outstanding on the date of the Indenture), imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs associated with hedging obligations,
amortization of other financing fees and expenses, the interest portion of any
deferred payment obligation, amortization of discount or premium, if any, and
all other non-cash interest expense (other than interest amortized to cost of
sales)) plus, without duplication, all net capitalized interest for such period
and all interest incurred or paid under any guarantee of Indebtedness
(including a guarantee of principal, interest or any combination thereof) of
any Person, plus the amount of all dividends or distributions paid on
Disqualified Capital Stock (other than dividends paid or payable in shares of
Capital Stock of the Company).
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the Net Income of any Person (the "other
Person") in which the Person in question or any of its Subsidiaries has less
than a 100% interest (which interest does not cause the net income of such
other Person to be consolidated into the net income of the Person in question
in accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions paid to the Person in question or its Subsidiaries,
(b) the Net Income of any Subsidiary of the Person in question that is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions (other than pursuant to the Notes or this Indenture) shall
be excluded to the extent of such restriction or limitation, (c)(i) the Net
Income of any Person acquired in a pooling of interests transaction for
<PAGE> 14
-7-
any period prior to the date of such acquisition and (ii) any gain or loss
resulting from an asset sale by the Person in question or any of its
Subsidiaries or abandonments or reserves relating thereto and the related tax
effects according to GAAP other than asset sales in the ordinary course of
business shall be excluded, and (d) extraordinary gains and losses shall be
excluded.
"Consolidated Net Worth" means, with respect to any Person at
any date, the consolidated stockholder's equity of such Person less the amount
of such stockholder's equity attributable to Disqualified Capital Stock of such
Person and its Subsidiaries, as determined in accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at 140 Broadway, New York, New York 10005.
"Currency Agreement" means, for any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person against fluctuations in currency
values.
"Default" means any event that is, or with the passing of time
or giving of notice or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another
Person designated as Depository by the Company, which Person must be a clearing
agency registered under the Exchange Act.
"Disqualified Capital Stock" means any Capital Stock of the
Company or a Restricted Subsidiary thereof which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable at
the option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to 180 days after the maturity date of the Notes, for cash or securities
constituting Indebtedness. Without limitation of the foregoing, Disqualified
Capital Stock shall be deemed to include (i) any Preferred Stock of a
Restricted Subsidiary of the Company and (ii) any Preferred Stock of the
Company, with respect to either of which, under the
<PAGE> 15
-8-
terms of such Preferred Stock, by agreement or otherwise, such Restricted
Subsidiary or the Company is obligated to pay current dividends or
distributions in cash during the period prior to the maturity date of the
Notes; provided, however, that Preferred Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
change of control of the Company or such Restricted Subsidiary, which
provisions have substantially the same effect as the provisions described in
Section 4.19, and Capital Stock of the Company or any Restricted Subsidiary
thereof that is issued to employees (other than George N. Gillet, Jr. and
Jeffrey J. Joyce) in connection with compensation arrangements that is issued
with the benefit of provisions requiring the Company or such Restricted
Subsidiary to redeem such Capital Stock shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount
equal to (a) the sum of (i) Consolidated Net Income for such period, plus (ii)
the provision for taxes for such period based on income or profits to the
extent such income or profits were included in computing Consolidated Net
Income and any provision for taxes utilized in computing net loss under clause
(i) hereof, plus (iii) Consolidated Interest Expense for such period (but only
including Redeemable Dividends in the calculation of such Consolidated Interest
Expense to the extent that such Redeemable Dividends have not been excluded in
the calculation of Consolidated Net Income), plus (iv) depreciation for such
period on a consolidated basis, plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) amortization of any capitalized real
estate development costs, plus (vii) any other non-cash items reducing
Consolidated Net Income for such period, minus (b) all non-cash items
increasing Consolidated Net Income for such period, all for such person and its
Subsidiaries determined in accordance with GAAP, except that with respect to
the Company each of the foregoing items shall be determined on a consolidated
basis with respect to the Company and its Restricted Subsidiaries only; and
provided, however, that for purposes of calculating EBITDA during any fiscal
quarter, cash income from a particular Investment of such person shall be
included only (x) if cash income has been received by such Person with respect
to such Investment during each of the previous four fiscal quarters, or (y) if
the cash income derived from such Investment is attributable to Temporary Cash
Investments.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 16
-9-
"Exchange Notes" has the meaning provided in the Registration
Rights Agreement or, with respect to Notes issued under this Indenture
subsequent to the Issue Date pursuant to Section 2.01, a registration rights
agreement substantially identical to the Registration Rights Agreement.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"Gillett Management Agreement" means the Management Agreement
dated November 27, 1996 between the Company and Booth Creek, Inc., as the same
may be amended, modified or supplemented form time to time and any replacement
agreement.
"Guarantee" means, as the context may require, individually, a
guarantee, or collectively, any and all guarantees, of the Obligations of the
Company with respect to the Notes by each Guarantor pursuant to the terms of
Article 10 hereof, substantially in the form set forth in Exhibit G.
"Guarantor" means all direct and indirect Restricted
Subsidiaries of the Company listed on the signature pages hereto and each
Restricted Subsidiary which guarantees payment of the Notes pursuant to Section
4.14, and "Guarantors" means such entities, collectively.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to
<PAGE> 17
-10-
the whole of the assets of such Person or only to a portion thereof), or
evidenced by bonds, notes, debentures or similar instruments or representing
the balance deferred and unpaid of the purchase price of any property
(excluding, without limitation, any balances that constitute accounts payable
or trade payables, and other accrued liabilities arising in the ordinary course
of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person is subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of
the pledged property or assets), (iii) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (provided that in the case of
any such letters of credit, the items for which such letters of credit provide
credit support are those of other Persons which would be included within this
definition for such other Persons), (v) in the case of the Company,
Disqualified Capital Stock of the Company or any Restricted Subsidiary thereof,
and (vi) obligations of any such Person under any Interest Rate Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement obligations would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum reasonably anticipated liability upon the occurrence
of the contingency giving rise to the obligation, provided (i) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the principal amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP and (ii) that Indebtedness shall not include
any liability for federal, state, local or other taxes. Notwithstanding any
other provision of the foregoing definition, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business shall not be deemed to be "Indebtedness" of the Company or any
<PAGE> 18
-11-
Restricted Subsidiary for purposes of this definition. Furthermore, guarantees
of (or obligations with respect to letters of credit supporting) Indebtedness
otherwise included in the determination of such amount shall not also be
included.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Initial Purchaser" means CIBC Wood Gundy Securities Corp.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501 (a)(1), (2),
(3) or (7) promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to protect the party indicated
therein against fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business or acquired as part of the assets acquired by the Company in
connection with an acquisition of assets which is otherwise permitted by the
terms of this Indenture), loan or capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
any Person or the making of any investment in any Person. Investments shall
exclude (i) extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices and (ii) the repurchase of securities of
any Person by such Person.
"Issue Date" means March 18, 1997.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge,
<PAGE> 19
-12-
easement, encumbrance, preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with respect to
such property or assets (including, without limitation, any Capitalized Lease
Obligation, conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Maturity Date" means March 15, 2007.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by the Company, the aggregate net proceeds received by the Company, after
payment of expenses, commissions and the like incurred in connection therewith,
whether such proceeds are in cash or in property (valued at the fair market
value thereof, as determined in good faith by the Board of Directors, at the
time of receipt) and (b) in the case of any exchange, exercise, conversion or
surrender of outstanding securities of any kind for or into shares of Capital
Stock of the Company which is not Disqualified Capital Stock, the net book
value of such outstanding securities on the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to be paid by the
holder to the Company upon such exchange, exercise, conversion or surrender,
less any and all payments made to the holders, e.g., on account of fractional
shares and less all expenses incurred by the Company in connection therewith).
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the securities issued by the Company, including,
without limitation, the Option Notes, the Subsequent Series Notes, the Private
Exchange Notes, if any, and the Exchange Notes, treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"Obligations" means, with respect to any Indebtedness, any
principal, premium, interest, penalties, fees, indemnifications,
reimbursements, damages and other expenses payable under the documentation
governing such Indebtedness.
<PAGE> 20
-13-
"Offering" means the offering of the Notes as described in the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum dated
March 13, 1997 pursuant to which the Notes issued on the Issue Date were
offered.
"Officer", with respect to any Person (other than the
Trustee), means the Chairman of the Board of Directors, Chief Executive
Officer, the President, any Vice President and the Chief Financial Officer, the
Treasurer or the Secretary of such Person, or any other officer of such Person
designated by the Board of Directors of such Person and set forth in an
Officers' Certificate delivered to the Trustee.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board of Directors, the Chief
Executive Officer, the President or any Vice President and the Chief Financial
Officer, Controller or the Treasurer of such Person that shall comply with
applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion reasonably
satisfactory in form and substance to the Trustee from legal counsel which
counsel is reasonably acceptable to the Trustee, stating the matters required
by Section 11.05 and delivered to the Trustee.
"Parent" means Booth Creek Ski Group, Inc., a Delaware
corporation, or its successors.
"Permitted Holders" means Booth Creek Partners Limited II,
L.L.L.P. as long as George N. Gillett, Jr. is the managing general partner,
Jeffrey J. Joyce, only with respect to shares he purchases upon exercise of his
option to purchase up to 15% of the shares of Common Stock of Parent held by
George N. Gillet, Jr. and Affiliates of George N. Gillet, Jr., the Parent as
long as it is controlled by another Permitted Holder other than Jeffrey J.
Joyce, John Hancock Mutual Life Insurance Company and/or its Affiliates other
than its portfolio companies, including without limitation, the Parent and its
Subsidiaries), CIBC WG Argosy Merchant Fund 2, L.L.C. and/or its Affiliates,
George N. Gillett, Jr., Rose Gillett, any trust solely for the benefit of
George N. Gillett, Jr. and Rose Gillett or their respective immediate family
members, or any partnership or other entity all the ownership interests in
which are beneficially owned by any of the foregoing; provided that with
respect to any such trust, partnership or other entity either George N.
Gillett,
<PAGE> 21
-14-
Jr. or Rose Gillett shall at all times have the exclusive power to direct,
directly or indirectly, the voting of the shares of Voting Stock of the Company
held by such trust, partnership or other entity.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted
Subsidiary arising under or in connection with the Senior Credit
Facility in a principal amount at any time not to exceed $20,000,000,
less each permanent reduction of commitments to extend credit
thereunder as provided for under this Indenture;
(ii) Indebtedness under the Notes offered pursuant to the
Offering Memorandum (including the Option Notes) and the Guarantees;
(iii) Indebtedness not covered by any other clause of this
definition which is outstanding on the date of this Indenture;
(iv) Indebtedness of the Company to any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the
Company or another Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of
business, which Purchase Money Indebtedness and Capitalized Lease
Obligations do not in the aggregate exceed $2,500,000 at any time
outstanding;
(vi) Obligations of the Company or any Restricted
Subsidiary under (A) Interest Rate Agreements designed to protect
against fluctuations in interest rates in respect of Indebtedness of
the Company and its Restricted Subsidiaries permitted to be incurred
under this Indenture, which obligations do not exceed the aggregate
principal amount of such Indebtedness, and (B) Currency Agreements
designated to protect the Company and its Subsidiaries against
fluctuations in foreign currency exchange rates in respect of foreign
exchange exposures incurred by the Company and its Restricted
Subsidiaries;
(vii) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of
business, including, without limitation,
<PAGE> 22
-15-
letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement
type obligations regarding workers' compensation claims; provided,
however, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence;
(viii) Indebtedness arising from agreements of the Company
or a Restricted Subsidiary providing for indemnification, adjustment
of purchase price or similar obligations, in each case, incurred or
assumed in connection with the acquisition or disposition of any
business, assets or a Subsidiary;
(ix) obligations in respect of performance and surety
bonds and completion guarantees provided by the Company or any
Restricted Subsidiary in the ordinary course of business;
(x) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries, and any guarantee
by any Restricted Subsidiary of Indebtedness of the Company or any
other Restricted Subsidiary, so long as the incurrence of such
Indebtedness is permitted under the terms of the Indenture;
(xi) additional Indebtedness of the Company and its
Restricted Subsidiaries not to exceed $2,500,000 in principal amount
outstanding at any time;
(xii) Refinancing Indebtedness; and
(xiii) Indebtedness assumed and subsequently repaid on the
Issue Date in connection with the acquisition of Grand Targhee
Incorporated.
"Permitted Investments" means, for any Person, Investments
made on or after the date of this Indenture consisting of:
(i) Investments by the Company or by a Restricted
Subsidiary thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
<PAGE> 23
-16-
(iii) Investments by the Company, or by a Restricted
Subsidiary thereof, in a Person, if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Company or, (b)
such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary thereof;
(iv) reasonable and customary loans and advances made to
employees in connection with their relocation (including related
travel expenses) not to exceed $500,000 in the aggregate at any one
time outstanding.
(v) an Investment that is made by the Company or a
Restricted Subsidiary thereof in the form of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities
that are issued by a third party to the Company or a Restricted
Subsidiary solely as partial consideration for the consummation of an
Asset Sale that is otherwise permitted by Section 4.10;
(vi) any Investment existing on the Issue Date;
(vii) any Investment acquired by the Company or any of its
Restricted Subsidiaries (a) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such Investment or
accounts receivable or (b) as the result of a foreclosure by the
Company or its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured
Investment in default;
(viii) Investments the payments for which consists of
Capital Stock of the Company (exclusive of Disqualified Capital Stock);
(ix) Investments by Ski Lifts, Inc. in the Real Estate LLC
pursuant to the Real Estate Option; and
(x) additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant
to this clause (ix) that are at that time outstanding, not to exceed
$1,000,000.
"Permitted Liens" means (i) Liens on property or assets of, or
any shares of stock of or secured debt of, any corporation
<PAGE> 24
-17-
existing at the time such corporation becomes a Restricted Subsidiary of the
Company or at the time such corporation is merged into the Company or any of
its Restricted Subsidiaries; provided that such Liens are not incurred in
connection with, or in contemplation of, such corporation becoming a Restricted
Subsidiary of the Company or merging into the Company or any of its Restricted
Subsidiaries, (ii) Liens securing Refinancing Indebtedness; provided that any
such Lien does not extend to or cover any Property, shares or debt other than
the Property, shares or debt securing the Indebtedness so refunded, refinanced
or extended, (iii) Liens in favor of the Company or any of its Restricted
Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens to secure
Purchase Money Indebtedness that is otherwise permitted under this Indenture;
provided that (a) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including sales and excise taxes, installation and delivery charges and
other direct costs of, and other direct expenses paid or charged in connection
with, such purchase or construction) of such Property, (b) the principal amount
of the Indebtedness secured by such Lien does not exceed 100% of such costs,
and (c) such Lien does not extend to or cover any Property other than such item
of Property and any improvements on such item, (vi) statutory liens or
landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which do not secure any Indebtedness and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor, (vii) other Liens securing
obligations incurred in the ordinary course of business which obligations do
not exceed $2,500,000 in the aggregate at any one time outstanding, (viii) any
extensions, substitutions, replacements or renewals of the foregoing, (ix)
Liens for taxes, assessments or governmental charges that are being contested
in good faith by appropriate proceedings, (x) Liens securing Capitalized Lease
Obligations permitted to be incurred under clause (v) of the definition of
"Permitted Indebtedness"; provided that such Lien does not extend to any
Property other than that subject to the underlying lease, (xi) easements or
minor defects or irregularities in title and other similar charges or
encumbrances on Property not interfering in any material respect with the use
of such Property by the Company or any Restricted Subsidiary, (xii) Liens
securing Indebtedness of the Company or any Restricted Subsidiary under the
Senior Credit Facility and (xiii) deposit arrangements entered into in
<PAGE> 25
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connection with an acquisition or in the ordinary course of business.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
"Physical Notes" means certificated Notes in registered form
in substantially the form set forth in Exhibit A.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the
holders of other Capital Stock issued by such Person.
"Private Exchange" has the meaning set forth in the
Registration Rights Agreement or, with respect to Notes issued under the
Indenture subsequent to the Issue Date pursuant to Section 2.01, a registration
rights agreement substantially identical to the Registration Rights Agreement.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement or, with respect to Notes issued under the
Indenture subsequent to the Issue Date pursuant to Section 2.01, a registration
rights agreement substantially identical to the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set
forth on the Rule 144A Notes in the form set forth in Exhibit B.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means a public offering by the
Company of shares of its Common Stock (however designated and whether voting or
non-voting) and any and all rights, warrants or options to acquire such Common
Stock.
"Purchase Agreement" means the Securities Purchase Agreement
dated as of March 13, 1997 by and among the Company, the Guarantors and the
Initial Purchaser.
<PAGE> 26
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"Purchase Money Indebtedness" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of Property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A promulgated under the Securities Act.
"Qualified IPO" shall mean an underwritten initial offering
and sale by the Company to the public of its Common Stock pursuant to an
effective registration statement filed by the Company under the Securities Act,
provided that the aggregate net proceeds to the Company from such offering and
sale is at least $35,000,000.
"Real Estate LLC" means the Delaware limited liability company
of which Ski Lifts, Inc. is a member and 99% equity interest holder and the
Company is the other member and 1% equity interest holder as of the Issue Date.
"Real Estate Option" means the option granted to the Real
Estate LLC by Ski Lifts, Inc. to purchase approximately 14 acres of
developmental real estate.
"Redeemable Dividend" means, for any dividend or distribution
with regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to the terms of the
Notes.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Company or its Restricted
Subsidiaries outstanding on the Issue Date or other Indebtedness permitted to
be incurred by the Company or its Restricted Subsidiaries pursuant to the terms
of this Indenture, but only to the extent that (i) the Refinancing Indebtedness
is subordinated to the Notes to at least the same extent as the Indebtedness
being refunded, refinanced or extended, if at all, (ii) the Refinancing
Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness
being refunded, refinanced
<PAGE> 27
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or extended, or (b) after the maturity date of the Notes, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the maturity date of the Notes has a weighted average life to maturity at the
time such Refinancing Indebtedness is incurred that is equal to or greater than
the weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid
interest, if any, and premiums owed, if any, not in excess of preexisting
prepayment provisions on such Indebtedness being refunded, refinanced or
extended and (c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness, and (v) such Refinancing
Indebtedness is incurred by the same Person that initially incurred the
Indebtedness being refunded, refinanced or extended, except that the Company
may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness
of any Wholly-Owned Subsidiary of the Company; provided, however, that
subclauses (ii) and (iii) of this definition will not apply to any refunding or
refinancing of any Indebtedness under the Senior Credit Facility.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date among the Company, the Guarantors and the
Initial Purchaser, as amended from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Responsible Officer" when used with respect to the Trustee,
means an officer or assistant officer assigned to the corporate trust
department of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Note" has the same meaning as "Restricted
Security" set forth in Rule 144(a)(3) promulgated under the Securities Act;
provided, that the Trustee shall be entitled to request and conclusively rely
upon an Opinion of Counsel with respect to whether any Note is a Restricted
Note.
<PAGE> 28
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"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Company or any Restricted Subsidiary of the Company or any
payment made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Company or any Restricted Subsidiary of the Company (other
than (x) dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the making of any principal payment on, or
the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated in
right of payment to the Notes other than subordinated Indebtedness acquired in
anticipation of satisfying a scheduled sinking fund obligation, principal
installment or final maturity (in each case due within one year of the date of
acquisition), (iv) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment, (v) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the
Investment by the Company therein and (vi) forgiveness of any Indebtedness of
an Affiliate of the Company (other than a Restricted Subsidiary) to the Company
or a Restricted Subsidiary. For purposes of determining the amount expended
for Restricted Payments, cash distributed or invested shall be valued at the
face amount thereof and property other than cash shall be valued at its fair
market value.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Company existing as of the Issue Date, except the Real Estate LLC. The
Board of Directors of the Company may designate any Unrestricted Subsidiary or
any Person that is to become a Subsidiary as a Restricted Subsidiary if
immediately after giving effect to such action (and treating any Acquired
Indebtedness as having been incurred at the time of such action), the Company
could have incurred at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.06 of this Indenture.
<PAGE> 29
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"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Sale and Lease-Back Transaction" means any arrangement with
any Person providing for the leasing by the Company or any Restricted
Subsidiary of the Company of any real or tangible personal Property, which
Property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person in contemplation of such leasing.
"S&P" means Standard & Poor's Ratings Services and its
successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Amended and Restated Credit
Agreement, dated as of March 18, 1997, among the Company, the Guarantors, the
lenders listed therein and The First National Bank of Boston, as agent,
together with the documents related thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Significant Restricted Subsidiary" means any Restricted
Subsidiary of the Company that satisfies the criteria for a "significant
subsidiary" set forth in Rule 1.02(v) of Regulation S-X under the Securities
Act.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
<PAGE> 30
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(without regard to the occurrence of any contingency) to vote in the election
of directors, officers or trustees thereof is held by such first- named Person
or any of its Subsidiaries; or (ii) in the case of a partnership, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or cause
the direction of the management and policies of such entity by contract or
otherwise or if in accordance with GAAP such entity is consolidated with the
first-named Person for financial statement purposes.
"Temporary Cash Investments" means (i) Investments in
marketable direct obligations issued or guaranteed by the United States of
America, or of any governmental agency or political subdivision thereof,
maturing within 365 days of the date of purchase; (ii) Investments in
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each
case having capital, surplus and undivided profits at the time of investment
totaling more than $500,000,000 and rated at the time of investment at least A
by S&P and A-2 by Moody's maturing within 365 days of purchase; or (iii)
Investments not exceeding 365 days in duration in money market funds that
invest substantially all of such funds' assets in the Investments described in
the preceding clauses (i) and (ii).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb) as in effect on the date of this Indenture
(except as provided in Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified as an Unrestricted Subsidiary by a resolution adopted by the Board
of Directors of the Company; provided that a Subsidiary organized or acquired
after the Issue Date may be so classified as an Unrestricted Subsidiary only if
such classification is in compliance with the covenant set forth in Section
4.09 hereof. The Trustee shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, and furnished with a Board Resolution with respect to each such
resolution adopted.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the
<PAGE> 31
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payment of which its full faith and credit are pledged or (b) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or a specific payment of principal or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof to vote under ordinary circumstances in the election of members of the
board of directors or other governing body of such Person.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary, all
of the outstanding voting securities (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Company.
Section 1.02. Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . 4.11
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . 11.07
"Cedel" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . 4.19
"Change of Control Payment Date" . . . . . . . . . . . . . . . . . 4.19
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . 9.03
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Euroclear" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
</TABLE>
<PAGE> 32
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<TABLE>
<S> <C>
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds Offer" . . . . . . . . . . . . . . . . . . . . . . 4.10
"Global Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . 9.02
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . 11.07
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Option Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Other Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Regulation S Global Notes" . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Regulation S Notes" . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Reinvestment Date" . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Restricted Global Note" . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Rule 144A Notes" . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Subsequent Series Notes" . . . . . . . . . . . . . . . . . . . . . 2.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Holder or Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
<PAGE> 33
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Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) words used herein implying any gender shall apply to
both genders; and
(6) whenever in this Indenture there is mentioned, in any
context, Principal, interest or any other amount payable under or with
respect to any Note, such mention shall be deemed to include mention
of the payment of Additional Interest to the extent that, in such
context, Additional Interest is, was or would be payable in respect
thereof.
ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes.
The Trustee shall authenticate (i) Notes for original issue on
the Issue Date in the aggregate principal amount of $110,000,000, (ii) in the
event of an exercise by the Initial Purchaser pursuant to Section 2.2(b) of the
Purchase Agreement of its option to purchase up to an additional $6,000,000
aggregate principal amount of Notes (the "Option Notes"), Option Notes for
original issue in the aggregate principal amount not to exceed $6,000,000,
which Option Notes may not be issued after April 22, 1997 and (iii) Notes
(other than Option Notes) for original issue subsequent to the Issue Date in an
aggregate principal amount not to exceed $90,000,000 (minus the aggregate
principal amount of any Option Notes authenticated pursuant to the terms
hereof) in one or more series ("Subsequent Series Notes"), in each case upon a
written order of the Company in the form of an Officers' Certificate of the
Company; provided, however, that no Subsequent
<PAGE> 34
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Series Notes may be authenticated and delivered in an aggregate principal
amount of less than $25,000,000; and provided, further, that the Company must,
in issuing any Subsequent Series Notes, comply with Section 4.06. Each such
written order shall specify the amount of Notes to be authenticated, the date
on which the Notes are to be authenticated and the title of the Notes of the
series (which shall distinguish the Notes of the series from Notes of any other
series). All Notes issued on the Issue Date, Option Notes and Subsequent
Series Notes shall be identical in all respects other than issue dates and the
date from which interest accrues and except as provided in this Section 2.01
and except that any Subsequent Series Notes may contain any notations, legends
or endorsements permitted under Section 2.02. The aggregate principal amount
of Notes outstanding at any time may not exceed $200,000,000, except as
provided in Section 2.08.
Upon receipt of a Company Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer
specified in the Registration Rights Agreement or, with respect to Notes issued
under the Indenture subsequent to the Issue Date, a registration rights
agreement substantially identical to the Registration Rights Agreement, is
effective and that the conditions precedent to a private exchange thereunder
have been met, the Trustee shall authenticate an additional series of Notes in
an aggregate principal amount not to exceed $200.0 million for issuance in
exchange for the Notes tendered for exchange pursuant to such exchange offer
registered under the Securities Act or pursuant to a Private Exchange.
Exchange Notes or Private Exchange Notes may have such distinctive series
designations and such changes in the form thereof as are specified in the
Company Request referred to in the preceding sentence.
In the event that the Company shall issue and the Trustee
shall authenticate any Notes issued under this Indenture subsequent to the
Issue Date pursuant to the first paragraph of this Section 2.01, the Company
shall use its best efforts to obtain the same "CUSIP" number for such Notes as
is printed on the Notes outstanding at such time; provided, however, that if
any series of Notes issued under this Indenture subsequent to the Issue Date is
determined, pursuant to an Opinion of Counsel of the Company in a form
reasonably satisfactory to the Trustee to be a different class of security than
the Notes outstanding at such time for federal income tax purposes, the Company
may obtain a "CUSIP" number for such Notes that is different than the "CUSIP"
number printed on the Notes then outstanding. Notwithstanding the foregoing,
all Notes issued under this Indenture shall vote and consent together on all
matters as one
<PAGE> 35
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class and no series of Notes will have the right to vote or consent as a
separate class on any matter.
Section 2.02. Form and Dating.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A,
which is incorporated in and forms a part of this Indenture. The Notes may
have notations, legends or endorsements required by law, rule or usage to which
the Company is subject. Without limiting the generality of the foregoing,
Notes offered and sold to Qualified Institutional Buyers in reliance on Rule
144A ("Rule 144A Notes") shall bear the legend and include the form of
assignment set forth in Exhibit B, Notes offered and sold in offshore
transactions in reliance on Regulation S ("Regulation S Notes") shall bear the
legend and include the form of assignment set forth in Exhibit C, and Notes
offered and sold to Institutional Accredited Investors in transactions exempt
from registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") may be represented by the Restricted Global Note
or, if such an investor may not hold an interest in the Restricted Global Note,
a Physical Note bearing the Private Placement Legend. Each Note shall be dated
the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are expressly made, a part of this Indenture and, to the extent
applicable, the Company, the Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
agree to be bound thereby.
The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar.
Section 2.03. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer (each of whom shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to, the Notes for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless.
<PAGE> 36
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No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Note to the Trustee
for cancellation as provided in Section 2.12, for all purposes of this
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Unless otherwise provided
in the appointment, an authenticating agent may authenticate the Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Company and Affiliates of the
Company. Each Paying Agent is designated as an authenticating agent for
purposes of this Indenture.
The Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
Section 2.04. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Company, if any, in respect of the Notes and this Indenture may be
served. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may have one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. Neither the Company
nor any Affiliate thereof may act as Paying Agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such
<PAGE> 37
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Agent. The Company shall notify the Trustee of the name and address of any
such Agent. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Section 7.07.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with
the Notes and this Indenture.
Section 2.05. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment
of principal of or premium or interest on the Notes (whether such money has
been paid to it by the Company or any other obligor on the Notes or the
Guarantors), and the Company and the Paying Agent shall notify the Trustee of
any default by the Company (or any other obligor on the Notes) in making any
such payment. Money held in trust by the Paying Agent need not be segregated
except as required by law and in no event shall the Paying Agent be liable for
any interest on any money received by it hereunder. The Company at any time
may require the Paying Agent to pay all money held by it to the Trustee and
account for any funds disbursed and the Trustee may at any time during the
continuance of any Event of Default specified in Section 6.01 (1) or (2), upon
written request to the Paying Agent, require such Paying Agent to pay forthwith
all money so held by it to the Trustee and to account for any funds disbursed.
Upon making such payment, the Paying Agent shall have no further liability for
the money delivered to the Trustee.
Section 2.06. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Noteholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least five Business Days before each Interest
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Noteholders.
Section 2.07. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to
the Registrar with a request from the Holder of such Notes to register a
transfer or to exchange them for an equal
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principal amount of Notes of other authorized denominations, the Registrar
shall register the transfer as requested. Every Note presented or surrendered
for registration of transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorneys
duly authorized in writing. To permit registrations of transfers and
exchanges, the Company shall issue and execute and the Trustee shall
authenticate new Notes (and the Guarantors shall execute the guarantee thereon)
evidencing such transfer or exchange at the Registrar's request. No service
charge shall be made to the Noteholder for any registration of transfer or
exchange. The Company may require from the Noteholder payment of a sum
sufficient to cover any transfer taxes or other governmental charge that may be
imposed in relation to a transfer or exchange, but this provision shall not
apply to any exchange pursuant to Section 2.11, 3.06, 4.10, 4.19 or 8.05 (in
which events the Company shall be responsible for the payment of such taxes).
The Registrar shall not be required to exchange or register a transfer of any
Note for a period of 15 days immediately preceding the mailing of notice of
redemption of Notes to be redeemed or of any Note selected, called or being
called for redemption except the unredeemed portion of any Note being redeemed
in part.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of the beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial
interest in the Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable U.S. Federal or state securities law.
Except as expressly provided herein, neither the Trustee nor
the Registrar shall have any duty to monitor the Company's compliance with or
have any responsibility with respect to the Company's compliance with any
Federal or state securities laws.
Section 2.08. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the
Trustee, or if the Holder of a Note claims that the Note has
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been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note (and the Guarantors shall execute
the guarantee thereon) if the Holder of such Note furnishes to the Company and
the Trustee evidence reasonably acceptable to them of the ownership and the
destruction, loss or theft of such Note and if the requirements of Section
8-405 of the New York Uniform Commercial Code as in effect on the date of this
Indenture are met. If required by the Trustee or the Company, an indemnity
bond shall be posted, sufficient in the judgment of both to protect the
Company, the Guarantors, the Trustee or any Paying Agent from any loss that any
of them may suffer if such Note is replaced. The Company may charge such
Holder for the Company's reasonable out-of-pocket expenses in replacing such
Note and the Trustee may charge the Company for the Trustee's expenses
(including, without limitation, attorneys' fees and disbursements) in replacing
such Note. Every replacement Note shall constitute a contractual obligation of
the Company.
Section 2.09. Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those cancelled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 9.01
and 9.02, on or after the date on which the conditions set forth in Section
9.01 or 9.02 have been satisfied, those Notes theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.09
as not outstanding. Subject to Section 2.10, a Note does not cease to be
outstanding because the Company or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser in whose hands such Note is a
legal, valid and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and principal with respect to the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
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Section 2.10. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Notes owned by the Company or any other Affiliate of
the Company shall be disregarded as though they were not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes as to which a Responsible Officer
of the Trustee has received an Officers' Certificate stating that such Notes
are so owned shall be so disregarded. Notes so owned which have been pledged
in good faith shall not be disregarded if the pledgee established to the
satisfaction of the Trustee the pledgee's right so to act with respect to the
Notes and that the pledgee is not the Company, a Guarantor, any other obligor
on the Notes or any of their respective Affiliates.
Section 2.11. Temporary Notes.
Until definitive Notes are prepared and ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 2.12. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall (subject to
the record-retention requirements of the Exchange Act) destroy cancelled Notes
and deliver a certificate of destruction thereof to the Company. The Company
may not reissue or resell, or issue new Notes to replace, Notes that the
Company has redeemed or paid, or that have been delivered to the Trustee for
cancellation.
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Section 2.13. Defaulted Interest.
If the Company defaults on a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, in accordance with the terms
hereof, to the Persons who are Noteholders on a subsequent special record date,
which date shall be at least five Business Days prior to the payment date. The
Company shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
the Company shall mail to each Noteholder a notice that states the special
record date, the payment date and the amount of defaulted interest, and
interest payable on defaulted interest, if any, to be paid. The Company may
make payment of any defaulted interest in any other lawful manner not
inconsistent with the requirements (if applicable) of any securities exchange
on which the Notes may be listed and, upon such notice as may be required by
such exchange, if, after written notice given by the Company to the Trustee of
the proposed payment pursuant to this sentence, such manner of payment shall be
deemed practicable by the Trustee.
Section 2.14. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, such CUSIP number shall be included in notices of redemption or exchange
as a convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any such CUSIP number used by the Company in
connection with the issuance of the Notes and of any change in the CUSIP
number.
Section 2.15. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest
Payment Date and Maturity Date, the Company shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Trustee to remit payment to
the Holders on such Interest Payment Date or Maturity Date, as the case may be.
The principal and interest on Global Notes shall be payable to the Depository
or its nominee, as the case may be, as the sole registered owner and the sole
holder of the Global Notes
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represented thereby. The principal and interest on Physical Notes shall be
payable at the office of the Paying Agent.
Section 2.16. Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes and Other Notes which may be held in
global form, other than Regulation S Notes, initially shall be represented by
one or more notes in registered, global form without interest coupons
(collectively, the "Restricted Global Note"). Regulation S Notes initially
shall be represented by one or more notes in registered, global form without
interest coupons (collectively, the "Regulation S Global Note," and, together
with the Restricted Global Note and any other global notes representing Notes,
the "Global Notes"). The Global Notes initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, in each case for
credit to an account of an Agent Member (or, in the case of the Regulation S
Global Notes, of Euroclear System ("Euroclear") and Cedel Bank, S.A.
("CEDEL")), (ii) be delivered to the Trustee as custodian for such Depository
and (iii) bear legends as set forth in Exhibit D.
Members of, or direct or indirect participants in, the
Depository ("Agent Members") shall have no rights under this Indenture with
respect to any Global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Notes, and the Depository may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(b) Transfers of Global Notes shall be limited to
transfer in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.17. In addition,
a Global Note shall be exchangeable for Physical Notes if (i) the Depository
(x) notifies the Company that it is unwilling or unable to continue as
depository for such Global Note and the Company thereupon fails to appoint a
successor depository or (y) has ceased to be a clearing agency registered under
the Exchange
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Act, (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of such Physical Notes or (iii) there shall have
occurred and be continuing an Event of Default with respect to the Notes. In
all cases, Physical Notes delivered in exchange for any Global Note or
beneficial interests therein shall be registered in the names, and issued in
any approved denominations, requested by or on behalf of the Depository (in
accordance with its customary procedures).
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in any Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes
are to be issued) reflect on its books and records the date and a decrease in
the principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred, and the
Company shall execute, and the Trustee shall upon receipt of a written order
from the Company authenticate and make available for delivery, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note
delivered in exchange for an interest in a Global Note pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.17, bear the Private Placement Legend or, in the case of the
Regulation S Global Note, the legend set forth in Exhibit C, in each case,
unless the Company determines otherwise in compliance with applicable law.
(f) On or prior to the 40th-day after the later of the
commencement of the offering of the Notes represented by the Regulation S
Global Note and the issue date of such Notes (such period through and including
such 40th day, the "Restricted Period"), a beneficial interest in a Regulation
S Global Note may be transferred to a Person who takes delivery in the form of
an interest in the corresponding Restricted Global Note only upon receipt by
the Trustee of a written certification from the transferor to the effect that
such transfer is being made (i)(a)
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to a Person whom the transferor reasonably believes is a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule 144A or
(b) pursuant to another exemption from the registration requirements under the
Securities Act which is accompanied by an opinion of counsel regarding the
availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.
(g) Beneficial interests in the Restricted Global Note
may be transferred to a Person who takes delivery in the form of an interest in
the Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and
that, if such transfer occurs prior to the expiration of the Restricted Period,
the interest transferred will be held immediately thereafter through Euroclear
or CEDEL.
(h) Any beneficial interest in one of the Global Notes
that is transferred to a Person who takes delivery in the form of an interest
in another Global Note shall, upon transfer, cease to be an interest in such
Global Note and become an interest in such other Global Note and, accordingly,
shall thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Note to any Institutional Accredited Investor which is not a QIB or
to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after March
18, 2000 or such other date as such Note shall be freely transferable
under Rule
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144 as certified in an Officer's Certificate or (y) (1) in the case of
a transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit E
hereto or (2) in the case of a transfer to a Non-U.S. Person
(including a QIB), the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit F hereto;
provided that in the case of a transfer of a Note bearing the Private
Placement Legend for a Note not bearing the Private Placement Legend,
the Registrar has received an Officers' Certificate authorizing such
transfer; and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in a Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and
(y) instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Company shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed registration of transfer
of a Note constituting a Restricted Note to a QIB (excluding transfers to
Non-U.S. Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on such Holder's Note stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on such
Holder's Note stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Note for its own
account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a
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QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and
the Notes to be transferred consist of Physical Notes which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private
Placement Legend. Upon the registration of transfer, exchange or replacement
of Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless (i) it has received the
Officers' Certificate required by paragraph (a)(i)(y) of this Section 2.17,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Note has been sold pursuant to an effective registration statement under the
Securities Act and the Registrar has received an Officers' Certificate from the
Company to such effect.
(d) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain for a period of two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The
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Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable notice to the Registrar.
Section 2.18. Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE 3
REDEMPTION
Section 3.01. Election to Redeem; Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5
of the Notes, at least 45 days prior to the Redemption Date (unless a shorter
notice shall be agreed to in writing by the Trustee) but not more than 65 days
before the Redemption Date, the Company shall notify the Trustee in writing of
the Redemption Date, the principal amount of Notes to be redeemed and the
redemption price, and deliver to the Trustee an Officers' Certificate stating
that such redemption will comply with the conditions contained in paragraph 5
of the Notes.
Section 3.02. Selection by Trustee of Notes To Be Redeemed.
In the event that fewer than all of the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed, if the Notes are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Notes are not so listed, either on a pro rata basis or by
lot, or such other method as it shall deem fair and equitable; provided,
however, that if a partial redemption is made with the proceeds of a Public
Equity Offering, selection of the Notes or portion thereof for redemption shall
be made by the Trustee on a pro rata basis to the extent practical, unless such
a method is prohibited. The Trustee shall promptly notify the Company of the
Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed. The Trustee
may select for redemption portions of the principal of the Notes that have
denominations larger than $1,000. Notes and portions thereof the Trustee
selects shall be redeemed in amounts of $1,000 or whole multiples of $1,000.
For all purposes of this Indenture unless the context otherwise
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requires, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a
Redemption Date, the Company shall mail, or cause to be mailed, a notice of
redemption by first-class mail to each Holder of Notes to be redeemed at his or
her last address as the same appears on the registry books maintained by the
Registrar pursuant to Section 2.04 hereof.
The notice shall identify the Notes to be redeemed (including
the CUSIP numbers thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of premium and
accrued interest to be paid;
(3) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that unless the Company default in making the
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date;
(7) the provision of paragraph 5 of the Notes pursuant to
which the Notes called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are
being redeemed.
At the Company's written request made at least five Business
Days prior to the date on which notice is to be given, the Trustee shall give
the notice of redemption in the Company's name and at the Company's sole
expense.
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Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued
to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall
be paid at the redemption price, including any premium, plus interest accrued
to the Redemption Date, provided that if the Redemption Date is after a regular
record date and on or prior to the Interest Payment Date, the accrued interest
shall be payable to the Holder of the redeemed Notes registered on the relevant
record date, and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Company shall deposit with the Paying Agent in immediately
available funds money sufficient to pay the redemption price of, including
premium, if any, and accrued interest on all Notes to be redeemed on that date
other than Notes or portions thereof called for redemption on that date which
have been delivered by the Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of, including premium, if any, and accrued interest on
Notes called for redemption shall have been made available in accordance with
the preceding paragraph, the Notes called for redemption will cease to accrue
interest and the only right of the Holders of such Notes will be to receive
payment of the redemption price of and, subject to the first proviso in Section
3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any
Note surrendered for redemption shall not be so paid, interest will be paid,
from the Redemption Date until such redemption payment is made, on the unpaid
principal of the Note and any interest not paid on such unpaid principal, in
each case, at the rate and in the manner provided in the Notes.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for the Holder thereof a new Note
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equal in principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of and interest (including
all Additional Interest as provided in the Registration Rights Agreement or, in
the case of Notes issued subsequent to the Issue Date, a registration rights
agreement substantially identical to the Registration Rights Agreement) on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay such installment.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
(a) The Company will file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements, so long as the SEC will accept such filings; provided, however,
that the Company shall not be required to make any such filings prior to the
date on which the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1997 would have been required to be filed if, at the
time such filings would have been required to be made with the SEC, either (i)
the Company shall have provided to each Holder of the Notes the information
that would have been required to be filed or (ii) the Exchange Registration
Statement (as such term is defined in the Registration Rights Agreement) has
been filed with the SEC but has not yet been declared effective and copies of
the Exchange Offer Registration Statement and any amendments thereto (to the
extent such Registration Statement and/or amendments contain additional
information not disclosed in the Offering Memorandum that would have been the
subject of a filing required to be made under
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Section 13 or 15(d) of the Exchange Act) have been provided to each Holder of
the Notes, provided that any exhibits to the Exchange Registration Statement
(or any amendments thereto) need not be delivered to any Holder of the Notes,
but sufficient copies thereof shall be furnished to the Trustee as reasonably
requested to permit the Trustee to deliver any such exhibits to any Holder of
the Notes upon request. The Company (at its own expense) shall file with the
Trustee within 100 days after the end of each fiscal year of the Company, or
within 50 days after the end of each of the first three fiscal quarters of each
fiscal year of the Company, as the case may be, copies of the annual reports or
unaudited quarterly consolidated financial statements, as the case may be, and
the information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may be rules and regulations prescribe) which the
Company files with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Upon qualification of this Indenture under the TIA, the Company shall also
comply with the provisions of TIA Section 314(a).
(b) At the Company's expense, regardless of whether the
Company is required to furnish such reports and other information referred to
in paragraph (a) above to its stockholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar within 100 days after the end of each fiscal year of the Company, or
within 50 days after the end of each of the first three fiscal quarters of each
fiscal year of the Company, as the case may be. Such reports shall be
delivered to the Registrar and the Registrar will mail them, at the Company's
expense, to the Holders at their addresses appearing in the register of Notes
maintained by the Registrar.
(c) The Company shall, upon request, provide to any
Holder of Notes or any prospective transferee of any such Holder any
information concerning the Company (including financial statements) necessary
in order to permit such Holder to sell or transfer Notes in compliance with
Rule 144A under the Securities Act; provided, however, that the Company shall
not be required to furnish such information in connection with any request made
on or after the date which is three years (or such other date as the Notes
shall be freely transferable pursuant to Rule 144) from the later of (i) the
date such Note (or any predecessor Note) was acquired from the Company or (ii)
the date such Note (or any predecessor Note) was last acquired from an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act.
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Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Company and the Guarantors covenant (to the extent that
they may lawfully do so) that they shall not at any time insist upon, or plead
(as a defense or otherwise) or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other
law which would prohibit or forgive the Company and the Guarantors from paying
all or any portion of the principal of, premium, if any, and/or interest on the
Notes as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Indenture;
and (to the extent that they may lawfully do so) the Company and the Guarantors
hereby expressly waive all benefit or advantage of any such law, and covenant
that they will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
(a) The Company and the Guarantors shall deliver to the
Trustee, within 100 days after the end of each fiscal year and on or before 50
days after the end of the first, second and third quarters of each fiscal year,
an Officers' Certificate (one of the signers on behalf of each of the Company
and the Guarantors of which shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company and such
Guarantors) stating that a review of the activities of the Company and its
Subsidiaries during such fiscal year or fiscal quarter, as the case may be, has
been made under the supervision of the signing Officers with a view to
determining whether the Company and the Guarantors have kept, observed,
performed and fulfilled their obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge, the Company and the Guarantors have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
are not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action they are taking or propose to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a
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description of the event and what action the Company and the Guarantors is
taking or propose to take with respect thereto.
(b) So long as the Trustee has not received an Officer's
Certificate stating that it would be contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company or any Guarantor has violated any provisions of this Article 4 or
Article 5 of this Indenture or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly for any failure to
obtain knowledge of any such violation.
(c) The Company and the Guarantors shall, so long as any
of the Notes are outstanding, deliver to the Trustee, forthwith upon any
Officer becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company and the Guarantors are taking or propose to take with respect thereto.
(d) The Company's fiscal year currently ends on the
Friday closest to October 31 of each year. The Company will provide notice to
the Trustee of any change in its fiscal year.
Section 4.05. Taxes.
The Company and the Guarantors shall, and shall cause each of
their Subsidiaries to, pay prior to delinquency all material taxes,
assessments, and governmental levies except as contested in good faith and by
appropriate proceedings.
Section 4.06. Limitation on Additional Indebtedness.
The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, directly or indirectly, incur (as defined) any
Indebtedness (including Acquired Indebtedness) unless (a) after giving effect
to the incurrence of such Indebtedness and the receipt and application of the
proceeds thereof, the ratio of the Company's EBITDA to the Company's
Consolidated Interest Expense (determined on a pro forma basis for the last
four fiscal quarters of the Company for which
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financial statements are available at the date of determination (the "Specified
Period")) is greater than 2.0 to 1 and (b) no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness.
If, during the Specified Period or subsequent thereto and on
or prior to the date of determination, the Company or any of its Restricted
Subsidiaries shall have engaged in any Asset Sale or acquisition or shall have
designated any Restricted Subsidiary to be an Unrestricted Subsidiary or any
Unrestricted Subsidiary to be a Restricted Subsidiary, EBITDA and Consolidated
Interest Expense for the Specified Period shall be calculated on a pro forma
basis giving effect to such Asset Sale or acquisition or designation, as the
case may be, and the application of any proceeds therefrom as if such Asset
Sale or acquisition or designation had occurred on the first day of the
Specified Period.
If the Indebtedness which is the subject of a determination
under this provision is Acquired Indebtedness, or Indebtedness incurred in
connection with the simultaneous acquisition of any Person, business, property
or assets, or Indebtedness of an Unrestricted Subsidiary being designated as a
Restricted Subsidiary, then such ratio shall be determined by giving effect (on
a pro forma basis, as if the transaction had occurred at the beginning of the
Specified Period) to both the incurrence or assumption of such Acquired
Indebtedness or such other Indebtedness by the Company or any of its Restricted
Subsidiaries and the inclusion in EBITDA of the EBITDA of the acquired Person,
business, Property or assets or redesignated Subsidiary.
If any Indebtedness outstanding or to be incurred (x) bears a
floating rate of interest, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire Specified Period (taking into account on a pro
forma basis any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months), (y) bears, at the option of the Company or a Restricted
Subsidiary, a fixed or floating rate of interest, the interest expense on such
Indebtedness shall be computed by applying, at the option of the Company or
such Restricted Subsidiary, either a fixed or floating rate and (z) was
incurred under a revolving credit facility, the interest expense on such
Indebtedness shall be computed based upon the average daily balance of such
Indebtedness during the applicable
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period. For purposes of this covenant, EBITDA for the fiscal quarter ended
January 31, 1997 shall be deemed to be $ 5,002,000, for the fiscal quarter
ended October 31, 1996 shall be deemed to be ($924,000), for the fiscal quarter
ended July 31, 1996 shall be deemed to be ($3,344,000) and for the fiscal
quarter ended April 30, 1996 shall be deemed to be $15,156,000. Consolidated
Interest Expense for each of the four fiscal quarters in the year ended January
31, 1997 shall be deemed to be $3,682,750.
Notwithstanding any restrictions set forth in this Section
4.06, the Company and its Restricted Subsidiaries may incur Permitted
Indebtedness.
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company shall not permit any Restricted Subsidiary to
issue any Preferred Stock (except Preferred Stock to the Company or a
Restricted Subsidiary) or permit any Person (other than the Company or a
Restricted Subsidiary) to hold any such Preferred Stock unless the Company or
such Restricted Subsidiary would be entitled to incur or assume Indebtedness
under the first paragraph of Section 4.06 in an aggregate principal amount
equal to the aggregate liquidation value of the Preferred Stock to be issued;
provided that this Section 4.07 shall not apply to Preferred Stock of a
Restricted Subsidiary outstanding on the Issue Date.
Section 4.08. Limitation on Capital Stock of Restricted Subsidiaries.
The Company shall not (i) sell, pledge, hypothecate or
otherwise convey or dispose of any Capital Stock of a Restricted Subsidiary
(other than under the Senior Credit Facility or a successor facility) or (ii)
permit any of its Restricted Subsidiaries to issue any Capital Stock, other
than to the Company or a Wholly-Owned Subsidiary of the Company. The foregoing
restrictions shall not apply to an Asset Sale made in compliance with Section
4.10 hereof or the issuance of Preferred Stock in compliance with Section 4.07
hereof.
Section 4.09. Limitation on Restricted Payments.
The Company shall not make, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment, unless:
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(a) no Default or Event of Default shall have occurred
and be continuing at the time of or immediately after giving effect to
such Restricted Payment;
(b) immediately after giving pro forma effect to such
Restricted Payment, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06
hereof; and
(c) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made
after the Issue Date does not exceed the sum of (1) an amount equal to
the excess of (x) cumulative Adjusted EBITDA of the Company subsequent
to the Issue Date less (y) 1.75 times cumulative Consolidated Interest
Expense of the Company subsequent to the Issue Date, plus (2) 100% of
the aggregate Net Proceeds and the fair market value of securities or
other property received by the Company from the issue or sale, after
the Issue Date, of Capital Stock (other than Disqualified Capital
Stock or Capital Stock of the Company issued to any Subsidiary of the
Company) of the Company or any Indebtedness or other securities of the
Company convertible into or exercisable or exchangeable for Capital
Stock (other than Disqualified Capital Stock) of the Company which has
been so converted or exercised or exchanged, as the case may be, plus
(3) 100% of the capital contributions made by the Parent to the
Company after the Issue Date (other than capital contributions which
constitute Indebtedness), plus (4) in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made
after the Issue Date, an amount equal to the lesser of the cash return
of capital with respect to such Investment and the initial amount of
such Investment, in either case, less the cost of disposition of such
Investment, plus (5) $3,500,000. For purposes of determining under
this clause (c) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value.
The provisions of this Section 4.09 shall not prohibit: (i)
the payment of any distribution within 60 days after the date of declaration
thereof, if at such date of declaration such payment would comply with the
provisions of this Indenture; (ii) the retirement of any shares of Capital
Stock of the Company or subordinated Indebtedness by conversion into, or by or
in exchange for, shares of Capital Stock (other than Disqualified Capital
Stock), or out of, the Net Proceeds of the substantially
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concurrent sale (other than to a Subsidiary of the Company) of other shares of
Capital Stock of the Company (other than Disqualified Capital Stock); (iii) the
redemption or retirement of Indebtedness of the Company subordinated to the
Notes in exchange for, by conversion into, or out of the Net Proceeds of, a
substantially concurrent sale or incurrence of Indebtedness (other than any
Indebtedness owed to a Subsidiary) of the Company that is contractually
subordinated in right of payment to the Notes to at least the same extent as
the subordinated Indebtedness being redeemed or retired; (iv) the retirement of
any shares of Disqualified Capital Stock by conversion into, or by exchange
for, shares of Disqualified Capital Stock, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other shares of Disqualified Capital Stock; (v) the payment by the Company of
cash dividends to the Parent for the purpose of paying, so long as all proceeds
thereof are promptly used by the Parent to pay, franchise taxes and federal,
state and local income taxes and interest and penalties with respect thereto,
if any, payable by the Parent, provided that any refund shall be promptly
returned by the Parent to the Company; (vi) payments to employees (other than
George N. Gillett, Jr. and Jeffrey J. Joyce) for repurchases of Capital Stock;
provided, however, that the amount of all such payments under this clause (vi)
does not exceed $500,000 during any twelve-month period and provided, further,
that with respect to this clause (vi), no Default or Event of Default shall
have occurred and be continuing at the time of any such payment or will occur
immediately after giving effect to any such payment; and provided, further,
that, in determining the aggregate amount of all Restricted Payments made
subsequent to the Issue Date, all payments made pursuant to this clause (vi)
shall be included, (vii) deposits and loans, not to exceed $3,000,000 at any
time outstanding, made in connection with acquisition agreements; provided,
however, that if an acquisition is not consummated within 180 days after the
deposit or loan is made with respect to such acquisition, in determining the
aggregate amount of all Restricted Payments made subsequent to the Issue Date,
such deposit or loan shall be included, or (viii) contingent payments made in
accordance with the terms of the Purchase Agreement dated as of February 11,
1997 relating to the acquisition of the capital stock of Grand Targhee
Incorporated.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations
may be based upon the Company's latest available financial statements, and
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that no Default or Event of Default exists and is continuing and no Default or
Event of Default will occur immediately after giving effect to any Restricted
Payments.
Section 4.10. Limitation on Certain Asset Sales.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Board of Directors of the Company,
and evidenced by a Board Resolution); (ii) not less than 85% of the
consideration received by the Company or its Subsidiaries, as the case may be,
is in the form of cash or Temporary Cash Investments; and (iii) the Asset Sale
Proceeds received by the Company or such Restricted Subsidiary are applied (a)
first, to the extent the Company elects, or is required, to prepay, repay or
purchase debt of the Company or any Restricted Subsidiary under the Senior
Credit Facility within 180 days following the receipt of the Asset Sale
Proceeds from any Asset Sale; provided that any such repayment shall result in
a permanent reduction of the commitments thereunder in an amount equal to the
principal amount so repaid; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Company
elects, to an investment in the existing businesses of the Company and its
Restricted Subsidiaries or in assets (including Capital Stock or other
securities purchased in connection with the acquisition of Capital Stock or
property of another Person) used or useful in businesses similar or ancillary
to the business of the Company or such Restricted Subsidiary as conducted at
the time of such Asset Sale, provided that such investment occurs or the
Company or a Restricted Subsidiary enters into contractual commitments to make
such investment, subject only to customary conditions (other than the obtaining
of financing), on or prior to the 181st day following receipt of such Asset
Sale Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 270 days following the receipt of such Asset
Sale Proceeds; and (c) third, if, on the Reinvestment Date with respect to any
Asset Sale, the Available Asset Sale Proceeds exceed $5,000,000, the Company
shall apply an amount equal to such Available Asset Sale Proceeds to an offer
to repurchase the Notes, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer"). If an Excess Proceeds Offer is not
fully subscribed, the Company may retain
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the portion of the Available Asset Sale Proceeds not required to repurchase
Notes.
If the Company is required to make an Excess Proceeds
Offer, the Company shall mail, within 30 days following the Reinvestment Date,
a notice to the Holders stating, among other things: (1) that such Holders
have the right to require the Company to apply the Available Asset Sale
Proceeds to repurchase such Notes at a purchase price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase; (2) the purchase date (the "Purchase Date"), which shall be
no earlier than 30 days and not later than 60 days from the date such notice is
mailed; (3) the instructions, determined by the Company, that each Holder must
follow in order to have such Notes repurchased; and (4) the calculations used
in determining the amount of Available Asset Sale Proceeds to be applied to the
repurchase of such Notes. The Excess Proceeds Offer shall remain open for a
period of 20 Business Days following its commencement (the "Offer Period").
The notice, which shall govern the terms of the Excess Proceeds Offer, shall
state:
(1) that the Excess Proceeds Offer is being made pursuant
to this Section 4.10 and the length of time the Excess Proceeds Offer
will remain open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment
will continue to accrue interest;
(4) that any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue interest on and after the
Purchase Date and the deposit of the purchase price with the Trustee;
(5) that Holders electing to have a Note purchased
pursuant to any Excess Proceeds Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified
in the notice prior to the close of business on the Business Day
preceding the Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Company, depositary or Paying Agent, as the case may
be, receives, not later than the expiration of the
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Offer Period, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Available Asset Sale Proceeds, the
Company shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so
that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(8) that Holders whose Notes were purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Notes or portions thereof tendered pursuant to the Excess Proceeds Offer,
deposit with the Paying Agent U.S. legal tender sufficient to pay the purchase
price plus accrued interest, if any, on the Notes to be purchased and deliver
to the Trustee an Officers' Certificate stating that such Notes or portions
thereof were accepted for payment by the Company in accordance with the terms
of this Section 4.10. The Paying Agent shall promptly (but in any case not
later than 5 days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Note tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, the Guarantors shall endorse the guarantee thereon and the
Trustee shall authenticate and mail or make available for delivery such new
Note to such Holder equal in principal amount to any unpurchased portion of the
Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Excess Proceeds Offer on the Purchase Date by
sending a press release to the Dow Jones News Service or similar business news
service in the United States. If an Excess Proceeds Offer is not fully
subscribed, the Company may retain that portion of the Available Asset Sale
Proceeds not required to repurchase Notes.
Notwithstanding any restrictions set forth in this Section
4.10, (i) the Company and its Subsidiaries may sell real property constituting
residential or commercial development parcels, and timber provided that (x) the
aggregate fair market
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value of all such property sold in any period of 365 consecutive days does not
exceed $5,000,000 and (y) at the time of such sale and after giving effect
thereto, no Default or Event of Default shall exist, and (ii) Ski Lifts, Inc.
(or any successor company) may sell and transfer real property pursuant to the
Real Estate Option.
Section 4.11. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (including entities in which the Company or any of
its Restricted Subsidiaries own a minority interest) or holder of 10% or more
of the Company's Common Stock (an "Affiliate Transaction"), or extend, renew,
waive or otherwise modify the terms of any Affiliate Transaction entered into
prior to the Issue Date unless (i) such Affiliate Transaction is between or
among the Company and its Wholly-Owned Subsidiaries or (ii) the terms of such
Affiliate Transaction are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be, and the terms of such Affiliate Transaction are
at least as favorable as the terms which could be obtained by the Company or
such Restricted Subsidiary, as the case may be, in a comparable transaction
made on an arm's-length basis between unaffiliated parties. In any Affiliate
Transaction involving an amount or having a value in excess of $1 million which
is not permitted under clause (i) above, the Company must obtain a resolution
of the Board of Directors certifying that such Affiliate Transaction complies
with clause (ii) above. In transactions with a value in excess of $3 million
which are not permitted under clause (i) above, the Company must obtain a
written opinion as to the fairness of such a transaction from an independent
investment banking firm or a firm experienced in the subject matter of the
Affiliate Transaction in question.
(b) The foregoing provisions shall not apply to (i) any
Restricted Payment that is not prohibited by Section 4.09 hereof, (ii) any
transaction, approved by the Board of Directors of the Company, with an officer
or director of the Company or of any Subsidiary in his or her capacity as
officer or director entered into in the ordinary course of business, including
compensation and employee benefit arrangements with any officer or director of
the Company or any of its Subsidiaries, (iii) capital contributions made by the
Parent to the Company or made by the Company and its Subsidiaries to
Subsidiaries of the
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Company or (iv) if no Default or Event of Default has occurred and is
continuing, payments by the Company pursuant to the Gillett Management
Agreement for the services specified in the Gillett Management Agreement as in
effect on the Issue Date in an amount not to exceed $350,000 in any fiscal
year.
Section 4.12. Limitations on Liens.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur or otherwise cause or suffer to exist
or become effective any Liens of any kind (other than Permitted Liens) upon any
property or asset of the Company or any Restricted Subsidiary or any shares of
stock or debt of any Restricted Subsidiary which owns property or assets, now
owned or hereafter acquired, unless (i) if such Lien secures Indebtedness which
is pari passu with the Notes, then the Notes are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligation is no longer secured by a Lien or (ii) if such Lien secures
Indebtedness which is subordinated to the Notes, any such Lien shall be
subordinated to the Lien granted to the Holders of the Notes to the same extent
as such subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Limitations on Investments.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any Investment other than (i) a Permitted
Investment or (ii) an Investment that is made as a Restricted Payment in
compliance with Section 4.09 hereof, after the Issue Date.
Section 4.14. Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the date of this Indenture, (ii) a
Restricted Subsidiary created after the date of this Indenture to hold assets
or conduct businesses previously held or conducted by the Company or any of its
other Subsidiaries or that is acquired or created after the date of this
Indenture in connection with the acquisition by the Company of a ski resort
related business or asset, or (iii) an Unrestricted Subsidiary; provided,
however, that each Restricted Subsidiary acquired or created pursuant to clause
(ii) shall at the time it has either assets or stockholder's equity in excess
of $20,000 execute a guarantee, substantially in the form attached as Exhibit G
to this Indenture and with such documentation relating thereto as the Trustee
shall require,
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including, without limitation a supplement or amendment to this Indenture and
Opinions of Counsel as to the enforceability of such guarantee, pursuant to
which such Restricted Subsidiary shall become a Guarantor.
Section 4.15. Limitation on Sale and Lease-Back Transactions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into any Sale and Lease-Back Transaction unless (i) the
consideration received in such Sale and Lease-Back Transaction is at least
equal to the fair market value of the property sold, as determined, in good
faith, by the Board of Directors of the Company and (ii) the Company could
incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with Section 4.06.
Section 4.16. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a)(i) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (A) on its
Capital Stock or (B) with respect to any other interest or participation in, or
measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (b) make loans or advances or capital
contributions to the Company or any of its Restricted Subsidiaries or (c)
transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (i) encumbrances or restrictions existing on the Issue
Date or under the Senior Credit Facility, (ii) the Indenture, the Notes and the
Guarantees, (iii) applicable law, (iv) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries or of any Person that becomes a Restricted Subsidiary as in effect
at the time of such acquisition or such Person becoming a Restricted Subsidiary
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition of such Person becoming a Restricted
Subsidiary), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person (including any Subsidiary of the Person), so
acquired, provided that the EBITDA of such Person is not taken into account (to
the extent of such restriction) in determining
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whether any financing or Restricted Payment in connection with such acquisition
was permitted by the terms of the Indenture, (v) customary non-assignment
provisions in leases or other agreements entered into in the ordinary course of
business and consistent with past practices, (vi) Refinancing Indebtedness;
provided that such restrictions are in the aggregate no more restrictive than
those contained in the agreements governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded, (viii) customary
restrictions in security agreements or mortgages securing Indebtedness of the
Company or a Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements and mortgages,
(ix) customary net worth provisions contained in leases and other agreements
entered into by a Restricted Subsidiary in the ordinary course of business or
(x) customary restrictions with respect to a Restricted Subsidiary pursuant to
an agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary.
Section 4.17. Payments for Consent.
Neither the Company nor any of the Guarantors shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
Section 4.18. Legal Existence.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its legal existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in
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the conduct of the business of the Company and its Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.
Section 4.19. Change of Control.
(a) Within 20 days of the occurrence of a Change of
Control, the Company shall notify the Trustee in writing of such occurrence and
shall make an offer to purchase (the "Change of Control Offer") the outstanding
Notes at a purchase price equal to 101% of the principal amount thereof plus
any accrued and unpaid interest thereon to the Change of Control Payment Date
(as hereinafter defined) (such applicable purchase price being hereinafter
referred to as the "Change of Control Purchase Price") in accordance with the
procedures set forth below.
If the Senior Credit Facility is in effect, or any amounts are
owing thereunder, at the time of the occurrence of a Change of Control, prior
to the mailing of the notice to Holders described in paragraph (b) below, but
in any event within 30 days following any Change of Control, the Company on a
joint and several basis covenant to (i) repay in full all obligations under the
Senior Credit Facility or offer to repay in full all obligations under or in
respect of the Senior Credit Facility and repay the obligations under or in
respect of the Senior Credit Facility of each lender who has accepted such
offer or (ii) obtain the requisite consent under the Senior Credit Facility to
permit the repurchase of the Notes pursuant to this Section 4.19. The Company
must first comply with the covenant described in the preceding sentence before
they shall be required to purchase Notes in the event of a Change of Control;
provided that the Company's failure to comply with the covenant described in
the preceding sentence constitutes an Event of Default described in clause (3)
under Section 6.01 hereof if not cured within 30 days after the notice required
by such clause.
(b) Within 20 days of the occurrence of a Change of
Control, the Company also shall (i) cause a notice of the Change of Control
Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class mail,
postage prepaid, to the Trustee and to each Holder of the Notes, at the address
appearing in the register maintained by the Registrar of the Notes, a notice
stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.19 and that all Notes tendered
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will be accepted for payment, and otherwise subject to the terms and
conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 20 Business Days
from the date such notice is mailed (the "Change of Control Payment
Date"));
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of
the Change of Control Purchase Price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to a depository, if
appointed, or the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
acceptance if the depository or Paying Agent receives, not later than
the close of business on the third Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, provided that each Note
purchased and each such new Note issued shall be in an original
principal amount in denominations of $1,000 and integral multiples
thereof;
(8) any other procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(9) the name and address of the depository or Paying
Agent.
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On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the depository or
Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price for such Notes, and the Company shall execute and issue, and
the Trustee shall promptly authenticate and mail to such Holder, a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered;
provided that each such new Note shall be issued in an original principal
amount in denominations of $1,000 and integral multiples thereof.
(c) (A) If either Company or any Subsidiary thereof
has issued any outstanding (i) Indebtedness that is subordinated in right of
payment to the Notes or (ii) Preferred Stock, and the Company or such
Subsidiary is required to repurchase or redeem, or make an offer to repurchase
or redeem, such Indebtedness or Preferred Stock, in the event of a Change of
Control or to make a distribution with respect to such subordinated
Indebtedness or Preferred Stock in the event of a Change of Control, the
Company shall not consummate any such redemption, repurchase offer or
distribution with respect to such subordinated Indebtedness or Preferred Stock
until such time as the Company shall have paid the Change of Control Purchase
Price in full to the Holders of Notes that have accepted the Company's Change
of Control Offer and shall otherwise have consummated the Change of Control
Offer made to Holders of the Notes and (B) the Company will not issue
Indebtedness that is subordinated in right of payment to the Notes or Preferred
Stock with change of control provisions requiring the payment of such
Indebtedness or Preferred Stock prior to the payment of the Notes in the event
of a Change in Control under this Indenture.
In the event that a Change of Control occurs and the Holders
of Notes exercise their right to require the Company to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act at that time, the Company will comply with the requirements of
Rule 14e-1 as then in effect with respect to such repurchase.
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Section 4.20. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Company shall, and shall cause each of its
Restricted Subsidiaries to, at all times cause all properties used or useful in
the conduct of their business to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and supplied with
all necessary equipment, and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereto.
(b) The Company shall, and shall cause each of its
Restricted Subsidiaries to, maintain insurance in such amounts and covering
such risks as are usually and customarily carried with respect to similar
facilities according to their respective locations.
(c) The Company shall, and shall cause each of its
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each Subsidiary of the Company, in accordance with
GAAP consistently applied to the Company and its Subsidiaries taken as a whole.
(d) The Company shall, and shall cause each of its
Subsidiaries to, comply with all statutes, laws, ordinances or government rules
and regulations to which they are subject, non-compliance with which would
materially adversely affect the business, prospects, earnings, properties,
assets or financial condition of the Company and their Subsidiaries taken as a
whole.
Section 4.21. Further Assurance to the Trustee.
The Company shall, upon the reasonable request of the Trustee,
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Indenture.
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ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
(a) The Company shall not, nor shall it permit any
Guarantor to, consolidate with, merge with or into, or transfer all or
substantially all of its assets (as an entirety or substantially as an entirety
in one transaction or a series of related transactions), to any Person unless
(in the case of the Company or any Guarantor): (i) the Company or such
Guarantor, as the case may be, shall be the continuing Person, or the Person
(if other than the Company or such Guarantor) formed by such consolidation or
into which the Company or such Guarantor, as the case may be, is merged or to
which the properties and assets of the Company or such Guarantor, as the case
may be, are transferred shall be a corporation organized and existing under the
laws of the United States or any State thereof or the District of Columbia and
shall expressly assume, by a supplemental indenture, executed and delivered to
the Trustee, in form and substance satisfactory to the Trustee, all of the
obligations of the Company or the Guarantor, as the case may be, under the
Notes and this Indenture, and the obligations under this Indenture shall remain
in full force and effect; (ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis the Consolidated Net Worth of the
Company or the surviving entity as the case may be is at least equal to the
Consolidated Net Worth of the Company immediately before such transaction or
series of transactions; and (iv) immediately after giving effect to such
transaction on a pro forma basis the Company or the Surviving Person could
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.06 hereof, provided that a Person that is a
Guarantor may consolidate with, merge into or transfer all or substantially all
of its assets to the Company or another Person that is a Guarantor without
complying with this clause (iv).
(b) In connection with any consolidation, merger or
transfer of assets contemplated by this Section 5.01, the Company shall
deliver, or cause to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion
of Counsel, each stating
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that such consolidation, merger or transfer and the supplemental indenture in
respect thereto, if any, comply with this Section 5.01 and that all conditions
precedent herein provided for relating to such transaction or transactions have
been complied with.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Company or such Guarantor
herein, and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if
(1) there is a default in the payment of any principal
of, or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon acceleration, redemption or otherwise;
(2) there is a default in the payment of any interest on
any Note when the same becomes due and payable and the Default
continues for a period of 30 days;
(3) either the Company or any Guarantor defaults in the
observance or performance of any other covenant in the Notes or this
Indenture for 30 days after written notice from the Trustee or the
Holders of not less than 25% in the aggregate principal amount of the
Notes then outstanding;
(4) there is a default in the payment when due of
principal, interest or premium in an aggregate amount of $5,000,000 or
more with respect to any Indebtedness of the
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Company or any Restricted Subsidiary thereof (other than Indebtedness
owed to the Company or any Subsidiary of the Company), or there is an
acceleration of any such Indebtedness aggregating $5,000,000 or more,
which default shall not be cured, waived or postponed pursuant to an
agreement with the holders of such Indebtedness within 60 days after
written notice of such default to the Company by the Trustee or to the
Company and the Trustee by any Holder, or which acceleration shall not
be rescinded or annulled within 20 days after written notice of such
Default to the Company by the Trustee or to the Company and the
Trustee by any Holder;
(5) the entry of a final judgment or judgments which can
no longer be appealed for the payment of money in excess of $5,000,000
(which are not paid or covered by third party insurance by financially
sound insurers that have not disclaimed coverage) against the Company
or any Restricted Subsidiary thereof and such judgment remains
undischarged, for a period of 60 consecutive days during which a stay
of enforcement of such judgment shall not be in effect;
(6) the Company or any Significant Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(D) makes a general assignment for the benefit of
its creditors, or
(E) generally is not paying its debts as they
become due; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against either of the Company
or any Restricted Subsidiary in an involuntary case,
(B) appoints a Custodian of either of the Company
or any Restricted Subsidiary or for all or
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substantially all of the property of either of the Company or
any Restricted Subsidiary, or
(C) orders the liquidation of either of the
Company or any Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Subject to Sections 7.01 and 7.02, the Trustee shall not be
charged with knowledge of any Default, Event of Default, Change of Control or
Asset Sale or the requirement for payment of Additional Interest unless written
notice thereof shall have been given to a Responsible Officer at the Corporate
Trust Office of the Trustee by the Company or any other Person.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7) with respect to the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may by
written notice to the Company and the Trustee declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued but unpaid interest to the date of acceleration and (i) such amounts
shall become immediately due and payable or (ii) if there are any amounts
outstanding under or in respect of the Senior Credit Facility, such amounts
shall become due and payable upon the first to occur of an acceleration of
amounts outstanding under or in respect of the Senior Credit Facility or five
Business Days after receipt by the Company and the representative of the
holders of Indebtedness under or in respect of the Senior Credit Facility, of
notice of the acceleration of the Notes; provided, however, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the Holders of a majority in aggregate principal
amount of the outstanding Notes may rescind and annul such acceleration and its
consequences if all existing Events of Default, other than the nonpayment of
accelerated principal, premium, if any, or interest that has become due solely
because of the acceleration, have been cured or waived and if the rescission
would not conflict with any judgment or decree. No
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such rescission shall affect any subsequent Default or impair any right
consequent thereto. In case an Event of Default specified in Section 6.01(6)
or (7) with respect to the Company occurs, such principal, premium, if any, and
interest amount with respect to all of the Notes shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of, or premium, if any, and interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture and
may take any necessary action requested of it as Trustee to settle, compromise
, adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.08 and 8.02 hereof, the Holders of
a majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or
that the
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Trustee determines may be unduly prejudicial to the rights of another
Noteholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.08 below, a Noteholder may not institute
any proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer and if requested provide
to the Trustee indemnity reasonably satisfactory to the Trustee
against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer, and, if requested,
provision of, indemnity; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60 day period by the Holders
of a majority in aggregate principal amount of the Notes then
outstanding.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor shall have any liability for any obligations of
the Company or the Guarantors under the Notes, the Guarantees or this Indenture
or for a claim
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based on, in respect of, or by reason of such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes.
Section 6.08. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal of, or premium,
if any, and interest of the Note (including Additional Interest) on or after
the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.
Section 6.09. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or the Guarantors (or any other obligor on the Notes)
for the whole amount of unpaid principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate set forth in the Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.10. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof) and the Noteholders
allowed in any judicial proceedings relative to the Company or the Guarantors
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same after
deduction of its charges and expenses to the extent that any such charges and
expenses are not paid out of the estate in any such proceedings and any
custodian in any such judicial proceeding is
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hereby authorized by each Noteholder to make such payments to the Trustee, and
in the event that the Trustee shall consent to the making of such payments
directly to the Noteholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan or reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceedings.
Section 6.11. Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Noteholders for amounts due and unpaid on the
Notes for principal, premium, if any, and interest (including
Additional Interest, if any) as to each, ratably, without preference
or priority of any kind, according to the amounts due and payable on
the Notes; and
THIRD: to the Company or, to the extent the Trustee collects
any amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.11.
Section 6.12. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit
by a Holder
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pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
Section 6.13. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a
Responsible Officer of the Trustee has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the same circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm
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or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.02, 6.05 or 6.06
hereof.
(4) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its rights, powers or
duties if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it
against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
paragraphs (a), (b), (c) and (e) of this Section 7.01 shall govern every
provision of this Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it in
its sole discretion against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company or any Guarantor. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by the law.
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Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to the provisions of Section 11.05 hereof.
The Trustee shall be protected and shall not be liable for any action
it takes or omits to take in good faith in reliance on such
certificate or opinion.
(3) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent appointed by it with due care.
(4) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to
be authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel as to matters of
law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion
of such counsel.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with the either of the Company or any
Guarantor, or any Affiliates thereof, with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. The Trustee,
however, shall be subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes or
any Guarantee, it shall not be accountable for the Company's or any Guarantor's
use of the proceeds from the
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sale of Notes or any money paid to the Company or any Guaranty pursuant to the
terms of this Indenture and it shall not be responsible for any statement in
the Notes, Guarantee or this Indenture other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determine(s) that withholding the notice is in the interests of
the Noteholders.
Section 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after May
15 of any year, commencing May 15, 1997, the Trustee shall mail to each
Noteholder a brief report dated as of such May 15 that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA Section
313(c) and TIA Section 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by
mail:
(1) to all Holders of Notes, as the names and addresses
of such Holders appear on the Registrar's books; and
(2) to such Holders of Notes as have, within the two
years preceding such transmission, filed their names and addresses
with the Trustee for that purpose.
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed. The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company and the Guarantors shall pay to the Trustee and
Agents from time to time such compensation as shall be agreed in writing
between the Company and the Trustee for its services hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an
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express trust). The Company and the Guarantors shall reimburse the Trustee and
Agents upon request for all reasonable disbursements, expenses and advances
incurred or made by it in connection with its duties under this Indenture,
including the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company and the Guarantors shall indemnify each of the
Trustee and any predecessor Trustee for, and hold each of them harmless
against, any and all loss, damage, claim, liability or expense, including
without limitation taxes (other than taxes based on the income of the Trustee
or such Agent) and reasonable attorneys' fees and expenses incurred by each of
them in connection with the acceptance or performance of its duties under this
Indenture including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder (including, without limitation,
settlement costs). The Trustee or Agent shall notify the Company and the
Guarantors in writing promptly of any claim asserted against the Trustee or
Agent for which it may seek indemnity. However, the failure by the Trustee or
Agent to so notify the Company and the Guarantors shall not relieve the Company
and Guarantors of their obligations hereunder except to the extent the Company
and the Guarantors are prejudiced thereby.
Notwithstanding the foregoing, the Company and the Guarantors
need not reimburse the Trustee for any expense or indemnify it against any loss
or liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Company and the Guarantors in this
Section 7.07, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Notes. The obligations of
the Company and the Guarantors under this Section 7.07 to compensate and
indemnify the Trustee, Agents and each predecessor Trustee and to pay or
reimburse the Trustee, Agents and each predecessor Trustee for expenses,
disbursements and advances shall be joint and several liabilities of the
Company and each of the Guarantors and shall survive the resignation or removal
of the Trustee and the satisfaction, discharge or other termination of this
Indenture, including any termination or rejection hereof under any Bankruptcy
Law.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) hereof occurs, the
expenses and the compensation for the services
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are intended to constitute expenses of administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company and the
Guarantors in writing. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the Company and the
removed Trustee in writing and may appoint a successor Trustee with the
Company's written consent, which consent shall not be unreasonably withheld.
The Company may remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the
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resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Noteholder. Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Consolidation, Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b), including the provision in Section 310(b)(1).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
Section 7.12. Paying Agents.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provisions of this
Section 7.12:
(A) that it will hold all sums held by it as agent for
the payment of principal of, or premium, if any, or interest on, the
Notes (whether such sums have been paid to it by the Company or by any
obligor on the Notes) in trust for the benefit of Holders of the Notes
or the Trustee;
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(B) that it will at any time during the continuance of
any Event of Default, upon written request from the Trustee, deliver
to the Trustee all sums so held in trust by it together with a full
accounting thereof; and
(C) that it will give the Trustee written notice within
three (3) Business Days of any failure of the Company (or by any
obligor on the Notes) in the payment of any installment of the
principal of, premium, if any, or interest on, the Notes when the same
shall be due and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend, waive or supplement this
Indenture or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(3) to comply with any requirements of the SEC under the
TIA;
(4) to cure any ambiguity, defect or inconsistency;
(5) to make any other change that does not adversely
affect the rights of any Noteholders hereunder;
(6) to add a Guarantor; or
(7) to provide for the issuance of the Exchange Notes,
the Private Exchange Notes, the Option Notes and the Subsequent Series
Notes in accordance with Section 2.01 in a manner that does not
adversely affect the rights of any Noteholder.
The Trustee is hereby authorized to join with the Company and
the Guarantors in the execution of any supplemental
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indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations which may be therein
contained, but the Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects its own rights, duties or
immunities under this Indenture.
Section 8.02. With Consent of Holders.
The Company (when authorized by a Board Resolution), the
Guarantors (each when authorized by a Board Resolution) and the Trustee may
modify or supplement this Indenture or the Notes with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
outstanding Notes. The Holders of not less than a majority in aggregate
principal amount of the outstanding Notes may waive compliance in a particular
instance by the Company or Guarantors with any provision of this Indenture or
the Notes. Subject to Section 8.04, without the consent of each Noteholder
affected, however, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may not:
(1) reduce the principal amount of outstanding Notes
whose Holders must consent to an amendment, supplement or waiver to
this Indenture or the Notes;
(2) reduce the rate of or change the time for payment of
interest on any Note;
(3) reduce the principal of or premium on or change the
stated maturity of any Note;
(4) make any Note payable in money other than that stated
in the Note or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by
the Notes or reduce the premium payable upon any redemption of the
Notes in accordance with Section 3.01 hereof, or change the time
before which no such redemption may be made;
(6) waive a default in the payment of the principal of,
or interest on, or redemption payment with respect to, any Note
(including any obligation to make a Change of Control Offer or, after
the Company's obligation to purchase Notes arises thereunder, an
Excess Proceeds Offer or modify
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any of the provisions or definitions with respect to such offers);
(7) make any changes in Sections 6.04 or 6.08 hereof or
this sentence of Section 8.02; or
(8) affect the ranking of the Notes or the Guarantee in a
manner adverse to the Holders.
After an amendment, supplement or waiver under this Section
8.02 becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the written request of the Company, accompanied by a
Board Resolution authorizing the execution of any such supplemental indenture,
and upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the written notice of revocation
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before the date the amendment, supplement, waiver or other action becomes
effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described
in any of clauses (1) through (8) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a
Note, the Trustee (in accordance with the specific written direction of the
Company) shall request the Holder of the Note (in accordance with the specific
written direction of the Company) to deliver it to the Trustee. In such case,
the Trustee shall place an appropriate notation on the Note about the changed
terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue, the
Guarantors shall endorse, and the Trustee shall authenticate a new Note that
reflects the changed terms. Failure to make the appropriate notation or issue
a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
Section 8.06. Trustee To Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing
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to sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating, in
addition to the matters required by Section 11.04, that such amendment,
supplement or waiver is authorized or permitted by this Indenture and is a
legal, valid and binding obligation of the Company and Guarantors, enforceable
against the Company and Guarantors in accordance with its terms (subject to
customary exceptions).
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
The Company and the Guarantors may terminate their obligations
under the Notes, the Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, if there shall have
been cancelled by the Trustee or delivered to the Trustee for cancellation all
Notes theretofore authenticated and delivered (other than any Notes that are
asserted to have been destroyed, lost or stolen and that shall have been
replaced as provided in Section 2.08 hereof) and the Company has paid all sums
payable by them hereunder or deposited all required sums with the Trustee.
After such delivery, the Trustee upon Company Request shall
acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company in Sections 7.07, 9.05 and 9.06
hereof shall survive.
Section 9.02. Legal Defeasance.
The Company may at its option, by Board Resolution of the
Board of Directors of the Company, be discharged from its obligations with
respect to the Notes and the Guarantors discharged from their obligations under
the Guarantees on the date the conditions set forth in Section 9.04 below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid
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and discharged the entire indebtedness represented by the Notes and to have
satisfied all its other obligations under such Notes and this Indenture insofar
as such Notes are concerned (and the Trustee, at the expense of the Company,
shall, subject to Section 9.06 hereof, execute instruments in form and
substance reasonably satisfactory to the Trustee and Company acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of outstanding Notes to
receive solely from the trust funds described in Section 9.04 hereof and as
more fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (B) the
Company's obligations with respect to such Notes under Sections 2.03, 2.04,
2.05, 2.06, 2.07, 2.08, 2.11 and 4.20 hereof, (C) the rights, powers, trusts,
duties, and immunities of the Trustee hereunder (including claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof) and (D) this
Article 9. Subject to compliance with this Article 9, the Company may exercise
its option under this Section 9.02 with respect to the Notes notwithstanding
the prior exercise of its option under Section 9.03 below with respect to the
Notes.
Section 9.03. Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution
of the Board of Directors of the Company, the Company and the Guarantors shall
be released from their respective obligations under Sections 4.02 (except for
obligations mandated by the TIA), 4.05 through 4.16, 4.19 and 4.21, inclusive,
and clause (a)(iii) of Section 5.01 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 9.04 hereof are
satisfied (hereinafter, "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that the Company and the Guarantors may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section or portion thereof, whether
directly or indirectly by reason of any reference elsewhere herein to any such
specified Section or portion thereof or by reason of any reference in any such
specified Section or portion thereof to any other provision herein or in any
other document, but the remainder of this Indenture and the Notes shall be
unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of
Section 9.02 or Section 9.03 hereof to the outstanding Notes:
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(1) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10 hereof who shall agree to comply with
the provisions of this Article 9 applicable to it) as funds in trust
for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders
of the Notes, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of, premium,
if any, and accrued interest on the outstanding Notes at the maturity
date of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and
interest selected in accordance with the terms of this Indenture and
of the Notes;
(2) no Event of Default or Default with respect to the
Notes shall have occurred and be continuing on the date of such
deposit, or shall have occurred and be continuing at any time during
the period ending on the 91st day after the date of such deposit or,
if longer, ending on the day following the expiration of the longest
preference period under any Bankruptcy Law applicable to the Company
in respect of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall
not cause the Trustee to have a conflicting interest for purposes of
the TIA with respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute default under
any other agreement or instrument to which the Company or any
Guarantor is a party or by which they are bound;
(5) the Company shall have delivered to the Trustee an
Opinion of Counsel stating that, as a result of such Legal
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Defeasance or Covenant Defeasance, neither the trust nor the Trustee
will be required to register as an investment company under the
Investment Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above,
the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that
or (ii) there has been a change in any applicable Federal income tax
law with the effect that, and such opinion shall confirm that, the
Holders of the outstanding Notes or Persons in their positions will
not recognize income, gain or loss for Federal income tax purposes
solely as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner, including
as a result of prepayment, and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 9.02 above or the Covenant Defeasance under
Section 9.03 hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was
not made by the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or others; and
(10) the Company shall have paid or duly provided for
payment under terms mutually satisfactory to the Company and the
Trustee all amounts then due to the Trustee pursuant to Section 7.07
hereof.
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Section 9.05. Deposited Money and U.S. Government Obligations To Be
Held in Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent, to the Holders of
such Notes, of all sums due and to become due thereon in respect of principal,
premium, if any, and accrued interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company and the Guarantors shall (on a joint and several
basis) pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the U.S. Government Obligations deposited
pursuant to Section 9.04 hereof or the principal, premium, if any, and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon an
Company Request any money or U.S. Government Obligations held by it as provided
in Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
Section 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03
hereof by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's and each Guarantor's obligations
under this Indenture, the Notes and the Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 9 until
such time as the Trustee or Paying Agent is permitted to apply all such money
or U.S. Government Obligations in accordance with Section 9.01 hereof;
provided, however, that if the Company or the Guarantors have
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made any payment of principal of, premium, if any, or accrued interest on any
Notes because of the reinstatement of their obligations, the Company or the
Guarantors, as the case may be, shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of
this Indenture shall, upon written demand of the Company, be paid to the
Trustee, or if sufficient moneys have been deposited pursuant to Section 9.01
hereof, to the Company upon an Company Request (or, if such moneys had been
deposited by the Guarantors, to such Guarantors), and thereupon such Paying
Agent shall be released from all further liability with respect to such moneys.
Section 9.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Company or the Guarantors in trust for the payment of the
principal of, or premium, if any, or interest on any Note that are not applied
but remain unclaimed by the Holder of such Note for two years after the date
upon which the principal of, or premium, if any, or interest on such Note shall
have respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon an Company Request, or if such moneys are
then held by the Company or the Guarantors in trust, such moneys shall be
released from such trust; and the Holder of such Note entitled to receive such
payment shall thereafter, as an unsecured general creditor, look only to the
Company and the Guarantors for the payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or any such Paying Agent, before
being required to make any such repayment, may, at the expense of the Company
and the Guarantors, either mail to each Noteholder affected, at the address
shown in the register of the Notes maintained by the Registrar pursuant to
Section 2.03 hereof, or cause to be published once a week for two successive
weeks, in a newspaper published in the English language, customarily published
each Business Day and of general circulation in the City of New York, New York,
a notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such moneys then remaining
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will be repaid to the Company. After payment to the Company or the Guarantors
or the release of any money held in trust by the Company or any Guarantors, as
the case may be, Noteholders entitled to the money must look only to the
Company and the Guarantors for payment as general creditors unless applicable
abandoned property law designates another Person.
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Guarantee.
Subject to the provisions of this Article 10, each Guarantor
hereby jointly and severally unconditionally guarantees to each Holder and to
the Trustee, (i) the due and punctual payment of the principal of, and premium,
if any, and interest on each Note, when and as the same shall become due and
payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest (including Additional Interest) on the overdue
principal of, and premium, if any, and interest on the Notes, to the extent
lawful, and the due and punctual performance of all other Obligations of the
Company to the Holders or the Trustee (including without limitation amounts due
the Trustee under Section 7.07) all in accordance with the terms of such Note
and this Indenture, and (ii) in the case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. Each
Guarantor hereby agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any
failure to enforce the provisions of any such Note or this Indenture, any
waiver, modification or indulgence granted to the Company with respect thereto
by the Holder of such Note or the Trustee, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or such
Guarantor.
Each Guarantor hereby waives diligence, presentment, demand
for payment, filing of claims with a court in the event of merger or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest or notice with respect to any such Note or the Indebtedness evidenced
thereby and all demands whatsoever, and covenants that this Guarantee
<PAGE> 95
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will not be discharged as to any such Note except by payment in full of the
principal thereof, premium if any, and interest thereon and as provided in
Section 9.01 hereof. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this
Guarantee. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article 6 hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided
for in this Article 10 and not discharged.
The Guarantee set forth in this Section 10.01 shall not be
valid or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee by its manual signature.
Section 10.02. Execution and Delivery of Guarantees.
To evidence the Guarantee set forth in this Article 10, each
Guarantor hereby agrees that a notation of such Guarantee substantially in the
form included in Exhibit G hereto shall be placed on each Note authenticated
and made available for delivery by the Trustee and that this Guarantee shall be
executed on behalf of each Guarantor by the manual or facsimile signature of an
Officer of each Guarantor.
Each Guarantor hereby agrees that the Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
<PAGE> 96
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of the Guarantee set forth in this Indenture on behalf of each Guarantor.
Section 10.03. Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor.
Section 10.04. Additional Guarantors.
The Company covenants and agrees that it shall cause any
Person which becomes obligated to guarantee the Notes, pursuant to the terms of
Section 4.14 hereof, to execute a guarantee satisfactory in form and substance
to the Trustee pursuant to which such Restricted Subsidiary shall guarantee the
obligations of the Company under the Notes and this Indenture in accordance
with this Article 10 with the same effect and to the same extent as if such
Person had been named herein as a Guarantor.
Section 10.05. Release of Guarantor.
A Guarantor shall be released from all of its obligations
under its Guarantee if:
(i) the Guarantor has sold all or substantially all of
its assets or the Company and its Restricted Subsidiaries have sold
all of the Capital Stock of the Guarantor owned by them, in each case
in a transaction in compliance with Sections 4.10 and 5.01 hereof; or
(ii) the Guarantor merges with or into or consolidates
with, or transfers all or substantially all of its assets to, the
Company or another Guarantor in a transaction in compliance with
Section 5.01 hereof;
<PAGE> 97
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and in each such case, such Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 11.02. Notices.
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
If to the Company or any Guarantor:
Booth Creek Ski Holdings, Inc.
1000 South Frontage Road, West
Suite 100
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Fax Number: (970) 479-0291
with, in the case of any notice furnished pursuant to Article
6, a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Bruce A. Toth, Esq.
Fax Number: (212) 294-4700
<PAGE> 98
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If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Fax Number: (212) 658-6425
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Company, the Guarantors or the Trustee by written notice
to the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 11.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, the Company
or such Guarantor shall furnish to the Trustee:
<PAGE> 99
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(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.05 below) stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 11.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it
or he has made such examination or investigation as is necessary to
enable it or him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such Person, such covenant or condition has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
meetings of Noteholders. The Registrar and Paying Agent may make reasonable
rules for their functions.
Section 11.07. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a
day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that
<PAGE> 100
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place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
Section 11.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 11.10. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest, including Additional Interest, on any of the Notes, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company or any Guarantor
in this Indenture or in any supplemental indenture, or in any of the Notes, or
because of the creation of any Indebtedness represented thereby, shall be had
against any stockholder, officer, director or employee, as such, past, present
or future, of the Company or of any successor corporation or against the
property or assets of any such stockholder, officer, employee or director,
either directly or through the Company or any Guarantor, or any successor
corporation thereof, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the Notes are solely obligations
of the Company and the Guarantors, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, any stockholder, officer,
employee or director of the Company or any Guarantor, or any successor
corporation thereof, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or the Notes or implied therefrom, and that any and
all such personal liability of, and any and all claims against every
stockholder, officer, employee and director, are hereby expressly waived and
released as a
<PAGE> 101
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condition of, and as a consideration for, the execution of this Indenture and
the issuance of the Notes. It is understood that this limitation on recourse
is made expressly for the benefit of any such shareholder, employee, officer or
director and may be enforced by any of them.
Section 11.11. Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee, any additional trustee and any Paying Agents in this Indenture
shall bind its successor.
Section 11.12. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 11.13. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 11.14. Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 102
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed all as of the date and year first written above.
BOOTH CREEK SKI HOLDINGS, INC.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By: /s/ Jeffrey J. Joyce
------------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President,
Finance
MARINE MIDLAND BANK,
as Trustee
By: /s/ Eileen M. Hughes
------------------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
<PAGE> 103
EXHIBIT A
[FORM OF FACE OF NOTE]
CUSIP [ ]
BOOTH CREEK SKI HOLDINGS, INC.
No. [ ] $
12 1/2% SENIOR NOTE DUE 2007
BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (the
"Company"), for value received, promises to pay to
or registered assigns the principal sum of $ dollars on March 15,
2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-1
<PAGE> 104
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
BOOTH CREEK SKI HOLDINGS, INC.
By:
-------------------------------------
Title:
By:
-------------------------------------
Title:
Dated:
Certificate of Authentication
This is one of the 12 1/2% Senior Notes due 2007 referred to
in the within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By:
-------------------------------------
Authorized Signatory
A-2
<PAGE> 105
[FORM OF REVERSE OF NOTE]
BOOTH CREEK SKI HOLDINGS, INC.
12 1/2% SENIOR NOTE DUE 2007
1. Interest. Booth Creek Ski Holdings, Inc., a Delaware
corporation (the "Company"), promises to pay, until the principal hereof is
paid or made available for payment, interest on the principal amount set forth
on the face hereof at a rate of 12 1/2% per annum. Interest hereon will accrue
from and including the most recent date to which interest has been paid or, if
no interest has been paid, from and including March 18, 1997* to but excluding
the date on which interest is paid. Interest shall be payable in arrears on
each March 15 and September 15 commencing September 15, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal and on overdue interest (to the full
extent permitted by law) at a rate of 12 1/2% per annum.
2. Method of Payment. The Company will pay interest hereon
(except defaulted interest) to the Persons who are registered Holders at the
close of business on March 1 or September 1 next preceding the interest payment
date (whether or not a Business Day). Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and
interest in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts. Interest may be paid
by check mailed to the Holder entitled thereto at the address indicated on the
register maintained by the Registrar for the Notes.
3. Paying Agent and Registrar. Initially, Marine Midland Bank
(the "Trustee") will act as a Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice. Neither the Company nor
any of its Affiliates may act as Paying Agent or Registrar.
4. Indenture. The Company issued the Notes under an Indenture
dated as of March 18, 1997 (the "Indenture") among the Company, the Guarantors
(as defined in the Indenture) and the Trustee. This is one of an issue of
Notes of the Company issued, or to be issued, under the Indenture. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15
- ----------------------
* For Option Notes and Subsequent Series Notes, will be the original issue
date or such other date as the Company and the Holder may agree.
A-3
<PAGE> 106
U.S. Code Section Section 77aaa-77bbbb), as amended from time to time. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of them. Capitalized and certain other terms
used herein and not otherwise defined have the meanings set forth in the
Indenture. The Notes are obligations of the Company limited in aggregate
principal amount to $200.0 million.
5. Optional Redemption. The Company, at its option, may redeem
the Notes, in whole or in part, at any time on or after March 15, 2002 upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount), set forth below, together, in each case,
with accrued and unpaid interest to the Redemption Date, if redeemed during the
twelve month period beginning on March 15 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.250%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.167%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.083%
2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 30% of the original principal amount of Notes at any time and
from time to time on or prior to March 15, 2000 at a redemption price equal to
112.5 % of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the Redemption Date with the Net Proceeds of one or more
Public Equity Offerings; provided, that at least $77.0 million of the principal
amount of Notes originally issued remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Notes or portions thereof called for redemption.
7. Offers to Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Company shall make an offer to purchase
outstanding Notes in accordance with the procedures set forth in the Indenture.
8. Registration Rights. Pursuant to a Registration Rights
Agreement among the Company, the Guarantors and CIBC Wood Gundy
A-4
<PAGE> 107
Securities Corp., as Initial Purchaser of the Notes, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Note shall have the right to exchange this Note for notes of a separate series
issued under the Indenture (or a trust indenture substantially identical to the
Indenture in accordance with the terms of the Registration Rights Agreement)
which have been registered under the Securities Act, in like principal amount
and having substantially identical terms as the Notes. The Holders shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Notes or portion of a Note
selected for redemption, or register the transfer of or exchange any Notes for
a period of 15 days before a mailing of notice of redemption.
10. Persons Deemed Owners. The registered Holder of this Note may
be treated as the owner of this Note for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee will pay the money back
to the Company at its written request. After that, Holders entitled to the
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
12. Amendment, Supplement, Waiver, Etc. The Company, the
Guarantors and the Trustee (if a party thereto) may, without the consent of the
Holders of any outstanding Notes, amend, waive or supplement the Indenture or
the Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not materially and adversely affect the rights of any Holder.
Other amendments and modifications of the Indenture or the Notes may be made by
the Company, the Guarantors and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding
Notes, subject to certain exceptions requiring the consent of the Holders of
the particular Notes to be affected.
A-5
<PAGE> 108
13. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
their Capital Stock or certain Indebtedness, make certain Investments, create
or incur liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions, issue Preferred Stock of any Restricted Subsidiaries of the
Company, enter into sale and leaseback transactions and on the ability of the
Company to merge or consolidate with any other Person or transfer all or
substantially all of the Company's or any Guarantor's assets. Such limitations
are subject to a number of important qualifications and exceptions. Pursuant
to Section 4.04 of the Indenture, the Company must annually report to the
Trustee on compliance with such limitations.
14. Successor Corporation. When a successor corporation assumes
all the obligations of its predecessor under the Notes and the Indenture and
the transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation will, except as provided in Article 5, be released from
those obligations.
15. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the outstanding Notes may, by written notice to the Trustee and the Company,
and the Trustee upon the request of the Holders of not less than 25% in
aggregate principal amount of the outstanding Notes shall, declare all
principal of and accrued interest on all Notes to be immediately due and
payable and (i) such amounts shall become immediately due and payable or (ii)
if there are any amounts outstanding under or in respect of the Senior Credit
Facility, such amounts shall become due and payable upon the first to occur of
an acceleration of amounts outstanding under or in respect of the Senior Credit
Facility or five Business Days after receipt by the Company and the
representative of the holders of Indebtedness under or in respect of the Senior
Credit Facility, of notice of the acceleration of the Notes. If an Event of
Default specified in Section 6.01(6) or (7) of the Indenture occurs with
respect to the Company, the principal amount of and interest on, all Notes
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of
A-6
<PAGE> 109
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company and each Guarantor
must furnish an annual compliance certificate to the Trustee.
16. Trustee Dealings with Company. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No director, officer, employee
incorporator or stockholder, of the Company or any Guarantor shall have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Indenture or the Guarantees or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
18. Discharge. The Company's obligations pursuant to the
Indenture will be discharged, except for obligations pursuant to certain
sections thereof, subject to the terms of the Indenture, upon the payment of
all the Notes or upon the irrevocable deposit with the Trustee of United States
dollars or U.S. Government Obligations sufficient to pay when due principal of
and interest on the Notes to maturity or redemption, as the case may be.
19. Guarantees. The Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and
the Holders.
20. Authentication. This Note shall not be valid until the
Trustee signs the certificate of authentication on the other side of this Note.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS NOTE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. The
Trustee, the Company, the Guarantor and the Holders agree to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to the Indenture or the Notes.
22. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in
A-7
<PAGE> 110
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
BOOTH CREEK SKI HOLDINGS, INC.
Route 267 and Northstar Drive
Truckee, California 96160
Attention: Chief Financial Officer
A-8
<PAGE> 111
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
A-9
<PAGE> 112
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$
--------------------
(multiple of $1,000)
Date:
----------------
Your Signature:
------------------------------------
(Sign exactly as your name appears on the face of
this Note)
- -----------------------
Signature Guaranteed
A-10
<PAGE> 113
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL
NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE ACT, (D) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE ACT (IF AVAILABLE) (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THREE YEARS AFTER
ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE ACT.
B-1
<PAGE> 114
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Date: Your Signature:
------------------ -------------------------------------
-----------------------------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:
-----------------------------------------------------
B-2
<PAGE> 115
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------------ -----------------------------------------
NOTICE: To be executed by an executive
officer
B-3
<PAGE> 116
EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
C-1
<PAGE> 117
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Date: Your Signature:
------------------ -------------------------------------
-----------------------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:
-----------------------------------------------------
C-2
<PAGE> 118
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------ ---------------------------------------
NOTICE: To be executed by an executive
officer
C-3
<PAGE> 119
EXHIBIT D
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall
bear a legend (which would be in addition to any other legends required in the
case of a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE> 120
EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
Attention:
Re: Booth Creek Ski Holdings, Inc. (the "Company") 12
1/2% Senior Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm
that:
1. We understand that any subsequent transfer of the
Notes is subject to certain restrictions and conditions set
forth in the Indenture dated as of March 15, 1997 relating to the
Notes and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
2. We understand that the Notes have not been registered
under the Securities Act, and that the Notes may not be offered, sold,
pledged or otherwise transferred except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell
any Notes, we will do so only (i) to the Company or any subsidiary
thereof, (ii) pursuant to an effective registration statement under the
Securities Act, (iii) in accordance with Rule 144A under the Securities
Act to a "qualified institutional buyer" (as defined in Rule 144A),
(iv) to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a
U.S. broker-dealer) to you a signed letter containing certain
representations and agreements relating to the restrictions on
E-1
<PAGE> 121
transfer of the Notes, (v) outside the United States to persons other
than U.S. persons in offshore transactions meeting the requirements of
Rule 904 of Regulation S under the Securities Act, or (vi) pursuant
to any other exemption from registration under the Securities Act (if
available), and we further agree to provide to any person purchasing
any of the Notes from us a notice advising such purchaser that resales
of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any
Notes, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of our investment in the Notes, and we and any accounts for which
we are acting each are able to bear the economic risk of our or their
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------
Authorized Signature
E-2
<PAGE> 122
EXHIBIT F
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
__________, ____
Attention:
Re: Booth Creek Ski Holdings, Inc. (the "Company") 12 1/2%
Senior Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(1) the offer of the Notes was not made to a U.S. person
or to a person in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
F-1
<PAGE> 123
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------------
Authorized Signature
F-2
<PAGE> 124
EXHIBIT G
[FORM OF GUARANTEE]
Each of the undersigned (the "Guarantors") hereby jointly and
severally unconditionally guarantees, to the extent set forth in the Indenture
dated as of March 18, 1997 by and among Booth Creek Ski Holdings, Inc., as
issuer, the Guarantors, as guarantors, and Marine Midland Bank, as Trustee (as
amended, restated or supplemented from time to time, the "Indenture"), and
subject to the provisions of the Indenture, (a) the due and punctual payment of
the principal of, and premium, if any, and interest on the Notes, when and as
the same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on overdue principal of,
and premium and, to the extent permitted by law, interest, and the due and
punctual performance of all other obligations of the Company to the Noteholders
or the Trustee, all in accordance with the terms set forth in Article 10 of the
Indenture, and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantors to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms and limitations of this Guarantee.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
MOUNT CRANMORE SKI RESORT, INC.
WATERVILLE VALLEY SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By:
------------------------------------
Name:
Title:
G-1
<PAGE> 1
EXHIBIT 4.2
================================================================================
SUPPLEMENTAL INDENTURE
NO. 1
TO
INDENTURE DATED AS OF MARCH 18, 1997
RE:
UP TO $200,000,000 12 1/2% SENIOR NOTES DUE 2007
================================================================================
<PAGE> 2
This SUPPLEMENTAL INDENTURE NO. 1 to INDENTURE (the
"Supplemental Indenture") is entered into among Booth Creek Ski Holdings, Inc.,
a Delaware corporation (the "Company"), Trimont Land Company, a California
corporation, Sierra-at-Tahoe, Inc., a Delaware corporation, Bear Mountain,
Inc., a Delaware corporation, Waterville Valley Ski Resort, Inc., a Delaware
corporation, Mount Cranmore Ski Resort, Inc., a Delaware corporation, Booth
Creek Ski Acquisition Corp., a Delaware corporation, Ski Lifts, Inc., a
Washington corporation, Grand Targhee Incorporated, a Delaware corporation, B-V
Corporation, a Wyoming corporation, Targhee Company, a Delaware corporation,
and Targhee Ski Corp., a Delaware corporation (collectively, the "Guarantors"),
and Marine Midland Bank, a New York banking corporation and trust company (the
"Trustee").
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee have
entered into that certain Indenture dated as of March 18, 1997 (the "Original
Indenture") providing for the issuance and delivery by the Company of its 12
1/2% Senior Notes due 2007; and
WHEREAS, pursuant to Section 8.01(4) of the Original
Indenture, the Company, the Guarantors and the Trustee wish to cure and correct
certain terms and provisions of the Original Indenture which are defective as
hereinafter set forth. Terms used herein and not otherwise defined shall have
the same meanings as specified in the Original Indenture.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. CURE AND CORRECTION TO ORIGINAL INDENTURE.
1.1 Section 2.01 of the Original Indenture. Section 2.01
of the Original Indenture is hereby cured and corrected by deleting the
reference to "April 22, 1997" therein and inserting "April 25, 1997" in lieu
thereof.
Section 2. MISCELLANEOUS.
2.1 GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO
AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL
INDENTURE.
<PAGE> 3
2.2 Confirmation of the Original Indenture. Except as
amended hereby, the Original Indenture shall remain in full force and effect
and is hereby ratified and confirmed in all respects.
2.3 Multiple Counterparts. The parties may sign multiple
counterparts of this Supplemental Indenture. Each signed counterpart shall be
deemed an original, but all of them together represent one and the same
agreement.
2.4 Separability. Each provision of this Supplemental
Indenture shall be considered separable and if for any reason any provision
which is not essential to the effectuation of the basic purpose of this
Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
2.5 Headings. The captions of the various section
headings of this Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
2.6 The Trustee. The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company and the Guarantors.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto caused this
Supplemental Indenture to be duly executed as of this 25th day of April, 1997.
BOOTH CREEK SKI HOLDINGS, INC.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By: /s/ Nanci N. Northway
---------------------------------------
Name: Nanci N. Northway
Title: Chief Financial Officer
MARINE MIDLAND BANK, as Trustee
By: /s/ Eileen M. Hughes
----------------------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
3
<PAGE> 1
EXHIBIT 4.3
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
Dated as of March 18, 1997
by and among
BOOTH CREEK SKI HOLDINGS, INC.,
THE GUARANTORS
named herein
and
CIBC WOOD GUNDY SECURITIES CORP.
as Initial Purchaser
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
Page
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
a. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
b. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
c. No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
d. Adjustments Affecting Registrable Notes . . . . . . . . . . . . . . . . . . . . . 30
e. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
f. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
g. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
h. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
i. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
j. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
k. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
l. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
m. Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 32
n. Notes Held by the Company or Its Affiliates . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
March 18, 1997, by and among BOOTH CREEK SKI HOLDINGS, INC., a Delaware
corporation (the "Company"), the Guarantors named herein and CIBC WOOD GUNDY
SECURITIES CORP. ("CIBC"), as initial purchaser (the "Initial Purchaser").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of March 13, 1997 among the Company,
the Guarantors and the Initial Purchaser (the "Purchase Agreement") relating
to the sale by the Company to the Initial Purchaser of $110,000,000 aggregate
principal amount of the Company's 12 1/2% Senior Notes due 2007 (the "Firm
Notes"), the grant to the Initial Purchaser of an option to purchase an
additional $6,000,000 aggregate principal amount of the Company's 12 1/2%
Senior Notes due 2007 (together with the Firm Notes, the "Notes") and the
guarantee of the Notes by the Guarantors (the "Guarantees"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
and the Guarantors have agreed to provide the registration rights set forth in
this Agreement to the Initial Purchaser and its direct and indirect transferees
and assigns. The execution and delivery of this Agreement is a condition to
the Initial Purchaser's obligation to purchase the Firm Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(c).
<PAGE> 4
-2-
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Guarantees: See the introductory paragraph of this Agreement.
Guarantors: Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore Ski Resort,
Inc., Booth Creek Ski Acquisition Corp., Ski Lifts, Inc., Grand Targhee
Incorporated, B-V Corporation, Targhee Company and Targhee Ski Corp. and any
Person who becomes a Guarantor by the terms of the Indenture (as defined
herein).
Holder: Any holder of a Registrable Note or Registrable
Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of March 18, 1997, among
the Company, the Guarantors and Marine Midland Bank, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchaser: See the introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Firm Notes are
sold to the Initial Purchaser pursuant to the Purchase Agreement.
Lien: See the Indenture.
<PAGE> 5
-3-
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the
Notes and at all times subsequent thereto and, if issued, the Private Exchange
Notes, until in the case of any such Notes or any such Private Exchange Notes,
as the case may be, (i) a Registration Statement covering such Notes or such
Private Exchange Notes has been declared effective by the SEC and such Notes or
such Private Exchange Notes, as the case may be, have been disposed of in
accordance with such effective Registration Statement, (ii) such Notes or such
Private Exchange Notes, as the case may be, are sold in compliance with Rule
144, (iii) in the case of any Note, such Note has been exchanged for an
Exchange Note or Exchange Notes pursuant to an Exchange Offer or (iv) such
<PAGE> 6
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Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the
Company or the Guarantors, including, but not limited to, the Exchange
Registration Statement, which covers any of the Registrable Notes pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
<PAGE> 7
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TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter(s)
for reoffering to the public.
2. Exchange Offer
(a) Each of the Company and the Guarantors jointly and
severally agrees to use its best efforts to file with the SEC as soon as
practicable after the Closing, but in no event later than the Filing Date, an
offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
(other than the Private Exchange Notes, if any) for a like aggregate principal
amount of debt securities of the Company, guaranteed by the Guarantors, which
are identical to the Notes (the "Exchange Notes") (and which are entitled to
the benefits of the Indenture or a trust indenture which is substantially
identical to the Indenture (other than such changes to the Indenture or any
such identical trust indenture as are necessary to comply with any requirements
of the SEC to effect or maintain the qualification thereof under the TIA) and
which, in either case, has been qualified under the TIA), except that the
Exchange Notes (other than the Private Exchange Notes, if any) shall have been
registered pursuant to an effective registration statement under the Securities
Act and will not contain terms with respect to transfer restrictions. The
Exchange Offer will be registered under the Securities Act on the appropriate
form (the "Exchange Registration Statement") and will comply with all
applicable tender offer rules and regulations under the Exchange Act. Each of
the Company and the Guarantors jointly and severally agrees to use its best
efforts to (x) cause the Exchange Registration Statement to become effective
under the Securities Act on or before the Effectiveness Date; (y) keep the
Exchange Offer open for at least 20 days (or longer if required by applicable
law) after the date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the 210th day following the
Issue Date. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired
in the ordinary course of its business, that at the time of the consummation of
the Exchange Offer such Holder will have no arrangement or understanding with
any Person to participate in the distribution of the Exchange Notes in
violation of the provisions of the Securities Act, that such
<PAGE> 8
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Holder is not an affiliate of any of the Company or the Guarantors within the
meaning of Rule 405 promulgated under the Securities Act or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act, to the extent applicable and that is not
acting on behalf of any Person who could not truthfully make the foregoing
representations. Upon consummation of the Exchange Offer in accordance with
this Section 2, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Notes that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company and the Guarantors shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers) pursuant to Section 3 of this Agreement.
(b) The Company and the Guarantors shall include within
the Prospectus contained in the Exchange Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to the Initial
Purchaser, which shall contain a summary statement of the positions taken or
policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of Exchange Notes
received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
reasonable judgment of the Initial Purchaser, represent the prevailing views of
the staff of the SEC. Such "Plan of Distribution" section shall also allow the
use of the Prospectus by all Persons subject to the prospectus delivery
requirements of the Securities Act, including all Participating Broker-Dealers,
and include a statement describing the means by which Participating
Broker-Dealers may resell the Exchange Notes.
Each of the Company and the Guarantors shall use its best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5) (the "Applicable Period").
<PAGE> 9
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If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, the status as an unsold allotment in the
initial distribution, the Company and the Guarantors upon the request of the
Initial Purchaser shall, simultaneously with the delivery of the Exchange Notes
in the Exchange Offer, issue and deliver to the Initial Purchaser, in exchange
(the "Private Exchange") for the Notes held by the Initial Purchaser, a like
principal amount of debt securities of the Company guaranteed by the
Guarantors, that are identical in all material respects to the Exchange Notes
(the "Private Exchange Notes") (and which are issued pursuant to the same
indenture as the Exchange Notes) except for the placement of a restrictive
legend on the Private Exchange Notes. If possible, the Private Exchange Notes
shall bear the same CUSIP number as the Exchange Notes. Interest on the
Exchange Notes and Private Exchange Notes will accrue from the last interest
payment date on which interest was paid on the Notes surrendered in exchange
therefor or, if no interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company and the
Guarantors shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business
day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company and the Guarantors
shall:
(i) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
<PAGE> 10
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(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of
such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture substantially identical to
the Indenture, which in either event will provide that (1) the Exchange Notes
will not be subject to the transfer restrictions set forth in the Indenture and
(2) the Private Exchange Notes will be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes will vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes nor the Notes will have the right to vote or consent as
a separate class on any matter.
(c) If (1) prior to the consummation of the Exchange
Offer, the Company and the Guarantors or Holders of at least a majority in
aggregate principal amount of the Registrable Notes reasonably determine in
good faith that (i) the Exchange Notes would not, upon receipt, be tradeable by
such Holders which are not affiliates (within the meaning of the Securities
Act) of the Company or the Guarantors without restriction under the Securities
Act and without restrictions under applicable state securities laws, (ii) the
interests of the Holders under this Agreement would be adversely affected by
the consummation of the Exchange Offer or (iii) after conferring with counsel,
the SEC is unlikely to permit the commencement of the Exchange Offer prior to
the Effectiveness Date, (2) subsequent to the consummation of the Private
Exchange, any holder of the Private Exchange Notes so requests or (3) the
Exchange Offer is commenced and not consummated within 210 days of the date of
this Agreement, then the Company and the Guarantors shall promptly deliver to
the Holders and the Trustee written notice thereof (the "Shelf Notice") and
shall file an Initial Shelf Registration pursuant to Section 3. Following the
delivery of a Shelf Notice to the Holders of Registrable Notes (in the
circumstances contemplated by clauses (1) and (3) of the preceding sentence),
the Company and the Guarantors shall not have any further obligation to conduct
the Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then:
<PAGE> 11
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(a) Initial Shelf Registration. The Company and the
Guarantors shall prepare and file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes (the "Initial Shelf Registration"). If the Company and
the Guarantors shall have not yet filed an Exchange Registration Statement,
each of the Company and the Guarantors shall use its best efforts to file with
the SEC the Initial Shelf Registration on or prior to the Filing Date. In any
other instance, each of the Company and the Guarantors shall use its best
efforts to file with the SEC the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice. The Initial Shelf Registration shall be on
Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by such Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Company and the Guarantors shall not permit any securities
other than the Registrable Notes to be included in the Initial Shelf
Registration or any Subsequent Shelf Registration. Each of the Company and the
Guarantors shall use its best efforts to cause the Initial Shelf Registration
to be declared effective under the Securities Act, if an Exchange Registration
Statement has not yet been declared effective, on or prior to the Effectiveness
Date, or, in any other instance, as soon as practicable thereafter and in no
event later than 45 days after filing of the Initial Shelf Registration, and to
keep the Initial Shelf Registration continuously effective under the Securities
Act until the date which is 36 months from the date on which such Initial Shelf
Registration is declared effective (subject to extension pursuant to the last
paragraph of Section 5 hereof), or such shorter period ending when (i) all
Registrable Notes covered by the Initial Shelf Registration have been sold in
the manner set forth and as contemplated in the Initial Shelf Registration or
(ii) a Subsequent Shelf Registration covering all of the Registrable Notes has
been declared effective under the Securities Act (the "Effectiveness Period").
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period, each of the Company and
the Guarantors shall use its best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event shall within
45 days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If
<PAGE> 12
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a Subsequent Shelf Registration is filed, each of the Company and the
Guarantors shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such filing
and to keep such Registration Statement continuously effective for a period
equal to the number of days in the Effectiveness Period less the aggregate
number of days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective. As used herein the
term "Shelf Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and the
Guarantors shall promptly supplement and amend the Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if requested by the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such Registration
Statement or by any underwriter(s) of such Registrable Notes.
4. Additional Interest
(a) The Company and the Initial Purchaser agree that the
Holders of Registrable Notes will suffer damages if the Company fails to
fulfill its obligations under Section 2 or Section 3 hereof and that it would
not be feasible to ascertain the extent of such damages with precision.
Accordingly, the Company agrees to pay additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below:
(i) if neither the Exchange Registration Statement nor
the Initial Shelf Registration has been filed on or prior to the
Filing Date;
(ii) if neither the Exchange Registration Statement nor
the Initial Shelf Registration has been declared effective on or prior
to the Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section
2(c)(2) has not been filed on or prior to the date required by Section
3(a);
(iv) if an Initial Shelf Registration required by Section
2(c)(2) has not been declared effective on or prior to the date
required by Section 3(a); and/or
<PAGE> 13
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(v) if (A) the Company has not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to 60 days after the Exchange
Registration Statement was declared effective or (B) the Exchange
Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the
Effectiveness Period;
(each such event referred to in clauses (i) through (v) above is a
"Registration Default"), the sole remedy available to Holders of the Notes will
be the immediate accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by .50% during the first 90-day period
following the occurrence of a Registration Default and until it is waived or
cured; and the per annum interest rate will increase by an additional .25% for
each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional interest rate of 2.0% per annum, provided,
however, that only Holders of Private Exchange Notes shall be entitled to
receive Additional Interest as a result of a Registration Default pursuant to
clause (iii) or (iv), provided, further, that (1) upon the filing of the
Exchange Registration Statement or the Initial Shelf Registration (in the case
of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or a Shelf Registration (in the case of (ii) above), (3) upon the
filing of the Shelf Registration (in the case of (iii) above), (4) upon the
effectiveness of the Shelf Registration (in the case of (iv) above), or (5)
upon the exchange of Exchange Notes for all Notes tendered (in the case of
(v)(A) above), or upon the effectiveness of the Exchange Registration Statement
which had ceased to remain effective (in the case of (v)(B) above), or upon the
effectiveness of the Shelf Registration which had ceased to remain effective
(in the case of (v)(C) above), Additional Interest on the Notes as a result of
such clause (i), (ii), (iii), (iv) or (v) (or the relevant subclause thereof),
as the case may be, shall cease to accrue and the interest rate on the Notes
will revert to the interest rate originally borne by the Notes.
(b) Notwithstanding the foregoing, no Additional Interest
will be payable with respect to a Registration Default described in clause
(v)(C) above, if pending a material corporate transaction, the Company issues a
notice that the registration statement, or the prospectus contained therein, is
unusable, or such notice is required under applicable securities laws to be
<PAGE> 14
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issued by the Company, and the aggregate number of days in any consecutive
twelve month period for which all such notices have been issued or required to
be issued has not exceeded 30 days in the aggregate.
(c) The Company and the Guarantors shall notify the
Trustee within one business day after each and every date on which an event
occurs in respect of which Additional Interest is required to be paid (an
"Event Date"). Any amounts of Additional Interest due pursuant to (a)(i),
(a)(ii) or (a)(iii) of this Section 4 will be payable in cash semi-annually on
each March 15 and September 15 (to the Holders of record on the March 1 and
September 1 immediately preceding such dates), commencing with the first such
date occurring after any such Additional Interest commences to accrue and until
such Registration Default is cured, by depositing with the Trustee, in trust
for the benefit of such Holders, immediately available funds in sums sufficient
to pay such Additional Interest. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Section 2 or 3 hereof, the Company and the Guarantors shall effect
such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company and the Guarantors shall:
(a) Prepare and file with the SEC, prior to the Filing
Date, a Registration Statement or Registration Statements as
prescribed by Section 2 or 3, and use their respective best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein, provided that, if (1) such filing is
pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company and the Guarantors shall, if
requested, furnish to
<PAGE> 15
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and afford the Holders of the Registrable Notes covered by such
Registration Statement and each such Participating Broker-Dealer, as
the case may be, their counsel and the managing underwriter(s), if
any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5
business days prior to such filing). The Company and the Guarantors
shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement, or
such Participating Broker-Dealer, as the case may be, their counsel,
or the managing underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to
keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to
the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by
a Participating Broker-Dealer covered by any such Prospectus; the
Company and the Guarantors shall be deemed not to have used their best
efforts to keep a Registration Statement effective during the
Applicable Period if any of them voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes
not being able to sell such Registrable Notes or such Exchange Notes
during that period unless such action is required by applicable law or
unless the Company and the Guarantors comply with this Agreement,
including without limitation, the provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange
<PAGE> 16
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Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-
Dealer who seeks to sell Exchange Notes during the Applicable Period,
notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriter(s), if any, promptly (but in any event within two
business days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment
thereto has been filed, and, with respect to a Registration Statement
or any post-effective amendment thereto, when the same has become
effective under the Securities Act (including in such notice a written
statement that any Holder may, upon request, obtain, without charge,
one conformed copy of such Registration Statement or post-effective
amendment thereto including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary Prospectus
or the initiation of any proceedings for that purpose, (iii) if at any
time when a Prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales
of Exchange Notes by Participating Broker-Dealers the representations
and warranties of the Company contained in any agreement (including
any underwriting agreement) contemplated by Section 5(n) below cease
to be true and correct, (iv) of the receipt by any of the Company or
the Guarantors of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event or any information
becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents
so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of
<PAGE> 17
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a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Company's or any Guarantor's reasonable determination that a post- effective
amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter(s), if any, or the Holders of a majority
in aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriter(s), if any, or such Holders reasonably request to be included
therein and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes who so
requests and to each such Participating Broker-Dealer who so requests and to
counsel and the managing underwriter(s), if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto,
<PAGE> 18
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including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the managing
underwriter or underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of preliminary
Prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, each of
the Company and the Guarantors hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the
selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, and the managing underwriter or
underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Notes covered by, or the
sale by Participating Broker-Dealers of the Exchange Notes pursuant
to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or
any delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use their best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification of (or exemption from such registration or
qualification), such Registrable Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters, if any, reasonably request in
writing, provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Company and the Guarantors agree to cause
their counsel to perform Blue Sky investigations and file registrations
and
<PAGE> 19
-17-
qualifications required to be filed pursuant to this Section
5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; provided that none of the Company or the
Guarantors shall be required to (A) qualify generally to do business in
any jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section
3, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in
such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use their best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the managing
underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which
case each of the Company and the Guarantors will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi),
as promptly as reasonably practicable prepare and (subject to
<PAGE> 20
-18-
Section 5(a)) file with the SEC, at the joint and several expense of
each of the Company and the Guarantors, a supplement or post-
effective amendment to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Notes being sold thereunder or to the purchasers of the Exchange Notes
to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case
may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount
of Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
debt securities similar to the Notes and take all such other actions
as are reasonably requested by the managing underwriter(s), if any, in
order to expedite or facilitate the registration or the disposition of
such Registrable Notes, and in such connection, (i) make such
representations and warranties to the managing underwriter or
underwriters on behalf of any underwriters, with respect to the
business of the Company and its subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to
be incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in underwritten offerings of debt
securities similar to the Notes, and confirm the same if and when
<PAGE> 21
-19-
requested; (ii) obtain opinions of counsel to the Company and the
Guarantors and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the managing underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by the managing underwriter(s); (iii) obtain
"cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriter or underwriters
from the independent certified public accountants of the Company and
the Guarantors (and, if necessary, any other independent certified
public accountants of any subsidiary of any of the Company or of any
business acquired by any of the Company or the Guarantors for which
financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to the managing
underwriter or underwriters on behalf of any underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and
such other matters as may be reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof
(or such other provisions and procedures acceptable to Holders of a
majority in aggregate principal amount of Registrable Notes covered by
such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, make available
for inspection by any selling Holder of such Registrable Notes being
sold, or each such Participating Broker-Dealer, as the case may be,
the managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the
<PAGE> 22
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offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
properties of the Company and the Guarantors and their respective
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Company and the Guarantors and their respective subsidiaries to
supply all information in each case reasonably requested by any such
Inspector in connection with such Registration Statement. Records
which the Company and the Guarantors determine, in good faith, to be
confidential and any Records which they notify the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public. Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer or underwriter will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or for any
purpose other than in connection with such Registration Statement
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction, give prompt notice to the Company and allow
the Company to undertake appropriate action to prevent disclosure of
the Records deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable
Notes or the Exchange Notes, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a), as the
case may be, to be qualified under the TIA not later than the
effective date of the Exchange Registration Statement or the first
Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such
indenture and the Holders of the Registrable Notes, to effect such
changes to such indenture as may be required for such indenture to be
so qualified in accordance with the terms of the TIA; and execute, and
use its best efforts to cause such trustee to
<PAGE> 23
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execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of
the SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12- month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters
in a firm commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Company and the
Guarantors, in a form customary for underwritten offerings of debt
securities similar to the Notes, addressed to the Trustee for the
benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) each of the Company and the Guarantors
has duly authorized, executed and delivered the Exchange Notes and
Private Exchange Notes and the related indenture and (ii) each of the
Exchange Notes or the Private Exchange Notes, as the case may be, and
related indenture constitute a legal, valid and binding obligation of
each of the Company and the Guarantors, enforceable against each of
the Company and the Guarantors in accordance with its respective terms
(with customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company and the Guarantors (or to such other Person as directed by the
Company and the Guarantors) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, the Company and the
Guarantors shall mark, or cause to be marked, on such Registrable
Notes that such Registrable Notes are being canceled in exchange for
the Exchange Notes or the Private Exchange Notes, as the
<PAGE> 24
-22-
case may be; and, in no event shall such Registrable Notes be
marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes
covered by any Registration Statement and the managing underwriter(s),
if any, participating in the disposition of such Registrable Notes and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD").
(u) Use their respective best efforts to take all other
reasonable steps necessary to effect the registration of the
Registrable Notes covered by a Registration Statement contemplated
hereby.
The Company and the Guarantors may require each seller of
Registrable Notes or Participating Broker-Dealer as to which any registration
is being effected to furnish to the Company and the Guarantors such information
regarding such seller or Participating Broker- Dealer and the distribution of
such Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, as the Company and the Guarantors may, from
time to time, reasonably request. The Company may exclude from such
registration the Registrable Notes of any seller or Participating Broker-Dealer
who unreasonably fails to furnish such information within a reasonable time
after receiving such request. Each seller as to which any Shelf Registration
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the
<PAGE> 25
-23-
Company shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Holder or Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company and the Guarantors shall be
borne by the Company and the Guarantors, jointly and severally, whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions in the United States (x) where
the Holders of Registrable Notes are located, in the case of the Exchange
Notes, or (y) as provided in Section 5(h), in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker- Dealer during the
Applicable Period)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Notes or Exchange Notes in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is reasonably requested by the
managing underwriter or underwriters, if any, or, in respect of Registrable
Notes or Exchange Notes to be sold by any Participating Broker-Dealer during
the Applicable Period, by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or of
such Exchange Notes, as the case may be), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
fees and disbursements of special counsel for the sellers of Registrable Notes
(subject to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters
<PAGE> 26
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required by or incident to such performance), (vi) rating agency fees, (vii)
Securities Act liability insurance, if the Company desire such insurance,
(viii) fees and expenses of the Trustee, (ix) fees and expenses of all other
Persons retained by the Company, (x) internal expenses of the Company and the
Guarantors (including, without limitation, all salaries and expenses of
officers and employees of the Company and the Guarantors performing legal or
accounting duties), (xi) the expense of any annual audit, (xii) the fees and
expenses incurred in connection with any listing of the securities to be
registered on any securities exchange and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder,
the Company and the Guarantors, jointly and severally, shall reimburse the
Holders of the Registrable Notes being registered in such registration for the
reasonable fees and disbursements (which fees and disbursements shall not in
any event exceed $25,000) of not more than one counsel (in addition to
appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Notes to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of
Registrable Notes incurred in connection with the registration of the
Registrable Notes. The Company and the Guarantors shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities.
7. Indemnification
(a) Each of the Company and the Guarantors, jointly and
severally, agrees to indemnify and hold harmless each Holder of Registrable
Notes and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, the officers and directors of each such Person, and each
Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Company
shall have furnished any
<PAGE> 27
-25-
amendments or supplements thereto) or any preliminary Prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by such Participant
expressly for use therein; provided that the foregoing indemnity with respect
to any preliminary Prospectus shall not inure to the benefit of any Participant
(or to the benefit of an officer or director of such Participant or any Person
controlling such Participant) from whom the Person asserting any such losses,
claims, damages or liabilities purchased Registrable Notes or Exchange Notes
if such untrue statement or omission or alleged untrue statement or omission
made in such preliminary Prospectus is eliminated or remedied in the related
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) and a copy of the related Prospectus (as so
amended or supplemented) shall have been furnished to such Participant at or
prior to the sale of such Registrable or Exchange Notes, as the case may be, to
such Person.
(b) Each Participant will be required to agree, severally
and not jointly, to indemnify and hold harmless the Company and the Guarantors,
their respective directors and officers and each Person who controls any of the
Company or the Guarantors within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Guarantors to each Participant and shall
have the rights and duties given to the Company and the Guarantors in paragraph
(c) of this Section 7 (except that if the Company and the Guarantors shall have
assumed the defense thereof, such Participant shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
holder), but only with reference to information relating to such Participant
furnished to the Company and the Guarantors in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary Prospectus. The liability of any
Participant under this paragraph (b) shall in no event exceed the proceeds
received by such Participant from sales of Registrable Notes or Exchange Notes
giving rise to such obligations.
<PAGE> 28
-26-
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) of this Section 7, such Person (the
"Indemnified Person") shall promptly notify the Person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain one
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
incurred by such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and such Indemnified Person shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to any such Indemnifying
Person. It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate law firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated
in writing by Participants who sold a majority in interest of Registrable Notes
and Exchange Notes sold by all such Participants and any such separate firm for
the Company and the Guarantors, their directors, their officers and such
control Persons of the Company and the Guarantors shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there be a final judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for reasonable fees and
<PAGE> 29
-27-
expenses incurred by counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement; provided, however, that the Indemnifying Person
shall not be liable for any settlement effected without its consent pursuant to
this sentence if the Indemnifying Party is contesting, in good faith, the
request for reimbursement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject
matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a)
and (b) of this Section 7 is unavailable to an Indemnified Person in respect of
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company and the Guarantors on the one hand and the Participants on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors on the
one hand and the Participants on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors or by the
Participants and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The
<PAGE> 30
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amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes exceeds the amount of any damages that such Participant
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained
in this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Company and the Guarantors covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Notes, make
publicly available other information of a like nature so long as necessary to
permit sales pursuant to Rule 144 or Rule 144A. Each of the Company and the
Guarantors further covenants that so long as any Registrable Notes remain
outstanding to make available to any Holder of Registrable Notes in connection
with any sale thereof, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
(a) such Rule 144A, or (b) any similar rule or regulation hereafter adopted by
the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Registrable
<PAGE> 31
-29-
Notes included in such offering and shall be reasonably acceptable to the
Company and the Guarantors.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company or
any Guarantor of any of its obligations under this Agreement, other than the
occurrence of an event which requires payment of Additional Interest, each
Holder of Registrable Notes, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case of the Initial
Purchaser, in the Purchase Agreement or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Each of the Company and the Guarantors jointly and severally agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agrees, jointly and severally, that, in the event of any action
for specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) Enforcement. The Trustee shall be authorized to
enforce the provisions of this Agreement for the ratable benefit of the
Holders.
(c) No Inconsistent Agreements. None of the Company or
the Guarantors has, as of the date hereof, and the Company and the Guarantors
shall not, after the date of this Agreement, enter into any agreement with
respect to any of their securities that is inconsistent with the rights granted
to the Holders of Registrable Notes in this Agreement or otherwise conflicts
with the provisions hereof. None of the Company or the Guarantors has entered
or will enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement required to be filed under this Agreement.
<PAGE> 32
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(d) Adjustments Affecting Registrable Notes. Neither the
Company nor the Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes
in a registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company and the Guarantors have
obtained the written consent of Holders of at least a majority of the then
outstanding aggregate principal amount of Registrable Notes. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold by such Holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. All notices and other communications
(including without limitation any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes or any
Participating Broker-Dealer, at the most current address given by the
Trustee to the Company; and
(ii) if to the Company, Booth Creek Ski Holdings, Inc.,
Booth Creek Ski Holdings, Inc., Highway 267 and Northstar Drive,
Truckee, California, Attention: Chief Financial Officer, with a copy
to Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601,
Attention: Bruce A. Toth, Esq.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii)
five business days after being deposited in the mail, postage prepaid, if
mailed; (iii) one business day after
<PAGE> 33
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being timely delivered to a next-day air courier; and (iv) when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Notes.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and
<PAGE> 34
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understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(m) Joint and Several Obligations. Unless otherwise
stated herein, each of the obligations of the Company and the Guarantors under
this Agreement shall be joint and several obligations of each of them.
(n) Notes Held by the Company or their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Company
or their affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
<PAGE> 35
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BOOTH CREEK SKI HOLDINGS, INC.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By: /s/ Jeffrey J. Joyce
--------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President,
Finance
<PAGE> 36
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The foregoing Agreement is hereby conformed and accepted as of the date first
above written.
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ William P. Phoenix
---------------------------
Name: William P. Phoenix
Title: Managing Director
<PAGE> 1
EXHIBIT 4.4
________________________________________________________________________________
SECURITIES PURCHASE AGREEMENT
by and among
BOOTH CREEK SKI HOLDINGS, INC.,
THE GUARANTORS NAMED HEREIN
and
THE INITIAL PURCHASER NAMED HEREIN
______________________________
Dated as of March 13, 1997
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms; Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF
NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. Purchase, Sale and Delivery of Notes;
Grant of Option to Purchase Additional
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3. Registration Rights of Holders
of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4. Offering by the Initial Purchaser . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of
the Company and the Guarantors . . . . . . . . . . . . . . . . . . . 9
Section 3.2. Resale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations
of the Initial Purchaser . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE VI
FEES
Section 6.1 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3. No Waiver; Modifications in
Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.4 Information Supplied by the Initial
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.5. Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.6. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.7. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.9. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
-ii-
<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of March 13, 1997 (the
"Agreement"), among BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (the
"Company"), the Guarantors (as defined herein) and CIBC WOOD GUNDY SECURITIES
CORP. (the "Initial Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Accredited Investor" has the meaning provided therefor in
Section 3.2 of this Agreement.
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Person in
question. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of at least 10% of the voting securities of a Person
shall be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Basic Documents" means, collectively, the Indenture, the
Notes, the Guarantee, the Registration Rights Agreement and this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking
<PAGE> 5
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institutions in the City of New York are authorized or obligated by law to
close.
"Capital Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's equity, including membership
interests or units in a limited liability company, and includes, without
limitation, all series and classes of such equity.
"Closing" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"Environmental Claim" means any written allegation, notice of
violation, claim, demand, abatement order or other order by any Tribunal or any
Person for any response or corrective action, any damage, including, without
limitation, personal injury (including sickness, disease or death), property
damage, contribution, indemnity, indirect or consequential damages, damage to
the environment, nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions, in each case arising
under any Environmental Law, including without limitation, relating to,
resulting from or in connection with Hazardous Materials and relating to the
Company, any Subsidiaries of the Company or any Facilities.
"Environmental Laws" means the common law and all statutes,
ordinances, orders, rules, regulations or decrees relating to (i) fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of
Hazardous Materials, (ii) the generation, use, storage, treatment,
transportation or disposal of Hazardous Materials, or (iii) pollution or
protection of human health, safety or the environment, including without
limitation, ambient air, indoor air, soil, surface water, ground water, land,
or subsurface
<PAGE> 6
-3-
strata, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), each as
amended or supplemented, and any analogous present statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of
determination, provided, however, that as used in Section 3.1(y), the term
"Environmental Laws" means, Environmental Laws in effect on the Closing Date.
"Environmental Lien" means a Lien in favor of a Tribunal or
other Person (i) for any liability under an Environmental Law or (ii) for
damages arising from or costs incurred by such Tribunal or other Person in
response to a Release or threatened Release of any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any event defined as an Event of
Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Notes" has the meaning provided therefor in the
Registration Rights Agreement.
"Facilities" means any and all real property (including
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by any of
the Company or Subsidiaries of the Company or any of their respective
predecessors in interest.
"Final Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Guarantee" has the meaning provided therefor in Section 2.1
of this Agreement.
<PAGE> 7
-4-
"Guarantors" means Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore
Ski Resort, Inc., Booth Creek Ski Acquisition Corp. and Ski Lifts, Inc.
"Hazardous Materials" means any pollutant, contaminant, toxic,
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance including, without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"Indemnified Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indemnifying Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indenture" means the indenture dated as of March 18, 1997
among the Company, the Guarantors and the Trustee, under which the Notes will
be issued.
"Initial Purchaser" has the meaning set forth in the
introductory paragraph to this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligations (as defined in
the Indenture)), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing.
"Material Adverse Effect" means, with respect to the Company
and its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole; provided that, with respect to the Company
and the Guarantors, "Material Adverse Effect" shall also mean a material
adverse effect on the ability of the Company and the Guarantors to perform
their respective obligations under this Agreement or the other Basic Documents.
"Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
<PAGE> 8
-5-
"Notes" means the 12 1/2% Senior Notes due 2007 of the
Company.
"Offering" has the meaning assigned thereto in the Memorandum.
"Offering Materials" has the meaning provided therefor in
Section 7.1 of this Agreement.
"Option" has the meaning provided therefor in Section 2.2(b)
of this Agreement.
"Permits" means certificates, permits, licenses, franchises,
consents, approvals, authorizations and clearances that are material to the
condition (financial or otherwise), business or operations of the Company and
the Subsidiaries of the Company, taken as a whole.
"Person" means any individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint-stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PORTAL" means the Private Offering, Resales, and Trading
through Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Private Exchange Notes" shall have the meaning provided
therefor in the Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"Real Property Assets" means interests in land, buildings,
improvements and fixtures attached thereto or used in the operation thereof, in
each case owned or leased (as lessee) by the Company or Subsidiaries of the
Company and, as used in Section 3.1(y), including land, buildings, improvements
and fixtures operated by the Company or Subsidiaries of the Company.
"Registration Rights Agreement" means the registration rights
agreement among the Company, the Guarantors and the Initial Purchaser relating
to the Notes.
<PAGE> 9
-6-
"Release" means any spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dumping, leaching
or migration of Hazardous Materials (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials.
"Senior Credit Facility" has the meaning provided therefor in
the Indenture.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means, with respect to any Person, any
corporation, partnership, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
generally accepted accounting principles such entity is consolidated with the
first-named Person for financial statement purposes. When used in any
representation, warranty or covenant contained herein, the terms "Subsidiaries"
or "Subsidiary" shall mean Subsidiaries or a Subsidiary of a Person at the time
such representation, warranty or covenant is made or deemed made.
"Taxes" has the meaning provided therefor in Section 3.1(v) of
this Agreement.
"Time of Purchase" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Transactions" has the meaning provided therefor in the Final
Memorandum.
"Tribunal" means any government, any arbitration panel, any
court or any governmental department, commission, board,
<PAGE> 10
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bureau, agency authority or instrumentality of the United States of America or
any state, province, commonwealth, nation, territory, possession, county,
parish, town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" means Marine Midland Bank, as trustee under the
Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
Section 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly retained
by the Company, conforms at the time to generally accepted accounting
principles in the United States applied on a consistent basis except for
changes which such accountants believe are reasonable. All determinations to
which accounting principles apply shall be made in accordance with sound
accounting practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes. The Company has authorized the
issuance of $110,000,000 aggregate principal amount of the Notes which are to
be issued pursuant to the Indenture. The Company has also authorized the
issuance of up to an additional $6,000,000 aggregate principal amount of the
Notes which are to be issued pursuant to the Indenture upon exercise by the
Initial Purchaser of its Option (as defined in Section 2.2(b) hereof) and to
the extent and subject to the terms thereof. Each Note will be substantially
in the form of the Note set forth as Exhibit A to the Indenture. The Notes
will be unconditionally guaranteed, on a senior basis, as to payment of
principal, premium, if any, and interest, jointly and severally, by the
Guarantors (the "Guarantee"). Each Guarantee will be substantially in the form
of the Guarantee set forth as Exhibit G to the Indenture.
<PAGE> 11
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The Notes will be offered and sold to the Initial Purchaser
without being registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company and the
Guarantors have prepared a preliminary offering memorandum dated February 25,
1997 (the "Preliminary Memorandum") and prepared a final offering memorandum
dated March 13, 1997 (the "Final Memorandum" and, together with the Preliminary
Memorandum, the "Memorandum") setting forth or including a description of the
terms of the Notes and the Guarantees, the terms of the Offering, a description
of the Company and the Guarantors and any material developments relating to the
Company and the Guarantors occurring after the date of the most recent
financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes; Grant of
Option to Purchase Additional Notes. (a) On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, the Company agrees that it will sell to the
Initial Purchaser, and the Initial Purchaser agrees that it will purchase from
the Company at the Time of Purchase, $110,000,000 aggregate principal amount of
the Notes (the "Firm Notes") at a price equal to 97% of the principal amount
thereof.
(b) In addition, on the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, the Company hereby grants an option (the
"Option") to the Initial Purchaser to purchase up to an additional $6,000,000
aggregate principal amount of the Notes (the "Option Notes"), at the price per
Note set forth in Section 2.2(a) hereof. The Option will expire thirty (30)
days after the date hereof and may be exercised in whole or in part upon notice
by the Initial Purchaser to the Company setting forth the aggregate principal
amount of Option Notes as to which the Initial Purchaser is then exercising the
Option and the time and date of payment and delivery for such Option Notes.
Such time and date of delivery, if any (any such date, a "Date of Delivery"),
shall be determined by the Initial Purchaser, but shall not be later than ten
(10) full business days after any exercise of said Option.
(c) The purchase, sale and delivery of the Firm Notes
will take place at a closing (the "Closing") at the offices of Winston &
Strawn, 200 Park Avenue, New York, New York, at 10:00 A.M., New York time, on
March 18, 1997, or such later date and time, if any, as the Initial Purchaser
and the Company shall
<PAGE> 12
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agree. The time at which such Closing is concluded is herein called the "Time
of Purchase." In addition, in the event that any or all of the Option Notes
are purchased by the Initial Purchaser, payment of the purchase price for, and
delivery of certificates for, such Option Notes shall be made at the offices of
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, or at such
other place as shall be agreed upon by the Initial Purchaser and the Company on
the Date of Delivery specified in the notice from the Initial Purchaser to the
Company.
(d) One or more certificates in definitive form for the
Notes that the Initial Purchaser has agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 36 hours prior
to the Closing or any Date of Delivery, as the case may be, shall be delivered
by or on behalf of the Company to the Initial Purchaser, against payment by or
on behalf of the Initial Purchaser of the purchase price therefor by wire
transfer of immediately available funds wired in accordance with the written
instructions of the Company. The Company will make such certificate or
certificates for the Notes available for checking and packaging by the Initial
Purchaser at the offices of the Initial Purchaser, or such other place as the
Initial Purchaser may designate, at least 24 hours prior to the Closing or any
Date of Delivery, as the case may be.
Section 2.3. Registration Rights of Holders of Notes. The
Initial Purchaser and its direct and indirect transferees of the Notes will
have such rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth
in the Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchaser. The Initial
Purchaser proposes to make an offering of the Notes at the price and upon the
terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchaser is
advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Company
and the Guarantors. The Company and the Guarantors,
<PAGE> 13
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jointly and severally, represent and warrant to and agree with the Initial
Purchaser as follows:
(a) The Final Memorandum, as of its date and at the Time
of Purchase or Date of Delivery, as the case may be, will not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this Section 3.1(a) do
not apply to statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchaser
furnished to the Company in writing by the Initial Purchaser expressly
for use in the Final Memorandum or any amendment or supplement thereto
as set forth in Section 8.4 hereof.
(b) The audited balance sheet of the Company together
with related notes, set forth in the Final Memorandum fairly presents
the financial condition of the Company as of the date indicated
therein. The audited financial statements of each of the Resort Group
of Fibreboard Corporation; Waterville Valley Ski Area Ltd.; Ski Lifts,
Inc.; and Grand Targhee Incorporated (collectively, the "Audited
Entities") together with related notes, set forth in the Final
Memorandum fairly present the financial condition, results of
operations and cash flows of the Audited Entities, as of the dates
indicated and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout, except as otherwise stated therein;
the summary and selected financial data in the Final Memorandum
present fairly the financial information shown therein and have been
prepared and compiled on a basis consistent with audited financial
statements included therein, except as otherwise stated therein; and
the pro forma financial information and the related notes thereto
included in the Final Memorandum have been prepared using reasonable
assumptions (except with respect to the adjusted pro forma financial
data and note K to the unaudited pro forma condensed consolidated
statement of operations, which each includes supplemental adjustments
not provided for under the Act, but which are appropriate to give
effect to the transactions or circumstances referred to therein) and
have been prepared in accordance with the applicable requirements of
the Act and include all adjustments necessary to present fairly the
pro forma financial information included in the Final Memorandum at
the respective dates and for the respective periods
<PAGE> 14
-11-
indicated. Ernst & Young LLP, Arthur Anderson LLP, Coopers & Lybrand
LLP and Feldhake & Associates, P.C. (collectively, the "Independent
Accountants") which have reported upon the audited financial
statements included in the Memorandum, are independent public
accounting firms as required by the Act and the rules and regulations
thereunder.
(c) The Company and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. The Company and each
Subsidiary has all requisite corporate power and authority to own its
properties and conduct its business as now conducted and as described
in the Final Memorandum. Each of the Company and its Subsidiaries is
duly qualified and in good standing as a foreign corporation and is
authorized to do business, in each jurisdiction in which the ownership
or leasing of any property or the character of its operations makes
such qualification necessary and in which the failure so to qualify
would reasonably be expected to have a Material Adverse Effect.
(d) As of the Time of Purchase (after giving pro forma
effect to the transactions contemplated by the Basic Documents), the
Company will have the authorized, issued and outstanding
capitalization as set forth in the Final Memorandum (which does not
give effect to any exercise of the Option by the Initial Purchaser).
All of the issued and outstanding shares of capital stock of the
Company and its Subsidiaries are validly issued, all of such capital
stock is fully paid and nonassessable and none of such shares or
interests were issued in violation of any preemptive or similar
rights. Except for the Real Estate LLC (as defined in the
Memorandum), the Company has no subsidiaries other than the
Guarantors. Except as set forth in the Final Memorandum and other
than with respect to the Real Estate LLC, (i) all of the outstanding
shares of Capital Stock of the Company and each of its Subsidiaries
will be free and clear of all liens, encumbrances, equities and claims
or restrictions on transferability (other than those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions),
(ii) there are no outstanding subscriptions, options, warrants,
rights, convertible securities or other binding agreements or
commitments of any character obligating the Company or its
Subsidiaries to issue any securities and (iii) there is no agreement,
understanding or arrangement among the Company or its Subsidiaries and
their respective securityholders or any other Person relating to the
ownership or disposition of any Capital Stock in the
<PAGE> 15
-12-
Company or its Subsidiaries, the election of directors of the Company
or any of its Subsidiaries or the governance of the Company's or any
of its Subsidiaries' affairs, and such agreements, arrangements or
understandings will not be breached or violated as a result of the
execution and delivery of, or the consummation of the transactions
contemplated by, this Agreement and the Basic Documents.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and (assuming the
due authorization, execution and delivery by the Initial Purchaser),
is a valid and legally binding agreement of the Company and each of
the Guarantors, enforceable against each of them in accordance with
its terms except (i) that the enforcement hereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and to general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought and (ii) as any rights to indemnity or contribution
hereunder may be limited by federal and state securities laws and
public policy considerations.
(f) The Indenture has been duly authorized by the Company
and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming the due authorization,
execution and delivery by the Trustee), will constitute a valid and
legally binding agreement of the Company and each of the Guarantors,
enforceable against each of them in accordance with its terms except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(g) The Registration Rights Agreement has been duly
authorized by the Company and the Guarantors and, when executed and
delivered by the Company and each of the Guarantors (assuming the due
authorization, execution and delivery by the Initial Purchaser), will
constitute a valid and legally binding agreement of the Company and
each of the Guarantors, enforceable against each of them in accordance
with its terms except (i) that the enforcement thereof may be subject
to bankruptcy, insolvency, reorganization,
<PAGE> 16
-13-
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations.
(h) The Notes, the Exchange Notes and the Private
Exchange Notes have each been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes,
delivered to and paid for by the Initial Purchaser in accordance with
the terms of this Agreement, will be entitled to the benefits of the
Indenture and will constitute valid and legally binding obligations of
the Company enforceable in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(i) The Guarantees endorsed on the Notes and the
guarantees to be endorsed on the Exchange Notes and the Private
Exchange Notes have each been duly authorized by the Guarantors and,
when the Notes are executed by the Company and the Guarantees are
endorsed by the Guarantors and the Notes are authenticated by the
Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchaser in accordance with
the terms of this Agreement, the Guarantees will be entitled to the
benefits of the Indenture and will constitute valid and legally
binding obligations of the Guarantors enforceable in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(j) Immediately after the consummation of the
transactions contemplated by this Agreement (including the use of
proceeds from the sale of Notes at the Time of Purchase), the fair
value and present fair saleable value of
<PAGE> 17
-14-
the assets of the Company (on a consolidated basis) will exceed the
sum of its stated liabilities and identified contingent liabilities;
the Company (on a consolidated basis) will not be, after giving effect
to the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including the
use of proceeds from the sale of Notes at the Time of Purchase), (i)
left with unreasonably small capital with which to carry on its
business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(k) Each of the Company and the Guarantors (to the extent
a party thereto) has all requisite corporate power and authority to
(i) execute, deliver and perform its obligations under this Agreement
and each of the other Basic Documents, (ii) execute, deliver and
perform its obligations under all other agreements and instruments
executed and delivered by the Company pursuant to or in connection
with this Agreement, and each of the other Basic Documents, (iii)
issue the Notes and the Guarantee, as the case may be, in the manner
and for the purpose contemplated by this Agreement and (iv) consummate
each of the transactions contemplated hereby and thereby.
(l) Subsequent to the date as of which financial
information is given in the Final Memorandum and except as disclosed
in the Final Memorandum there has not been (i) any event or condition
that has had or that could reasonably be expected to have a Material
Adverse Effect, (ii) any transaction entered into by the Company or
the Guarantors, other than in the ordinary course of business, that is
material to the Company or the Guarantors, or (iii) any dividend or
distribution of any kind declared, paid or made by the Guarantors or
the Company on its common equity other than to the Company or another
Guarantor.
(m) Except as set forth in the Final Memorandum, there is
no action, suit, investigation or proceeding, governmental or
otherwise, pending or, to the best knowledge of the Company,
threatened to which the Company or the Guarantors is or would be a
party or of which the properties or assets of the Company or the
Guarantors are or may be subject that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance and
sale of the Notes by the Company or the making of the Guarantee by the
Guarantors or any of the other transactions contemplated hereby, (ii)
questions the legality or validity
<PAGE> 18
-15-
of any such transactions or seeks to recover damages or obtain other
relief in connection with any such transactions or (iii) would,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(n) The execution, delivery and performance by the
Company and the Guarantors (to the extent a party thereto) of this
Agreement and the other Basic Documents, and the issuance and sale by
the Company of the Notes, the making of the Guarantees by the
Guarantors, and the execution, delivery and performance by the Company
and the Guarantors (to the extent a party thereto) of all other
agreements and instruments to be executed and delivered by the Company
and the Guarantors, pursuant hereto or thereto or in connection
herewith or therewith, and compliance by the Company and the
Guarantors (to the extent a party thereto) with the terms and
provisions hereof and thereof, do not and will not (i) (assuming
compliance with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 3.2 hereof) violate any provision of any
law, rule or regulation (including, without limitation, Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System),
order, writ, judgment, decree, determination or award presently in
effect or in effect at the Time of Purchase having applicability to
the Company or the Guarantors or (ii) conflict with or result in a
breach of or constitute a default under the organizational documents
of the Company or the Guarantors or, as of the Time of Purchase, any
indenture or loan or credit agreement, or any other material agreement
or instrument, to which the Company or the Guarantors, is a party or
by which the Company or the Guarantors, or any of their respective
properties or assets may be bound or affected, or (iii) except as
contemplated by this Agreement and the other Basic Documents, result
in, or require the creation or imposition of, any Lien upon or with
respect to any of the properties now owned or hereafter acquired by
the Company or the Guarantors, except, in the case of clauses (i),
(ii) and (iii), where such violation, conflict, default or creation or
imposition of any Lien would not (individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect.
(o) Each agreement or instrument (other than the Basic
Documents) executed and delivered by the Company or the Guarantors (to
the extent a party thereto) in connection with the Basic Documents has
been duly and validly authorized, executed and delivered by the
Company and the
<PAGE> 19
-16-
Guarantors (to the extent a party thereto) and constitutes or will
constitute a valid and legally binding obligation of the Company and
the Guarantors (to the extent a party thereto), enforceable against
them in accordance with its terms, except (i) that the enforcement
thereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (ii) as any rights to
indemnity and contribution hereunder and thereunder may be limited by
applicable law.
(p) None of the Company or the Guarantors is currently
or, after giving effect to the consummation of the transactions
contemplated by this Agreement and the Basic Documents, will be (i) in
violation of its respective organizational documents, (ii) in default
(nor will an event occur which with notice or passage of time or both
would constitute such a default) under or in violation of any
indenture or loan or credit agreement or any other material agreement
or instrument to which it is a party or by which it or any of its
properties or assets may be bound or affected (except as set forth in
the Final Memorandum), (iii) in violation of any order of any court,
arbitrator or governmental body or (iv) in violation of or will have
violated any statute, rule or regulation of any governmental
authority, which default or violation (individually or in the
aggregate) would reasonably be expected to (x) affect the legality,
validity or enforceability of this Agreement or any of the other Basic
Documents or (y) have a Material Adverse Effect.
(q) Except as set forth in the Final Memorandum, no
authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities
exchange is required in connection with the execution, delivery or
performance by the Company or the Guarantors of this Agreement, or any
of the other Basic Documents or any of the transactions contemplated
thereby, except (i) as may be required under state securities or "blue
sky" laws or the laws of any foreign jurisdiction in connection with
the offer and sale of the Notes or (ii) as would not (individually or
in the aggregate) reasonably be expected to have a Material Adverse
Effect. All such authorizations, consents, approvals,
<PAGE> 20
-17-
licenses, qualifications, exemptions, filings, declarations and
registrations set forth in the Final Memorandum (other than as
disclosed therein) which are required to have been obtained by the
date hereof have been obtained or made, as the case may be, and are in
full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(r) None of the Company or any of the Guarantors is, and
immediately after the Time of Purchase will not be, an "investment
company" or a "promoter" or "principal underwriter" for an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(s) The execution and delivery of this Agreement and the
other Basic Documents and the sale of the Notes to the Initial
Purchaser will not involve any non-exempt prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code
on the part of the Company or any of its Subsidiaries. No Reportable
Event (as defined in Section 4043 of ERISA) has occurred during the
five-year period prior to the date on which this representation is
made or deemed made with respect to any Employee Benefit Plan (as
defined below), and the Company and each of its Subsidiaries and
Commonly Controlled Entities (as defined below) have complied in all
material respects with the applicable provisions of ERISA and the Code
in connection with the Employee Benefit Plans (as defined below). The
present value of all accrued benefits under each Employee Benefit Plan
subject to Title IV of ERISA (based on the current liability, interest
rate and other assumptions used in preparation of the plan's Form 5500
Annual Report) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed
the value of the assets of such plan allocable to such accrued
benefits. Neither the Company, any of their Subsidiaries, nor any
Commonly Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan (as defined in Section 4001(a)(3) of
ERISA), and neither the Company, any of its Subsidiaries, nor any
Commonly Controlled Entity would become subject to any liability under
ERISA if the Company, any of its Subsidiaries, or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on
which such representation is made or deemed made. No such
Multiemployer Plan is in reorganization or insolvent. There are no
material
<PAGE> 21
-18-
liabilities of the Company, any of its Subsidiaries, or any Commonly
Controlled Entity for post-retirement benefits to be provided to their
current and former employees under Plans which are welfare benefit
plans (as described in Section 3(1) of ERISA). With respect to each
Employee Benefit Plan, no event has occurred and there exists no
condition or set of circumstances in connection with which the Company
or any of its Subsidiaries may, directly or indirectly (though a
Commonly Controlled Entity or otherwise), to be subject to material
liability under the Code, ERISA or any other applicable law, except
for liability for benefit claims and funding obligations payable in
the ordinary course. "Commonly Controlled Entity" shall mean any
person or entity that, together with the Company or any Subsidiary of
the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code. "Employee Benefit Plan" shall mean an
employee benefit plan, as defined in Section 3(3) of ERISA, which is
maintained or contributed to by the Company, any of its Subsidiaries
or any Commonly Controlled Entity or to which the Company, any of its
Subsidiaries or any Commonly Controlled Entity may have liability for
which the Company and its Subsidiaries are not fully indemnified.
(t) The Company and each of its Subsidiaries has good and
valid title to, or valid and enforceable leasehold interests in, all
properties and assets identified in the Final Memorandum as owned or
leased, respectively, by it free and clear of all Liens, except (i) to
the extent the failure to have such title or the existence of such
Liens, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, (ii) such Liens as are
described in the Final Memorandum or (iii) Liens created in the
ordinary course of business which are Permitted Liens (as defined in
the Indenture). All of the leases material to the business of the
Company and each of its Subsidiaries and under which the Company and
each of its Subsidiaries holds properties described in the Final
Memorandum, are valid and binding as leased by them, with such
exceptions as, individually and in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
(u) No form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act)
was used by the Company or the Guarantors or their agents in
connection with the offer and sale of the Notes. None of the Company
or the Guarantors or any Person
<PAGE> 22
-19-
authorized to act for any of them has, either directly or indirectly,
sold or offered for sale any of the Notes or any other similar
security of the Company to, or solicited any offers to buy any thereof
from, or has otherwise approached or negotiated in respect thereof
with, any Person or Persons other than with or through the Initial
Purchaser; and the Company and the Guarantors agree that neither they
nor any Person acting on their behalf will sell or offer for sale any
Notes to, or solicit any offers to buy any Notes from, or otherwise
approach or negotiate in respect thereof with, any Person or Persons
so as thereby to bring the issuance or sale of any of the Notes within
the provisions of Section 5 of the Act.
(v) All tax returns required to be filed by each of the
Company and its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been duly filed and all taxes, assessments, fees
and other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes would not
reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect. The Company knows of no actual or proposed additional
tax assessments for any fiscal period prior to the date hereof against
the Company or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect.
(w) The Company and each of its Subsidiaries owns or
possesses adequate licenses or other rights to use all trade names,
unregistered trademarks and service marks, brand names, patents,
registered and unregistered copyrights, registered trademarks and
service marks, and all applications for any of the foregoing, and all
permits, grants and licenses or other rights with respect thereto, the
absence of which (individually or in the aggregate) would have or
could reasonably be expected to have a Material Adverse Effect.
Except as set forth in the Final Memorandum, neither the Company nor
any of its Subsidiaries has been charged with any material
infringement of any intangible property of the character described
above or been notified or advised of any material claim of any other
Person relating to any of the intangible property which
<PAGE> 23
-20-
infringements or claims (individually or in the aggregate) would have
a Material Adverse Effect.
(x) Except as set forth in the Final Memorandum, each of
the Company and its Subsidiaries is in compliance with all, and have
no liability under any, laws, rules and regulations (including,
without limitation, all applicable Environmental Laws, rules and
regulations) applicable to the Company, and the Company owns or
possesses and is operating in compliance in all material respects with
the terms, provisions, conditions, restrictions and limitations
contained in all licenses, franchises, approvals, certificates and
permits (including, without limitation, environmental permits) from
all Federal, state, territorial, foreign and local governmental and
regulatory authorities which are necessary to own or lease their
respective properties and assets and to the conduct of their
respective businesses (other than where the failure to be in
compliance with or liability under such laws, rules, regulations,
licenses, franchises, approvals, certificates or permits would not
reasonably be expected to have a Material Adverse Effect). Except as
described in the Final Memorandum, there are no citations or notices
of forfeiture or other proceedings pending or, to the best knowledge
of the Company, threatened or any basis therefor which would lead to
the revocation, termination, suspension or non-renewal of any such
license, franchise, approval, certificate or permit except where all
such revocations, terminations, suspensions or non- renewals,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Other than as disclosed in the Final
Memorandum, (i) there are no license renewal or rate or tariff
proceedings existing, pending or, to the best knowledge of the
Company, threatened against the Company or the Guarantors that would
have a Material Adverse Effect, and (ii) there are no restrictions or
limitations contained in any applicable license, franchise, approval,
certificate or permit, or, to the best knowledge of the Company,
threatened or proposed in any pending or contemplated hearing,
proceeding or procedure, that would have a Material Adverse Effect.
(y) Except as set forth in the Final Memorandum,
(1) none of the Company or any Subsidiaries of the Company
has received (a) any written notice or claim to the effect that it is
or may be liable to any Person under any Environmental Law, except as
would not reasonably be expected to have a Material Adverse Effect or
(b) any
<PAGE> 24
-21-
written notice of potential liability or request for information under
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended or any comparable state laws regarding any
matter except as would not reasonably be expected to have a Material
Adverse Effect, and none of the Company or any Subsidiaries of the
Company is presently involved in any investigation, response or
corrective action relating to or in connection with any Hazardous
Materials at any location except for such of the foregoing which would
not reasonably be expected to have a Material Adverse Effect;
(2) none of the Company or any Subsidiaries of the Company or
any of their Real Property Assets or, to the Company's knowledge, any
Facilities, are subject to any outstanding written order with any
governmental authority or written agreement with any Person relating
to (a) any actual or potential violation of or liability under
Environmental Laws or (b) any Environmental Claims except, in each
case, for such of the foregoing which would not reasonably be expected
to have a Material Adverse Effect;
(3) there are currently no Releases and, to the best
knowledge of the Company and its Subsidiary Guarantors, there have
been no Releases of Hazardous Materials at, on, under or from any of
the Real Property Assets in a manner that could reasonably be expected
to give rise to an Environmental Claim except for Releases which would
not reasonably be expected to have a Material Adverse Effect, and none
of the Company or any Subsidiaries of the Company has reported a
Release of any Hazardous Materials that could reasonably be expected
to give rise to an Environmental Claim except for Releases which would
not reasonably be expected to have a Material Adverse Effect;
(4) no underground storage tanks or surface impoundments are
on or at any Real Property Assets which require response, corrective
or other action under any applicable Environmental Law, in each case,
which would reasonably be expected to have a Material Adverse Effect;
(5) no Environmental Lien in favor of any Person has been
filed with respect to any Real Property Assets or other assets of the
Company or any Subsidiaries of the Company except for any such Lien
which would not reasonably be expected to have a Material Adverse
Effect;
<PAGE> 25
-22-
(6) There have been no past or present events, conditions
or activities which could reasonably be expected to prevent the
Company or any of its Subsidiaries from complying with, or to give
rise to any liability of any of them under, any applicable
Environmental Law which would reasonably be expected to have a
Material Adverse Effect.
(z) The Notes, the Guarantees, the Indenture, and the
Registration Rights Agreement, when executed and delivered, will
conform in all material respects to the descriptions thereof in the
Final Memorandum.
(aa) Assuming the accuracy of the Initial Purchaser's
representation and warranties set forth in Section 3.2 hereof, and the
due performance by the Initial Purchaser of the covenants and
agreements set forth in Section 3.2 hereof, the offer and sale of the
Notes to the Initial Purchaser in the manner contemplated by this
Agreement and the Final Memorandum does not require registration under
the Act and the Indenture does not require qualification under the
Trust Indenture Act of 1939, as amended.
(bb) Except as set forth in the Final Memorandum, there is
no strike, labor dispute, slowdown or work stoppage with the employees
of the Company or any of its Subsidiaries which is pending or, to the
best knowledge of the Company or any of its Subsidiaries, threatened,
which would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(cc) Each of the Company and its Subsidiaries carries
insurance (including self insurance) in such amounts and covering such
risks as in its reasonable determination is adequate for the conduct
of its business and the value of its properties.
(dd) No securities of the Company or any of its
Subsidiaries are of the same class (within the meaning of Rule 144A
under the Act) as the Notes and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in
a U.S. automated interdealer quotation system.
(ee) None of the Company or its Subsidiaries has taken,
nor will any of them take, directly or indirectly, any action designed
to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes.
<PAGE> 26
-23-
(ff) None of the Company, the Guarantors, any of their
respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchaser) has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act
("Regulation S") with respect to the Notes, the Company, the
Guarantors and their respective Affiliates and any person acting on
its or their behalf (other than the Initial Purchaser) have acted in
accordance with the offering restrictions requirements of Regulation
S.
(gg) The Company and each of the Guarantors have duly
authorized each of the transactions contemplated hereby and by the
Final Memorandum.
(hh) The statistical and market-related data included in
the Final Memorandum are based on or derived from sources which the
Company believes to be reliable and accurate or represents the
Company's good faith estimates that are made on the basis of data
derived from such sources.
(ii) Except as stated in the Final Memorandum, none of
the Company or any of the Guarantors know of any claims against the
Company or any of the Guarantors for services, either in the nature of
a finder's fee or financial advisory fee, with respect to the offering
of the Notes and the transactions contemplated by the Final
Memorandum.
Section 3.2. Resale of Notes. The Initial Purchaser
represents and warrants that it is a "qualified institutional buyer" as defined
in Rule 144A of the Act ("QIB"). The Initial Purchaser agrees with the Company
and each of the Guarantors that (a) it has not and will not solicit offers for,
or offer or sell, the Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act; and (b) it has and will solicit offers for the Notes only from, and will
offer the Notes only to (A) in the case of offers inside the United States, (i)
Persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such Person is buying for one or more institutional accounts for which such
Person is acting as fiduciary or agent, only when such Person has represented
to the Initial Purchaser that each such account is a QIB, to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A,
and, in each case, in transactions under Rule 144A or (ii) a limited number of
other institutional investors reasonably believed by the Initial Purchaser to
be "Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or
<PAGE> 27
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(7) of the Act) that, prior to their purchase of the Notes, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Annex A to the Final Memorandum and (B) in the case of offers outside
the United States, to Persons other than U.S. Persons (as such term is defined
in Regulation S under the Act) ("foreign purchasers," which term shall include
dealers or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)); provided, however, that, in the case of this clause (B), in purchasing
such Notes such Persons are deemed to have represented and agreed as provided
under the caption "Notice to Investors" contained in the Final Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchaser. The obligation of the Initial Purchaser to purchase the
Notes to be purchased by it hereunder is subject to the satisfaction or waiver
of the following conditions:
(a) At the Time of Purchase, the Initial Purchaser shall
have received an opinion, dated as of the Time of Purchase and
addressed to the Initial Purchaser, of Winston & Strawn, counsel for
the Company and the Guarantors, in the form set forth on Exhibit A
hereto. At the time of Purchase, the Initial Purchaser shall have
received the opinion, dated as of the Time of Purchase and addressed
to the Initial Purchaser, of local counsel for Trimont Land Company
and for Ski Lifts, Inc., in form and substance satisfactory to counsel
for the Initial Purchaser.
(b) The Initial Purchaser shall have received an opinion,
addressed to the Initial Purchaser in form and substance satisfactory
to the Initial Purchaser and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchaser.
(c) The Initial Purchaser shall have received from each
of Ernst & Young LLP, Arthur Anderson LLP, Coopers & Lybrand LLP and
Feldhake & Associates P.C., a comfort letter or letters dated the date
hereof and the Closing in form and substance reasonably satisfactory
to counsel to the Initial Purchaser.
<PAGE> 28
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(d) The representations and warranties made by the
Company and the Guarantors herein shall be true and correct in all
material respects (except for changes expressly provided for in this
Agreement) on and as of the Time of Purchase with the same effect as
though such representations and warranties had been made on and as of
the Time of Purchase, and the Company and the Guarantors shall have
complied in all material respects with all agreements as set forth in
or contemplated hereunder and in the Basic Documents required to be
performed by the Company and the Guarantors at or prior to the Time of
Purchase.
(e) Subsequent to the date of the Final Memorandum, (i)
there shall not have been any change, or any development involving a
prospective change, which has had or would reasonably be expected to
have a Material Adverse Effect and (ii) the Company and its
Subsidiaries shall have conducted their respective businesses only in
the ordinary course.
(f) At the Time of Purchase and after giving effect to
the consummation of the transactions contemplated by this Agreement
and the Basic Documents, there shall exist no Default or Event of
Default.
(g) The purchase of and payment for the Notes by the
Initial Purchaser hereunder shall not be prohibited or enjoined
(temporarily or permanently) by any applicable law or governmental
regulation (including, without limitation, Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchaser shall
have received a certificate, dated the Time of Purchase, from the
Chairman of the Board, President or any Vice President and the Chief
Financial Officer of each of the Company and the Guarantors stating
that the conditions specified in Sections 4.1(d), (e), (f) and (g)
have been satisfied or duly waived at the Time of Purchase.
(i) Each of the Basic Documents shall be satisfactory in
form and substance to the Initial Purchaser and shall have been
executed and delivered by all the respective parties thereto and shall
be in full force and effect.
(j) All proceedings taken in connection with the issuance
of the Notes and the transactions contemplated by this Agreement, the
other Basic Documents and all documents and papers relating thereto
shall be reasonably satisfactory
<PAGE> 29
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to the Initial Purchaser and counsel to the Initial Purchaser. The
Initial Purchaser and counsel to the Initial Purchaser shall have
received copies of such papers and documents as they may reasonably
request in connection therewith, all in form and substance reasonably
satisfactory to them.
(k) The sale of the Notes hereunder shall not have been
enjoined (temporarily or permanently) at the Time of Purchase.
(l) Subsequent to the execution and delivery of this
Agreement, there shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined
for purposes of Rule 436(g) under the Act, that (A) it is downgrading
its rating assigned to any debt securities of the Company or any
Subsidiary, or (B) it is reviewing its rating assigned to any debt
securities of the Company or any Subsidiary with a view to possible
downgrading, or with negative implications, or direction not
determined.
(m) In the event that the Initial Purchaser exercises its
Option provided in Section 2.2(b) hereof to purchase all or any
portion of the Option Notes, the representations and warranties of the
Company and the Guarantors contained herein and the statements in any
certificates furnished by the Company and the Guarantors hereunder
shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Initial Purchaser shall have received:
(1) A certificate, dated such Date of Delivery, of
the Chairman of the Board, President or any Vice President and
the Chief Financial Officer of each of the Company and the
Guarantors confirming that the certificate delivered at the
Time of Purchase pursuant to Section 4.1(h) hereof remains
true and correct as of such Date of Delivery.
(2) The favorable opinion of Winston & Strawn,
counsel for the Company and the Guarantors, and of local
counsel for Trimont Land Company and for Ski Lifts, Inc., each
in form and substance satisfactory to counsel for the Initial
Purchaser, dated such Date of Delivery, relating to the Option
Notes to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Section 4.1(a)
hereof.
<PAGE> 30
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(3) A letter from Ernst & Young LLP,, in form and
substance satisfactory to counsel to the Initial Purchaser and
dated such Date of Delivery, substantially the same in form
and substance as the letters furnished to the Initial
Purchaser pursuant to Section 4.1(c) hereof, except that the
"specified date" in the letter furnished pursuant to this
Section 4.1(m)(3) shall be a date not more than three days
prior to such Date of Delivery.
On or before the Closing or Date of Delivery, as the case may
be, the Initial Purchaser and counsel to the Initial Purchaser shall have
received such further documents, opinions, certificates and schedules or other
instruments relating to the business, corporate, legal and financial affairs of
the Company and its Subsidiaries as they may reasonably request.
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the Guarantors.
The Company and the Guarantors, jointly and severally, covenant and agree with
the Initial Purchaser that:
(a) None of the Company or any of the Guarantors will
amend or supplement the Final Memorandum or any amendment or
supplement thereto of which the Initial Purchaser shall not previously
have been advised and furnished a copy for a reasonable period of time
prior to the proposed amendment or supplement and as to which the
Initial Purchaser shall not have given its consent, which consent
shall not be unreasonably withheld. The Company and the Guarantors
will promptly, upon the reasonable request of the Initial Purchaser or
counsel to the Initial Purchaser, make any amendments or supplements
to the Preliminary Memorandum or the Final Memorandum that may be
necessary or advisable in connection with the resale of the Notes by
the Initial Purchaser.
(b) The Company and the Guarantors will cooperate with
the Initial Purchaser in arranging for the qualification of the Notes
for offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchaser may designate and will continue
such qualifications in effect for as long as may be reasonably
necessary to complete the resale of the Notes; provided, however,
that in connection therewith, the Company and the
<PAGE> 31
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Guarantors shall not be required to qualify as a foreign corporation
or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so
subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Notes, the Exchange Notes
or the Private Exchange Notes, any event occurs or information becomes
known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if for any other reason it is necessary at any time
to amend or supplement the Final Memorandum to comply with applicable
law, the Company and the Guarantors will promptly notify the Initial
Purchaser thereof (who thereafter will not use such Final Memorandum
until appropriately amended or supplemented) and will prepare, at the
expense of the Company and the Guarantors, an amendment or supplement
to the Final Memorandum that corrects such statement or omission or
effects such compliance.
(d) The Company will, without charge, provide to the
Initial Purchaser and to counsel to the Initial Purchaser as many
copies of the Preliminary Memorandum and the Final Memorandum or any
amendment or supplement thereto as the Initial Purchaser may
reasonably request.
(e) The Company will apply the net proceeds from the sale
of the Notes as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period commencing on the date
hereof and ending on the date no Notes are outstanding, the Company
will furnish to the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by the Company to
the Trustee or the holders of the Notes and, promptly after available,
copies of any reports or financial statements furnished to or filed by
the Company with the Commission or any national securities exchange on
which any class of securities of the Company may be listed.
(g) Prior to the Time of Purchase, the Company will
furnish to the Initial Purchaser, as soon as they have been
<PAGE> 32
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prepared, a copy of any unaudited interim financial statements of the
Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Final Memorandum.
(h) None of the Company or any of its Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Notes in a manner which would require
the registration under the Act of the Notes.
(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2)
of the Act.
(j) For so long as any of the Notes remain outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Act and not salable in full under Rule 144 under the Act (or
any successor provision), the Company will make available, upon
request, to any seller of such Notes the information specified in Rule
144A(d)(4) under the Act, unless the Company is then subject to
Section 13 or 15(d) of the Exchange Act.
(k) The Company and the Guarantors will use their best
efforts to (i) permit the Notes to be included for quotation on PORTAL
and (ii) permit the Notes to be eligible for clearance and settlement
through The Depository Trust Company.
(l) The Company and the Guarantors (to the extent a party
thereto) will use their best efforts to do and perform all things
required to be done and performed by them under this Agreement and the
other Basic Documents prior to or after the Closing and to satisfy all
conditions precedent on their part to the obligations of the Initial
Purchaser to purchase and accept delivery of the Notes.
(m) In connection with Notes offered and sold in an
offshore transaction (as defined in Regulation S) the Company will not
register any transfer of such Notes not made in accordance with the
provisions of Regulation S and will not, except in accordance with the
provisions of
<PAGE> 33
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Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Company and the
Guarantors, jointly and severally, agree to pay all costs and expenses incident
to the performance of their obligations under this Agreement, whether or not
the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 8.2 hereof, including, but not limited to, all
costs and expenses incident to (i) the negotiation, preparation, printing, word
processing, reproduction, execution and delivery of this Agreement, each of the
Basic Documents, any amendment or supplement to or modification of any of the
foregoing and any and all other documents furnished pursuant hereto or thereto
or in connection herewith or therewith, (ii) any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, any other marketing related materials, (iii) all arrangements relating
to the delivery to the Initial Purchaser of copies of the foregoing documents,
(iv) the fees and disbursements of the counsel, the accountants and any other
experts or advisors retained by the Company and the Guarantors, (v) all
reasonable out-of-pocket expenses (including word processing charges, messenger
and duplicating services, research document expenses, travel expenses and other
customary expenditures) of the Initial Purchaser, plus the reasonable fees and
expenses of its legal counsel, (vi) preparation (including printing), issuance
and delivery to the Initial Purchaser of the Notes, (vii) the qualification of
the Notes under state securities and "Blue Sky" laws, including filing fees,
word processing and reproduction costs of any "Blue Sky" memoranda and
reasonable fees and disbursements of counsel to the Initial Purchaser relating
thereto, (viii) expenses in connection with any meetings with prospective
investors in the Notes, (ix) fees and expenses of the trustee, including fees
and expenses of counsel to the Trustee, (x) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on
PORTAL, (xi) any fees charged by investment rating agencies for the rating of
the Notes, and (xii) except as limited by Article VII, all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), if
any, in connection with the enforcement of this Agreement, the Notes or any
other agreement furnished pursuant hereto or thereto or in connection herewith
or therewith. In addition, the Company and
<PAGE> 34
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the Guarantors shall pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any Basic Document or the issuance of the Notes,
and shall save and hold the Initial Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company and the Guarantors.
The Company and the Guarantors, jointly and severally, agree and covenant to
hold harmless and indemnify the Initial Purchaser and any Affiliates thereof
(including any director, officer, employee, agent or controlling Person of any
of the foregoing) from and against any losses, claims, damages, liabilities and
expenses (including expenses of investigation) to which such Initial Purchaser
and its Affiliates may become subject arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Memorandum and any amendments or supplements thereto, the Basic Documents or
any application or other document filed by or on behalf of the Company or any
Guarantor with the Commission or any State Commission (collectively, the
"Offering Materials") or arising out of or based upon the omission or alleged
omission to state in any of the Offering Materials a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company and the Guarantors shall not be liable
under this paragraph (a) to the extent that such losses, claims, damages or
liabilities arose out of or are based upon an untrue statement or omission made
in any of the documents referred to in this paragraph (a) in reliance upon and
in conformity with the information relating to the Initial Purchaser furnished
in writing by such Initial Purchaser for inclusion therein; provided, further,
that the Company and the Guarantors shall not be liable under this paragraph
(a) to the extent that such losses, claims, damages or liabilities arose out of
or are based upon an untrue statement or omission made in any Memorandum that
is corrected in the Final Memorandum (or any amendment or supplement thereto)
if the person asserting such loss, claim, damage or liability purchased Notes
from the Initial Purchaser in reliance on such Memorandum but was not given the
Final Memorandum (or any amendment or supplement thereto) on or prior to the
confirmation of the sale of such Notes. The Company
<PAGE> 35
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and the Guarantors, on a joint and several basis, further agree to reimburse
the Initial Purchaser for any reasonable legal and other expenses as they are
incurred by it in connection with investigating, preparing to defend or
defending any lawsuits, claims or other proceedings or investigations arising
in any manner out of or in connection with such Person being the Initial
Purchaser; provided that if the Company or the Guarantors reimburses the
Initial Purchaser hereunder for any expenses incurred in connection with a
lawsuit, claim or other proceeding for which indemnification is sought, the
Initial Purchaser hereby agrees to refund such reimbursement of expenses to the
extent that the losses, claims, damages or liabilities are not entitled to
indemnification hereunder. The Company and the Guarantors further agree that
the indemnification, contribution and reimbursement commitments set forth in
this Article VII shall apply whether or not the Initial Purchaser is a formal
party to any such lawsuits, claims or other proceedings. The indemnity,
contribution and expense reimbursement obligations of the Company and the
Guarantors under this Article VII shall be in addition to any liability the
Company and the Guarantors may otherwise have.
(b) Indemnification by the Initial Purchaser. The
Initial Purchaser agrees and covenants to hold harmless and indemnify the
Company and the Guarantors and any Affiliates thereof (including any director,
officer, employee, agent or controlling Person of any of the foregoing) from
and against any losses, claims, damages, liabilities and expenses insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement of any material fact contained in the Offering
Materials, or upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
omission was made in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished in writing by the Initial Purchaser
for inclusion therein. The indemnity, contribution and expense reimbursement
obligations of the Initial Purchaser under this Article VII shall be in
addition to any liability the Initial Purchaser may otherwise have.
(c) Procedure. If any Person shall be entitled to
indemnity hereunder (each an "Indemnified Party"), such Indemnified Party shall
give prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided,
<PAGE> 36
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however, that the failure so to notify the Indemnifying Parties shall not
relieve the Indemnifying Parties from any obligation or liability except to the
extent that the Indemnifying Parties have been prejudiced materially by such
failure. The Indemnifying Parties shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such Proceeding, to assume, at the
Indemnifying Parties' expense, the defense of any such Proceeding, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that an
Indemnified Party or parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or parties
unless: (1) the Indemnifying Parties agree to pay such fees and expenses; or
(2) the Indemnifying Parties fail promptly to assume the defense of such
Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or parties; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party or
parties and the Indemnifying Party or an Affiliate of the Indemnifying Party
and such Indemnified Parties, and the Indemnified Parties shall have been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party or parties that are different from or
additional to those available to the Indemnifying Parties, in which case, if
such Indemnified Party or parties notifies the Indemnifying Parties in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Parties, the Indemnifying Parties shall not have the right to assume the
defense thereof on behalf of such Indemnified Party or parties and such counsel
shall be at the expense of the Indemnifying Parties, it being understood,
however, that, unless there exists a conflict among Indemnified Parties, the
Indemnifying Parties shall not, in connection with any one such Proceeding or
separate but substantially similar or related Proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified
Party or parties, or for fees and expenses that are not reasonable. No
Indemnified Party or parties will settle any Proceeding without the consent of
the Indemnifying Party or Parties (but such consent shall not be unreasonably
withheld). No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
Proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been
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sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability or claims
that are the subject of such Proceeding.
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the Offering of the Notes, but also the relative fault of the Indemnifying and
Indemnified Parties in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Indemnifying and Indemnified Parties shall be deemed to be in the same
proportion as the total proceeds from the offering of the Notes (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Initial Purchaser. The relative fault of the
Indemnifying and Indemnified Parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying or Indemnified Parties and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses incurred
by such party in connection with investigating or defending any such claim.
The Company and the Guarantors and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to the
immediately preceding paragraph were determined pro rata or per capita or by
any other method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
<PAGE> 38
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Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding
anything to the contrary in this Article 7, the indemnification and
contribution provisions of the Registration Rights Agreement shall govern any
claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations,
warranties and covenants of the Company, the Guarantors, their respective
officers and the Initial Purchaser made herein, the indemnity and contribution
agreements contained herein and each of the provisions of Articles VI, VII and
VIII shall remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Company, the Guarantors, the Initial
Purchaser or any Indemnified Party, (b) acceptance of any of the Notes and
payment therefor, (c) any termination of this Agreement, or (d) disposition of
the Notes by the Initial Purchaser whether by redemption, exchange, sale or
otherwise.
Section 8.2. Termination. (a) This Agreement may be
terminated in the sole discretion of the Initial Purchaser by notice to the
Company given prior to the Time of Purchase in the event that the Company or
the Guarantors shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on their part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Closing:
(1) the Company or the Guarantors shall have sustained
any loss or interference with respect to their businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference, in the sole judgment of the
Initial Purchaser, has had or has a Material Adverse Effect, or there
shall have been, in the sole judgment of the Initial Purchaser, any
event or development that, individually or in the
<PAGE> 39
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aggregate, has or would be reasonably be expected to have a Material
Adverse Effect (including without limitation a Change of Control (as
defined in the Indenture) of the Company or the Guarantors), except in
each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(2) trading in securities of the Company generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(3) a banking moratorium shall have been declared by New
York or United States authorities;
(4) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, or (B)
an outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum; or
(5) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this
Section 8.2 shall be without liability of any party to any other party except
as provided in Section 8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure
or delay on the part of the Company, the Guarantors or the Initial Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Guarantors or the Initial Purchaser at law or in equity or otherwise. No
waiver of or consent to any departure by the Company or the Guarantors from
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any provision of this Agreement shall be effective unless signed in writing by
the party entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or
on behalf of each of the Company, the Guarantors and the Initial Purchaser.
Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to
any departure by the Company or the Guarantors from the terms of any provision
of this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company or the
Guarantors in any case shall entitle the Company or the Guarantors to any other
or further notice or demand in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchaser.
The statements set forth in the first paragraph on page (i), the fourth and the
fifth sentences of the third paragraph and in the sixth paragraph under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Company for the purposes of Sections
3.1(a) and 7.1(a) and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchaser, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Wood Gundy Securities Corp., 425 Lexington Avenue,
3rd floor, New York, New York 10017, with a copy to Cahill Gordon & Reindel, 80
Pine Street, New York, New York, 10005, Attention: Roger Meltzer, Esq. and (b)
if to the Company or the Guarantors, shall be given by similar means to Booth
Creek Ski Holdings, Inc., Highway 267 and Northstar Drive, Truckee, California,
Attention: Chief Financial Officer and General Counsel, with copies to Winston
& Strawn, 200 Park Avenue, New York, New York 10166, Attention: Bruce Toth,
Esq. In each case notices, demands and other communications shall be deemed
given when received.
Section 8.6. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to
<PAGE> 41
-38-
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchaser, the Company, the
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other Person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such Persons and
for the benefit of no other Person except that (i) the indemnities of the
Company and the Guarantors contained in Section 7.1(a) of this Agreement shall
also be for the benefit of the directors, officers, employees and agents of the
Initial Purchaser and any Person or Persons who control the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchaser contained in Section 7.1(b)
of this Agreement shall also be for the benefit of the directors of the Company
and the Guarantors, their officers and any Person or Persons who control the
Company or the Guarantors within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Notes from the Initial
Purchaser will be deemed a successor because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
BOOTH CREEK SKI HOLDINGS, INC.
(a Delaware corporation)
By: /s/ Jeffrey J. Joyce
--------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President, Finance
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
By: /s/ Jeffrey J. Joyce
--------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President, Finance
<PAGE> 43
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ William P. Phoenix
------------------------------
Name: William P. Phoenix
Title: Managing Director
<PAGE> 44
EXHIBIT A
[FORM OF OPINION OF COUNSEL OF COMPANY]
CIBC Wood Gundy Securities Corp.
425 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
We have acted as special counsel to Booth Creek Ski Holdings, Inc., a
Delaware corporation (the "Company"), Trimont Land Company, a California
corporation ("Trimont"), Sierra-at-Tahoe, Inc., a Delaware corporation, Bear
Mountain, Inc., a Delaware corporation, Booth Creek Ski Acquisition Corp., a
Delaware corporation, Waterville Valley Ski Resort, Inc., a Delaware
corporation, Mount Cranmore Ski Resort, Inc., a Delaware corporation, and Ski
Lifts, Inc., a Washington corporation ("Ski Lifts") (collectively, the
"Subsidiary Guarantors"), in connection with the issuance and sale by the
Company, pursuant to the Securities Purchase Agreement dated as of March 13,
1997 (the "Purchase Agreement") among the Company, the Subsidiary Guarantors
and CIBC Wood Gundy Securities Corp. (the "Initial Purchaser"), of $110 million
aggregate principal amount of the Company's 12 1/2% Senior Notes due 2007 (the
"Notes"), which will be issued under an Indenture dated as of March 17, 1997
(the "Indenture") among the Company, the Subsidiary Guarantors and Marine
Midland Bank, as trustee.
This opinion is furnished to you pursuant to Section 4.1(a) of the
Purchase Agreement. Except as otherwise specified, capitalized terms used
herein and not otherwise defined shall have the same meanings as are ascribed to
such terms in the Purchase Agreement.
In rendering the opinions set forth herein, we have examined:
(i) the Certificate of Incorporation and Bylaws of the Company and each of
the Subsidiary Guarantors;
(ii) resolutions of the Board of Directors of the Company and each of the
Subsidiary Guarantors with respect to the transactions referred to
herein;
<PAGE> 45
CIBC Wood Gundy Securities Corp.
Page 2
(iii) the Final Memorandum;
(iv) the Indenture;
(v) the Notes;
(vi) the Purchase Agreement; and
(vii) the Registration Rights Agreement,
(the documents identified in clauses (iv) through (vii) are collectively
hereinafter referred to as the "Transaction Documents") and such other
agreements, instruments and documents, and such questions of law as we have
deemed necessary or appropriate to enable us to render the opinions expressed
below. Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and officers and
representatives of the Company and the Subsidiary Guarantors, and we have made
such inquiries of officers and representatives of the Company and the
Subsidiary Guarantors as we have deemed relevant or necessary, in connection
with the opinions set forth herein.
In rendering the opinions expressed below, we have, with your consent,
assumed that the signatures of persons signing all documents in connection with
which this opinion is rendered are genuine, all documents submitted to us as
originals or duplicate originals are authentic and all documents submitted to us
as copies, whether certified or not, conform to authentic original documents.
Additionally, we have, with your consent, assumed and relied upon, the
following;
(a) the accuracy and completeness of all certificates and other
statements, documents, records, financial statements and papers reviewed by us,
and the accuracy and completeness of all representations, warranties, schedules
and exhibits contained in the Transaction Documents, with respect to the factual
matters set forth therein;
(b) all parties to the documents reviewed by us (other than the Company
and the Subsidiary Guarantors (other than Trimont and Ski Lifts)) are duly
organized, validly existing and in good standing under the laws of all
jurisdictions where they are conducting their businesses or otherwise required
to be so qualified, and have full power and authority to execute, deliver and
perform under such documents and all such documents have been duly authorized,
executed and delivered by such parties; and
(c) the Notes have been delivered and paid for by the Initial Purchaser in
accordance with the terms of the Purchase Agreement, and each Transaction
Document constitutes the legal, valid and binding obligation of each party
thereto (other than the Company and the Subsidiary Guarantors) enforceable
against such party in accordance with its terms.
<PAGE> 46
CIBC Wood Gundy Securities Corp.
Page 3
Whenever our opinion with respect to the existence or absence of facts is
indicated to be based on our knowledge or awareness, we are referring to the
actual present knowledge of the particular attorneys presently members of or
employed by Winston & Strawn who have given substantive attention to matters
involving the Company and the Subsidiary Guarantors. Except as expressly set
forth herein, we have not undertaken any independent investigation, examination
or inquiry to determine the existence or absence of any facts (and have not
caused the review of any court file or indices) and no inference as to our
knowledge concerning any facts should be drawn as a result of the limited
representation undertaken by us.
Based upon the foregoing and subject to the qualifications and assumptions
stated herein, we are of the opinion that:
1. The Company and each of the Subsidiary Guarantors (A) (other than
Trimont and Ski Lifts, as to whom we express no opinion) is duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum and (B) is duly
qualified to do business as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
2. Based solely on our review of the Company's and each of the Subsidiary
Guarantors' corporate minutes and stock transfer records, the Company has the
authorized, issued and outstanding capitalization set forth in the Final
Memorandum; all of the issued and outstanding shares of capital stock of the
Company and the Subsidiary Guarantors (other than Trimont and Ski Lifts, as to
whom we express no opinion) have been duly authorized and validly issued and are
fully paid and non-assessable; all of the issued and outstanding shares of
capital stock of the Company were not issued in violation of any preemptive or
similar rights; and except as set forth in the Final Memorandum, all of the
outstanding shares of capital stock of the Subsidiary Guarantors are owned of
record by the Company or another Subsidiary Guarantor.
3. Except as set forth in the Final Memorandum, to our knowledge (A) no
options, warrants or other rights to purchase from the Company or the Subsidiary
Guarantors shares of capital stock or ownership interests in the Company or the
Subsidiary Guarantors are outstanding, (B) no agreements or other obligations to
issue, or other rights to convert any obligation into, or exchange any
securities for, shares of capital stock or ownership interests in the Company or
the Subsidiary Guarantors are outstanding and (C) no holder of securities of the
Company or the Subsidiary Guarantors is entitled to have such securities
registered under a registration statement filed by the Company or the Subsidiary
Guarantors pursuant to the Registration Rights Agreement.
<PAGE> 47
CBIC Wood Gundy Securities Corp.
Page 4
4. The Company has all requisite corporate power and authority to
execute and deliver, and to perform its obligations under, each of the
Indenture, the Notes, the Exchange Notes and the Private Exchange Notes. Each
of the Subsidiary Guarantors (other than Trimont and Ski Lifts, as to whom we
express no opinion) has all requisite corporate power and authority to execute
and deliver, and to perform its obligations under, each of the Indenture, its
Guarantee and its guarantee to be endorsed on the Exchange Notes and the
Private Exchange Notes.
5. The Indenture meets the requirements for qualification under the
TIA.
6. The Indenture has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors (other than Trimont and Ski
Lifts, as to whom we express no opinion) and, when the Indenture is duly
executed and delivered by the Company and each of the Subsidiary
Guarantors (assuming due authorization, execution and delivery thereof by
Trimont, Ski Lifts and the Trustee), the Indenture will constitute the valid
and legally binding agreements of the Company and each the Subsidiary
Guarantors, enforceable against the Company and each of the Subsidiary
Guarantors in accordance with its terms.
7. The Notes are in the form contemplated by the Indenture. The
Notes have each been duly and validly authorized by the Company and, when duly
executed and delivered by the Company and paid for by the Initial Purchaser in
accordance with the terms of the Purchase Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture, and enforceable against the
Company in accordance with their terms. The Guarantees endorsed on the Notes
and the guarantees to be endorsed on the Exchange Notes and the Private
Exchange Notes have each been duly authorized by each of the Subsidiary
Guarantors (other than Trimont and Ski Lifts, as to whom we express no opinion)
and, when the Notes are executed by the Company and the Guarantees are executed
by the Subsidiary Guarantors and the Notes are authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered to and paid for
by the Initial Purchaser in accordance with the terms of the Purchase Agreement
(assuming due authorization, execution and delivery of the Indenture by
Trimont, Ski Lifts and the Trustee and due authorization and delivery of the
Notes by the Trustee in accordance with the Indenture), will constitute the
valid and legally binding obligations of each of the Subsidiary Guarantors,
entitled to the benefits of the Indenture, and enforceable against each of the
Subsidiary Guarantors in accordance with their terms.
8. The Exchange Notes and the Private Exchange Notes have been duly
and validly authorized by the Company, and when the Exchange Notes and the
Private Exchange Notes have been duly executed and delivered by the Company in
accordance with the terms of the Registration Rights Agreement and the
Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee and due authentication and delivery of the Exchange
<PAGE> 48
CIBC Wood Gundy Securities Corp.
Page 5
Notes and the Private Exchange Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture, and enforceable against the
Company in accordance with their terms.
9. The Company and each of the Subsidiary Guarantors (other than
Trimont and Ski Lifts, as to whom we express no opinion) have all requisite
corporate power and authority to execute, deliver and perform their obligations
under the Registration Rights Agreement; the Registration Rights Agreement has
been duly and validly authorized by the Company and each of the Subsidiary
Guarantors (other than Trimont and SkiLifts, as to whom we express no opinion)
and, when duly executed and delivered by each of the Company and the Subsidiary
Guarantors (assuming due authorization, execution and delivery thereof by
Trimont, Ski Lifts and the Initial Purchaser), will constitute the valid and
legally binding agreement of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms, except that any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public
policy considerations.
10. The Company and each of the Subsidiary Guarantors (other than
Trimont and Ski Lifts, as to whom we express no opinion) has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Purchase Agreement and to consummate the transactions contemplated
thereby; the Purchase Agreement and the consummation by the Company and each of
the Subsidiary Guarantors of the transactions contemplated thereby have been
duly and validly authorized by the Company and each of the Subsidiary
Guarantors (other than Trimont and Ski Lifts, as to whom we express no
opinion); and the Purchase Agreement has been duly executed and delivered by
the Company and each of the Subsidiary Guarantors (other than Trimont and Ski
Lifts, as to whom we express no opinion).
11. The Indenture, the Notes, the Guarantees and the Registration
Rights Agreement conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
12. None of the Company or the Subsidiary Guarantors is (A) in
violation of its certificate of incorporation or bylaws (or similar
organizational document) (except we express no opinion with respect to Trimont
and Ski Lifts), (B) to our knowledge, in breach or violation of any statute,
judgment, decree, order, rule or regulation of the United States of America, the
State of New York or the General Corporation Law of the State of Delaware
applicable to it or any of its properties or assets, except for any such
breaches or violations which would not, individually or in the aggregate, have
a Material Adverse Effect, or (C) in breach or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
agreements or instruments identified to us by the Company in an officers'
certificate (a copy of which is attached hereto as Exhibit A) as being all of
the Company's material contracts (the "Material Contracts") (except we express
no opinion as to (i) breaches, defaults, violations or events under
<PAGE> 49
CIBC Wood Gundy Securities Corp.
Page 6
Material Contracts which would not, individually or in the aggregate, have a
Material Adverse Effect, (ii) violations resulting from cross-default
provisions relating to defaults under an agreement which is not a Material
Contract and (iii) violations of financial covenants).
13. The execution, delivery and performance of the Purchase Agreement, the
Indenture and the Registration Rights Agreement and the consummation of the
transactions contemplated thereby (including, without limitation, the issuance
and sale of the Notes to the Initial Purchaser and the making of the Guarantees
by the Subsidiary Guarantors) will not conflict with or constitute or result in
a breach or a default under (or an event which with notice or passage of time
or both would constitute a default under) or violation of any of (A) the terms
or provisions of any Material Contract, except for any such conflicts,
breaches, violations, defaults or events which would not, individually or in
the aggregate, have a Material Adverse Effect, (B) the certificate of
incorporation or bylaws (or similar organizational document) of the Company or
any of the Subsidiary Guarantors (except we express no opinion with respect to
Trimont and Ski Lifts), or (C) (assuming compliance with all applicable state
securities or "Blue Sky" laws, as to which we render no opinion, and assuming
the accuracy of the representations and warranties of the Initial Purchaser in
Section 3.2 of the Purchase Agreement) any statute, judgement, decree, order,
rule or regulation of the United States of America, the State of New York or
the General Corporation Law of the State of Delaware known to us to be
applicable to the Company or any of the Subsidiary Guarantors or any of their
respective properties or assets, except for any such conflicts, breaches or
violations which would not, individually or in the aggregate, have a Material
Adverse Effect.
14. Assuming the accuracy of the representations and warranties of the
Company, the Subsidiary Guarantors and the Initial Purchaser in the Purchase
Agreement, no consent, approval, authorization or order of any governmental
authority is required for (A) the issuance and sale by the Company of the Notes
to the Initial Purchaser or the consummation by the Company of the other
transactions contemplated in the Purchase Agreement or (B) the issuance and sale
by the Subsidiary Guarantors of the Guarantees or the consummation by the
Subsidiary Guarantors of the other transactions contemplated in the Purchase
Agreement, except such as may be required under state securities or "Blue Sky"
laws, as to which we express no opinion, and those which have previously been
obtained; provided, however that we express no opinion as to any consent,
approval, authorization or order of any governmental authority that may be
required by virtue of the Initial Purchaser's legal or regulatory status.
15. To the best of our knowledge, the Company and the Subsidiary
Guarantors own or possess adequate licenses or other rights to use all patents,
trademarks, service marks, trade names, copyrights and know-how (collectively,
"Intellectual Property") necessary to conduct the business now operated by them
as described in the Final Memorandum, except where the failure to own or possess
adequate licenses or other rights to such Intellectual Property would not
reasonably be expected to have a Material Adverse Effect.
<PAGE> 50
CIBC Woood Gundy Securities Corp.
Page 7
16. To our knowledge, no legal or governmental proceedings are pending
or threatened to which any of the Company or the Subsidiary Guarantors is a
party or to which the property or assets of the Company or any of the
Subsidiary Guarantors is subject which, if determined adversely to the
Company or the Subsidiary Guarantors, would result, individually or in the
aggregate, in a Material Adverse Effect, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Notes or the consummation of the other transactions in the Final Memorandum
under the caption "Use of Proceeds."
17. To our knowledge, there are no legal or governmental proceedings
involving or affecting the Company or any of the Subsidiary Guarantors or any
of their respective properties or assets which would be required to be
described in a prospectus pursuant to the Act that are not described in the
Final Memorandum, nor are there any material contracts or other documents which
would be required to be described in a prospectus pursuant to the Act that are
not described in the Final Memorandum.
18. None of the Company or the Subsidiary Guarantors is, or
immediately after the sale of the Notes and the Guarantees to be sold under the
Purchase Agreement and the application of the proceeds from such sale (as
described in the Final Memorandum under the caption "Use of Proceeds") will
be, in "investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
19. No registration under the Act of the Notes or the Guarantees is
required in connection with the Notes to the Initial Purchaser as contemplated
by the Purchase Agreement and the Final Memorandum or in connection with the
initial resale of the Notes by the Initial Purchaser in accordance with Section
3.2 of the Purchase Agreement, and prior to the commencement of the Exchange
Offer (as defined in the Registration Rights Agreement) or the effectiveness of
the Shelf Registration Statement (as defined in the Registration Rights
Agreement), and the Indenture is not required to be qualified under the TIA, in
each case assuming (A)(i) that the purchasers who buy such Notes in the
initial resale thereof are qualified institutional buyers as defined in Rule
144A promulgated under the Act ("QIBs") or accredited investors as defined in
Rule 501(a)(1), (2), (3) or (7) promulgated under the Act ("Accredited
Investors") or (ii) that the offer or sale of the Notes is made to a non-U.S.
Person in an offshore transaction as such terms are defined in Regulation S
under the Act, (B) the accuracy of the Initial Purchaser's representations and
those of the Company contained in the Purchase Agreement regarding the absence
of a general solicitation in connection with the sale of such Notes to the
Initial Purchaser and the initial resale thereof and (C) the due performance by
the Initial Purchaser of the agreements set forth in Section 3.2 of the
Purchase Agreement.
20. Neither the consummation of the transactions contemplated by the
Purchase Agreement nor the sale, issuance, execution or delivery of the Notes
will violate Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
<PAGE> 51
CIBC Wood Gundy Securities Corp.
Page 8
In addition, we have participated in conferences with officers and
representatives of the Company and the Subsidiary Guarantors, representatives
of Ernst & Young LLP, the independent public accountants for the Company and
the Subsidiary Guarantors, representatives of the Initial Purchaser and counsel
for the Initial Purchaser, at which conferences the contents of the Final
Memorandum and related matter were discussed, and, although we have not
independently verified and are not passing upon and assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Final Memorandum (except to the extent specified in paragraph 11 hereof), no
facts have come to our attention which lead us to believe that the Final
Memorandum, on the date thereof or at the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading (it being
understood that we express no opinion with respect to the financial statements
and related notes thereto and the other financial, statistical and accounting
data included in the Final Memorandum).
The opinions as expressed herein are subject to the following
qualifications and assumptions:
(a) the enforceability of the Indenture, the Notes, the Exchange
Notes, the Private Exchange Notes, the Purchase Agreement, the Registration
Rights Agreement and the obligations of the Company and the Subsidiary
Guarantors thereunder and the availability of certain rights and remedial
provisions provided for in such documents are subject to the effect of
bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization,
arrangement, liquidation, conservatorship, and moratorium laws and are subject
to limitations imposed by other laws and judicial decisions relating to or
affecting the rights of creditors generally, and general principles of equity
(regardless of whether enforcement is considered in proceedings at law or in
equity) and upon the availability of injunctive relief or other equitable
remedies, including, without limitation, where (i) the breach of convenants or
provisions imposes restrictions or burdens upon a debtor and it cannot be
demonstrated that the enforcement of such remedies, restrictions or burdens is
reasonably necessary for the protection of a creditor; (ii) a creditor's
enforcement of remedies, covenants or provisions under the circumstances, or
the manner or procedures of such enforcement, would violate such creditor's
implied covenant of good faith and fair dealing, or would be commercially
unreasonable; or (iii) a court having jurisdiction finds that remedies,
covenants or provisions were, at the time made, or are in application,
unconscionable as a matter of law or contrary to public; and
(b) with respect to the Indenture, the Notes, the Exchange Notes,
the Private Exchange Notes, the Purchase Agreement and the Registration Rights
Agreement, we express no opinion as to (i) the enforceability of cumulative
remedies to the extent such cumulative remedies purport to or would have the
effect of compensating the party entitled to the benefits thereof in amounts in
excess of the actual loss suffered by such party or (ii) the severability
provisions contained in such documents; and
<PAGE> 52
CIBC Wood Gundy Securities Corp.
Page 9
(c) requirements in the Transaction Documents specifying that
provisions thereof may only be waived in writing may not be valid, binding or
enforceable to the extent that an oral agreement or an implied agreement by
trade practice or course of conduct has been created modifying any provision of
such documents.
The opinions expressed herein are based upon and are limited to the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the laws of the United States of America and we express no opinion
with respect to the laws of any other state or jurisdiction.
Our opinions set forth in this letter are based upon the facts in
existence and laws in effect on the date hereof and we expressly disclaim any
obligation to update our opinions herein, regardless of whether changes in such
facts or laws come to our attention after the delivery hereof.
We understand that you will receive opinion letters from Lewis, D'Amato,
Brisbois & Bisgaard, special California counsel to the Company, and Carney
Badley Smith & Spellman, special Washington counsel to the Company, and believe
that you are justified in relying on such opinion letters.
This opinions is solely for the benefit of the addressee hereof in
connection with the consummation of the transactions contemplated by the
Purchase Agreement. This opinion may not be relied upon in any manner by any
other person and may not be disclosed, quoted, filed with a governmental agency
or otherwise referred to without our express prior written consent.
Very truly yours,
<PAGE> 1
EXHIBIT 10.1
Execution Copy
-----------------------------------------------------------------
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BOOTH CREEK SKI HOLDINGS, INC.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
$20,000,000
CREDIT AGREEMENT
Dated as of December 3, 1996
As Amended and Restated as of March 18, 1997
THE FIRST NATIONAL BANK OF BOSTON
-----------------------------------------------------------------
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Restatement; Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Definitions; Certain Rules of Construction . . . . . . . . . . . . . . . . . . . . . . 2
2. The Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1. The Revolving Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1.1. Revolving Loan. . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1.2. Other Limits on Amount of Revolving Loan. . . . . . . . . . . . 23
2.1.3. Borrowing Requests. . . . . . . . . . . . . . . . . . . . . . . 23
2.1.4. Revolving Notes. . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2.1. Issuance of Letters of Credit. . . . . . . . . . . . . . . . . . 24
2.2.2. Participations in Letters of Credit . . . . . . . . . . . . . . 24
2.2.3. Form and Expiration of Letters of Credit. . . . . . . . . . . . 24
2.2.4. Payment of Drafts. . . . . . . . . . . . . . . . . . . . . . . . 25
2.3. Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3.1. The Revolving Loan. . . . . . . . . . . . . . . . . . . . . . . 25
2.3.2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 25
2.3.3. Specifically Prohibited Applications; Use of Proceeds. . . . . . 25
2.4. Nature of Obligations of Lenders to Extend Credit . . . . . . . . . . . . . . . . 25
3. Interest; LIBOR Pricing Options; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2. LIBOR Pricing Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2.1. Election of LIBOR Pricing Options . . . . . . . . . . . . . . . 26
3.2.2. Notice to Lenders and Borrowers . . . . . . . . . . . . . . . . 27
3.2.3. Selection of LIBOR Interest Periods . . . . . . . . . . . . . . 27
3.2.4. Additional Interest . . . . . . . . . . . . . . . . . . . . . . 27
3.2.5. Violation of Legal Requirements . . . . . . . . . . . . . . . . 28
3.2.6. Funding Procedure . . . . . . . . . . . . . . . . . . . . . . . 28
3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.3.1. Commitment Fees for Revolving Loan. . . . . . . . . . . . . . . 29
3.3.2. Prepayment Fee . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.3.3. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . 29
3.4. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.5. Computations of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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4.1. Payment at Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3. Voluntary Prepayments of Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.4. Reborrowing; Application of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.5. Payment and Interest Cut-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.6. Charging Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1. Conditions to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1.1. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1.2. Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1.3. Acquisition of Wyoming Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.4. Acquisition of Washington Resorts . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.5. Unsecured Debt Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.6. Equity Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.7. Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.8. Reports and Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1.9. Forest Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1.10. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2. Conditions to Extending Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2.1. Representations and Warranties; No Default; No Material Adverse Change . . . . . . . . 33
5.2.2. Perfection of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2.3. Proper Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2.4. Legality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2.5. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7. General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1. Taxes and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2. Conduct of Business, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2.1. Types of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2.2. Maintenance of Properties; Compliance with Agreements, etc. . . . . . . . . . . . . . 35
7.2.3. Statutory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4. Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4.1. Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4.2. Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4.3. Monthly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4.4. Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4.5. Notice of Litigation; Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . 38
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7.4.6. ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4.7. Right to Obtain Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4.8. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5. Certain Financial Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.5.1. Financing Debt to Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.5.2. Cash Flow to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.5.3. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.5.4. Resorts Cash Flow Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7. Guarantees; Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.8. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.9. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.10. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.11. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.12. Merger and Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.13. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.15. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.16. Key Employee Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.17. Loan to Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.18. Environmental Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.19. Cash Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.20. Permitted Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.21. Letters of Credit at Annual Clean-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.22. Use of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.23. Use of Proceeds for Debt Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1. Organization and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1.1. The Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1.2. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.2. Financial Statements and Other Information; Certain Agreements . . . . . . . . . . . . . . . . . . . . 48
8.2.1. Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . 48
8.2.2. Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.3. Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4. Agreements Relating to Financing Debt, Investments, etc. . . . . . . . . . . . . . . . . . . . . . . . 49
8.5. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.6. Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.8. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9. No Legal Obstacle to Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.10. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.11. Certain Business Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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8.11.1. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.11.2. Burdensome Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.11.3. Future Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.12. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.13. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2. Certain Actions Following an Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2.1. No Obligation to Extend Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2.2. Specific Performance; Exercise of Rights . . . . . . . . . . . . . . . . . . . . . . . 57
9.2.3. Enforcement of Payment; Credit Security; Setoff . . . . . . . . . . . . . . . . . . . 57
9.2.4. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2.5. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.3. Annulment of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.4. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.2. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.3. Indemnity With Respect to Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11. Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.1. Interests in Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.2. Agent's Authority to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.3. Borrowers to Pay Agent, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4. Lender Operations for Advances, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4.2. Agent to Allocate Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4.3. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.5. Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.6. Amendments, Consents, Waivers, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.7. Agent's Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8. Concerning the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8.1. Action in Good Faith, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8.2. No Implied Duties, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8.3. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8.4. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8.5. Employment of Agents and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8.6. Reliance on Documents and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.8.7. Agent's Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.9. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.10. Independent Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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11.11. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.1. Assignments by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.1.1. Assignees and Assignment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.1.2. Acceptance of Assignment and Assumption . . . . . . . . . . . . . . . . . . . . . . . 66
12.1.3. Federal Reserve Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.1.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.2. Credit Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
14. Course of Dealing, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
15. Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
16. Venue; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
17. Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
18. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
19. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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EXHIBITS
Exhibit 2.1.4 - Form of Revolving Note
Exhibit 5.2.1 - Form of Officer's Certificate (for Closing Date)
Exhibit 7.4.1 - Form of Officer's Certificate (for annual financial
statements and reports)
Exhibit 7.4.2 - Form of Officer's Certificate (for quarterly
financial statements and reports)
Exhibit 7.18 - Environmental Cleanup Requirements and Schedule
Exhibit 8.1 - The Borrowers and their Subsidiaries
Exhibit 8.4 - Financing Debt, etc.
Exhibit 8.11.1 - Environmental Litigation
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<PAGE> 8
BOOTH CREEK SKI HOLDINGS, INC.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
CREDIT AGREEMENT
BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (together with
its successors and assigns, "BCS Holdings"), BOOTH CREEK SKI ACQUISITION CORP.,
a Delaware corporation (together with its successors and assigns, "BCS
Acquisition"), TRIMONT LAND COMPANY, a California corporation (together with its
successors and assigns, "Northstar-at-Tahoe"), SIERRA-AT-TAHOE, INC., a Delaware
corporation (together with its successors and assigns, "Sierra-at-Tahoe"), BEAR
MOUNTAIN, INC., a Delaware corporation (together with its successors and
assigns, "Bear Mountain"), WATERVILLE VALLEY SKI RESORT, INC., a Delaware
corporation (together with its successors and assigns, "Waterville"), MOUNT
CRANMORE SKI RESORT, INC., a Delaware corporation (together with its successors
and assigns, "Cranmore", and together with BCS Holdings, BCS Acquisition,
Northstar-at-Tahoe, Sierra-at-Tahoe, Bear Mountain and Waterville, the "Original
Borrowers", and each an "Original Borrower"), SKI LIFTS, INC., a Washington
corporation (together with its successors and assigns, "Ski Lifts"), GRAND
TARGHEE INCORPORATED, a Delaware corporation (together with its successors and
assigns, "Grand Targhee", and together with Ski Lifts, the "New Borrowers", and
each a "New Borrower", and all of the New Borrowers together with all of the Old
Borrowers, the "Borrowers", and each a "Borrower"), THE FIRST NATIONAL BANK OF
BOSTON, a national banking association (together with its successors and
assigns, "FNBB"), any other Lenders from time to time party hereto, and FNBB, as
agent for itself and the other Lenders (the "Agent") hereby agree as follows:
1. General.
1.1. Restatement; Calculations. Effective as of the date hereof
(the "Restatement Date"), this Agreement amends and restates in its entirety the
Credit Agreement dated as of December 3, 1996, as in effect immediately prior to
the amendment and restatement thereof effected hereby (the "1996 Credit
Agreement"), between the Original Borrowers, FNBB and FNBB, as agent.
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Effective on the Restatement Date, the "Revolving Loan" outstanding
under the 1996 Credit Agreement on such date shall be deemed to be the Revolving
Loan under Section 2.1.1 and shall be evidenced by Revolving Notes. As of the
Restatement Date, any unexpired portion of the "Designated Cleanup Period" for
1997 under the 1996 Credit Agreement shall commence, and shall constitute the
Designated Cleanup Period under Section 2.1.2(i).
Amounts in respect of interest, fees and other amounts payable to or for
the account of the Lenders shall be calculated in accordance with the provisions
of (i) the 1996 Credit Agreement with respect to any period (or portion of any
period) ending prior to the Restatement Date and (ii) this Agreement as in
effect on the Restatement Date after giving effect to the amendment and
restatement thereof effected hereby and as from time to time thereafter in
effect with respect to any period (or portion of any period) commencing on or
after the Restatement Date.
1.2. Definitions; Certain Rules of Construction. Except as the
context otherwise explicitly requires, (i) the capitalized term "Section" refers
to sections of this Agreement, (ii) the capitalized term "Exhibit" refers to
exhibits to this Agreement, (iii) references to a particular Section shall
include all subsections thereof and (iv) the word "including" shall be construed
as "including without limitation". Certain capitalized terms are used in this
Agreement as specifically defined in this Section 1.2 as follows:
"Acceptable Rule 144A Offering" means a consummated sale of debt
securities of BCS Holdings on terms and in amount acceptable to the Agent;
provided, however, that the terms set forth in the Final Offering Memorandum
shall be deemed acceptable.
"Accumulated Benefit Obligations" means the actuarial present value of
the accumulated benefit obligations under any Plan, calculated in a manner
consistent with Statement No. 87 of the Financial Accounting Standards Board.
"Acquisition Appraisals" means, collectively, the Original Appraisals
and the New Appraisals.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such Person, and shall include (i) any officer or director or
general partner of such Person and (ii) any Person of which such Person or any
Affiliate (as defined in clause (i) above) of such Person shall, directly or
indirectly, beneficially own either at least 5% of the outstanding equity
securities having the general power to vote or at least 5% of all equity
interests.
"Agent" means The First National Bank of Boston in its capacity as agent
for the Lenders hereunder, as well as its successors and assigns in such
capacity pursuant to Section 11.7.
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"Agent's Base Rate" means, on any date, the rate of interest announced
by the Agent at its Boston Office as its Base Rate.
"Agreement" has the meaning provided in the preamble hereto.
"Alternate Base Rate" means, on any date, the greater of (a) the Agent's
Base Rate or (b) the sum of 1/2% plus the Federal Funds Rate.
"Alternate Base Rate Loan" means any portion of the Loan for which
interest is calculated on the basis of the Alternate Base Rate.
"Applicable Margin" means
(i) during any fiscal quarter of the Borrowers ending
on or prior to January 31, 1998, during any fiscal quarter of
the Borrowers thereafter for which Trailing Four Fiscal
Quarter Cash Flow for the four fiscal quarters then most
recently ended, is less than or equal to $20,000,000, and
during any Default Rate Period, 0.50% for any Alternate Base
Rate Loan and 3.00% for any LIBOR Loan;
(ii) during any fiscal quarter of the Borrowers ending
after January 31, 1998 for which Trailing Four Fiscal Quarter
Cash Flow for the four fiscal quarters then most recently
ended, is greater than $20,000,000 and less than or equal to
$25,000,000, 0.25% for any Alternate Base Rate Loan and 2.25%
for any LIBOR Loan; and
(iii) during any fiscal quarter of the Borrowers ending
after January 31, 1998 for which Trailing Four Fiscal Quarter
Cash Flow for the four fiscal quarters then most recently
ended, is greater than $25,000,000, 0.00% for any Alternate
Base Rate Loan and 2.00% for any LIBOR Loan.
"Applicable Rate" means, at any date, the sum of:
(a) (i) with respect to each portion of the Loan subject to
a LIBOR Pricing Option, the sum of the Applicable Margin plus
the LIBOR Rate with respect to such LIBOR Pricing Option;
(ii) with respect to each other portion of the Loan,
the sum of the Applicable Margin plus the Alternate Base Rate;
plus (b) an additional 2% effective during any Default Rate
Period.
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"Appraisal" means a valuation similar in form to the Acquisition
Appraisals, of the operating business, assets, real estate or any portion
thereof of any of the Borrowers.
"ASC Subordinated Note" means the Subordinated Promissory Note dated
November 27, 1996 issued by BCS Acquisition, Waterville and Cranmore payable to
American Skiing Company, a Maine corporation.
"Assignee" has the meaning provided in Section 12.1.1.
"Availability Step-Up Date" means the earliest date on or after July
15, 1998 for which the ratio of (a) the sum of (x) Trailing Four Fiscal Quarter
Cash Flow measured on the last day of the fiscal quarter then most recently
completed minus (y) the Cash Flow Adjustment for such period to (b)
Consolidated Fixed Charges for such period exceeds 1.25 to 1.0.
"Banking Day" means any day other than Saturday, Sunday or a day on
which banks in Boston, Massachusetts are authorized or required by law or other
governmental action to close and, if such term is used with reference to a
LIBOR Pricing Option, any day on which dealings are effected by first-class
banks in the inter-bank LIBOR markets in New York, New York.
"Bankruptcy Code" means Title 11 of the United States Code (or any
successor statute) and the rules and regulations thereunder, all as from time
to time in effect.
"Bankruptcy Default" means an Event of Default referred to in
Section 9.1.9.
"BCS Acquisition" has the meaning provided in the preamble hereto.
"BCS Acquisition Security Agreement" means the Security Agreement,
originally dated as of November 27, 1996, as amended and restated as of
December 3, 1996, between the Agent and BCS Acquisition, as amended, restated,
supplemented or otherwise modified and in effect from time to time.
"BCS Group" means Booth Creek Ski Group, Inc., a Delaware
corporation, together with its successors and assigns.
"BCS Holdings" has the meaning provided in the preamble hereto.
"BCS Holdings Security Agreement" means the Security Agreement dated
as of December 3, 1996 between the Agent and BCS Holdings, as amended,
restated, supplemented or otherwise modified and in effect from time to time.
"Bear Mountain" has the meaning provided in the preamble hereto.
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"Bear Mountain Mortgage" means the Deed of Trust, Assignments of
Rents, Security Agreement and Fixture Filing dated as of December 3, 1996,
executed by Bear Mountain in favor of the Agent, as amended, restated,
supplemented or otherwise modified and in effect from time to time.
"Bear Mountain Security Agreement" means the Security Agreement
dated as of December 3, 1996, between Bear Mountain and the Agent, as amended,
restated, supplemented or otherwise modified and in effect from time to time.
"Booth Creek Management Company" means Booth Creek, Inc., a Delaware
corporation, and its successors and assigns.
"Booth Creek LLP" means Booth Creek Partners Limited II, L.L.L.P., a
Colorado limited liability limited partnership, and its successors and assigns.
"Borrowers" has the meaning provided in the preamble hereto.
"Boston Office" means the principal banking office of the Agent in
Boston, Massachusetts.
"California Resorts" means Northstar-at-Tahoe, Sierra-at-Tahoe and
Bear Mountain, collectively.
"Capital Expenditures" means, for any period, amounts added or
required to be added to the fixed assets account on the balance sheet of any of
the Borrowers, prepared in accordance with GAAP, in respect of (i) the
acquisition, construction, improvement or replacement of land, buildings,
machinery, equipment, leaseholds and any other real or personal property, and
(ii) to the extent not included in clause (i) above, expenditures on account of
materials, contract labor and direct labor relating thereto (excluding
expenditures properly expensed as repairs and maintenance in accordance with
GAAP).
"Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP and
Statement Nos. 13 and 97 of the Financial Accounting Standards Board.
"Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP and Statement Nos. 13 and
97 of the Financial Accounting Standards Board.
"Cash Equivalents" means:
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(i) negotiable certificates of deposit, time deposits and
bankers' acceptances issued by any United States financial
institution having capital and surplus and undivided profits
aggregating at least $100,000,000 and rated Prime-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation or
issued by any Lender;
(ii) short-term corporate obligations rated Prime-1 by
Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Corporation;
(iii) any direct obligation of the United States of America
or any agency or instrumentality thereof, or of any state or
municipality thereof, (a) which has a remaining maturity at the time
of purchase of not more than one year or (b) which is subject to a
repurchase agreement with any Lender (or any other financial
institution referred to in clause (i) above) exercisable within one
year from the time of purchase and (c) which, in the case of
obligations of any state or municipality, is rated AA or better by
Moody's Investors Service, Inc.; and
(iv) any mutual fund or other pooled investment vehicle rated
AA or better by Moody's Investors Service, Inc. which invests only
in obligations described above.
"Cash Flow" means, for any period, on a Consolidated basis for the
Borrowers, the total of (a) Net Income, plus (b) all amounts deducted in
computing such Net Income in respect of:
(i) depreciation and amortization; provided, however, that
when computing Cash Flow for any four fiscal quarter period the
maximum amount to be added to Net Income pursuant to this clause (i)
in respect of amortization of any capitalized real estate
development costs shall not exceed $5,000,000;
(ii) Interest Expense; and
(iii) taxes based upon or measured by income.
"Cash Flow Adjustment" means, for any four fiscal quarter period of
the Borrowers, the sum of (a) the amount of taxes based upon or measured by
income actually paid during period, plus (b) $3,000,000., plus (c)
Distributions made pursuant to Section 7.10.2, plus (d) Investments in DRE LLC
made pursuant to Section 7.9.10.
"Cash Management System" has the meaning provided in Section 7.19.
"CIBC Securities Subsidiary" means CIBC WG Argosy Merchant Fund 2,
L.L.C., a limited liability company, and its successors and assigns.
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"Closing Date" means the Restatement Date and any subsequent date on
which any extension of credit is made pursuant to Section 2.1.1 or 2.2.1.
"Code" means, collectively, the federal Internal Revenue Code of 1986
(or any successor statute), and the rules and regulations thereunder, all as
from time to time in effect.
"Computation Covenants" means Sections 7.5, 7.6.7, 7.6.8, 7.9.7, 7.10.2,
7.10.3, 7.10.4, 7.11, 7.12, and 7.20.
"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 the Borrowers (or other specified
Person) and all of their Subsidiaries (or other specified Persons), or such of
its Subsidiaries as may be specified, consolidated (or combined) in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries, whether or not such deductions are required by GAAP.
"Control Group Person" means any of the Borrowers, any Subsidiary and
any Person which is at any time after the Effective Date a member of the
controlled group or under common control with any of the Borrowers or any
Subsidiary within the meaning of sections 414(b) or 414(c) of the Code or
section 4001(a)(14) of ERISA.
"Controlled Disbursement Advance" has the meaning provided in Section
2.1.3.
"Controlled Disbursement Agreement" means any present or future written
agreement from time to time entered into between the Borrowers and the Agent or
any Affiliate of the Agent pursuant to which loans may be made to cover checks
drawn by the Borrowers on a zero balance account or similar controlled
disbursement basis.
"Cranmore" has the meaning provided in the preamble hereto.
"Cranmore Mortgage" means the Fee Mortgage and Security Agreement,
originally dated as of November 27, 1996, executed by Cranmore in favor of FNBB,
as amended, restated, supplemented or otherwise modified and in effect from time
to time.
"Cranmore Security Agreement" means the Guarantee and Security
Agreement, originally dated as of November 27, 1996, between Cranmore and the
FNBB, as amended, restated, supplemented or otherwise modified and in effect
from time to time.
"Credit Documents" means
(i) this Agreement, any Controlled Disbursement Agreement,
the Revolving Notes, the Security Agreements and the Mortgages, each
as from time to time in effect;
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(ii) all financial statements, mortgages, assignments,
Uniform Commercial Code financing statements or certificates
delivered to any of the Lenders by any of the Borrowers in
connection herewith or with any of the above; and
(iii) any other present or future agreement or instrument
from time to time entered into among the Agent or all the Lenders,
on one hand, and any of the Borrowers or (so long as any of the
Borrowers is also party thereto) any Affiliate of any of them, on
the other hand, relating to, amending or modifying this Agreement or
any other Credit Document referred to above or which is stated to be
a Credit Document, each as from time to time in effect.
"Credit Obligation Advance" has the meaning provided in Section
2.1.3.
"Credit Obligations" means all present and future liabilities,
obligations and Indebtedness of any of the Borrowers or any of their respective
Affiliates party to a Credit Document owing to the Lenders or any of them, or
to the Agent or any Affiliate of the Agent, under or in connection with this
Agreement or any other Credit Document, including obligations in respect of
principal, interest, commitment fees, Letter of Credit fees, reimbursement
obligations under Letters of Credit and other fees, charges, indemnities and
expenses from time to time owing hereunder or under any other Credit Document.
"Credit Participant" has the meaning provided in Section 12.2.
"Credit Security" means all assets now or from time to time
hereafter subjected to a security interest or charge (or intended or required
so to be pursuant to the Security Agreement or any other Credit Document) to
secure the payment or performance of any of the Credit Obligations, including
the assets described in the Security Agreements and the Mortgages (excluding
any environmental indemnity agreements).
"Default" means any Event of Default and any event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default.
"Default Rate Period" means any period commencing on a day the Agent
notifies the Borrowers that the interest rates hereunder are increasing as a
result of the occurrence and continuance of an Event of Default until the
earlier of such time as (i) such Event of Default is no longer continuing or
(ii) such Event of Default is deemed no longer to exist, in each case pursuant
to Section 9.3.
"Designated Cleanup Period" has the meaning provided in Section
2.1.2(ii).
"Distribution" means, with respect to any Person:
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(i) the declaration or payment of any dividend,
including dividends payable in shares of capital stock of such
Person, on or in respect of any shares of any class of capital
stock of such Person;
(ii) the purchase or redemption of any shares of any class of
capital stock of such Person (or of options, warrants or other
rights for the purchase of such shares), directly, indirectly
through a Subsidiary of such Person or otherwise;
(iii) any other distribution on or in respect of any shares of
any class of equity of or beneficial interest in such Person;
(iv) any payment of principal or interest with respect to, or
any purchase or redemption of, any Indebtedness of such Person which
by its terms is subordinated to the payment of the Credit
Obligations; and
(v) any payment, loan or advance (including any salary,
management fee or other fee, benefit, bonus or any other
compensation in respect of services provided to such Person or any
lease payments) by such Person to, or any other Investment by such
Person in, the holder of any shares of any class of the capital
stock of or equity interest in such Person.
"DRE LLC" means DRE, L.L.C., a Delaware limited liability company,
and its successors and assigns.
"Effective Date" means December 3, 1996.
"Environmental Audits" means, collectively, the Original
Environmental Audits and the New Environmental Audits.
"ERISA" means, collectively, the Employee Retirement Income Security
Act of 1974 (or any successor statute), and the rules and regulations
thereunder, all as from time to time in effect.
"Event of Default" has the meaning provided in Section 9.1.
"Excess Senior Unsecured Notes" means any Senior Unsecured Notes
issued in excess of the $110,000,000 of such notes issued on the date hereof.
"Exchange Act" means the federal Securities Exchange Act of 1934, as
amended and in effect from time to time.
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"Executive Officer" means the chief executive officer, chief
operating officer or president of any of the Borrowers (or other specified
Person) or any vice president of any of the Borrowers (or other specified
Person) who is not a Financial Officer.
"Federal Funds Rate" means, for any day, the rate equal to the
weighted average (rounded upward to the nearest 1/8%) of (a) the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, (a) as such weighted average is published
for such day (or, if such day is not a Banking Day, for the immediately
preceding Banking Day) by the Federal Reserve Bank of New York or (b) if such
rate is not so published for such Banking Day, quotations received by the Agent
from three federal funds brokers of recognized standing selected by the Agent.
Each determination by the Agent of the Federal Funds Rate shall, in the absence
of manifest error, be conclusive.
"Fibreboard" means Fibreboard Corporation, a Delaware corporation,
and its successors and assigns.
"Final Maturity Date" means March 18, 1999.
"Final Offering Memorandum" means the Offering Memorandum dated
March 13, 1997, of BCS Holdings, in respect of the Senior Unsecured Notes.
"Financial Officer" means the chief financial officer, controller
treasurer or assistant treasurer of any of the Borrowers (or other specified
Person) or a vice president whose primary responsibility is for the financial
affairs of any of the Borrowers (or other specified Person).
"Financing Debt" means:
(i) Indebtedness for borrowed money;
(ii) Indebtedness evidenced by notes, bonds, debentures or
similar instruments;
(iii) Indebtedness in respect of Capitalized Leases;
(iv) Indebtedness for the deferred purchase price of assets
(other than normal trade accounts payable in the ordinary course of
business); and
(v) Indebtedness in respect of mandatory redemption or
mandatory dividends on capital stock (or other equity interests).
"Financing Statements" means Uniform Commercial Code financing
statement(s) from the Borrowers in favor of the Agent giving notice of a
security interest in the Credit Security,
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such financing statements to be in form and substance satisfactory to the Agent
and the Lenders.
"Fixed Charges" means, for any four consecutive fiscal quarters, the
sum of:
(i) Interest Expense; plus
(ii) the aggregate amount of all mandatory scheduled
payments, prepayments and sinking fund payments, in each case with
respect to principal paid by the Borrowers in respect of Financing
Debt; plus
(iii) the aggregate amount of all mandatory payments actually
paid in cash in respect of leases of equipment, excluding all
payments (whether in the nature of interest or principal) in respect
of Capitalized Leases;
provided, however, that for any such period ending on or before October 31,
1997, Fixed Charges shall mean the sum of (x) actual Fixed Charges, computed as
provided in clauses (i) through (iii) hereof, accrued or paid by the Original
Borrowers since the Effective Date through the end of such period, annualized,
plus (y) actual Fixed Charges, computed as provided in clauses (i) through
(iii) hereof, accrued or paid by the New Borrowers since the Restatement Date
through the end of such period, annualized.
"FNBB" has the meaning provided in the preamble hereto.
"GAAP" means generally accepted accounting principles, as defined by
the United States Financial Accounting Standards Board, as from time to time in
effect; provided, however, that for purposes of compliance with Section 8
(other than Section 8.4) and the related definitions, and for purposes of
Section 8.2.1, "GAAP" means such principles as in effect on October 31, 1996 as
applied by the Borrowers in the preparation of the financial statements
referred to in Section 8.2.1, and consistently followed, without giving effect
to any subsequent changes other than changes consented to in writing by the
Agent.
"Grand Targhee" has the meaning provided in the preamble hereto.
"Grand Targhee Development Contingent Payment" means the
"Development Contingent Payment" as that term is defined in the Grand Targhee
Purchase Agreement.
"Grand Targhee Purchase Agreement" has the meaning provided in
Section 5.1.3.
"Grand Targhee Security Agreement" means the Fixture Filing and
Security Agreement of even date herewith, between Grand Targhee and the Agent,
as amended, restated, supplemented or otherwise modified and in effect from
time to time.
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"Grand Targhee Skiers Contingent Payments" means the "Skier
Contingent Payments" as that term is defined in the Grand Targhee
Purchase Agreement.
"Guarantee" means:
(i) any guarantee by a Person of the payment or performance
of, or any contingent obligation by a Person in respect of, any
Indebtedness or other obligation of any obligor other than such
Person;
(ii) any other arrangement whereby credit is extended to one
obligor on the basis of any promise or undertaking of another Person
(including any "comfort letter" or "keep well agreement" written by
such other Person to a creditor or prospective creditor) to (a) pay
the Indebtedness of such obligor, (b) purchase an obligation owed by
such obligor, (c) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (d) maintain
the capital, working capital, solvency or general financial
condition of such obligor, in each case whether or not such
arrangement is disclosed in the balance sheet of such other Person
or referred to in a footnote thereto;
(iii) any liability of a Person as a general partner of a
partnership in respect of Indebtedness or other obligations of such
partnership;
(iv) any liability of a Person as a joint venturer of a joint
venture in respect of Indebtedness or other obligations of such
joint venture; and
(v) reimbursement obligations with respect to letters of
credit, surety bonds and other financial guarantees;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Material" means, collectively, any pollutant, toxic or
hazardous material or waste, including any "hazardous substance" or "pollutant"
or "contaminant" as defined in section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act (or any successor
statute) or regulated as toxic or hazardous under the Resource Conservation and
Recovery Act of 1976 or any similar state or local statute or regulation, and
the rules and regulations thereunder, all as from time to time in effect.
"Indebtedness" means all obligations, contingent or otherwise, which
in accordance with GAAP should be classified upon the obligor's balance sheet
as liabilities, but in any event including:
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(i) liabilities secured by any Lien existing on
property owned or acquired by the obligor or any Subsidiary
thereof, whether or not the liability secured thereby shall
have been assumed;
(ii) Capitalized Lease Obligations;
(iii) liabilities in respect of mandatory redemption,
repurchase or dividend obligations with respect to capital stock (or
other evidence of beneficial interest); and
(iv) all Guarantees and endorsements in respect of
Indebtedness of others.
"Indemnitee" has the meaning provided in Section 10.2.
"Interest Expense" means, for any period, the aggregate amount of
interest, including payments in the nature of interest under Capitalized
Leases, paid or accrued by the Borrowers (whether such interest is reflected as
an item of expense or capitalized) on Indebtedness; provided, however, that for
any such period ending on or before October 31, 1997, Interest Expense shall
mean the sum of (x) actual Interest Expense accrued or paid by the Original
Borrowers since the Effective Date through the end of such period, annualized
plus (y) the actual Interest Expense accrued or paid by the New Borrowers since
the Restatement Date through the end of such period, annualized.
"Interest Reserve Proceeds" means the initial $5,820,000 of
aggregate proceeds derived from any (i) sales of Excess Senior Unsecured Notes,
and (ii) equity investments in BCS Holdings made after the date hereof.
"Investment" means, with respect to any Person:
(i) any share of capital stock, evidence of Indebtedness or
other security issued by any other Person;
(ii) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person;
(iii) any Guarantee of the Indebtedness of any other Person;
(iv) any acquisition of all or any part of the business of
any other Person or the assets comprising such business or part
thereof;
(v) any commitment or option to make any Investment; and
(vi) any other similar investment.
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The investments described in the foregoing clauses (i) through (vi)
shall be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (a) current trade and customer accounts
receivable for goods furnished or services rendered in the ordinary course of
business and payable in accordance with customary trade terms, (b) advances and
prepayments to suppliers for goods and services in the ordinary course of
business, (c) advances to employees for travel expenses, drawing accounts and
similar expenditures, (d) stock or other securities acquired in connection with
the satisfaction or enforcement of Indebtedness or claims due to such Person or
as security for any such Indebtedness or claim or (e) demand deposits in banks
or trust companies.
"John Hancock" means the John Hancock Mutual Life Insurance Company,
a Massachusetts corporation, and its successors and assigns.
"Legal Requirement" means any present or future requirement imposed
upon any of the Lenders or the Borrowers and their Subsidiaries by any law,
statute, rule, regulation, directive, order, decree or guideline (or any
interpretation thereof by courts or of administrative bodies) of the United
States of America, or any jurisdiction in which any LIBOR Office is located or
any state or political subdivision of any of the foregoing, or by any board,
governmental or administrative agency, central bank or monetary authority of
the United States of America, any jurisdiction in which any LIBOR Office is
located, or any political subdivision of any of the foregoing. Any such law,
statute, rule, regulation, directive, order, decree, guideline or
interpretation imposed on any of the Lenders not having the force of law shall
be deemed to be a Legal Requirement for purposes of Section 3 if such Lender
reasonably believes that compliance therewith is customary commercial practice
of similarly situated lending institutions generally.
"Lender" means the Agent, the banks and other Persons owning a
Percentage Interest and their respective successors and assigns, including
Assignees under Section 12.1.
"Lending Officer" shall mean Andrew T. Fay or other officers of the
Agent from time to time designated by it in writing to the Borrower.
"Letter of Credit Exposure" means, with respect to any Letter of
Credit, the amount of the Maximum Exposure Under Letters of Credit attributable
to such Letter of Credit.
"Letters of Credit" has the meaning provided in Section 2.2.1.
"LIBOR Base Rate" means, for any LIBOR Interest Period, the average
(rounded upward to the nearest whole multiple of one sixteenth of one percent
(1/16 of 1%)) of the rate of interest per annum at which deposits in United
States Dollars in a principal amount approximately equal to the principal
amount of the portion of the Loan to be subject to such
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Interest Period would be quoted on Telerate page 3750 (or such other page as
may replace the 3750 page on the Telerate Service or such other service or
services as may be nominated by the British Bankers' Association for United
States Dollar deposits) as of 11:00 AM., London time, at least two London
banking days prior to the first day of the LIBOR Interest Period, the
determination of which by the Agent shall, in the absence of manifest error, be
conclusive.
"LIBOR Interest Period" means any period, selected as provided in
Section 3.2.1, of one, two, three or six months, commencing on any Banking Day
and ending on the corresponding date in the subsequent calendar month so
indicated (or, if such subsequent calendar month has no corresponding date, on
the last day of such subsequent calendar month); provided, however, that
subject to Section 3.2.3, if any LIBOR Interest Period so selected would
otherwise begin or end on a date which is not a Banking Day, such LIBOR
Interest Period shall instead begin or end, as the case may be, on the
immediately preceding or succeeding Banking Day as determined by the Agent in
accordance with the then current banking practice in the inter-bank LIBOR
market with respect to LIBOR deposits at the applicable LIBOR Office, which
determination by the Agent shall, in the absence of manifest error, be
conclusive.
"LIBOR Loan" means any portion of the Loan for which interest is
calculated on the basis of a LIBOR Rate.
"LIBOR Office" means such non-United States office or international
banking facility of any Lender as the Lender may from time to time select.
"LIBOR Pricing Options" means the options granted pursuant to
Section 3.2.1 to have the interest on any portion of the Loan computed on the
basis of a LIBOR Rate.
"LIBOR Rate" for any LIBOR Interest Period means the rate, rounded
upward to the nearest 1/100%, obtained by dividing (a) the LIBOR Base Rate for
such LIBOR Interest Period by (b) an amount equal to 1 minus the LIBOR Reserve
Rate; provided, however, that if at any time during such LIBOR Interest Period
the LIBOR Reserve Rate applicable to any outstanding LIBOR Pricing Option
changes, the LIBOR Rate for such LIBOR Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change to the
extent required by the Legal Requirement implementing such change.
"LIBOR Reserve Rate" means the stated maximum rate (expressed as a
decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in
effect, required by any Legal Requirement to be maintained by any Lender
against (a) "Eurocurrency liabilities" as specified in Regulation D of the
Board of Governors of the Federal Reserve System applicable to LIBOR Pricing
Options, (b) any other category of liabilities that includes LIBOR deposits by
reference to which the interest rate on portions of the Loan subject to LIBOR
Pricing Options is determined, (c) the principal amount of or interest on any
portion of the Loan subject to a LIBOR Pricing Option
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or (d) any other category of extensions of credit, or other assets, that
includes loans subject to a LIBOR Pricing Option by a non-United States office
of any of the Lenders to United States residents.
"Lien" means, with respect to any Person:
(i) any encumbrance, mortgage, pledge, lien, charge or
security interest of any kind upon any property or assets of such
Person, whether now owned or hereafter acquired, or upon the income
or profits therefrom;
(ii) any arrangement or agreement which prohibits such Person
from creating encumbrances, mortgages, pledges, liens, charges or
security interests;
(iii) the acquisition of, or the agreement or option to
acquire, any property or assets upon conditional sale or subject to
any other title retention agreement, device or arrangement
(including a Capitalized Lease); and
(iv) the sale, assignment, pledge or transfer for security of
any accounts, general intangibles or chattel paper of such Person,
with or without recourse.
"Loans" means the Revolving Loans and the Letters of Credit.
"Majority Lenders" means such Lenders who together own at least 51%
or more of the Percentage Interests.
"Margin Stock" means "margin stock" within the meaning of
Regulations G, T, U or X (or any successor provisions) of the Board of
Governors of the Federal Reserve System, or any regulations, interpretations or
rulings thereunder, all as from time to time in effect.
"Material Adverse Change" means any materially adverse change in the
business, assets, financial condition, income or prospects of any of the
Borrowers or their Subsidiaries (on an individual basis) or the Borrowers and
their Subsidiaries (on a Consolidated basis), (a) since December 31, 1995 with
respect to the California Resorts, (ii) since April 30, 1996 with respect to
the New Hampshire Resorts, (iii) since September 30, 1996 with respect to the
Washington Resorts, (iv) since May 31, 1996 with respect to the Wyoming Resort.
"Material Agreements" has the meaning provided in Section 8.2.2.
"Material Plan" means any Plan or Plans, collectively, as to which
(i) the excess of (a) the aggregate Accumulated Benefit Obligations under such
Plan or Plans over (b) the aggregate fair market value of the assets of such
Plan or Plans allocable to such benefits, all determined as of the then most
recent valuation date or dates for such Plan or Plans, is greater than (ii)
$500,000.
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"Maximum Amount of Revolving Credit" has the meaning provided in
Section 2.1.1.
"Maximum Exposure Under Letters of Credit" means at any time the sum
of (i) the aggregate face amount of all unpaid drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit then
outstanding, plus (ii) the aggregate face amount of all drafts then outstanding
which the Agent has theretofore accepted under Letters of Credit but has not
paid.
"Mortgages" means, collectively, the Northstar-at-Tahoe Mortgage,
the Sierra-at-Tahoe Mortgage, the Bear Mountain Mortgage, the Waterville
Mortgage, the Cranmore Mortgage, the Ski Lifts Mortgage, and related
assignments to the Agent of leases of real property owned by any of the
Borrowers.
"Multiemployer Plan" means any Plan which is a "multiemployer plan"
as defined in section 4001(a)(3) of ERISA.
"Net Income" means, for any period, the net income (or loss) of the
Borrowers determined in accordance with GAAP; provided, however, that Net
Income shall not include:
(a) all amounts included in computing such net income (or
loss) in respect of the write-up (i) after the Effective Date of any
asset acquired in connection with the acquisition of the New
Hampshire Resorts and the California Resorts and (ii) after the
Restatement Date of any asset acquired in connection with the
acquisition of the Washington Resorts and the Wyoming Resort; and
(b) extraordinary and nonrecurring gains.
"Net Worth" means, at any date, the excess of the total assets of
the Borrowers over the total Indebtedness of the Borrowers, on a Consolidated
Basis. Total assets shall be determined in accordance with GAAP, excluding,
however:
(i) all loans to any Subsidiary, employee, officer or other
Affiliate of the Borrowers, and all amounts payable to the Borrowers
from any of such Persons,
(ii) minority interests in other Persons,
(iii) cash and securities segregated in a sinking or other
similar fund established for the purpose of redemption or other
retirement of capital stock or Financing Debt, and
(iv) current reserves on the date of calculation for
depreciation, depletion, obsolescence and amortization of properties
and all other reserves which, in accordance
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with GAAP, should be established in connection with the business
conducted by the Borrowers.
"New Appraisals" means collectively:
(i) the Appraisal on Ski Lifts; and
(ii) the Appraisal on Grand Targhee.
"New Borrowers" has the meaning provided in the preamble hereto.
"New Environmental Audits" means collectively:
(i) the Phase I Assessment of Ski Lifts;
(ii) the Phase I Assessment of Grand Targhee; and
(iii) the Phase II Assessment at Grand Targhee.
"New Hampshire Resorts" means the assets of Waterville and the assets
of Cranmore, collectively.
"Northstar-at-Tahoe" has the meaning provided in the preamble
hereto.
"Northstar-at-Tahoe Mortgage" means the Deed of Trust, Assignments
of Rents, Security Agreement and Fixture Filing of even date herewith, executed
by Northstar-at-Tahoe in favor of the Agent, as amended, restated, supplemented
or otherwise modified and in effect from time to time.
"Northstar-at-Tahoe Security Agreement" means the Security Agreement
of even date herewith, between Northstar-at-Tahoe and the Agent, as amended,
restated, supplemented or otherwise modified and in effect from time to time.
"Obligor" means the Borrowers and each other Person guaranteeing or
granting collateral to secure any Credit Obligations.
"Original Appraisals" means collectively:
(i) the Appraisal on the assets of Cranmore performed by
Sno.engineering and dated October 2, 1996;
(ii) the Appraisal on Northstar-at-Tahoe performed by
ResortNorth Valuation and dated September 21, 1996;
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(iii) the Appraisal on Sierra-at-Tahoe performed by
Sno.engineering and dated September 27, 1996;
(iv) the Appraisal on Bear Mountain performed by ResortNorth
Valuation and dated September 18, 1996; and
(v) the Real Estate Appraisal on Northstar-at-Tahoe performed
by Hanford Healy Appraisal Company and dated November 22, 1996.
"Original Borrowers" has the meaning provided in the preamble
hereto.
"Original Environmental Audits" means collectively:
(i) the summary of environmental audit on the assets of
Waterville attached as Exhibit B-1 to the Line Letter dated November
27, 1996 by FNBB to BCS Acquisition, Waterville and Cranmore;
(ii) the Limited Phase II Environmental Audit on the assets of
Cranmore performed by H. Edmund Bergeron Civil Engineers and dated
May 30, 1995;
(iii) the Phase I Environmental Site Audit on
Northstar-at-Tahoe performed by Roy C. Hampson & Associates and
dated October 1996;
(iv) the Phase I Environmental Site Audit on Sierra-at-Tahoe
performed by Roy C. Hampson & Associates and dated October 1996; and
(v) the Phase I Environmental Site Audit on Bear Mountain
performed by Roy C. Hampson & Associates and dated October 1996.
"Payment Date" means the first Banking Day of each calendar month,
commencing with the first such date after the Restatement Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
"Percentage Interest" has the meaning provided in Section 11.1.
"Permitted BCS Group Owners" means Booth Creek LLP so long as George
N. Gillett, Jr. or Rose Gillett is the managing general partner thereof, John
Hancock and its Affiliates (other than its portfolio companies), the CIBC
Securities Subsidiary, Jeffrey J. Joyce, George N. Gillett, Jr., Rose Gillett,
any trust solely for the benefit of George N. Gillett, Jr. and Rose Gillett or
their respective immediate family members, or any partnership all the ownership
interests in which are beneficially owned by any of the foregoing; provided
that with respect to any trust or partnership either George N. Gillett, Jr. or
Rose Gillett shall at all times have the
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exclusive power under such trust or partnership to direct, directly or
indirectly, the voting of the share of voting stock of BCS Group held by such
trust or partnership.
"Person" means any present or future natural person or any
corporation, association, partnership, joint venture, company, trust, business
trust, organization, business, individual or government or any governmental
agency or political subdivision thereof.
"Plan" means any pension or other employee benefit plan subject to
Title IV of ERISA and/or Section 412 of the Code maintained, or to which
contributions have been made by either of the Borrowers, any of their
Subsidiaries or any Control Group Person at any time after the Effective Date.
"Resorts" means the California Resorts, the New Hampshire Resorts,
the Washington Resorts and the Wyoming Resort, collectively.
"Resorts Cash Flow" means Cash Flow for the Borrowers, less that
portion of such Cash Flow attributable to the real estate activities of the
Borrowers.
"Restatement Date" has the meaning provided in Section 1.1.
"Revolving Loan" has the meaning provided in Section 2.1.1.
"Revolving Note" has the meaning provided in Section 2.1.4.
"Securities Act" means, collectively, the federal Securities Act of
1933 (or any successor statute) and the rules and regulations thereunder, all
as from time to time in effect.
"Security Agreements" means, collectively, the Northstar-at-Tahoe
Security Agreement, the Sierra-at-Tahoe Security Agreement, the Bear Mountain
Security Agreement, the Waterville Security Agreement, the Cranmore Security
Agreement, the Ski Lifts Security Agreement, the Grand Targhee Security
Agreement, the BCS Acquisition Security Agreement and the BCS Holdings Security
Agreement.
"Securities Purchase Agreements" means, collectively, the Securities
Purchase Agreement dated November 27, 1996 between John Hancock and BCS Group
and the Securities Purchase Agreement dated November 27, 1996 between the CIBC
Securities Subsidiary and BCS Group, each as amended on the date hereof.
"Senior Exchange Notes" means the "Exchange Notes" or the "Private
Exchange Notes" as those terms are defined in the Senior Indenture.
"Senior Indenture" means the Indenture of even date herewith, among
BCS Holdings, the Guarantors named therein, Marine Midland Bank as Trustee, and
certain note holders.
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"Senior Unsecured Notes" means the notes, issued pursuant to the
Senior Indenture, and any Senior Exchange Notes issued therefor.
"Senior Unsecured Notes Interest Account" has the meaning provided
in Section 7.23.
"Sierra-at-Tahoe" has the meaning provided in the preamble hereto.
"Sierra-at-Tahoe Mortgage" means the Deed of Trust, Assignments of
Rents, Security Agreement and Fixture Filing dated as of December 3, 1996,
executed by Sierra-at-Tahoe in favor of the Agent, as amended, restated,
supplemented or otherwise modified and in effect from time to time.
"Sierra-at-Tahoe Security Agreement" means the Security Agreement
dated as of December 3, 1996, between Sierra-at-Tahoe and the Agent, as
amended, restated, supplemented or otherwise modified and in effect from time
to time.
"Senior Liabilities" means all Indebtedness of the Borrowers minus
Subordinated Indebtedness.
"Ski Lifts" has the meaning provided in the preamble hereto.
"Ski Lifts Mortgage" means the Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing of even date herewith, executed by Ski
Lifts in favor of the Agent, as amended, restated, supplemented or otherwise
modified and in effect from time to time.
"Ski Lifts Security Agreement" means the Security Agreement of even
date herewith, between Ski Lifts and the Agent, as amended, restated,
supplemented or otherwise modified and in effect from time to time.
"Stated Maximum" means $20,000,000.
"Step Down Period" has the meaning provided in Section 2.1.2(i).
"Subordinated Indebtedness" means Indebtedness of the Borrowers
which is subordinated to the Credit Obligations on terms approved in writing by
the Agent.
"Subsidiary" means any Person of which any of the Borrowers (or
other specified Person) shall at the time, directly or indirectly through one
or more of its Subsidiaries, (i) own at least 50% of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally, (ii)
hold at least 50% of the partnership, limited liability company membership,
joint venture or similar interests or (iii) be a general partner or joint
venturer; provided,
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however, that in no event shall DRE LLC be considered a Subsidiary for purposes
of this Agreement.
"Trailing Four Fiscal Quarter Cash Flow" means for any four
consecutive fiscal quarters ending on the dates set forth in the table below
the amount set forth with respect to such fiscal quarter:
Fiscal Quarter Ending Amount
April 30, 1997 The sum of Cash Flow for
the quarters ending January 31, 1997
and April 30, 1997 minus $4,268,000
July 31, 1997 The sum of Cash Flow for the quarters
ending January 31, 1997, April 30,
1997 and July 31, 1997 minus
$924,000
October 31, 1997 and Cash Flow for the period
thereafter of four fiscal
quarters most recently completed
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect in Massachusetts on the Restatement Date.
"USFS" means the United States Department of Agriculture, Forest
Service.
"Washington Resorts" means Ski Lifts.
"Waterville" has the meaning provided in the preamble hereto.
"Waterville Mortgage" means the Fee Mortgage and Security Agreement
originally dated November 27, 1996 between Waterville and the Agent, as
amended, restated, supplemented or otherwise modified and in effect from time
to time.
"Waterville Security Agreement" means the Guarantee and Security
Agreement, originally dated as of November 27, 1996 between Waterville and the
FNBB, as amended, restated, supplemented or otherwise modified and in effect
from time to time.
"Wyoming Resort" means Grand Targhee.
2. The Credit.
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2.1. The Revolving Credit.
2.1.1. Revolving Loan. Subject to all of the terms and conditions of
this Agreement and so long as no Default exists, the Lenders will make
loans to the Borrowers in an aggregate principal amount not to exceed at
any time outstanding an amount (the "Maximum Amount of Revolving Credit")
equal to the sum of (x) the lesser of (a) the Stated Maximum or (b) such
amount (in a minimum amount of $1,000,000 and in integral multiples of
$500,000) specified by irrevocable notice from BCS Holdings to the Agent
(such notice reducing the Maximum Revolving Credit seven calendar days
after being given to the Agent) minus (y) the Maximum Exposure Under
Letters of Credit. The aggregate principal amount of the loans made
pursuant to this Section 2.1.1 at any one time outstanding is referred to
as the "Revolving Loan".
2.1.2. Other Limits on Amount of Revolving Loan.
(i) Initial Availability. At all times before the
Availability Step-Up Date the Revolving Loan shall not exceed the sum
of $12,000,000 minus the Maximum Exposure Under Letters of Credit.
(ii) Annual Step-Down. For the period in each year from
February 1 through July 14 of such year (such period being the
"Step-Down Period" for each year), the Revolving Loan shall not exceed
the sum of $6,000,000 minus the Maximum Exposure Under Letters of
Credit.
(iii) Annual Clean-Up. For a period in each year from March
1 through April 30 of such year (such period being the "Designated
Cleanup Period" for such year), the Revolving Loan shall not exceed
$0.
(iv) Initial Borrowing. On the Restatement Date the
Revolving Loan shall not exceed $0.
2.1.3. Borrowing Requests. Revolving Loans will be made to the
Borrowers by the Lenders under Section 2.1.1 on any Banking Day on or after
the Restatement Date and prior to the Final Maturity Date. Not later than
noon (Boston time) on the first Banking Day prior to the requested Closing
Date for any such Loan, the Borrowers will give the Agent notice of their
request (which may be given by a telephone call received by a Lending
Officer and promptly confirmed in writing), specifying (i) the amount of
the requested Loan (which shall be not less than $500,000 and in an
integral multiple of $500,000) and (ii) the requested Closing Date
therefor. Notwithstanding anything to the contrary contained in this
Section 2.1.3, the Agent may, in its sole discretion, make Revolving Loans
to the Borrowers under Section 2.1.1 at any time and in any amount in order
to cover (i) the obligations of the Borrowers under any Controlled
Disbursement Agreement (each such Loan being a
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"Controlled Disbursement Advance"), and (ii) the Credit Obligations of the
Borrowers (each such Revolving Loan being a "Credit Obligation Advance").
Each loan under this Section 2.1.3 will be made at the Boston Office by
depositing the amount thereof to the general account of the Borrowers with
the Agent.
2.1.4. Revolving Notes. All Revolving Loans shall be evidenced by
notes in substantially the form of either Exhibit 2.1.4 to this Agreement
(each such note being a "Revolving Note") payable jointly and severally by
the Borrowers to each Lender in a stated amount equal to such Lender's
Percentage Interest in the Revolving Loan. Each Lender shall keep a record
of the date and amount of (i) each loan made by such Lender to the
Borrowers pursuant to Section 2.1.1 and (ii) each payment of principal made
by the Borrowers pursuant to Section 4. Prior to the transfer of any
Revolving Note, the Lender shall endorse on a schedule thereto appropriate
notations evidencing such dates and amounts; provided, however, that the
failure of any Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrowers under this Agreement, the Revolving
Notes or any other Credit Document.
2.2. Letters of Credit.
2.2.1. Issuance of Letters of Credit. Subject to all of the terms
and conditions of this Credit Agreement and so long as no Default exists,
the Agent will issue for the account of any Borrower one or more
irrevocable standby letters of credit (the "Letters of Credit") up to a
Maximum Exposure Under Letters of Credit of $500,000. Letters of Credit
will be issued on any Banking Day on or after the Restatement Date and
prior to the Final Maturity Date. Any Borrower may from time to time
request a Letter of Credit to be issued by providing notice to the Agent
received not less that three Banking Days prior to the requested Closing
Date for such Letter of Credit specifying (i) the amount of the requested
Letter of Credit, (ii) the beneficiaries thereof and (iii) the requested
Closing Date. As a condition to the issuance of any Letter of Credit such
Borrower will provide to the Agent a signed application and such other
documents relating to the issuance of letters of credit as are customarily
required by the Agent.
2.2.2. Participations in Letters of Credit. Upon the issuance of any
Letter of Credit, a participation therein, in an amount equal to the
Lenders' respective Percentage Interests, shall automatically be deemed
granted by the Agent to each other Lender on the date of such issuance and
the Lenders shall automatically be obligated, as set forth in Section 11.1,
to reimburse the Agent to the extent of their respective Percentage
Interests for all obligations incurred by the Agent to third parties in
respect of such Letter of Credit not reimbursed by or on behalf of the
Borrowers.
2.2.3. Form and Expiration of Letters of Credit. Each Letter of
Credit and each draft accepted or paid under a Letter of Credit shall be
issued, accepted or paid, as the case may be by the Agent at the Boston
Office. No Letter of Credit shall
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provide for the payment of drafts drawn thereunder, and no draft shall
be payable, at a date that is later that the earlier of (i) the date
12 months after the date of issuance or (ii) the Final Maturity Date.
Each Letter of Credit and each draft accepted under a Letter of Credit
shall be in such form and minimum amount, and shall contain such
terms, as the Agent and the Borrower may agree upon at the time such
Letter of Credit is issued, including a requirement of not less than
three Banking Days after presentation of a draft before payment must
be made thereunder, the term of such Letter of Credit and any rights
of cancellation with respect thereto.
2.2.4. Payment of Drafts. At such time as the Agent makes any
payment on a draft presented or accepted under a Letter of Credit, the
Borrowers will pay to the Agent in immediately available funds on
demand the amount of such payment. If the Borrowers do not pay to the
Agent the amount required by the foregoing provision, the Agent may
make a Credit Obligation Advance pursuant to Section 2.1.3 in such
amount as to pay in full the reimbursement obligation under such
Letter of Credit and any reasonable other fees and costs permitted by
this Agreement with respect to such Letter of Credit.
2.3. Application of Proceeds.
2.3.1. The Revolving Loan. Subject to Section 2.3.3 and Section
7, the Borrowers will apply the proceeds of the Revolving Loan only
for working capital and other lawful corporate purposes or
expenditures of the Borrowers related to the Resorts.
2.3.2. Letters of Credit. Subject to Section 2.3.3 and Section
7, Letters of Credit shall be issued only for such lawful corporate
purposes as the Borrowers have requested in writing and to which the
Agent in its sole discretion may agree.
2.3.3. Specifically Prohibited Applications; Use of Proceeds. The
Borrowers will not, directly or indirectly, apply any part of the
proceeds of any of the Loans (i) to purchase or carry Margin Stock,
(ii) to any transaction prohibited by any laws or regulations
applicable to the Lenders, or (iii) in a manner prohibited by Section
7.23. The Borrowers also will not directly or indirectly, apply any
part of the proceeds of any extension of credit hereunder to any real
estate development activity of the Borrowers or any of their
Subsidiaries or Affiliates except as permitted by Section 7.11.
2.4. Nature of Obligations of Lenders to Extend Credit. The Lenders'
obligations under this Agreement to make the Revolving Loan or participate
in Letters of Credit are several and are not joint or joint and several. If
any Lender shall fail to perform its obligations to extend such credit, the
amount of the commitment of the Lender so failing to perform may be assumed
by the other Lenders, in their sole discretion, in such proportions as
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such Lenders may agree among themselves and the Percentage Interests of each
other Lender shall be appropriately adjusted, but such failure or such
assumption and adjustment shall not relieve the Lenders from any of their
obligations to make such extension of credit.
3. Interest; LIBOR Pricing Options; Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate per
annum which shall at all times equal the Applicable Rate. Prior to any stated
or accelerated maturity of the Loan, the Borrowers will jointly and severally
pay, on each Payment Date, the accrued and unpaid interest on the portion of
the Loan which was not subject to a LIBOR Pricing Option. On the last day of
each LIBOR Interest Period or on any earlier termination of any LIBOR Pricing
Option, the Borrowers will jointly and severally pay the accrued and unpaid
interest on the portion of the Loan which was subject to the LIBOR Pricing
Option which expired or terminated on such date. In the case of any LIBOR
Interest Period longer than 30 days, the Borrowers will also jointly and
severally pay the accrued and unpaid interest on the portion of the Loan
subject to the LIBOR Pricing Option having such LIBOR Interest Period at
one-month intervals, the first such payment to be made on the last Banking Day
of the one-month period which begins on the first day of such LIBOR Interest
Period. On the stated or any accelerated maturity of the Loan, the Borrowers
will jointly and severally pay all accrued and unpaid interest on the Loan,
including any accrued and unpaid interest on any portion of the Loan which is
subject to a LIBOR Pricing Option. Upon the occurrence and during the
continuance of an Event of Default, the Lenders may require accrued interest to
be payable on demand or at regular intervals more frequent than each Payment
Date. All payments of interest hereunder shall be made to the Agent for the
account of each Lender in accordance with such Lender's Percentage Interest.
3.2. LIBOR Pricing Options.
3.2.1. Election of LIBOR Pricing Options. Subject to all of the
terms and conditions hereof and so long as no Default exists, the
Borrowers may from time to time, by irrevocable notice to the Agent actually
received not less than three Banking Days prior to the commencement of the
LIBOR Interest Period selected in such notice, elect to have such portion of
the Loan as the Borrowers may specify in such notice accrue and bear
interest during the LIBOR Interest Period so selected at the Applicable Rate
computed on the basis of the LIBOR Rate. In the event the Borrowers at any
time fail to elect a LIBOR Pricing Option under this Section 3.2.1 for any
portion of the Loan (upon termination of a LIBOR Pricing Option or
otherwise), then such portion of the Loan will accrue and bear interest at
the Applicable Rate based on the Alternate Base Rate. No election of a
LIBOR Pricing Option shall become effective:
(a) if, prior to the commencement of any such LIBOR Interest
Period, the Agent determines that (i) the electing or granting
of the LIBOR Pricing Option in question would violate a Legal
Requirement, (ii) LIBOR deposits in an amount
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comparable to the principal amount of the Loan as to which such
LIBOR Pricing Option has been elected and which have a term
corresponding to the proposed LIBOR Interest Period are not readily
available in the inter-bank LIBOR market, or (iii) by reason of
circumstances affecting the inter-bank LIBOR market, adequate and
reasonable methods do not exist for ascertaining the interest rate
applicable to such deposits for the proposed LIBOR Interest Period;
or
(b) if the Majority Lenders shall have advised the Agent by
telephone or otherwise at or prior to noon (Boston time) on the
second Banking Day prior to the commencement of such proposed LIBOR
Interest Period (and shall have subsequently confirmed in writing)
that, after reasonable efforts to determine the availability of such
LIBOR deposits, the Majority Lenders reasonably anticipate that LIBOR
deposits in an amount equal to the Percentage Interest of the Majority
Lenders in the portion of the Loan as to which such LIBOR Pricing
Option has been elected and which have a term corresponding to the
LIBOR Interest Period in question will not be offered in the LIBOR
market to the Majority Lenders at a rate of interest that does not
exceed the anticipated LIBOR Base Rate.
3.2.2. Notice to Lenders and Borrowers. The Agent will promptly
inform each Lender (by telephone or otherwise) of each notice received
by it from the Borrowers pursuant to Section 3.2.1 and of the LIBOR Interest
Period specified in such notice. Upon determination by the Agent of the
LIBOR Rate for such LIBOR Interest Period or in the event such election
shall not become effective, the Agent will promptly notify the Borrowers and
each Lender (by telephone or otherwise) of the LIBOR Rate so determined or
why such election did not become effective, as the case may be.
3.2.3. Selection of LIBOR Interest Periods. LIBOR Interest Periods
shall be selected so that:
(a) the minimum portion of the Loan subject to any LIBOR Pricing
Option shall be $1,000,000 and an integral multiple of $500,000;
(b) no more than three LIBOR Pricing Options shall be outstanding at any
one time; and
(c) no LIBOR Interest Period with respect to any part of the Loan
subject to a LIBOR Pricing Option shall expire later than the
Final Maturity Date.
3.2.4. Additional Interest. If any portion of the Loan subject to
a LIBOR Pricing Option is repaid, or any LIBOR Pricing Option is
terminated for any reason (including acceleration of maturity), on a date
which is prior to the last Banking Day of
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the LIBOR Interest Period applicable to such LIBOR Pricing Option, the
Borrowers will pay to the Agent for the account of each Lender in accordance
with such Lender's Percentage Interest, in addition to any amounts of
interest otherwise payable hereunder, an amount equal to the present value
(calculated in accordance with this Section 3.2.4) of interest for the
unexpired portion of such LIBOR Interest Period on the portion of the Loan
so repaid, or as to which a LIBOR Pricing Option was so terminated, at a per
annum rate equal to the excess, if any, of (a) the rate applicable to such
LIBOR Pricing Option minus (b) the rate of interest obtainable by the Agent
upon the purchase of debt securities customarily issued by the Treasury of
the United States of America which have a maturity date approximating the
last Banking Day of such LIBOR Interest Period. The present value of such
additional interest shall be calculated by discounting the amount of such
interest for each day in the unexpired portion of such LIBOR Interest Period
from such day to the date of such repayment or termination at a per annum
interest rate equal to the interest rate determined pursuant to clause (b)
of the preceding sentence, and by adding all such amounts for all such days
during such period. The determination by the Agent of such amount of
interest shall, in the absence of manifest error, be conclusive. For
purposes of this Section 3.2.4, if any portion of the Loan which was to have
been subject to a LIBOR Pricing Option is not outstanding on the first day
of the LIBOR Interest Period applicable to such LIBOR Pricing Option other
than for reasons described in Section 3.2.1, the Borrowers shall be deemed
to have terminated such LIBOR Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
shall prevent any Lender from funding or maintaining through the purchase of
deposits in the interbank LIBOR market any portion of the Loan subject to a
LIBOR Pricing Option or otherwise from giving effect to such Lender's
obligations as contemplated by Section 3.2, (a) the Agent may by notice to
the Borrowers terminate all of the affected LIBOR Pricing Options, (b) the
portion of the Loan subject to such terminated LIBOR Pricing Options shall
immediately bear interest thereafter at the Applicable Rate computed on the
basis of the Alternate Base Rate and (c) the Borrowers shall make any
payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any portion of
the Loan subject to a LIBOR Pricing Option out of any funds available to the
Lenders. Regardless of the source of the funds actually used by any of the
Lenders to fund any portion of the Loan subject to a LIBOR Pricing Option,
however, all amounts payable hereunder, including the interest rate
applicable to any such portion of the Loan and the amounts payable under
Sections 3.2.4 and 3.5, shall be computed as if each Lender had actually
funded such Lender's Percentage Interest in such portion of the Loan through
the purchase of deposits in such amount of the type by which the LIBOR Base
Rate was determined with a maturity the same as the applicable LIBOR
Interest Period relating thereto and through the transfer of such deposits
from an office of the Lender having
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the same location as the applicable LIBOR Office to one of such Lender's
offices in the United States.
3.3. Fees.
3.3.1. Commitment Fees for Revolving Loan. In consideration of the
Lenders' commitments to make the extensions of credit provided for in
Section 2.1.1, while such commitments are outstanding, the Borrowers will
pay, to the Agent for the account of the Lenders in accordance with the
Lenders' respective commitments in the Revolving Loan, on each Payment Date
in the last month of a fiscal quarter of the Borrowers, an amount equal to
interest computed at the rate of 0.50% per annum on the amount by which (a)
the average daily Maximum Amount of Revolving Credit during the quarter or
portion thereof ending on such Payment Date exceeded (b) the sum of the
average daily Revolving Loan during such period or portion thereof;
provided, however, that the first such payment shall be for the period
beginning on the Restatement Date and ending on the first such Payment
Date.
3.3.2. Prepayment Fee. In consideration of the Agent's arranging the
commitments to make the extensions of credit provided for in this
Agreement, if the Borrowers provide notice pursuant to Section 2.1.1 such
that the Maximum Amount of Revolving Credit (excluding the effects of
Section 2.1.2 and the Maximum Exposure Under Letters of Credit on the
Maximum Amount of Revolving Credit at the time such notice is given) is
reduced to $10,000,000 or less, the Borrowers will pay to the Agent (a)
$200,000 if such notice is given on or before March 31, 1998, and (b)
$100,000 if such notice is given thereafter.
3.3.3. Letter of Credit Fees. The Borrowers will pay to the Agent on
the date on which each Letter of Credit is issued and, if any such Letter
of Credit is extended, renewed or otherwise remains outstanding longer than
one year from the date of issuance, on each anniversary of the issuance of
such Letter of Credit, a Letter of Credit fee at a rate of 1.5% per annum
on the amount of the Letter of Credit Exposure with respect to such Letter
of Credit for a period which is the shorter of (i) the period from the date
on which such Letter of Credit is issued through the expiration date of
such Letter of Credit (or, if later, the date on which an accepted draft
presented under such Letter of Credit may be paid) or (ii) one year. The
Borrower shall also pay to the Agent customary service charges and expenses
for its services at the times and in the amount from time to time in effect
in accordance with the Agent's general rate structure, including fees and
expenses relating to the issuance, amendment, negotiation, cancellation and
similar operations.
3.4. Capital Adequacy. If any Lender shall have determined that
compliance by such Lender with any applicable law, governmental rule, regulation
or order regarding capital adequacy of banks or bank holding companies, or any
interpretation or administration thereof
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by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital as a
consequence of such Lender's obligations hereunder to a level below that which
such Lender could have achieved but for such compliance (taking into
consideration such Lender's policies with respect to capital adequacy
immediately before such compliance and assuming that such Lender's capital was
fully utilized prior to such compliance) by an amount deemed by such Lender to
be material, such Lender shall, promptly after it has made such determination,
give notice thereof to the Borrowers, with a copy to the Agent. Promptly after
the receipt by the Borrowers of any such notice, the Borrowers and the Lender
who sent such notice shall attempt to negotiate in good faith an adjustment to
the amount payable to such Lender under this Agreement, which amount shall be
sufficient to compensate such Lender for such reduced return. If the Borrowers
and such Lender are unable to agree to such adjustment within thirty days of the
day on which the Borrowers receives such notice, then the Borrowers will on
demand by such Lender pay to such Lender such additional amounts as shall be
sufficient, in such Lender's reasonable determination, to compensate such Lender
for such reduced return, such additional amounts commencing on the date of such
notice (but not earlier than the effective date of any such law, governmental
rule, regulation or order). Any such determination by a Lender hereunder shall
be conclusive and binding upon the Borrowers, absent manifest error. In making
any such determination such Lender may use any reasonable averaging and
attribution methods.
3.5. Computations of Interest. For purposes of this Agreement,
interest (and any amount expressed as interest) shall be computed on a daily
basis and on the basis of a 360-day year for any LIBOR Loans, and on a daily
basis and on the basis of a 365-day year for any Alternate Base Rate Loan.
4. Payment.
4.1. Payment at Maturity. On the stated or any accelerated
maturity of the Revolving Notes, the Borrowers will jointly and severally pay to
the Agent for the account of each Lender for credit to the Revolving Notes an
amount equal to the Indebtedness evidenced by the Revolving Notes then due,
together with all accrued and unpaid interest thereon and all other Credit
Obligations then outstanding in respect of the Revolving Loan.
4.2. Mandatory Prepayments. If at any time the Revolving Loan
exceeds (i) the Maximum Amount of Revolving Credit or (ii) the amount permitted
by Section 2.1.2, the Borrowers promptly will jointly and severally pay the
amount of such excess to the Agent for the account of each Lender for credit to
the Revolving Notes.
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4.3. Voluntary Prepayments of Revolving Loan. In addition to
the prepayments required by Section 4.2, the Borrowers may from time to time
prepay all or any portion of the Revolving Loan (in a minimum amount of
$1,000,000 and an integral multiple of $500,000), without premium (except with
respect to additional interest due pursuant to Section 3.2.4 in the case of
certain voluntary repayments of LIBOR Loans). With respect to such prepayment,
the Borrowers shall give the Agent at least one Banking Day's prior notice of
its intention to prepay, specifying the date of payment, the total principal
amount of the Revolving Loan to be paid on such date and the amount of interest
to be paid with such prepayment. Notwithstanding anything contained in this
Section 4.3, the Agent may accept payments in connection with a Controlled
Disbursement Agreement at any time and in any amount.
4.4. Reborrowing; Application of Payments. The amounts of the
Revolving Loan prepaid pursuant to Section 4.3 may be reborrowed from time to
time prior to the Final Maturity Date in accordance with Section 2.1. The
amount of the Revolving Loan prepaid pursuant to Section 4.2 may not be
reborrowed. All payments of principal hereunder shall be made to the Agent for
the account of each Lender in accordance with the Lenders' respective Percentage
Interests.
4.5. Payment and Interest Cut-off. Notice of prepayment having been
given in accordance with Section 4.3 and whether or not notice is given
of prepayments pursuant to Section 4.2, the amount specified to be prepaid shall
become due and payable on the date specified for prepayment, and from and after
such date (except to the extent the Borrowers shall fail to make the payment
thereof) interest thereon shall cease to accrue.
4.6. Charging Accounts. The Borrowers authorize the Agent to charge the
accounts of the Borrowers, on the dates when the amounts thereof become
due and payable, with the amounts of the principal of and interest on the Loans,
commitment fees and all other fees and amounts owing under any Credit Document.
5. Conditions.
5.1. Conditions to Initial Extension of Credit. The obligations of the
Lenders to make the initial extension of credit under Section 2 shall be subject
to the satisfaction, of the conditions set forth in this Section 5.1 and in
Section 5.2.
5.1.1. Notes. The Borrowers shall have executed Revolving Notes and
delivered them to the Agent.
5.1.2. Security Agreements. Ski Lifts shall have executed the
Ski Lifts Security Agreement and the Ski Lifts Mortgage, and
Northstar-at-Tahoe shall have executed the Northstar-at-Tahoe Security
Agreement and the Northstar-at-Tahoe Mortgage, and Grand Targhee shall have
executed the Grand Targhee Security Agreement. Each of the Bear Mountain,
Sierra-at-Tahoe, Waterville and Cranmore shall have entered into
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amendments to mortgages and assignments of leases all in form and
substance satisfactory to the Agent.
5.1.3. Acquisition of Wyoming Resort. BCS Holdings shall have
entered into and consummated a stock purchase agreement (as in effect on the
date hereof, the "Grand Targhee Purchase Agreement") with the stockholders
of Grand Targhee, in form and substance satisfactory to the Agent and its
counsel, to the effect that BCS Holdings will purchase 100% of the
outstanding stock of Grand Targhee on or before the Restatement Date.
5.1.4. Acquisition of Washington Resorts. BCS Holdings shall
have paid in full all obligations under the Stock Purchase Agreement dated
as of February 21, 1997, by and between the persons identified therein as
sellers, the representative as identified therein and BCS Holdings, to the
effect that BCS Holdings shall own on the Restatement Date 100% of the
outstanding common stock of Ski Lifts, free and clear of all liens and
encumbrances except as permitted hereunder.
5.1.5. Unsecured Debt Financing. BCS Holdings shall have
consummated an Acceptable Rule 144A Offering of which the principal amount
of securities sold shall not be less than $110,000,000.
5.1.6. Equity Capitalization. The value, determined in
accordance with GAAP, of the stockholders' equity contributed to BCS
Holdings shall not be less than $44,000,000.
5.1.7. Payment of Fees. The Borrowers shall have paid (i) the
fees and expenses of the Agent's counsel, Ropes & Gray, for which statements
have been rendered on or before the Restatement Date, and (ii) a total fee
of $200,000 to FNBB as Lender, of which $100,000 has been paid. In
addition, the Borrowers shall have paid the full cost of the Acquisition
Appraisals and the Environmental Audits.
5.1.8. Reports and Other Documents. The Agent shall have
received the following, each in form and substance satisfactory to the
Agent:
(i) the New Environmental Audits;
(ii) the audited Consolidated balance sheet of Ski Lifts as at
September 30, 1996, and Consolidated statements of income and changes in
shareholders' equity and cash flows of Ski Lifts for the fiscal year of
Ski Lifts then ended, accompanied by a management letter prepared by
independent certified public accountants of recognized standing
reasonably satisfactory to the Agent;
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(iii) the Consolidated balance sheet of Grand Targhee as at
May 31, 1996 and Consolidated statements of income and changes in
shareholders' equity and cash flows of Grand Targhee for the fiscal year
of Grand Targhee then ended; and
(iv) the Consolidated and Consolidating balance sheet of the
Borrowers, giving pro forma effect to the transactions
occurring as of the date hereof, as at February 28, 1997, and
Consolidated and Consolidating statements of income and changes in
shareholders' equity of the Borrowers for the four-month period then
ended, and projections of the same as at October 31, 1997 and for the
fiscal year then ended.
5.1.9. Forest Service Agreements. Each of the Ski Lifts and
Grand Targhee shall have entered into agreements with the USFS and the
Agent, and each of Bear Mountain, Sierra-at-Tahoe and Waterville shall have
entered into amendments to agreements with the USFS and the Agents, all in
form and substance satisfactory to the Agent, to the effect that the Agent
would have the benefits of all USFS permits held by such Borrowers after an
Event of Default.
5.1.10. Legal Opinion. The Lenders shall have received from
Winston & Strawn, special counsel for the Borrowers, and from the Borrowers'
local counsel, duly authorized and directed by the Borrowers, their opinion
with respect to the transactions contemplated by the Credit Documents, which
opinion shall be in form and substance satisfactory to the Lenders.
5.2. Conditions to Extending Credit. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the conditions set forth in this Section 5.2.
5.2.1. Representations and Warranties; No Default; No
Material Adverse Change. The representations and warranties of each of
the Borrowers contained in this Agreement, the Security Agreements and the
Mortgages shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though originally made on
and as of such date; no Default shall exist on such Closing Date prior to or
immediately after giving effect to the requested extension of credit no
Material Adverse Change shall have occurred; and the Borrowers shall have
furnished to the Agent on such Closing Date a certificate to these effects,
in substantially the form of Exhibit 5.2.1, signed by an Executive Officer
or a Financial Officer.
5.2.2. Perfection of Security. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, (including, but not limited to, the
Security Agreements, the Revolving Notes, and the Mortgages, three-party
agreements with the USFS, notices, financing
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statements and other instruments as the Agent may have requested in
order to perfect the security interests and encumbrances purported or
required pursuant to the Credit Documents to be created in the Credit
Security.
5.2.3. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary proceedings of each Obligor and any of
their respective Affiliates party thereto. All necessary consents,
approvals and authorizations of any governmental or administrative agency or
any other Person of any of the transactions contemplated hereby or by any
other Credit Document shall have been obtained and shall be in full force
and effect.
5.2.4. Legality, etc. The making of the requested extension
of credit on the Closing Date shall not (i) subject any Lender to any
penalty or special tax, (ii) be prohibited by any law or governmental order
or regulation applicable to any Lender or any Obligor or (iii) violate any
voluntary credit restraint program of the executive branch of the government
of the United States of America, the Board of Governors of the Federal
Reserve System or any other governmental or administrative agency so long as
any Lender reasonably believes that compliance therewith is in the best
interests of such Lender.
5.2.5. General. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement and each
other Credit Document shall be satisfactory in form and substance to the
Agent, and the Lenders shall have received copies of all documents,
including records of corporate proceedings, appraisals and opinions of
counsel, which any Lender may have reasonably requested in connection
therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
6. Security. Each of the Borrowers acknowledges and agrees that all of
the Credit Obligations under this amended and restated Agreement shall at all
times be secured in the manner and on the terms contemplated by the Credit
Documents, including the Security Agreements and the Mortgages, but excluding
any environmental indemnity agreements.
7. General Covenants. The Borrowers covenant that, until all of
the Credit Obligations shall have been paid in full and until the Lender's
commitment to extend credit under this Agreement and any other Credit Document
shall have been irrevocably terminated, they will comply with such of the
following provisions:
7.1. and Other Charges. The Borrowers will duly pay and discharge, or
cause to be paid and discharged, before the same shall become in arrears
(or in conformity with customary trade terms, where applicable) (i) all taxes,
assessments and other governmental charges imposed upon the Borrowers and their
properties, sales or activities, or
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upon the income or profits therefrom, (ii) all claims for labor,
materials or supplies which if unpaid might by law become a Lien upon any of its
property, and (iii) all accounts payable and other Indebtedness incident to
their operations; provided, however, that any such tax, assessment, charge,
claim or Indebtedness need not be paid if the validity or amount thereof shall
at the time be contested in good faith by appropriate proceedings and if the
Borrowers shall, in accordance with GAAP, have set aside on their books adequate
reserves with respect thereto.
7.2. Conduct of Business, etc.
7.2.1. Types of Business. The Borrowers will engage only in
the businesses of owning, maintaining and operating ski areas.
7.2.2. Maintenance of Properties; Compliance with Agreements,
etc. The Borrowers will, and will cause each of their Subsidiaries to,
(i) keep their properties in such repair, working order and condition
(ordinary wear and tear excepted), and from time to time make such repairs,
replacements, additions and improvements thereto, as their management deems
necessary and appropriate and comply at all times in all material respects
with all franchises, licenses, leases and other material agreements to which
any of them is a party so as to prevent any loss or forfeiture thereof or
thereunder, unless compliance is at the time being contested in good faith
by appropriate proceedings or unless such losses or forfeitures could not in
the aggregate result in any Material Adverse Change and (ii) do all things
necessary to preserve, renew and keep in full force and effect and in good
standing their legal existence and authority necessary to continue any of
their business; provided, however, that this Section 7.2.2 shall not apply
to assets or entities disposed of in transactions permitted by Section 7.12.
7.2.3. Statutory Compliance. The Borrowers will, and will
cause each of their Subsidiaries to, comply in all material respects with
all valid and applicable statutes, ordinances, zoning and building codes and
other rules and regulations of the United States of America, of the states
and territories thereof and their counties, municipalities and other
subdivisions and of any foreign country or other jurisdictions applicable to
the Borrowers and their Subsidiaries, except where compliance therewith
shall at the time be contested in good faith by appropriate proceedings or
where failure so to comply could not in the aggregate result in any Material
Adverse Change.
7.3. Insurance. Each of the Borrowers will, and will
cause their Subsidiaries to, maintain at all times, with financially sound and
reputable insurers, insurance with respect to its properties and business and
against such casualties and contingencies in such types and such amounts as
shall be in accordance with sound business practices and reasonably
satisfactory to the Lenders. Such insurance will be deemed satisfactory so
long as each of the Borrowers and their Subsidiaries (i) keep their physical
property insured against fire and extended coverage
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risks in amounts and with deductibles equal to those generally maintained by
businesses of similar size engaged in similar activities, (ii) maintain all
such workers' compensation or similar insurance as may be required by law, and
(iii) maintain, in amounts and with deductibles equal to those generally
maintained by businesses of similar size engaged in similar activities, general
public liability insurance against claims for bodily injury, death or property
damage occurring on, in or about the properties of each of the Borrowers, and
product liability insurance.
7.4. Financial Statements and Reports. Each of the Borrowers will
maintain a system of accounting in which full and correct entries will be made
of all dealings and transactions in relation to their business and affairs in
accordance with GAAP. The fiscal year of each of the Borrowers will end on
October 31 in each year.
7.4.1. Annual Statements. The Borrowers will furnish to the
Lenders as soon as available and in any event within 100 days after the end
of each fiscal year, the Consolidated and Consolidating balance sheet and
statement of income of each of the Borrowers and their Subsidiaries,
respectively, as at the end of such fiscal year and the Consolidated
statements of changes in shareholders' equity and cash flows of the
Borrowers and their Subsidiaries, respectively, for such year (all in
reasonable detail), together with (for each fiscal year ending on or after
October 31, 1997) comparative figures for the preceding fiscal year
(computed on a pro forma basis if necessary), and accompanied by:
(i) unqualified reports or certificates of Ernst & Young,
L.L.P. (or, if they cease to be auditors of the Borrowers and
their Subsidiaries, independent certified public accountants of
recognized standing reasonably satisfactory to the Lenders), to the
effect that they have audited such financial statements in accordance
with GAAP and that such financial statements present fairly, in all
material respects, the financial position of the Persons covered
thereby at the dates thereof and the results of their operations for
the periods covered thereby in conformity with GAAP;
(ii) the statement of such accountants that they have caused
this Agreement to be reviewed and that in the course of their audit
of the Borrowers and their Subsidiaries nothing has come to their
attention to lead them to believe that any Default hereunder exists
and in particular that they have no knowledge of any Default under
Sections 7.5 through 7.17 and 7.19 through 7.22 or, if such is not
the case, specifying such Default or possible Default and the nature
thereof, it being understood that the examination of such accountants
cannot be relied upon to give them knowledge of any such Default
except as it relates to accounting or auditing matters;
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(iii) a certificate of the Borrowers signed by a Financial
Officer substantially in the form of Exhibit 7.4.1;
(a) to the effect that such officer has caused this
Agreement to be reviewed by the Borrowers and has no
knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action
the Borrowers have taken, is taking or proposes to take with
respect thereto,
(b) stating what changes, if any, have occurred in GAAP since
the date of the financial statements described in Section 8.2.1,
and
(c) containing a schedule of computations demonstrating, as
of the close of such fiscal year, compliance with the
Computation Covenants; and
(iv) supplements to Exhibits 8.1 and 8.4 showing any
changes in the information set forth in such Exhibits during such
fiscal year.
7.4.2. Quarterly Reports. The Borrowers will furnish to the
Lenders as soon as available and, in any event, within 45 days after
the end of each fiscal quarter, an internally prepared balance sheet as at
the end of such quarter, and statements of income and cash flows of each of
the Borrowers for such quarter (all in reasonable detail), accompanied by a
certificate of the Borrowers signed by a Financial Officer substantially in
the form of Exhibit 7.4.2
(a) to the effect that such financial statements have
been prepared in accordance with GAAP and present fairly, in
all material respects, the financial position of the Borrowers at the
dates thereof and the results of its operations for the periods
covered thereby, subject only to normal year-end audit adjustments
and the addition of footnotes;
(b) to the effect that such officer has caused this
Agreement to be reviewed by the Borrowers and has no knowledge
of any Default, or if such officer has such knowledge, specifying
such Default and the nature thereof and what action the Borrowers
have taken, are taking or propose to take with respect thereto, and
(c) containing a schedule of computations by the Borrowers
demonstrating, as of the close of such fiscal quarter, compliance
with the Computation Covenants.
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7.4.3. Monthly Reports. The Borrowers will furnish to the Lenders
as soon as available and, in any event, within 40 days after the end of
each calendar month, an internally prepared balance sheet as at the end of
such month, and statements of income and cash flows of each of the
Borrowers for such month (all in reasonable detail).
7.4.4. Other Reports. The Borrowers will furnish to the Lenders:
(i) as soon as available, and in any event within 40
days after the end of each fiscal year, an annual budget and/or
operating projections for the upcoming fiscal year of the Borrowers,
prepared in a manner consistent with the manner in which the
financial statements described in Sections 7.4.1 through 7.4.3 are
prepared;
(ii) as soon as available, any material updates, if
any, of such budget and projections;
(iii) as soon as available, all management letters
furnished to the Borrowers by their auditors;
(iv) as soon as practicable but, in any event, within
20 Banking Days after the issuance thereof, all budgets,
projections, statements of operations and other reports furnished by
the Borrowers or any of their Subsidiaries generally to their
shareholders in such capacity; and
(v) as soon as practicable but, in any event, within 20
Banking Days after the issuance thereof, such registration
statements, proxy statements and reports, if any, as may be filed by
the Borrowers or any Subsidiary with the Securities and Exchange
Commission.
7.4.5. Notice of Litigation; Notice of Defaults. The Borrowers will
promptly furnish to the Agent written notice of any litigation or any
administrative or arbitration proceeding to which any of the Borrowers or
any Subsidiary may hereafter become a party which may involve any material
risk of any judgment which, after giving effect to any applicable
insurance, may result in a claim of more than $500,000 against any of the
Borrowers or any Subsidiary. Within five Banking Days after acquiring
knowledge thereof, the Borrowers will notify the Lenders of the existence
of any Default, specifying the nature thereof and what action the Borrowers
have taken, are taking or propose to take with respect thereto.
7.4.6. ERISA Reports. The Borrowers will:
(i) Furnish the Lenders with a copy of any request for a
waiver of the funding standards or an extension of the amortization
period required by
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sections 303 and 304 of ERISA or section 412 of the Code, promptly
after any Control Group Person submits such request to the
Department of Labor or the Internal Revenue Service;
(ii) Notify the Lenders of any reportable event (as
defined in section 4043 of ERISA), unless the notice
requirement with respect thereto has been waived by regulation,
promptly after any Control Group Person learns of such reportable
event; and furnish the Lenders with a copy of the notice of such
reportable event required to be filed with the PBGC, promptly after
such notice is required to be given;
(iii) Furnish the Lenders with a copy of any notice
received by any Control Group Person that the PBGC has
instituted or intends to institute proceedings under section 4042 of
ERISA to terminate any Plan, or that any Multiemployer Plan is
insolvent or in reorganization status under Title IV of ERISA,
promptly after receipt of such notice;
(iv) Notify the Lenders of the possibility of the
termination of any Plan by its administrator pursuant to
section 4041 of ERISA, as soon as any Control Group Person learns of
such possibility and in any event prior to such termination; and
furnish the Lenders with a copy of any notice to the PBGC that a
Plan is to be terminated, promptly after any Control Group Person
files a copy of such notice; and
(v) Notify the Lenders of the intention of the
Borrowers or any Control Group Person to withdraw, in whole or
in part, from any Multiemployer Plan, prior to such withdrawal, and,
upon any Lender's request from time to time, of the extent of the
liability, if any, of such Person as a result of such withdrawal, to
be the best of such Person's knowledge at such time.
7.4.7. Right to Obtain Appraisals. The Agent shall have the right
to obtain from time to time, at the Borrowers' cost and expense,
updated Appraisals, provided that so long as no Default or Event of Default
shall have occurred and be continuing, the Borrowers shall only be
obligated to obtain an updated Appraisal for each of the Resorts no more
than once per fiscal year and to pay for the costs and expenses associated
with such updated Appraisals as may be necessary to enable the Lenders to
comply with the Legal Requirements applicable to such Lenders with respect
to loans made pursuant to this Credit Agreement. The costs and expenses
incurred by the Agent and the Lenders in obtaining such Appraisals shall be
paid by the Borrowers forthwith upon billing or request by the Agent for
reimbursement therefor.
7.4.8. Other Information. From time to time upon request of any
authorized officer of the Lenders, the Borrowers will furnish to the
Lenders such other
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information regarding the business, affairs and condition, financial or
otherwise, of each of the Borrowers and their Subsidiaries as such officer may
reasonably request, including copies of all licenses, agreements, contracts,
leases and instruments to which each of the Borrowers or their Subsidiaries are
party. The Lenders' authorized officers and representatives shall have the
right during normal business hours to examine the books and records of each of
the Borrowers and their Subsidiaries, to make copies, notes and abstracts
therefrom and to make an independent examination of its books and records, for
the purpose of verifying the accuracy of the reports delivered by any of the
Borrowers and their Subsidiaries pursuant to this Section 7.4 or otherwise and
ascertaining compliance with this Agreement or any other Credit Document.
7.5. Certain Financial Tests.
7.5.1. Financing Debt to Cash Flow. At all times, the ratio of the
unpaid principal amount of Consolidated Financing Debt of the Borrowers
to Trailing Four Fiscal Quarter Cash Flow for such time shall not exceed the
amount set forth in the table below.
<TABLE>
<CAPTION>
Period Maximum Ratio
------ -------------
<S> <C>
Restatement Date through January 30, 1998 7.50 to 1.0
January 31, 1998 through January 30, 1999 6.75 to 1.0
January 31, 1999 and thereafter 6.25 to 1.0
</TABLE>
; provided, however that during the Designated Cleanup Period in each
fiscal year the numerator in such ratio shall be the numerator listed in the
table above minus 0.50.
7.5.2. Cash Flow to Fixed Charges. On the last day of each fiscal
quarter of the Borrowers, the sum of (a) Trailing Four Fiscal Quarter
Cash Flow measured on such date minus (b) Cash Flow Adjustment for the four
fiscal quarters then ending, shall equal or exceed the percentage of such
Consolidated Fixed Charges for such period set forth in the table below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Percentage
--------------------- ----------
<S> <C>
Restatement Date through January 30, 1998 110%
January 31, 1998 through January 30, 1999 120%
January 31, 1999 and thereafter 130%
</TABLE>
7.5.3. Minimum Net Worth. At all times, Consolidated Net Worth of the
Borrowers shall be in excess of the sum of the proceeds of any equity
offering by the Borrowers plus the amounts set forth in the table below at any
time while Loans are outstanding:
Period Amount
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Restatement Date through October 31, 1997 $37,000,000
November 1, 1997 and thereafter The sum of $37,000,000
plus 75% of Consolidated
Net Income of the
Borrowers since
October 31, 1997
7.5.4. Resorts Cash Flow Test. As of April 30, 1997 Resorts
Cash Flow for the six months then most recently ended shall equal or
exceed $22,000,000, and as of April 30 of each fiscal year of the
Borrowers thereafter, Resorts Cash Flow for the six months then most
recently ended shall equal or exceed $26,000,000.
7.6. Indebtedness. None of the Borrowers and their subsidiaries will
create, incur, assume or otherwise become or remain liable with respect to
any Indebtedness except the following:
7.6.1. Indebtedness in respect of the Credit Obligations.
7.6.2. Guarantees permitted by Section 7.7.
7.6.3. Current liabilities, other than for Financing Debt and
operating leases, incurred in the ordinary course of business;
provided, however, that all such Indebtedness, including without
limitation trade payables, shall be paid in accordance with Section
7.1.
7.6.4. To the extent that payment thereof shall not at the time
be required by Section 7.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials and
supplies.
7.6.5. Indebtedness secured by Liens of carriers,
warehousemen, mechanics and landlords permitted by Sections 7.8.5 and
7.8.6.
7.6.6. Indebtedness in respect of judgments or awards
(i) which have been in force for less than the applicable appeal
period, so long as execution is not levied, or (ii) in respect of
which the Borrowers shall at the time in good faith be prosecuting an
appeal or proceedings for review, so long as execution thereof shall
have been stayed pending such appeal or review.
7.6.7. To the extent permitted by Section 7.8.7,
Indebtedness in respect of Capitalized Lease Obligations or secured by
purchase money security interests; provided, however, that the
aggregate principal amount of all Indebtedness permitted by this
Section 7.6.7 shall not exceed $2,500,000 at any one time outstanding.
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7.6.8. Indebtedness in respect of (i) leases with the United
States Forest Service with respect to forest lands and (ii) other
operating leases, provided the basic annual rental payments under such
other operating leases do not exceed in the aggregate $2,500,000 in
any fiscal year.
7.6.9. Indebtedness with respect to deferred
compensation in the ordinary course of business and Indebtedness with
respect to employee benefit programs (including liabilities in respect
of deferred compensation, pension or severance benefits, early
termination benefits, disability benefits, vacation benefits and
tuition benefits) incurred in the ordinary course of business.
7.6.10. Indebtedness in respect of customer advances and
deposits, deferred income, deferred taxes and other deferred credits
arising in the ordinary course of business.
7.6.11. Indebtedness in respect of inter-company loans
and advances among the Borrowers and their Subsidiaries which are not
prohibited by Section 7.9.
7.6.12. Indebtedness relating to deferred gains and
deferred taxes existing (i) as of the Effective Date with respect to
the Original Borrowers or (ii) as of the Restatement Date with respect
to the New Borrowers, or arising in connection with sale of assets
permitted under Section 7.12.
7.6.13. Indebtedness in respect of the Senior Unsecured
Notes, not to exceed the sum of $116,000,000 in aggregate principal
amount; provided, however, that to the extent that such Indebtedness
exceeds $110,000,000 in aggregate Principal amount the proceeds of the
sale of Excess Senior Unsecured Notes shall be immediately deposited
in the Senior Unsecured Notes Interest Account in accordance with the
terms of Section 7.23.
7.6.14. Indebtedness in respect of the ASC Subordinated
Note; provided, however, that such Indebtedness shall not in the
aggregate exceed $2,750,000.
7.6.15. Indebtedness in respect of the Grand Targhee
Development Contingent Payment and the Grand Targhee Skier Contingent
Payments.
7.6.16. Indebtedness in respect of obligations
outstanding on the date hereof and described on Exhibit 8.4.
7.7. Guarantees; Letters of Credit. None of the Borrowers or their
Subsidiaries will become or remain liable with respect to any Guarantee,
including reimbursement obligations under letters of credit and other
financing guarantees by third parties, except as contemplated by (i) the
Senior Indenture, not to exceed $116,000,000 in aggregate principal amount,
(ii) the
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ASC Subordinated Note or (iii) a Guarantee by BCS Holdings of workers'
compensation liability of Ski Lifts.
7.8. Liens. None of the Borrowers and their Subsidiaries will
create, incur or enter into, or suffer to be created or incurred or to
exist, any Lien (including any arrangement or agreement which prohibits it
from creating any Lien), except the following.
7.8.1. Liens included in any Credit Document and Liens
on the Credit Security which secure the Credit Obligations.
7.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not at
the time be required by Section 7.1.
7.8.3. Deposits or pledges made (i) in connection with,
or to secure payment of, workers' compensation, unemployment
insurance, old age pensions or other social security, (ii) in
connection with casualty insurance maintained in accordance with
Section 7.3, (iii) to secure the performance of bids, tenders,
contracts (other than contracts relating to Financing Debt) or leases,
(iv) to secure statutory obligations or surety or appeal bonds, (v) to
secure indemnity, performance or other similar bonds in the ordinary
course of business or (vi) in connection with contests to the extent
that payment thereof shall not at that time be required by Section
7.1.
7.8.4. Liens in respect of judgments or awards, to the
extent that such judgments or awards are permitted by Section 7.6.6.
7.8.5. Liens of carriers, warehousemen, mechanics and
similar Liens or deposits to secure the release thereof.
7.8.6. Encumbrances in the nature of (i) zoning
restrictions, (ii) easements, (iii) restrictions of record on the use
of real property and (iv) landlords' and lessors' Liens on rented
premises, which in each case do not materially detract from the value
of the encumbered property or impair the use thereof in the business
of the Borrowers.
7.8.7. Capitalized Lease Obligations incurred after the
Restatement Date and purchase money security interests in or purchase
money mortgages on real or personal property acquired after the
Restatement Date to secure purchase money Indebtedness to the extent
permitted by Section 7.6.7 incurred in connection with the acquisition
of such property, which security interests or mortgages cover only the
real or personal property so acquired and proceeds thereof and
reasonable attachments and accessories thereto.
7.8.8. Liens securing obligations under the ASC
Subordinated Note, to the extent permitted by Section 7.7.14.
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7.8.9. Other existing Liens and Capitalized Lease
Obligations described on Exhibit 8.4 on the property secured by such
Liens or the subject of such Capitalized Lease as of the Restatement
Date and any renewals thereof, but not any increase in the amount
thereof.
7.9. Investments. None of the Borrowers and their
Subsidiaries will have outstanding, acquire, commit itself to acquire or
hold any Investment (including any Investment consisting of the acquisition
of any business) except for the following:
7.9.1. Investments in Cash Equivalents.
7.9.2. Trade or customer accounts or notes receivable for
inventory sold or leased or services rendered in the ordinary course
of business.
7.9.3. Advances to employees, agents and consultants in
the ordinary course of business, including, but not limited to,
travel, payroll and other expenses incurred in the ordinary course of
business.
7.9.4. Investments representing Indebtedness of any
Person owing as a result of the sale by the Borrowers or a Subsidiary
in the ordinary course of business to such Person of products or
services or the sale of tangible property no longer required in its
business.
7.9.5. Capital Expenditures to the extent permitted by
Section 7.11.
7.9.6. Investments by any Borrower in any other
Borrower.
7.9.7. Investments consisting of loans to employees of
any of the Borrowers provided that the aggregate outstanding principal
amount of such loans shall not at any time exceed $50,000.
7.9.8. Investments consisting of contingent liabilities
of any Borrower represented by endorsements of negotiable instruments
for collection or deposit in the ordinary course of business, and
advances, deposits, down payments and prepayments on account of
certain firm purchase orders made in the ordinary course of business.
7.9.9. Investments described on Exhibit 8.4.
7.9.10. Investments consisting of no more than 25 shares
of common stock of Tahoe Airline Guarantee Corp.
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<PAGE> 52
7.9.11. Investments consisting of any loan, advance or
extension of credit to, or contribution to the capital of, DRE LLC
provided that the maximum amount of any such Investment made in any
fiscal quarter of the Borrowers shall not exceed the "Purchase Price"
required to be made by DRE LLC on "Purchase Dates" occurring during
such fiscal quarter in respect of "Shares" pursuant to Sections 2.1,
2.2 and 2.3 of the Preferred Stock Purchase Agreement dated as of
February 21, 1997 by and between the Persons identified therein as
"Sellers", the "Representative" as identified therein and DRE LLC, as
such agreement is in effect on the date hereof.
7.10. Distributions. None of the Borrowers and their
Subsidiaries shall make any Distribution except for the following:
7.10.1. The Borrowers may pay dividends in their common
stock and, so long as immediately before and after giving effect
thereto no Default exists, the Borrowers may make Distributions
consisting of the exchange of one class of capital stock for another
class of capital stock.
7.10.2. So long as before and after giving effect
thereto no Default exists, the Borrowers may make Distributions to BCS
Group to provide funds to service notes issued under the Securities
Purchase Agreements.
7.10.3. So long as before and after giving effect
thereto no Default exists, payments of principal and interest due
under the ASC Subordinated Note.
7.10.4. So long as before and after giving effect
thereto no Default exists, Distributions from one Borrower to any
other Borrower.
7.11. Capital Expenditures. The Borrowers will not make
aggregate Capital Expenditures exceeding $7,000,000 during any fiscal year;
provided, however, that Capital Expenditures with respect to real estate
activities of the Borrowers shall not in the aggregate exceed $2,000,000
during any fiscal year.
7.12. Merger and Dispositions of Assets. None of the Borrowers
will become a party to any merger or consolidation, and none of the
Borrowers will sell, sell and lease back, lease, sublease or otherwise
dispose of any of its assets; provided, however, that so long as
immediately prior to and after giving effect thereto no Default exists, the
Borrowers may sell or otherwise dispose of (i) inventory in the ordinary
course of business, (ii) tangible assets to be replaced in the ordinary
course of business by other assets of substantially equal or greater value,
(iii) assets to any Borrower; and (iv) tangible assets either obsolete or
no longer used or useful in the business of the Borrowers; provided,
however, that the aggregate fair market value (or book value, if greater)
of the assets sold or disposed of pursuant to this clause (iv) shall not
exceed $1,000,000 in any fiscal year.
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<PAGE> 53
7.13. Subsidiaries. Each of the Borrowers shall have no
Subsidiaries other than as set forth on Exhibit 8.1.
7.14. ERISA. Each of the Borrowers and their respective
Subsidiaries will meet, and will cause all Control Group Persons to meet,
all minimum funding requirements applicable to them with respect to any
Plan pursuant to section 302 of ERISA or section 412 of the Code, without
giving effect to any waivers of such requirements or extensions of the
related amortization periods which may be granted. Each of the Borrowers
and their respective Subsidiaries will comply, and will cause all Control
Group Persons to comply, in all material respects, with the provisions of
ERISA and the Code applicable to each Plan. At no time shall the
Accumulated Plan Benefit Obligations under any Plan that is not a
Multiemployer Plan exceed the fair market value of the assets of such Plan
allocable to such benefits by more than $250,000.
7.15. Transactions with Affiliates. No Borrower shall effect
any transaction with any of its Affiliates, other than as permitted by
Section 7.20, on a basis less favorable to such Borrower than would be the
case if such transaction had been effected with a non-Affiliate.
7.16. Key Employee Life Insurance. Not later than 60 days
after the Restatement Date the Borrowers shall at all times thereafter
maintain, with an insurer or insurers reasonably satisfactory to the Agent,
a key employee life insurance policy on the life of George N. Gillett, Jr.,
in an amount not less than $5,000,000, which policy shall be duly assigned
to and delivered to the Agent on behalf of the Lenders. Not later than 60
days after the hiring of a chief operating officer (or officer serving in
similar capacity) of BCS Holdings, the Borrowers shall obtain from such
insurers, and shall at all times thereafter maintain with such insurers, a
key employee life insurance policy on the life of such chief operating
officer, in an amount not less than $5,000,000, which policy shall be duly
assigned and delivered to the Agent at the time it is obtained.
7.17. Loan to Value Ratio. The Borrowers will ensure that the
Revolving Loan shall at no time exceed seventy-five percent (75%) of the
sum of the value of the mountain operations of the Borrowers as set forth
in the Acquisition Appraisals, or if later such new Appraisals have been
obtained by the Agent pursuant to Section 7.4.7 hereof, the value of the
mountain operations as set forth in the most recent such Appraisals.
7.18. Environmental Cleanup. The Borrowers will develop a
written action plan addressing those items listed on Exhibit 7.18 which if
not addressed would result in a Material Adverse Change, and submit such
action plan to the Agent within 60 days of the Restatement Date, such
action plan to be reasonably acceptable to the Agent.
7.19. Cash Concentration. The Borrowers shall establish a cash
management system accounts with the Agent (the "Cash Management System")
within 30 days of the Restatement Date, and all the Borrowers shall
maintain such system with the Agent at all times prior to the
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<PAGE> 54
Final Maturity Date. The Cash Management System shall include an automatic
weekly transfer of all positive balances in any deposit or other cash
account of the Borrowers not maintained at the Boston Office to accounts
maintained at the Boston Office.
7.20. Permitted Management Fees. So long as before and after
giving effect thereto no Default exists, the Borrowers may pay management
fees to Booth Creek Management Company; provided, however, that (i) payment
of such fees shall be made in equal monthly installments in each fiscal
year; and (ii) such fees shall not during any fiscal year of the Borrowers
exceed in the aggregate the lesser of (a) $750,000 and (b) $350,000 plus
0.025 times the amount that Cash Flow for that fiscal year exceeds
$25,000,000; provided further, however, that during any period in which
payment of fees is not permitted by this Section 7.20 because of the
existence of a Default, such management fee payments shall accrue without
interest and may be paid at such time as no Default or Event of Default
exists.
7.21. Letters of Credit at Annual Clean-Up. At all times
during any Designated Cleanup Period the accounts of the Borrowers
maintained at the Boston Office, excluding the Senior Unsecured Notes
Interest Account, shall have an aggregate balance that exceeds the
aggregate amount of Letter of Credit Exposure with respect to all of the
Letters of Credit previously issued and not yet canceled or expired at such
time.
7.22. Use of Equipment. The Borrowers shall provide the Agent
with 30 days' prior written notice before (i) any of the California
Resorts, Ski Lifts or Grand Targhee removes, relocates or maintains any
tangible personal property outside the states of California, Washington and
Wyoming, and (ii) either Waterville or Cranmore removes, relocates or
maintains any tangible personal property outside the state of New
Hampshire.
7.23. Use of Proceeds for Debt Service. The Borrowers shall
not use in excess of $1,430,000 of the proceeds of the Revolving Loan to
fund the payment of interest due September 15, 1997 in respect of the
Senior Unsecured Notes. At all times from and after August 1, 1997 until
the payment of interest described in this Section, the Borrowers shall
maintain a separate deposit account at the Boston Office (the "Senior
Unsecured Notes Interest Account"), which account shall contain the
Interest Reserve Proceeds, and shall have a balance at all such times of at
least $5,820,000, which funds shall be used to directly pay interest on the
Senior Unsecured Notes; provided, however, that (x) from and after the
first sale of Excess Senior Unsecured Notes, all Interest Reserve Proceeds
derived from all such sales of Excess Senior Unsecured Notes shall be
immediately placed, and shall be maintained at all times through the
interest payment described in this Section, in the Senior Unsecured Notes
Interest Account and (y) with respect to all equity investments made in BCS
Holdings from and after the date hereof and prior to the interest payment
described in this Section, all Interest Reserve Proceeds from all such
equity investments shall be immediately placed, and shall be maintained at
all times through the interest payment described in this Section, in the
Senior Unsecured Notes Interest Account.
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8. Representations and Warranties. In order to induce the Lenders to extend
credit to the Borrowers hereunder, the Borrowers represent and warrant that:
8.1. Organization and Business.
8.1.1. The Borrowers. Each of BCS Holdings, BCS
Acquisition, Sierra-at-Tahoe, Bear Mountain, Waterville, Cranmore and
Grand Targhee is a duly organized and validly existing corporation, in
good standing, under the laws of the State of Delaware,
Northstar-at-Tahoe is a duly organized and validly existing
corporation, in good standing, under the laws of the State of
California, and Ski Lifts is a duly organized and validly existing
corporation, in good standing, under the laws of the State of
Washington, each with all power and authority, corporate or otherwise,
necessary to (i) enter into and perform each of this Agreement and
other Credit Documents to which it is party, (ii) grant the Lenders
the security interests in the Credit Security owned by it to secure
the Credit Obligations as applicable and (iii) own its properties and
carry on the business now conducted or proposed to be conducted by it.
Each of the Borrowers have taken all corporate or other action
required to execute, deliver and perform each of this Agreement and
other Credit Documents to which it is party. Certified copies of the
charter and by-laws of each of the Borrowers have been previously
delivered to the Agent and are correct and complete. Exhibit 8.1, as
from time to time hereafter supplemented in accordance with Section
7.4 or otherwise by written notice to the Lenders, sets forth (a) the
jurisdiction of incorporation or organization of each of the
Borrowers, (b) the address of each of the Borrowers' chief executive
office and chief place of business and (c) the name under which each
of the Borrowers conducts its business and the jurisdictions in which
the name is used.
8.1.2. Qualification. Except as set forth on Exhibit
8.1 each of the Borrowers is duly and legally qualified to do business
as a foreign corporation and is in good standing in each state or
jurisdiction in which such qualification is required and is duly
authorized, qualified and licensed under all laws, regulations,
ordinances or orders of public authorities, or otherwise, to carry on
its business in the places and in the manner in which it is conducted,
except for failures to be so qualified, authorized or licensed which
would not in the aggregate result, or pose a material risk of
resulting, in any Material Adverse Change.
8.2. Financial Statements and Other Information; Certain
Agreements.
8.2.1. Financial Statements and Other Information. The
Borrowers have previously furnished to the Lenders copies of the
Consolidated and Consolidating balance sheet of the California Resorts
and their Subsidiaries as at December 31, 1995, the Consolidated and
Consolidating balance sheet of the New Hampshire Resorts and their
Subsidiaries as at April 30, 1996, the Consolidated balance sheet of
Ski Lifts as at September 30, 1996, and the Consolidated balance sheet
of Grand Targhee as at May
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<PAGE> 56
31, 1996, and the Consolidated and Consolidating statements of income
and Consolidated statement of changes in shareholders' equity and cash
flows of the California Resorts, the New Hampshire Resorts, Ski Lifts
and Grand Targhee and their respective Subsidiaries for the periods
then ended.
The Consolidated and Consolidating financial statements
(including the notes thereto, subject, in the case of any unaudited
financial statements, to the absence of footnote disclosure and normal
year-end and audit adjustments and, in the case of the financial
statements of Fibreboard and its Subsidiaries for December 31, 1995
and period ended on such date, (i) to adjustments made to the
depreciable lives of assets in order to more approximate their useful
lives and (ii) to adjustments not being made to exclude assets which
constitute "Excluded Assets" under the Stock Purchase and
Indemnification Agreement dated as of November 26, 1996 among BCS
Holdings, Fibreboard, Northstar-at-Tahoe, Sierra-at-Tahoe and Bear
Mountain) referred to above were prepared in accordance with GAAP and
fairly present the financial position of the Persons covered thereby
at the respective dates thereof and the results of their operations
for the periods covered thereby. Neither the Borrowers nor any of
their Subsidiaries has any known material contingent liability which
is not reflected in the most recent balance sheet referred to above or
the notes thereto, or in the Final Offering Memorandum.
8.2.2. Certain Agreements. The Borrowers have
previously furnished to the Lenders correct and complete copies,
including all exhibits, schedules and amendments thereto, of the
following agreement, as in effect on the Restatement Date (the
"Material Agreements"): the Purchase Agreement dated February 11, 1997
by and among BCS Holdings, Grand Targhee, Moritz O. Bergmeyer and
Carol Mann Bergmeyer, as amended and in effect on the date hereof.
8.3. Changes in Condition. No Material Adverse Change has
occurred, and since December 31, 1995 the Borrowers have not entered into
any material transaction outside the ordinary course of business except for
the transactions contemplated by this Agreement and the other Material
Agreements, and transactions described in the Final Offering Memorandum.
8.4. Agreements Relating to Financing Debt, Investments, etc.
Exhibit 8.4, as from time to time hereafter supplemented in accordance with
Section 7.4 or otherwise by written notice to the Lenders, sets forth (i)
the amounts (as of the dates indicated in Exhibit 8.4, as so supplemented)
of all Financing Debt of the Borrowers and all agreements which relate to
such Financing Debt, (ii) all Liens and Guarantees with respect to such
Financing Debt and (iii) all agreements which directly or indirectly
require the Borrowers to make any Investment. The Borrowers have furnished
the Agent with correct and complete copies of any agreements described in
clauses (i), (ii) and (iii) above requested by the Lenders.
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8.5. Title to Assets. The Borrowers and their Subsidiaries
have good and marketable title to all assets necessary for or used in the
operations of their respective businesses as now conducted or proposed to
be conducted by them and reflected in the most recent balance sheet
referred to in Section 8.2.1 (or the balance sheet most recently furnished
to the Lenders pursuant to Sections 7.4.1 through 7.4.3 or otherwise by
written notice to the Lenders), and to all assets acquired subsequent to
the date of such balance sheet, subject to no Liens except for those
permitted by Section 7.8 and except for assets disposed of as permitted by
Section 7.12.
8.6. Licenses, etc. The Borrowers have all material patents,
patent applications, patent licenses, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, licenses, franchises,
permits, authorizations and other rights as are necessary for the conduct
of their business as now conducted or proposed to be conducted by them. All
of the foregoing are in full force and effect, and the Borrowers are in
substantial compliance with the foregoing without any known conflict with
the valid rights of others which has resulted, or poses a material risk of
resulting, in any Material Adverse Change. No event has occurred which
permits, or after notice or lapse of time or both would permit, the
revocation or termination of any such license, franchise or other right or
affect the rights of the Borrowers thereunder so as to result in any
Material Adverse Change. There is no litigation or other proceeding or
dispute with respect to the validity or, where applicable, the extension or
renewal, of any of the foregoing which has resulted, or poses a material
risk of resulting, in any Material Adverse Change.
8.7. Litigation. No litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator is pending or, to the knowledge of the Borrowers
or their Subsidiaries, threatened which may involve any material risk of
any final judgment, order or liability which, after giving effect to any
applicable insurance, has resulted, or poses a material risk of resulting,
in any Material Adverse Change or which seeks to enjoin the consummation,
or which questions the validity, of any of the transactions contemplated by
this Agreement or any other Credit Document. No judgment, decree or order
of any court, board or other governmental or administrative agency or any
arbitrator has been issued against or binds the Borrowers or any Subsidiary
which has resulted, or poses a material risk of resulting, in any Material
Adverse Change.
8.8. Tax Returns. Each of the Borrowers and their
Subsidiaries has filed all material tax and information returns which are
required to be filed by it and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to such returns
or to any assessment received by it. The Borrowers know of no material
additional assessments or any basis therefor. The Borrowers reasonably
believe that the charges, accruals and reserves on the books of the
Borrowers and their Subsidiaries in respect of taxes or other governmental
charges are adequate.
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8.9. No Legal Obstacle to Agreements. Neither the execution
and delivery of this Agreement or any other Credit Document, nor the making
of any borrowings hereunder, nor the securing of the Credit Obligations
with the Credit Security, nor the consummation of any transaction referred
to in or contemplated by this Agreement or any other Credit Document, nor
the fulfillment of the terms hereof or thereof or of any other agreement,
instrument, deed or lease referred to in this Agreement or any other Credit
Document, has constituted or resulted in or will constitute or result in:
(i) any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Borrowers or any
Subsidiary is a party or by which it is bound, or of the charter or
by-laws of the Borrowers;
(ii) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Borrowers or
any Subsidiary;
(iii) the creation under any agreement, instrument, deed or
lease of any Lien (other than Liens on the Credit Security which
secure the Credit Obligations) upon any of the assets of the
Borrowers; or
(iv) any redemption, retirement or other repurchase obligation
of the Borrowers under any charter, by-law, agreement, instrument,
deed or lease.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by the Borrowers in connection with the
execution, delivery and performance of this Agreement, the Notes or any
other Credit Document, the transactions contemplated hereby or thereby or
the making of any borrowing hereunder which has not been obtained or made
prior to the Restatement Date, or which, if not obtained, does not result,
or pose a material risk of resulting, in any Material Adverse Change.
8.10. Defaults. Neither the Borrowers nor any Subsidiary is in
default under any provision of its charter or by-laws or of this Agreement
or any other Credit Document. Neither the Borrowers nor any Subsidiary is
in default under any provision of any agreement, instrument, deed or lease
to which it is party or by which it or its property is bound, or has
violated any law, judgment, decree or governmental order, rule or
regulation, so as to result, or pose a material risk of resulting, in any
Material Adverse Change.
8.11. Certain Business Representations.
8.11.1. Environmental Compliance.
(i) Each of the Borrowers and their Subsidiaries is in
compliance in all material respects with the applicable
provisions of the Clean Air Act, the
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Federal Water Pollution Control Act, the Resource Conservation and
Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation and Liability Act and any similar state or local statute
or regulation in effect in any jurisdiction in which any properties of
the Borrowers or any Subsidiary are located, and with all applicable
published rules and regulations of the United States Environmental
Protection Agency and of any similar state agencies, other than those
which in the aggregate could not reasonably be expected to result in a
Material Adverse Change.
(ii) Except as set forth on Exhibit 8.11.1, no suit, claim,
action or proceeding, of which any of the Borrowers have been given
written notice or otherwise have actual knowledge, is now pending
before any court, governmental agency or board, or to the Borrowers'
knowledge, threatened by any Person (nor to the Borrowers' knowledge,
does any factual basis exist therefor) for, and none of the Borrowers
nor any of their Subsidiaries has received written correspondence from
any federal, state or local governmental authority with respect to, in
each case excepting items as would not reasonably be expected to
result in a Material Adverse Change:
(a) currently alleged noncompliance by any of the Borrowers
or Subsidiaries with any such environmental law, rule or
regulation which could result in a Material Adverse Change,
(b) personal injury, wrongful death or other tortious
conduct relating to materials, commodities or products used,
generated, sold, transferred or manufactured by any of the
Borrowers or their Subsidiaries (including but not limited to
products made of, containing or incorporating asbestos, lead or
other hazardous materials, commodities or toxic substances), or
(c) the release into the environment by any of the Borrowers
or their Subsidiaries of any Hazardous Material generated by the
Borrowers or any of their Subsidiaries whether or not occurring
at or on a site owned, leased or operated by any of the Borrowers
or their Subsidiaries.
(iii) To the best of the Borrowers' knowledge, none of the
properties owned or leased by any of the Borrowers or their
Subsidiaries has been used as a treatment, storage or disposal site.
(iv) To the best of any of the Borrowers' knowledge, no
Hazardous Material is present in any real property currently or
formerly owned or operated by any of the Borrowers or their
Subsidiaries except that which could not reasonably be expected to
result in a Material Adverse Change.
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8.11.2. Burdensome Obligations. None of the Borrowers
is party to or bound by any agreement, instrument, deed or lease and
is not subject to any charter, by-law or other restriction which, in
the opinion of the management of the Borrowers, is so unusual or
burdensome as in the foreseeable future to result, or pose a material
risk of resulting, in a Material Adverse Change.
8.11.3. Future Expenditures. The Borrowers do not
anticipate that future expenditures, if any, by the Borrowers needed
to meet the provisions of any then existing federal, state or foreign
governmental statutes, orders, rules or regulations will be so
burdensome as to result, or pose a material risk of resulting, in any
Material Adverse Change.
8.12. Pension Plans. Neither the Borrowers nor any Subsidiary
has any Plan in effect as of the date hereof except for Plans of which the
Lenders have been notified in writing and are in compliance with Section
7.14. Neither the Borrowers nor any Subsidiary has any liability
(contingent or otherwise) under Title IV of ERISA or under Section 412 of
the Code nor is any of the Borrowers or any Subsidiary currently a
participant in a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA).
8.13. Disclosure. Neither this Agreement nor any other Credit
Document to be furnished to the Lenders by or on behalf of any of the
Borrowers or any Subsidiary in connection with the transactions
contemplated hereby or by such Credit Document contains any untrue
statement of material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. No fact is actually
known to any of the Borrowers which has resulted, or in the future (so far
as any of the Borrowers can reasonably foresee) will result in any Material
Adverse Change, except to the extent that present or future general
economic conditions may result in a Material Adverse Change.
9. Defaults.
9.1. Events of Default. The following events are referred to
as "Events of Default":
9.1.1. Any of the Borrowers shall fail to make any
payment in respect of: (i) interest or any fee on or in respect of
any of the Credit Obligations owed by them as the same shall become
due and payable, and such failure shall continue for a period of five
Banking Days, or (ii) principal of any of the Credit Obligations owed
by them as the same shall become due, whether at maturity or by
acceleration or otherwise.
9.1.2. Any of the Borrowers shall fail to perform or
observe any of the provisions of Sections 7.5 through 7.23.
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9.1.3. Any of the Borrowers or any of their Subsidiaries or
any of their respective Affiliates party to any Credit Document shall
fail to perform or observe any other covenant, agreement or provision
to be performed or observed by them under this Agreement or any other
Credit Document after giving effect to the applicable grace periods.
Such failure shall not be rectified or cured to the written
satisfaction of the Majority Lenders within 15 days after notice
thereof by the Agent to any of the Borrowers.
9.1.4. Any representation or warranty of or with
respect to any of the Borrowers, any Subsidiary or any of their
respective Affiliates party to any Credit Document made to the Lenders
in, pursuant to or in connection with this Agreement or any other
Credit Document shall prove to have been false in any material respect
upon the date when made and the condition, transaction or event which
causes such representation or warranty to be false has had a Material
Adverse Change.
9.1.5. (i) Any of the Borrowers or any of their
Subsidiaries or BCS Group shall fail to make any payment when due
(after giving effect to any applicable grace periods) in respect of
any Financing Debt the principal amount of which exceeds $1,000,000
(other than the Credit Obligations);
(ii) Any of the Borrowers or any Subsidiary or BCS Group shall
fail to perform or observe the terms of any agreement relating to such
Financing Debt, and such failure or condition shall continue, without
having been duly cured, waived or consented to, beyond the period of
grace, if any, specified in such agreement or, if such Financing Debt
is in respect of the notes issued under the Securities Purchase
Agreements for 15 days or longer beyond the period of grace, if any,
specified in such Securities Purchase Agreements;
(iii) any such Financing Debt of any of the Borrowers or any
Subsidiary or BCS Group shall be accelerated or become due or payable
prior to its stated maturity for any reason whatsoever (other than
voluntary prepayments thereof);
(iv) any Lien on any property of any of the Borrowers or any
Subsidiary securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(v) any holder of any such Financing Debt shall exercise any
right of rescission with respect to the issuance thereof.
9.1.6. Except as permitted by Section 7.12, any of the
Borrowers shall cease to own, directly or indirectly, all the capital
stock of any of their Subsidiaries.
9.1.7. Any Credit Document shall cease, for any reason
(other than the scheduled termination thereof in accordance with its
terms), to be in full force and
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effect, or any of the Borrowers, any Subsidiary or any of their
respective Affiliates party thereto shall so assert, or the security
interests created by this Agreement and the other Credit Documents
shall cease to be enforceable and of the same effect and priority
purported to be created hereby.
9.1.8. A final judgment which, with other outstanding
final judgments against any of the Borrowers and their Subsidiaries,
exceeds an aggregate of $1,000,000 shall be rendered against any of
the Borrowers or any of their Subsidiaries or Affiliates party to any
Credit Document and if, within 60 days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed
pending appeal, or if, within 60 days after the expiration of any such
stay, such judgment shall not have been discharged.
9.1.9. Any of the Borrowers, any Subsidiary or any of
their respective Affiliates obligated with respect to any Credit
Obligation shall:
(i) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors
or other governing body, the commencement of such a voluntary
case;
(ii) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code which shall not have
been dismissed within 60 days after the date on which such
petition is filed; or file an answer or other pleading within
such 60-day period admitting or failing to deny the material
allegations of such a petition or seeking, consenting to or
acquiescing in the relief therein provided;
(iii) have entered against it an order for relief in any
involuntary case commenced under the Bankruptcy Code;
(iv) seek relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to
the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or consent
to or acquiesce in such relief;
(v) have entered against it an order by a court of
competent jurisdiction (a) finding it to be bankrupt or
insolvent, (b) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of
its creditors or (c) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial portion of
its property; or
(vi) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the
appointment of, or suffer to
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exist a receiver or other custodian for, all or a substantial
portion of its property.
9.1.10. Any Control Group Person shall fail to pay when
due amounts aggregating in excess of $500,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed under
Title IV of ERISA by any Control Group Person or administrator; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate
or to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material
Plan against any Control Group Person to enforce section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated.
9.1.11. George N. Gillett, Jr. is no longer an incumbent
director or officer of BCS Holdings, or George N. Gillett, Jr. is no
longer actively involved in the management of the Resorts.
9.1.12. (i) BCS Group shall cease to own 100% of the
capital stock of BCS Holdings;
(ii) the approval by the holders of capital stock of BCS Group
of any plan or proposal for the liquidation or dissolution of BCS
Group;
(iii) John Hancock and its Affiliates (other than its portfolio
companies) shall cease to beneficially own (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, voting stock
(or non-voting stock convertible into voting stock) representing at
least 30% of the total voting power of all voting stock of BCS Group;
or Booth Creek LLP shall cease to beneficially own (within the meaning
of Rule 13d-3 under the Exchange Act), directly or indirectly, voting
stock representing at least (x) 50% of the total voting power of all
voting stock of BCS Group prior to the exercise of the John Hancock
warrants, the CIBC warrants and any management options and (y) 35% of
the total voting power of all voting stock of BCS Group after the
exercise of all such warrants and options;
(iv) Except for Permitted BCS Group Owners, any Person or group
of related persons for purposes of Section 13(d) of the Exchange Act
(a "Group"), together with any affiliates thereof, shall become the
owner, directly or indirectly, beneficially or of record, of voting
stock representing more than 35% of the total voting power of all
voting stock of BCS Group.
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(v) Booth Creek LLP shall cease to have the right to appoint a
majority of the Board of Directors of BCS Group.
(vi) The replacement of a majority of the Board of Directors of
either of BCS Group or BCS Holdings over a two-year period from the
directors who constituted the Board of Directors of BCS Group or BCS
Holdings, respectively, at the beginning of such period, and such
replacement shall not have been approved by a vote of at least
two-thirds of the Board of Directors of BCS Group or BCS Holdings,
respectively, then still in office who either were members of such
Board of Directors at the beginning of such period or whose election
as a member of such Board of Directors was previously so approved;
(vii) The occurrence of any "Change of Control" as defined in the
Senior Indenture.
9.2. Certain Actions Following an Event of Default. If any one
or more Events of Default shall occur, then in each and every such case:
9.2.1. No Obligation to Extend Credit. Upon notice from
the Agent to any of the Borrowers, the obligations of the Lenders to
make any further extensions of credit hereunder shall terminate.
9.2.2. Specific Performance; Exercise of Rights. The
Agent may (and upon written request of the Majority Lenders shall)
proceed to protect and enforce the Lenders' rights 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 Credit Document or in any instrument or assignment
delivered to the Lenders pursuant to this Agreement or any other
Credit Document, or in aid of the exercise of any power granted in
this Agreement or any other Credit Document or any such instrument or
assignment.
9.2.3. Enforcement of Payment; Credit Security; Setoff.
The Agent may (and upon written request of the Majority Lenders shall)
proceed to enforce payment of the Credit Obligations in such manner as
it may elect and to realize upon any and all rights in the Credit
Security, and the Lenders may offset and apply toward the payment of
such balance (and/or toward the curing of any Event of Default) any
Indebtedness from the Lenders to the respective Obligors, including
any Indebtedness represented by deposits in any account maintained
with the Lenders, regardless of the adequacy of any security for the
Credit Obligations, and the Lenders shall have no duty to determine
the adequacy of any such security in connection with any such offset.
9.2.4. Acceleration. The Agent on behalf of the
Lenders may (and upon written request of the Majority Lenders shall)
by notice in writing to any of the
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Borrowers (i) declare all or any part of the unpaid balance of the
Credit Obligations then outstanding to be immediately due and
payable, and thereupon such unpaid balance or part thereof shall
become so due and payable, and (ii) require the Borrowers
immediately to deposit with the Agent in cash an amount equal to the
then Maximum Exposure Under Letters of Credit, and thereupon such
unpaid balance or part thereof and such amount equal to the Maximum
Exposure Under Letters of Credit shall become so due and payable,
all without presentation, protest or further demand or notice of any
kind, all of which are hereby expressly waived; provided, however,
that if a Bankruptcy Default shall have occurred, the unpaid balance
of the Credit Obligations shall automatically become immediately due
and payable.
9.2.5. Cumulative Remedies. To the extent not
prohibited by applicable law which cannot be waived, all of the
Lenders' rights hereunder and under each other Credit Document shall
be cumulative.
9.3. Annulment of Defaults. Any Default or Event of Default
shall be deemed not to exist or to have occurred for any purpose of this
Agreement if the required holders of Credit Obligations in accordance with
Section 11.6 or the Agent (with any consent of holders of Credit
Obligations required by Section 11.6) shall have waived such Default or
Event of Default in writing, stated in writing that the same has been cured
to such Lenders' reasonable satisfaction or entered into an amendment to
this Agreement which by its express terms cures such Default or Event of
Default. No such action by the Lenders or the Agent shall extend to or
affect any subsequent Default or Event of Default or impair any rights of
the Lenders upon the occurrence thereof. The making of any extension of
credit during the existence of any Default or Event of Default shall not
constitute a waiver thereof.
9.4. Waivers. Each of the Borrowers hereby waives to the
extent not prohibited by applicable law:
(i) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions of
this Agreement or any other Credit Document), protests, notices of
protest and notices of dishonor,
(ii) any requirement of diligence or promptness on the part of
any Lender in the enforcement of its rights under this Agreement, the
Notes or any other Credit Document,
(iii) any and all notices of every kind and description which
may be required to be given by any statute or rule of law, except as
expressly required in any Credit Document, and
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(iv) any defense of any kind (other than indefeasible payment in
full) which it may now or hereafter have with respect to its liability
under this Agreement, the Notes or any other Credit Document or with
respect to the Credit Obligations.
10. Expenses; Indemnity.
10.1. Expenses. Whether or not the transactions contemplated
hereby shall be consummated, the Borrowers will bear
(i) all reasonable out of pocket expenses of the Lenders
(including the reasonable fees and disbursements of the special
counsel to the Agent, but excluding fees and expenses of counsel to
the other Lenders) in connection with the preparation and duplication
of this Agreement, each other Credit Document, the transactions
contemplated hereby and thereby and each closing hereunder, and any
amendments, modifications, approvals, consents or waivers hereunder;
(ii) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this
Agreement, any other Credit Document, any Credit Security or the
incurrence of the Credit Obligations; and
(iii) to the extent not prohibited by applicable law that cannot
be waived, after the occurrence and during the continuance of any
Default or Event of Default, all other reasonable expenses incurred by
the Lenders or the holder of any Credit Obligation in connection with
the enforcement of any rights hereunder or under any other Credit
Document, including costs of collection and reasonable attorneys' fees
(including a reasonable allowance for the hourly cost of attorneys
employed by the Lenders on a salaried basis) and expenses; and
(iv) fees and disbursements of the Agent in connection with the
Acquisition Appraisals and any updated Appraisals conducted pursuant
to Section 7.4.7.
10.2. General Indemnity. The Borrowers will indemnify the
Lenders and hold them harmless from any liability, loss or damage resulting
from the violation by the Borrowers of Section 2.1.3. The Borrowers will
also indemnify each Lender, each of the Lenders' directors, officers and
employees, and each Person, if any, who controls any Lender (each Lender
and each of such directors, officers, employees and control Persons is
referred to as an "Indemnitee") and hold each of them harmless from and
against any and all claims, damages, liabilities and reasonable expenses
(including reasonable fees and disbursements of counsel with whom any
Indemnitee may consult in connection therewith and all reasonable expenses
of litigation or preparation therefor) which any Indemnitee may incur or
which may be asserted against any Indemnitee in connection with (i) the
existence or exercise of any of the security rights with respect to the
Credit Security in accordance with the Credit Documents or (ii) any other
litigation or investigation involving the Borrowers, any Subsidiaries or
Affiliates, or any
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officer, director or employee thereof (including the Lenders' compliance
with or contest of any subpoena or other process issued against them in any
proceeding involving the Borrowers or any Subsidiaries or Affiliates),
other than litigation commenced by the Borrowers against the Lenders which
seeks enforcement of any of the rights of the Borrowers hereunder or under
any other Credit Document and is finally determined adversely to the
Lenders and except to the extent such claims, damages, liabilities and
expenses result from an Indemnitee's gross negligence or willful
misconduct.
10.3. Indemnity With Respect to Letters of Credit. Any action,
inaction or omission on the part of the Agent or any of its correspondents
under or in connection with any Letter of Credit or the relative
instruments, documents or property, if in good faith and not constituting
gross negligence, shall be binding upon each Borrower and shall not place
the Agent or any of its correspondents under any liability to any Borrower.
Each Borrower agrees to indemnify the Agent and its correspondents and hold
them harmless from and against any and all claims, losses, liabilities and
damages, including without limitation reasonable attorneys' fees, arising
from or in connection with any Letter of Credit, including any such claim,
loss, liability or damage arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt
or other document at any time held by the Agent, or held for its account by
any of its correspondents, in connection with any Letter of Credit;
provided, however, that the foregoing shall not extend to actions taken by
the Agent unless such actions were taken in good faith by the Agent and,
with respect to drafts presented for payment, if it determines in good
faith that the drafts and related documents appear on their face to be in
accordance with the terms and conditions of the Letter of Credit in
question, and any action or failure to act in accordance with a written
opinion of its counsel shall conclusively be deemed to be in good faith.
11. Operations.
11.1. Interests in Credits. The percentage interest of each Lender
in the Revolving Loan and Letters of Credit shall be computed based on the
maximum principal amount for each Lender as follows:
<TABLE>
<CAPTION>
Maximum Principal Percentage Lender
Amount Interest
<S> <C> <C>
The First National $20,000,000 100%
Bank of Boston
Total $20,000,000 100%
</TABLE>
The foregoing percentage interests, as otherwise adjusted as the Lenders may
from time to time agree among themselves, are referred to as the "Percentage
Interests" with respect to all or any portion of the Revolving Loan and Letters
of Credit. References in any Credit
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Document to the Lenders' respective Percentage Interests are to such
interests as from time to time in effect.
11.2. Agent's Authority to Act. Each of the Lenders hereby
appoints and authorizes the Agent to act for the Lenders as the Lenders'
Agent in connection with the transactions contemplated by this Agreement
and the other Credit Documents on the terms set forth herein.
11.3. Borrowers to Pay Agent, etc. The Borrowers shall be
fully protected in making all payments in respect of the Credit Obligations
to the Agent, in relying upon consents, modifications and amendments
executed by the Agent purportedly on the Lenders' behalf, and in dealing
with the Agent as herein provided. The Agent shall charge the accounts of
the Borrowers, any amounts paid by the Agent to third parties under Letters
of Credit or drafts presented thereunder, Letter of Credit fees, on the
dates when the amounts thereof become due and payable, with the amounts of
the principal of and interest on the Loan for the Borrowers, commitment
fees, and all other fees and amounts owing under any Credit Document.
11.4. Lender Operations for Advances, etc.
11.4.1. Advances. On each Closing Date, each Lender
shall advance to the Agent in immediately available funds such
Lender's Percentage Interest in the portion of the Loans advanced on
such Closing Date prior to 10:00 a.m. (Boston time). If such funds
are not received at such time, but all the conditions set forth in
Section 5 have been satisfied, each Lender hereby authorizes and
requests the Agent to advance for the Lender's account, pursuant to
the terms hereof, the Lender's respective Percentage Interest in such
portion of the Loan and agrees to reimburse the Agent in immediately
available funds for the amount thereof prior to 2:00 p.m. (Boston
time) on the day any portion of the Loans is advanced hereunder;
provided, however, that the Agent shall be under no obligation to make
any such advance.
11.4.2. Agent to Allocate Payments. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, commitment fees, and other fees under this
Agreement shall, as a matter of convenience, be made by the Borrowers
to the Agent in immediately available funds, and the share of each
Lender shall be credited to such Lender by the Agent in immediately
available funds in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance
with the Lenders' respective Percentage Interests in such Credit
Obligations.
11.4.3. Letters of Credit. Each of the Lenders hereby
authorizes and requests the Agent to issue the Letters of Credit and
to grant each Lender a participation in each of such Letter of Credit
in an amount equal to its Percentage Interest in the amount of each
such Letter of Credit. Promptly upon the request of the Agent, each
Lender hereby agrees to reimburse the Agent in immediately available
funds for such Lender's
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Percentage Interest in the amount of all obligations to third
parties incurred by the Agent in respect of each Letter of Credit
and each draft accepted under a Letter of Credit to the extent
not reimbursed by the Borrowers. The Agent will notify each
Lender monthly of the issuance of any Letter of Credit, the
amount and date of payment of any draft drawn or accepted under a
Letter of Credit and whether in connection with the payment of
any such draft the amount thereof was added to the Revolving Loan
or was reimbursed by the Borrowers.
11.5. Sharing of Payments, etc. Each Lender agrees that (i) if
by exercising any right of set-off or counterclaim or otherwise, it
shall receive payment of a proportion of the aggregate amount of
principal and interest due with respect to its Percentage Interest in
the Loan which is greater than the proportion received by any other
Lender in respect of the aggregate amount of principal and interest
due with respect to the Percentage Interest in the Loan of such other
Lender and (ii) if such inequality shall continue for more than 10
days, the Lender receiving such proportionately greater payment shall
purchase participations in the Percentage Interests in the Loans held
by the other Lenders, and such other adjustments shall be made from
time to time, as may be required so that all such payments of
principal and interest with respect to the Loans held by the Lenders
shall be shared by the Lenders pro rata in accordance with their
respective Percentage Interests; provided, however, that this Section
11.5 shall not impair the right of any Lender to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to
such exercise to the payment of Indebtedness of any Obligor other than
Indebtedness with respect to the Loans. The Borrowers agree, to the
fullest extent permitted by applicable law, that any Credit
Participant and any Lender purchasing a participation from another
Lender pursuant to this Section 11.5 may exercise all rights of
payment (including the right of set-off), and shall be obligated to
share payments under this Section 11.5, with respect to its
participation as fully as if such Credit Participant or such Lender
were the direct creditor of the Borrowers and a Lender hereunder in
the amount of such participation.
11.6. Amendments, Consents, Waivers, etc. Except as
otherwise set forth herein, the Agent may (and upon the written
request of the Majority Lenders shall) take or refrain from taking any
action under this Agreement or any other Credit Document, including
giving its written consent to any modification of or amendment to and
waiving in writing compliance with any covenant or condition in this
Agreement or any other Credit Document or any Default or Event of
Default hereunder or thereunder, all of which actions shall be binding
upon all of the Lenders; provided, however, that without the written
consent of such Lenders as own 100% of the Percentage Interests (other
than Delinquent Lenders during the existence of a Delinquency Period
so long as such Delinquent Lender is treated the same as the other
Lenders with respect to any actions enumerated below):
(i) No reduction in the interest rate on the Loans shall be
made.
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(ii) No extension or postponement of the stated time of
payment of all or any portion of the Loans or interest thereon
shall be made.
(iii) No increase in the amount, or extension of the term,
of the Lenders' commitments beyond that provided for in Section 2
shall be made.
(iv) No alteration of the Lenders' several rights of
set-off contained in Section 11.5 shall be made.
(v) No release of any Credit Security other than as
permitted by Section 7.12 and other than assets having an
aggregate fair value not exceeding $1,000,000 shall be made.
11.7. Agent's Resignation. The Agent may resign at any
time by giving at least 60 days' prior written notice of its intention
to do so to each other of the Lenders and upon the appointment by the
Majority Lenders of a successor Agent satisfactory to the Borrowers.
If no successor Agent shall have been so appointed and shall have
accepted such appointment within 45 days after the retiring Agent's
giving of such notice of resignation, then the retiring Agent may with
the consent of the Borrowers, which shall not be unreasonably
withheld, appoint a successor Agent which shall be a bank or a trust
company organized under the laws of the United States of America or
any state thereof and having a combined capital, surplus and undivided
profit of at least $25,000,000; provided, however, that any successor
Agent appointed under this sentence may be removed upon the written
request of the Majority Lenders, which request shall also appoint a
successor Agent satisfactory to the Borrowers. Upon the appointment
of a new Agent hereunder, the term "Agent" shall for all purposes of
this Agreement thereafter mean such successor. After any retiring
Agent's resignation hereunder as Agent, or the removal hereunder of
any successor Agent, the provisions of this Agreement shall continue
to inure to the benefit of such Agent as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
11.8. Concerning the Agent.
11.8.1. Action in Good Faith, etc. The Agent and
its officers, directors, employees and agents shall be under no
liability to any of the Lenders or to any future holder of any
interest in the Credit Obligations for any action or failure to
act taken or suffered in good faith and not constituting gross
negligence, and any action or failure to act in accordance with a
written opinion of its counsel shall conclusively be deemed to be
in good faith and not grossly negligent. The Agent shall in all
cases be entitled to rely, and shall be fully protected in
relying, on instructions given to the Agent by the required
holders of Credit Obligations as provided in this Agreement.
11.8.2. No Implied Duties, etc. The Agent shall have and
may exercise such powers as are specifically delegated to the
Agent under this Agreement or any other
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Credit Document together with all other powers incidental thereto. The
Agent shall have no implied duties to any Person or any obligation to
take any action under this Agreement or any other Credit Document
except for action specifically provided for in this Agreement or any
other Credit Document to be taken by the Agent. Before taking any
action under this Agreement or any other Credit Document, the Agent
may request an appropriate specific indemnity satisfactory to it from
each Lender in addition to the general indemnity provided for in
Section 11.11 and until the Agent has received such specific
indemnity, the Agent shall not be obligated to take (although it may
in its sole discretion take) any such action under this Agreement or
any other Credit Document.
11.8.3. Validity, etc. Subject to Section 11.8.1, the
Agent shall not be responsible to any Lender or any future holder of
any interest in the Credit Obligations (i) for the legality, validity,
enforceability or effectiveness of this Agreement or any other Credit
Document, (ii) for any recitals, reports, representations, warranties
or statements contained in or made in connection with this Agreement
or any other Credit Document, (iii) for the existence or value of any
assets included in any security for the Credit Obligations, (iv) for
the perfection or effectiveness of any Lien purported to be included
in such security or (v) for the specification or failure to specify
any particular assets to be included in such security.
11.8.4. Compliance. The Agent shall not be obligated to
ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Credit Document; and in
connection with any extension of credit under this Agreement or any
other Credit Document, the Agent shall be fully protected in relying
on a certificate of any of the Borrowers or any guarantor as to the
fulfillment by the Borrowers of any conditions to such extension of
credit.
11.8.5. Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent under this Agreement or any other
Credit Document by or through employees, agents and attorneys-in-fact
and shall not be answerable to any of the Lenders, any of the
Borrowers or any other Subsidiary (except as to money or securities
received by the Agent or the Agent's authorized agents) for the
default or misconduct of any such agents or attorneys-in-fact selected
by the Agent with reasonable care. The Agent shall be entitled to
advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder or under any other Credit
Document.
11.8.6. Reliance on Documents and Counsel. The Agent
shall be entitled to rely, and shall be fully protected in relying,
upon any affidavit, certificate, cablegram, consent, instrument,
letter, notice, order, document, statement, telecopy, telegram, telex
or teletype message or writing reasonably believed in good faith by
the Agent to the genuine and correct and to have been signed, sent or
made by the Person in question, including without limitation any
telephonic or oral statement made by such
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Person, and, with respect to legal matters, upon the written opinion
of counsel selected by the Agent.
11.8.7. Agent's Reimbursement. Each of the Lenders
severally agrees to reimburse the Agent in the amount of such Lender's
Percentage Interest, for any expenses not reimbursed by the Borrowers
(without limiting the obligation of the Borrowers to make such
reimbursement): (i) for which the Agent is entitled to reimbursement
by the Borrowers under this Agreement or any other Credit Document,
and (ii) after the occurrence of a Default, for any other expenses
incurred by the Agent on the Lenders' behalf in connection with the
enforcement of the Lenders' rights under this Agreement or any other
Credit Document.
11.9. Rights as a Lender. With respect to any credit extended
by it hereunder, The First National Bank of Boston shall have the same
rights, obligations and powers hereunder as any other Lender and may
exercise such rights and powers as though it were not the Agent, and unless
the context otherwise specifies, The First National Bank of Boston shall be
treated in its individual capacity as though it were not the Agent
hereunder. Without limiting the generality of the foregoing, the
Percentage Interest of The First National Bank of Boston shall be included
in any computations of Percentage Interests. The First National Bank of
Boston and its Affiliates may accept deposits from, lend money to, act as
trustee for and generally engage in any kind of banking or trust business
with the Borrowers, any Subsidiary or any Affiliate of any of them and any
Person who may do business with or own an equity interest in the Borrowers,
any of its Subsidiaries or any Affiliate of any of them, all as if such
bank were not the Agent and without any duty to account therefor to the
other Lenders.
11.10. Independent Credit Decision. Each of the Lenders
acknowledges that it has independently and without reliance upon the Agent,
based on the financial statements and other documents referred to in
Section 8.2, on the other representations and warranties contained herein
and on such other information with respect to each of the Borrowers and
their respective Subsidiaries as such Lender deemed appropriate, made such
Lender's own credit analysis and decision to enter into this Agreement and
to make the extensions of credit provided for hereunder. Each Lender
represents to the Agent that such Lender will continue to make its own
independent credit and other decisions in taking or not taking action under
this Agreement or any other Credit Document. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to such Lender, and no act by the Agent taken
under this Agreement or any other Credit Document, including any review of
the affairs of the Borrowers and any of their Subsidiaries, shall be deemed
to constitute any representation or warranty by the Agent. Except for
notices, reports and other documents expressly required to be furnished to
each Lender by the Agent under this Agreement or any other Credit Document,
the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition, financial or otherwise, or credit worthiness of the
Borrowers or any of their Subsidiaries which may
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come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
11.11. Indemnification. The holders of the Credit
Obligations hereby agree to indemnify the Agent (to the extent not
reimbursed by the Obligors and without limiting the obligation of any of
the Obligors to do so), pro rata according to their respective Percentage
Interests, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Agent relating to or arising out of
this Agreement, any other Credit Document, the transactions contemplated
hereby or thereby, or any action taken or omitted by the Agent in
connection with any of the foregoing; provided, however, that the foregoing
shall not extend to actions or omissions which are taken by the Agent with
gross negligence or willful misconduct.
12. Successors and Assigns. Any reference in this Agreement to
any of the parties hereto shall be deemed to include the successors and
assigns of such party, and all covenants and agreements by or on behalf
of the Borrowers, the Agent or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective
successors and assigns; provided, however, that (a) the Borrowers may not
assign their rights or obligations under this Agreement, and (b) the
Lenders may not assign their respective Percentage Interests in the Loan
hereunder except as set forth below in this Section 12.
12.1. Assignments by Lenders.
12.1.1. Assignees and Assignment Procedures. Any Lender
may, with the consent of the Borrowers (which consent shall not be
unreasonably withheld) and the consent of the Majority Lenders (which
consent shall not be unreasonably withheld), assign to one or more
banks or other institutional lenders (each an "Assignee") (a) in the
case of any Lender other than the Agent, all but not less than all,
and (b) in the case of the Agent, all or a portion (which shall not be
less than $5,000,000), of its interests, rights and obligations under
this Agreement and the other Credit Documents. From and after the
effective date specified in each assignment agreement:
(i) the Assignee shall be a party hereto and, to the extent
provided in such assignment agreement have the rights and obligations
of the assigning Lender under this Agreement, and
(ii) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this Agreement.
12.1.2. Acceptance of Assignment and Assumption. Upon
the execution of an assignment agreement pursuant to this Section 12,
the assigning Lender shall give prompt notice thereof to the Borrowers
and the Agent. Within five Banking Days after
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receipt of notice, the Borrowers, at their own expense, shall execute
and deliver to the assigning Lender, in exchange for each surrendered
Note, (i) a new Note to the order of such Assignee in a principal
amount equal to the amount of the Loans evidenced by the surrendered
Note which has been assumed by such Assignee pursuant to such
assignment agreement and (ii) a new Note to the order of the assigning
Lender in a principal amount equal to the amount of the Loan evidenced
by the surrendered Note which has been retained by such assigning
Lender. Such new Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Notes, and
shall be dated the date of the surrendered Notes which they replace.
12.1.3. Federal Reserve Bank. Notwithstanding the
foregoing provisions of this Section 12, each Lender and any Assignee
may at any time pledge or assign all or any portion of such Person's
rights under this Agreement and the other Credit Documents to a
Federal Reserve Bank; provided, however, that no such pledge or
assignment shall release such Person from such Person's obligations
hereunder or under any other Credit Document.
12.1.4. Further Assurances. The Borrowers shall sign
such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the
benefits of the rights created by the Credit Documents.
12.2. Credit Participants. Any Lender may, without the
consent of the Borrowers, in compliance with applicable laws in connection with
such participation, sell to one or more "qualified institutional investors" as
defined in Rule 144A under the Securities Act (each a "Credit Participant")
participations in all or a portion of its interests, rights and obligations
under this Agreement and the other Credit Documents; provided, however, that:
(a) such Lender's obligations under this Agreement shall remain
unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations; and
(c) the Borrowers shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrowers under this Agreement or any
Credit Document and to approve any amendment, modification or waiver
of any provision of this Agreement or any Credit Document (other than
amendments, modifications or waivers with respect to any fees payable
hereunder or the amount of principal of or the rate at which interest
is payable on the Loan, or the stated dates for payments of principal
of or interest on the Loan).
13. Notices. Except as otherwise specified in this Agreement, any
notice required to be given pursuant to this Agreement shall be given in
writing. Any notice, demand or other
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communication in connection with this Agreement shall be deemed to be given if
given in writing (including telex, telecopy or similar teletransmission)
addressed as provided below (or to the addressee at such other address as the
addressee shall have specified by notice actually received by the addressor),
and if either (i) actually delivered in fully legible form to such address
(evidenced in the case of a telex by receipt of the correct answer back) or (ii)
in the case of a letter, five days shall have elapsed after the same shall have
been deposited in the United States mails, with first-class postage prepaid and
registered or certified.
If to any of the Borrowers, to them at their addresses set forth in Exhibit
8.1 (as supplemented pursuant to Section 7.4), to the attention of their
respective Presidents.
If to the Agent, to it at its address set forth on the signature page of
this Agreement, to the attention of the account offices specified on the
signature page, with a copy to David A. McKay, Esq., Ropes & Gray, One
International Place, Boston, MA 02110.
If to any Lenders, to them at their respective addresses set forth on the
signature page of this Agreement, to the attention of the account officer
specified on the signature page, with a copy to the Agent.
14. Course of Dealing, Amendments and Waivers. No course of dealing between
any Lenders and the Borrowers or any Subsidiary or Affiliate of the Borrowers
shall operate as a waiver of any of the Lenders' rights under this Agreement or
any other Credit Document or with respect to the Credit Obligations. No delay
or omission on the part of any Lender in exercising any right under this
Agreement or any other Credit Document or with respect to the Credit Obligations
shall operate as a waiver of such right or any other right hereunder or
thereunder. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion. No waiver, consent or
amendment with respect to this Agreement or any other Credit Document shall be
binding unless it is in writing and signed by the Agent or the holders of the
required Credit Obligations.
15. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Borrowers hereunder or under any other Credit Document, this
Agreement shall terminate and, at the Borrowers's written request, accompanied
by such certificates and opinions as the Agent shall reasonably deem necessary,
the Credit Security shall revert to the Borrowers and the right, title and
interest of the Lenders therein shall terminate. Thereupon, on the Borrowers's
demand and at their cost and expense, the Agent shall execute proper
instruments, acknowledging satisfaction of and discharging this Agreement, and
shall redeliver to the Borrowers any Credit Security then in its possession;
provided, however, that Sections 9, 11.8.7, 11.11, 16, 17 and 19 shall survive
the termination of this Agreement.
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16. Venue; Service of Process. Each of the Borrowers and the Lenders by its
execution hereof:
(i) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the
nonexclusive jurisdiction of the United States District Court for the
District of Massachusetts for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement or any other
Credit Document or the subject matter hereof or thereof.
(ii) Waives to the extent not prohibited by applicable law, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such proceeding brought in any of the above-named courts, any
claim that it is not subject personally to the jurisdiction of such
court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum,
that the venue of such proceeding is improper, or that this Agreement
or any other Credit Document, or the subject matter hereof or thereof,
may not be enforced in or by such court.
Each of the Borrowers and the Lenders consents to service of process in any
such proceeding in any manner permitted by Chapter 223A of the General Laws of
The Commonwealth of Massachusetts and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified in or pursuant to Section 13 is reasonably calculated to give actual
notice.
17. Joint and Several Liability. Any obligations of the Borrowers, including
without limitation any obligations of any of the Borrowers, shall be joint and
several obligations of the Borrowers.
18. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been material and relied on
by each Lender, notwithstanding any investigation made by any Lender on its
behalf, and shall survive the execution and delivery to the Lenders hereof and
thereof. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only
and shall not limit, alter or otherwise affect the meaning hereof. This
Agreement and the other Credit Documents constitute the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede
all prior and current understandings and agreements, whether written or oral.
This Agreement may be executed in any number of counterparts which together
shall constitute one instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(OTHER THAN THE CONFLICT OF LAWS RULES).
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19. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE BORROWERS, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT, OR THE BORROWERS
OR ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE.
Each of the Borrowers and the other Obligors acknowledges that it has been
informed by the Agent that the provisions of this Section 19 constitute a
material inducement upon which each of the Lenders has relied and will rely in
entering into this Agreement and any other Credit Document, and that it has
reviewed the provisions of this Section 19 with its counsel. Any Lender, the
Agent, the Borrowers or any other Obligor may file an original counterpart or a
copy of this Section 19 with any court as written evidence of the consent of the
Borrowers, the other Obligors, the Agent and the Lenders to the waiver of their
rights to trial by Jury.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
BOOTH CREEK SKI HOLDINGS, INC.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
By: /s/ Jeffrey J. Joyce
------------------------------
Title: Executive Vice President
THE FIRST NATIONAL BANK OF BOSTON
as Agent
By: /s/ Andrew T. Fay
---------------------------
Title: Vice President
100 Federal Street
Boston, Massachusetts 02110
Attention: Andrew T. Fay
Telecopy: (617) 434-9204
THE FIRST NATIONAL BANK OF BOSTON
as Lender
By: /s/ Andrew T. Fay
---------------------------
Title: Vice President
100 Federal Street
Boston, Massachusetts 02110
Attention: Andrew T. Fay
Telecopy: (617) 434-9204
[Credit Agreement]
<PAGE> 79
EXHIBIT 2.1.4
FORM OF REVOLVING NOTE
N-__
March __, 1997
FOR VALUE RECEIVED, the undersigned, Booth Creek Ski Holdings Inc., a
Delaware corporation (together with its successors and assigns, "BCS
Holdings"), Booth Creek Ski Acquisition Corp., a Delaware corporation (together
with its successors and assigns, "BCS Acquisition"), Trimont Land Company, a
California corporation (together with its successors and assigns,
"Northstar-at-Tahoe"), Sierra-at-Tahoe, Inc., a Delaware corporation (together
with its successors and assigns, "Sierra-at-Tahoe"), Bear Mountain, Inc., a
Delaware corporation (together with its successors and assigns, "Bear
Mountain"), Waterville Valley Ski Resort, Inc., a Delaware corporation
(together with its successors and assigns, "Waterville"), Mount Cranmore Ski
Resort, Inc., a Delaware corporation (together with its successors and assigns,
"Cranmore"), Ski Lifts, Inc., a Washington corporation (together with its
successors and assigns, "Ski Lifts"), and Grand Targhee Incorporated, a
Delaware corporation (together with its successors and assigns, "Grand
Targhee", and together with BCS Holdings, BCS Acquisition, Northstar-
at-Tahoe, Sierra-at-Tahoe, Bear Mountain, Waterville, Cranmore, and Ski Lifts,
the "Borrowers", and each a "Borrower"), hereby jointly and severally promise
to pay [INSERT LENDER] (the "Lender") or order, on March 31, 1999, the
aggregate unpaid principal amount of the loans made by the Lender to the
Borrowers pursuant to the Credit Agreement referred to below. The Borrowers
promise to pay daily interest from the date hereof, computed as provided in
such Credit Agreement, on the aggregate principal amount of such loans from
time to time unpaid at the per annum rate applicable to such unpaid principal
amount as provided in such Credit Agreement, such interest being payable at the
times specified in such Credit Agreement, except that all accrued interest
shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof.
Payments hereunder shall be made to The First National Bank of Boston,
as agent for the payee hereof (the "Agent"), at 100 Federal Street, Boston,
Massachusetts 02110.
All loans made by the Lender pursuant to the Credit Agreement referred
to below and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such loan then outstanding shall be
endorsed by the Lender on the schedule attached hereto or on a continuation of
such schedule attached to and made a part hereof; provided, however, that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrowers under this Revolving Note, such Credit
Agreement or under any other Credit Document.
This Revolving Note evidences borrowings under, and is entitled to the
benefits and security of, and is subject to the provisions of, the Credit
Agreement dated as of December 3,
<PAGE> 80
1996, as amended and restated as of March ___, 1997, as from time to time in
effect (the "Credit Agreement"), among the Borrowers, the Agent, the Lender and
certain other lenders. The principal of this Revolving Note is prepayable in
the amounts and under the circumstances set forth in the Credit Agreement, and
may be prepaid in whole or from time to time in part, all as set forth in the
Credit Agreement. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined.
In case an Event of Default shall occur, the entire principal of this
Revolving Note may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (OTHER THAN THE CONFLICT OF LAWS
RULES).
The parties hereto, including the Borrowers and all guarantors and
endorsers, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance
and enforcement of this Revolving Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of payment,
or forbearance or other indulgence without notice.
BOOTH CREEK SKI HOLDINGS, INC.
By ___________________________
Title: Executive Vice President
BOOTH CREEK SKI ACQUISITION CORP.
By ___________________________
Title: Vice President
TRIMONT LAND COMPANY
By __________________________
Title: Vice President
SIERRA-AT-TAHOE, INC.
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<PAGE> 81
By __________________________
Title: Vice President
BEAR MOUNTAIN, INC.
By __________________________
Title: Vice President
WATERVILLE VALLEY SKI RESORT, INC.
By __________________________
Title: Vice President
MOUNT CRANMORE SKI RESORT, INC.
By __________________________
Title: Vice President
SKI LIFTS, INC.
By __________________________
Title: Vice President
GRAND TARGHEE INCORPORATED
By __________________________
Title: Vice President
LOAN AND PAYMENTS OF PRINCIPAL
____________________________________________________________
Amount Amount of Unpaid
of Principal Principal Notation
Date Loan Repaid Balance Made By
____________________________________________________________
-iii-
<PAGE> 82
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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<PAGE> 83
EXHIBIT 5.2.1
FORM OF OMNIBUS OFFICER'S CERTIFICATE
(For Closing Date)
Pursuant to Section 5.2.1 of the Credit Agreement dated as of
December 3, 1996, as amended and restated as of March __, 1997 and as now in
effect (the "Credit Agreement"), among the undersigned Booth Creek Ski
Holdings, Inc., Booth Creek Ski Acquisition Corp., Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc, Waterville Valley Ski Resort, Inc.,
Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc., and Grand Targhee
Incorporated (collectively the "Borrowers"), The First National Bank of Boston,
a national banking association ("FNBB"), the other Lenders, and FNBB, as Agent
for itself and the other Lenders, the Borrowers represent and warrant that the
representations and warranties contained in Section 8 of the Credit Agreement,
and the representations and warranties of each of the Borrowers under the
Security Agreements and the Mortgages are true and correct in all material
respects on and as of the date hereof with the same force and effect as though
originally made on and as of the date hereof; after giving effect to the
requested extension of credit under the Credit Agreement, no Default exists;
and no Material Adverse Change has occurred.
Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings so defined.
This certificate has been executed by a duly authorized Executive
Officer or Financial Officer of each of the Borrowers this ___ day of
___________, 19__.
BOOTH CREEK SKI HOLDINGS, INC.
By: ___________________________
Title: Executive Vice President
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<PAGE> 84
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
SKI LIFTS, INC.
MOUNT CRANMORE SKI RESORT, INC.
WATERVILLE VALLEY SKI RESORT, INC.
GRAND TARGHEE INCORPORATED
By:_____________________________
Title: Vice President
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<PAGE> 85
EXHIBIT 7.4.1
OFFICER'S CERTIFICATE
(For Annual Financial Statements and Reports)
Pursuant to Section 7.4.1 of the Credit Agreement dated as of December
3, 1996, as amended and restated as of March ___, 1997 and as now in effect
(the "Credit Agreement"), among the undersigned Booth Creek Ski Holdings, Inc.,
Booth Creek Ski Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe, Inc.,
Bear Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Ski Lifts, Inc., and Grand Targhee Incorporated (collectively the
"Borrowers"), The First National Bank of Boston, a national banking association
("FNBB"), the other Lenders, and FNBB, as Agent for itself and the other
Lenders, the Borrowers represent and warrant that (i) no Default exists as of
the date hereof except as set forth in Exhibit A attached hereto; (ii) no
changes have occurred in GAAP since October 31, 1996 affecting the Borrowers
except as set forth in Exhibit B attached hereto; and (iii) the Schedule of
Computations set forth in Exhibit C attached hereto demonstrates, as of the
close of the fiscal year just ended, compliance with the Computation Covenants.
Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings so defined.
This certificate has been executed by a duly authorized Financial
Officer of Booth Creek Ski Holdings, Inc. this ____ day of _________, 19__.
BOOTH CREEK SKI HOLDINGS, INC.
By:___________________________
Title: Executive Vice President
-iii-
<PAGE> 86
EXHIBIT 7.4.2
OFFICER'S CERTIFICATE
(For Quarterly Financial Statements and Reports)
Pursuant to Section 7.4.2 of the Credit Agreement dated as of December
__, 1996, as amended and restated as of March ___, 1997, as now in effect (the
"Credit Agreement"), among the undersigned Booth Creek Ski Holdings, Inc.,
Booth Creek Ski Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe, Inc.,
Bear Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Ski Lifts, Inc., and Grand Targhee Incorporated (collectively the
"Borrowers"), The First National Bank of Boston, a national banking association
("FNBB"), the other Lenders, and FNBB, as Agent for itself and the other
Lenders, the Borrowers represent and warrant that (i) the financial statements
furnished pursuant to Section 7.4.2 have been prepared in accordance with GAAP
and present fairly, in all material respects, the financial position of the
Borrowers at the dates thereof and the results of its operations for the
periods covered thereby, subject only to normal year- end audit adjustments and
the addition of footnotes; (ii) no Default exists as of the date hereof except
as set forth in Exhibit A attached hereto; and (iii) the Schedule of
Computations set forth in Exhibit B attached hereto demonstrates, as of the
close of the fiscal quarter just ended, compliance with the Computation
Covenants.
Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings so defined.
This certificate has been executed by a duly authorized Financial
Officer of Booth Creek Ski Holdings, Inc., this ____ day of _________, 19__.
BOOTH CREEK SKI HOLDINGS, INC.
By:___________________________
Title:
-iv-
<PAGE> 87
EXHIBIT 7.18
Environmental Cleanup
1. Snoqualmie Pass, Washington.
# Remove four heating oil underground storage tanks used to heat
several buildings at Snoqualmie and, if necessary, remediate
any contamination associated with such tanks.
# Repair floors in the maintenance areas at Alpental, Snoqualmie
and Ski Acres resorts so as to eliminate any potential pathway
for hazardous materials into the environment.
# Evaluate nature and extent of any contamination associated
with two above-ground storage tanks containing diesel and
gasoline located near the Alpental maintenance shop and any
contamination associated with stained soils or pools of liquid
associated with other above-ground storage tanks.. Remediate
any contamination discovered with respect to such tanks in
accordance with applicable federal, state and local laws,
rules and regulations. Provide secondary containment for such
tanks.
# Comply with all applicable reporting and record keeping
requirements set forth in SARA Title III, Sections 311 and 312.
# Test all potentially hazardous wastes generated onsite to
determine if they qualify as hazardous waste under RCRA or any
equivalent state or local law, rule or regulation. To the
extent such wastes are determined to be hazardous, such wastes
must be handled, stored and disposed of in compliance with all
applicable federal, state and local laws, rules or
regulations. Prepare and implement a plan for compliance with
RCRA or any equivalent state or local law, rule or regulation
regarding reporting or record keeping relating to hazardous
wastes.
# Operate any space heaters located at Ski Acres or other
facilities which are used to burn used oil in compliance with
all applicable federal, state or local requirements.
# Perform any testing, record keeping or reporting required by
federal, state or local law, rule or regulation ground water
wells.
-v-
<PAGE> 88
# Obtain any required permits for any aboveground or underground
tanks used to store hazardous substances or petroleum products.
# Create and implement compliance plan for handling waste
antifreeze generated from vehicle maintenance operations in
compliance with all applicable federal, state or local
environmental laws rules or regulations.
# Create and implement compliance plan for handling, storing and
disposing of used oil filters in accordance with federal,
state or local laws, rules or regulations.
# Develop an asbestos operation and maintenance plan and
implement same to assure that the presumed asbestos containing
materials identified in the ENVIRON January 20, 1997 report
are properly managed.
# Prepare a spill prevention control and countermeasures plan
(SPCC).
# Prepare a written hazard communication plan or a
lockout/tag-out plan and maintain a complete set of MSDS
forms, as required by law.
# Store all oils, hydraulic fluids, solvents or antifreezes
stored at the Alpental, Snoqualmie and Ski Acres maintenance
buildings in approved and segregated hazardous material
storage area and secondary containment must be provided.
# Remediate visible staining of the floor areas so as to comply
with all applicable federal, state or local environmental laws
rules or regulations.
# Prepare a plan to address the occupational safety and health
issues identified in the January 20, 1997 ENVIRON report.
2. Grand Targhee Ski & Summer Resort, Alta, Wyoming.
# Evaluate nature and extent of any contamination associated
with soils underlying a concrete pit and two former floor
drains located within the lower maintenance building at Grand
Targhee Ski & Summer Resort as detailed in the February 4,
1997, letter from ENVIRON to Eleni Kouimelis, Esq. Remediate
any contamination discovered with respect to such pit and
drains in accordance with applicable federal, state and local
laws, rules and regulations.
-vi-
<PAGE> 89
# Complete construction of new wastewater treatment plant in
compliance with applicable federal, state and local laws,
rules and regulations, including the compliance order entered
with the Wyoming Department of Environmental Quality.
Evaluate and, if necessary, remediate or dispose of existing
wastewater treatment lagoon sludges in compliance with
applicable federal, state and local laws, rules and
regulations.
# Evaluate nature and extent of any contamination associated
with several areas of soil contamination identified in the
vicinity of lower maintenance building in the May,
1996, Nelson Engineering and January 17, 1997 ENVIRON
Corporation reports. Remediate any contamination discovered
with respect to such areas in accordance with applicable
federal, state and local laws, rules and regulations.
# Provide secondary containment for existing above-ground fuel
storage tanks located west of the maintenance building used to
fuel Grand Targhee vehicles and for the waste oil tank located
adjacent to the lower maintenance building.
# Discontinue practice of vehicle maintenance and steam cleaning
over concrete pit located in the lower maintenance building.
# Develop an alternative plan for treatment and disposal of oily
wastewater, including installation of an oil-water separator
system and secondary containment for the waste oil storage
tank and discharge of treated water to new package wastewater
treatment system following construction during 1998/1999 ski
season.
# Develop SPCC plan for Grand Targhee.
# Determine whether emergency generators require registration
under WDEQ Air Quality Standards. If so, register such
generators.
# Dispose of all spent mineral spirits in accordance with all
applicable federal, state and local law, rules or regulations.
# Comply with all applicable reporting and record keeping
requirements set forth in SARA Title III Sections 311 and 312.
# Prepare written hazard communication plan and a
lockout/tag-out plan, or a noise conservation program as
outlined in the ENVIRON January 1997 report.
-vii-
<PAGE> 90
Exhibit 8.1--The Borrowers and their Subsidiaries
<TABLE>
<CAPTION>
LEGAL NAME AND
JURISDICTION OF CHIEF EXECUTIVE OFFICER; NAME UNDER WHICH JURISDICTIONS IN WHICH
INCORPORATION CHIEF PLACE OF BUSINESS BUSINESS CONDUCTED NAME IS USED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Booth Creek Ski Holdings, Highway 267 & Northstar Booth Creek Ski Holdings, N.H., California,
Inc. (Delaware) Drive, Truckee, CA 96160 Inc. Washington and Wyoming
- ----------------------------------------------------------------------------------------------------------------------
Booth Creek Ski Acquisition Highway 267 & Northstar Booth Creek Ski Acquisition N.H., California,
Corp. (Delaware) Drive, Truckee, CA 96160 Corp. Washington and Wyoming
- ----------------------------------------------------------------------------------------------------------------------
Mount Cranmore Ski Resort, Chief Executive Office: Mount Cranmore Ski Resort, New Hampshire
Inc. (Delaware) 1000 Highway 267 & Inc.
Northstar Drive, Truckee,
CA 96160
Chief Place of Business;
Skimobile Road,
North Conway, N.H. 03860
- ----------------------------------------------------------------------------------------------------------------------
Waterville Valley Ski Chief Executive Office: Waterville Valley Ski New Hampshire
Resort, Inc. (Delaware) 1000 Highway 267 & Resort, Inc.
Northstar Drive, Truckee,
CA 96160
Chief Place of Business:
1 Ski Area Road
Waterville Valley, N.H.
03215
- ----------------------------------------------------------------------------------------------------------------------
Trimont Land Company Highway 267 & Northstar Northstar-at-Tahoe California
(California) Drive, Truckee, CA 96160
- ----------------------------------------------------------------------------------------------------------------------
Sierra-at-Tahoe, Inc. Chief Executive Office: Sierra-at-Tahoe, Inc. California
(Delaware) Highway 267 &
Northstar Drive, Truckee,
CA 96160
Chief Place of Business:
1111 Sierra-at-Tahoe Road
Twin Bridges, CA 95735
- ----------------------------------------------------------------------------------------------------------------------
Bear Mountain, Inc. Chief Executive Office: Bear Mountain, Inc. California
(Delaware) Highway 267 &
Northstar Drive, Truckee,
CA 96160
Chief Place of Business:
Big Bear Lake, CA 92315
- ----------------------------------------------------------------------------------------------------------------------
Ski Lifts, Inc. Chief Executive Office: Ski Lifts Washington
Highway 267 & Snoqualmie
Northstar Drive, Truckee, Alpental
CA 96160 Ski Acres
Chief Place of Business: Hyak
Snoqualmie Pass, Washington The Pass
- ----------------------------------------------------------------------------------------------------------------------
Grand Targheee, Incorporated Chief Executive Office: Grand Targhee Wyoming
Highway 267 & Grand Targhee Ski and
Northstar Drive, Truckee, Summer Resort
CA 96160
Chief Place of Business:
Ski Hill Road
Alta, Wyoming 83422
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 91
Exhibit 8.4--Financing Debt. etc.
FINANCING DEBT AMOUNT OUTSTANDING
- - Senior Unsecured Notes $100 million/$116 million
- - ASC Subordinated Note $2,750,000
- - Bombardier-Cranmore $ 75,360
- - Bombardier-Waterville $ 204,160 (based on certain
usage over life of lease)
- - Orix Credit Alliance-Waterville $ 819,471
- - Townline Equipment Sales-Waterville $ 35,193
- - Ski Data-Cranmore $ 154,508
- - Advance Previously made to G. Targhee $ 655,000
by an Affiliate of Gary Rogers, a prior
potential purchaser of G. Targhee
- - Grand Targhee/Case Financial Equipment $ 9,145
- - Grand Targhee/AT&T Leasing $ 17,450
- - Grand Targhee/Citicorp Leasing $ 60,340
- - Grand Targhee/Jackson Hole Resort Association $ 13,630
- - Ski Lifts/KeyCorp. Leasing $ 150,000
- - See attached schedule of Capital Leases
LIENS AND GUARANTEES
- - "Credit Security" (as defined in the Agreement).
- - The Senior Unsecured Notes are guaranteed by the Subsidiaries of Booth
Creek Ski Holdings, Inc. other than DRE, L.L.C., B-V Corporation,
Targhee Company and Targhee Ski Corp.
- - The ASC Subordinated Note is secured by a mortgage and pledge of
substantially all of the assets of Cranmore and Waterville.
- - The equipment and components constituting a ski lift, commonly known as
Cranmore A.K.A. New Quad Express Lift, including all fixtures, is
secured by a security agreement by Doppelmayer USA, Inc. The payment
obligations to Doppelmayer have not been assumed by Booth Creek Ski
Acquisition Corp., Cranmore or Waterville. Such obligations have been
retained by ASC or an ASC Affiliate under the ASC Acquisition Documents.
- - Bombardier Capital, Inc. has a security interest in all Bombardier
equipment leased at both Cranmore and Waterville Valley.
- - Orix Credit Alliance, Inc. has a security interest in certain equipment
leased under the Orix Credit Alliance Lease.
<PAGE> 92
- - Liens as provided in the leases set forth in the attached Schedule of
Leases.
- - Lien on stock of Booth Creek Ski Holdings, Inc. granted by Booth Creek Ski
Group, Inc. to holders of notes under the Securities Purchase Agreements.
- - Booth Creek Ski Holdings, Inc. has issued a guaranty of workers'
compensation liability of Ski Lifts.
<PAGE> 93
<TABLE>
<CAPTION>
PROPERTY DESCRIPTION TERM
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter Miller dba CAMCO (tenant)/Rent of Trimont's Premises 6/1/91 (no term indicated)
- -------------------------------------------------------------------------------------------------------------------------------
CIT Group/Equipment Financing, Inc. Master Lease 11/21/95
Schedule: 1. AMFIT 11/21/95 to 4/21/98
2. Hypercom 11/21/95 to 4/21/98
3. Waxers & Binding Machines 11/21/95 to 4/21/98
4. PRANCE 12/12/95 to 4/12/98
5. LMC 12/12/95 to 4/12/98
6. Bombardier 12/12/95 to 3/21/98
- -------------------------------------------------------------------------------------------------------------------------------
CIT Group/Equipment Financing, Inc. - Master Lease 12/16/93
Schedule: 1. Bombardier & Kassbohrer expired
2. Stonegrinder & Binding Machines 11/07/94 to 4/15/97
3. Bombardier 11/07/94 to 12/96
4. Kassbohrer 12/09/94 to 4/21/98
5. Roba 02/04/95 to 4/17/01
- -------------------------------------------------------------------------------------------------------------------------------
Motorola (lessee) and Consent of Trimont to license agreement between Motorola and Nextel 11/8/94 to 11/8/99
- -------------------------------------------------------------------------------------------------------------------------------
Ellen Marie Roland (tenant)/"Photo Shop" Building to 10/31/96
- -------------------------------------------------------------------------------------------------------------------------------
Toyota Motor Sales USA, Inc./5 Toyota Vehicles to 11/15/96
- -------------------------------------------------------------------------------------------------------------------------------
First Interstate Bank of Nevada/Master Lease 6/1/94
Schedule A: 3 El Dorado 25 Passenger Buses 6/1/94 to 6/1/99
Schedule B: 2 Toyota Pickups 6/1/94 to 6/1/97
- -------------------------------------------------------------------------------------------------------------------------------
USL International, Inc. (lessor)/Bus lease 2/13/93 to 2/13/98
- -------------------------------------------------------------------------------------------------------------------------------
Web Service Co./Laundry Facilities lease 6/12/92 to 6/11/94
- -------------------------------------------------------------------------------------------------------------------------------
Karl Kuttel/Billboard lease 10/1/96 to 9/30/97
- -------------------------------------------------------------------------------------------------------------------------------
LMC Operating Corp. lease of Equipment - Beartrac 9/15/93 to 4/15/94
Lease A: LMC Lease #1447A (4/24/92)
Lease B: LMC Lease #1447B (4/24/92)
- -------------------------------------------------------------------------------------------------------------------------------
Rykcoll-Sexton, Inc./Dishwasher lease 12/94 to 12/95 (has been
renewed)
- -------------------------------------------------------------------------------------------------------------------------------
Third Century Equipment/Photocopier lease 12/3/93 to 12/2/96
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 11 -
<PAGE> 94
<TABLE>
<CAPTION>
PROPERTY DESCRIPTION TERM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kim E. Hensley/Ski Security Systems/Lockers and Ski Racks lease 12/1/93 to 5/1/95
- ------------------------------------------------------------------------------------------------------------------------------------
William Scotsman/Mobile Office lease agreement 4/16/96 to 4/17/97 (has been renewed)
- ------------------------------------------------------------------------------------------------------------------------------------
Oliver Allen Corp. (now assigned to Norwest Equipment Finance, Inc.) 5/1/95 to 4/30/96
Equipment lease
Schedule 1: Commencing 6/16/95 - computer hardware and accessories
Schedule 2: Dated 11/1/95 - computer hardware and accessories
- ------------------------------------------------------------------------------------------------------------------------------------
Teleprompter Corporation (Motorola)/Lease and Equipment agreement 12/31/90 (99 year term)
- ------------------------------------------------------------------------------------------------------------------------------------
Sierra-at-Tahoe
- ------------------------------------------------------------------------------------------------------------------------------------
Walco Copiers/Equipment lease 10/6/95 to 10/5/99
- ------------------------------------------------------------------------------------------------------------------------------------
Bear Mountain
- ------------------------------------------------------------------------------------------------------------------------------------
All real property leased by Bear Mountain identified in Exhibit 2
to this Appendix 3
- ------------------------------------------------------------------------------------------------------------------------------------
Volvo Car Finance 11/28/95 to 11/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Associates (Assigned to Commercial Corporation/
Associates Leasing, Inc.) 10/92 to 10/97
- ------------------------------------------------------------------------------------------------------------------------------------
Diversey Lease & Loan/Dishmachine lease 6/9/93 to 6/96
- ------------------------------------------------------------------------------------------------------------------------------------
Bombardier Corporation Sales/Leaseback agreement of Certain Snow-Grooming
Vehicles 7/27/95 to 6/99
- ------------------------------------------------------------------------------------------------------------------------------------
Ski View Information Systems 5/10/95 to 5/9/2000 then option to
renew 5 years
- ------------------------------------------------------------------------------------------------------------------------------------
City of Big Bear Lake/City Clerk's Office lease agreement with Killington
West, Ltd. and Bear Mountain, Inc. 12/6/95 to 12/5/96
- ------------------------------------------------------------------------------------------------------------------------------------
Jeff Grim (tenant)/Sublease for Sale of Food & Beverage 12/1/94 to 10/31/95 then option to
renew 2 years
- ------------------------------------------------------------------------------------------------------------------------------------
Textron Master Lease agreement for Golf Carts 5/14/95 to 5/14/99
Schedule A: 5/14/95 for 2 EZ Go XT 500
Schedule B: 5/14/95 for 25 EZ Go Medals-Electric
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 12 -
<PAGE> 95
EXHIBIT 8.11.1-ENVIRONMENTAL LITIGATION
None.
<PAGE> 1
EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into as of this 30th day of August 1996,
among Waterville Valley Ski Area, Ltd., a New Hampshire corporation with a
principal place of business at Waterville Valley, New Hampshire ("WVSAL"),
Cranmore, Inc., a Maine corporation with a principal place of business at North
Conway, New Hampshire ("CI") (WVSAL and CI being collectively referred to as the
"Sellers"), American Skiing Company, a Maine corporation with a principal place
of business at Bethel, Maine ("American SKI") and Booth Creek Ski Acquisition
Corp., a Delaware corporation with a principal place of business at Vail,
Colorado.("Buyer"), all of the issued and outstanding stock of which is
beneficially owned by George N. Gillett, Jr. of Vail, Colorado.
RECITALS
1. WVSAL owns and operates the Waterville Valley Ski Resort located in
Waterville Valley, New Hampshire (the "WVSAL Resort") and CI owns and operates
the Mount Cranmore Ski Resort located in North Conway, New Hampshire (the "CI
Resort"). The WVSAL Resort and CI Resort are hereinafter collectively referred
to as the "Ski Areas".
2. WVSAL and CI wish to sell to Buyer, and Buyer wishes to purchase
and acquire from WVSAL and CI the Ski Areas and all WVSAL's assets located in
Waterville Valley, New Hampshire and all CI's assets located in North Conway,
New Hampshire.
3. The sale and purchase and the other transactions contemplated
hereby will be subject to the approval of the United States Department of
Justice ("USDOJ") as provided in the Stipulation and Final Judgment in the
proceeding entitled United States of America v. American Skiing Company and
S-K-I Limited, United States District Court, District of Columbia, Docket No.
96-1308 (the "Consent Decree").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
PURCHASED ASSETS
Subject to the terms and conditions of this Agreement, Sellers agree to
sell, convey, transfer, set over, assign and deliver to Buyer, and Buyer agrees
to purchase and accept from Sellers all right, title and interest in and to the
assets, real, personal and mixed, tangible and intangible, of every kind, nature
and description pertaining to or used or useful in the operations of the Ski
Areas (excluding, however, the Excluded Assets), including without limitation
the following assets (the "Purchased Assets"):
<PAGE> 2
1.01 REAL PROPERTY.
The real property consisting of:
(a) All real property owned by WVSAL, together with all buildings and
other improvements located thereon, including those described in
Schedule 1.01(a) (the "WVSAL Real Estate");
(b) All real property owned by CI, together with all buildings and
other improvements located thereon, including those described in
Schedule 1.01(b) (the "CI Real Estate"); and
(c) All easements, rights, privileges, rights of way and appurtenances
belonging to Sellers, whether or not appurtenant to, adjoining or
adjacent to the WVSAL Real Estate and/or the CI Real Estate and
all buildings, fixtures and improvements thereon, including any
interest in adjoining or adjacent highways, roads, streets and
lanes, whether public or private, used by Sellers for the benefit
of the WVSAL Real Estate and/or the CI Real Estate, and including
all development rights owned by either WVSAL or CI, including but
not limited to those described in Schedule 1.01(c) (the
"Easements"); the WVSAL Real Estate, CI Real Estate and Easements
being hereinafter referred to as the "Sellers' Real Estate".
Without limiting the foregoing, the Sellers' Real Estate shall
include the Waterville Valley Conference Center, the Mt. Cranmore
Mountain Club and those certain recreational easements pertaining
to Black Cap Mountain described on Schedule 1.01(c).
1.02 UNITED STATES FOREST SERVICE PERMITS.
WVSAL's rights under the United States Forest Service Permit No. 4008-01
dated October 31, 1994 ("USFS Permit") for alpine skiing on Mt. Tecumseh and
Snow's Mountain and cross-country skiing, all taking place on White Mountain
National Forest lands in Waterville Valley, New Hampshire.
1.03 SKI AREAS IMPROVEMENTS.
All buildings, structures, lifts, snowmaking equipment, fixtures and other
improvements owned by Sellers which are utilized in any way in the operation of
the Ski Areas, including, but not limited to, the parking lots, lifts,
snowmaking systems, snowmaking compressor and pumphouse buildings, services
buildings and base lodges, including those described in Schedule 1.03 (the "Ski
Areas Improvements").
1.04 PERSONAL PROPERTY.
2
<PAGE> 3
All inventory, supplies, materials, computers, phone equipment, vehicles,
machinery and equipment, furniture and other personal property owned by Sellers
which are utilized in any way in the operation of the Ski Areas, including
without limitation the personal property described in Schedule 1.04 (the
"Personal Property").
1.05 LICENSES AND PERMITS.
To the extent assignable by Sellers', all of Sellers' rights under all
governmental licenses, authorizations and permits relating to operation of the
Ski Areas, including but not limited to the licenses, authorizations and permits
listed on Schedule 1.06 ("Assumed Permits").
1.06 BOOKS AND RECORDS.
All Sellers' books, records, reports, studies, documents, data and other
information relating to the Purchased Assets or the Sellers ("Records").
1.07 INTELLECTUAL PROPERTY.
All rights to any trademarks, tradenames, servicemarks (whether or not
registered), registrations thereof, applications for registration, copyrights
(whether or not registered) and any other intangible assets or property, and any
applications for registration thereof, used in connection with Sellers'
operation of the Ski Areas, including without limitation as listed on Schedule
1.07 ("Intellectual Property Rights").
1.08 CONTRACT RIGHTS.
All of the contracts, agreements leases and commitments, and all
amendments, extensions, renewals, substitutions and replacements thereof,
necessary for or used or useful in the operations of the Ski Resorts.
1.09 CLAIMS, SUITS, ETC.
All claims, suits, and causes of action that either Seller has against
third parties with respect to the Ski Resorts, including without limitation, any
rights or claims arising from manufacturer warranties with respect to machinery
and equipment included in the Purchased Assets.
1.10 ACCOUNTS RECEIVABLE; DEPOSITS.
All of Sellers' accounts receivable for services to be performed or
products to be delivered on or after the Closing and all deposits, prepaid
expenses and refunds (including deposits received in connection with the 1996-7
ski season and any ski season thereafter), excepting those that are prorated as
of Closing in accordance with the standards set forth on Schedule 1.10.
3
<PAGE> 4
1.11 CASH.
All of the Sellers' cash on hand and any cash equivalents in the form of
bank accounts, investment securities and other deposits, prepaid expenses and
refunds, which specifically relate to the sale of a ski pass for the 1996-1997
season or any season thereafter for use at either Ski Area.
1.12 GOING CONCERN
The business of the Ski Resorts as a going concern.
ARTICLE II
EXCLUDED ASSETS
The assets listed below shall be excluded from the Purchased Assets (the
"Excluded Assets"):
2.01 CASH.
All of the Sellers' cash on hand and any cash equivalents in the form of
bank accounts, investment securities and other deposits, prepaid expenses and
refunds, excepting those that specifically relate to the sale of a ski pass for
the 1996-1997 season or any season thereafter for use at either Ski Area and
excepting those that are prorated as of the Closing in accordance with Section
1.10.
2.02 ACCOUNTS RECEIVABLE.
All of Sellers' accounts receivable for services performed or products
delivered on or prior to the Closing, the collection of which is addressed in
Section 13.20 hereof.
ARTICLE III
NO ASSUMPTION OF LIABILITIES
3.01 NO ASSUMPTION BY BUYER.
Except for the liabilities of Sellers assumed by Buyer as described in
Schedule 3.01 hereof ("Assumed Liabilities"), Buyer does not, and shall not be
obligated to, assume or become liable for any of Sellers' liabilities,
obligations, debts, contracts or other commitments whatsoever, whether known or
unknown, fixed or contingent, now existing or hereafter existing.
4
<PAGE> 5
3.02 NO ASSUMPTION BY SELLERS.
Nothing in the foregoing shall be deemed to constitute an assumption by
Sellers of any of Buyer's liabilities, obligations, debts, contracts or other
commitments whatsoever, whether known or unknown, fixed or contingent, now
existing or hereafter arising which relate to Buyer's ownership of or the
operation, or removal by Buyer of any of, the Purchased Assets after the Closing
Date other than those liabilities, obligation, debts, contracts or other
commitments, whether known or unknown, which exist or shall be deemed to have
occurred prior to Buyer's ownership and operation of the Ski Areas and which
were not specifically assumed by Buyer pursuant to Section 3.01.
ARTICLE IV
PURCHASE AND SALE
4.01 DETERMINATION OF PURCHASE PRICE.
(a) In consideration of Sellers' sale, assignment and
transfer of the Purchased Assets to Buyer and Sellers' agreement to perform the
terms, covenants and provisions of this Agreement on its part to be performed,
at Closing (as hereinafter defined) Buyer will assume the Assumed Liabilities,
and will pay to Sellers an amount equal to Seventeen Million Five Hundred
Thousand Dollars ($17,500,000) minus the Adjustment (as defined in this Section
4.01(a)) (the "Purchase Price"). The "Adjustment" shall be the amount of the
diminution in value in excess of $500,000 of the Purchased Assets, the business
of the Sellers and or the Ski Areas resulting from (i) any breach or breaches of
a representation or warranty by either of the Sellers or (ii) one or more
failures by either of the Sellers to comply with any of the other provisions of
this Agreement. In the event that the diminution referred to above is greater
than $1,500,000 (in which case the Adjustment would be greater than $1,000,000)
and the Buyer requests an Adjustment in excess of $1,000,000, the Sellers and
Buyer shall have the right to terminate this Agreement under this Section
4.01(a), it being understood that the Sellers shall not have the right to
terminate this Agreement under this Section 4.01(a) if the Buyer does not
request an Adjustment in excess of $1,000,000 and the Buyer shall not have the
right to terminate this Agreement under this Section 4.01(a) if the diminution
referred to above is not greater than $1,500,000.
(b) If the Buyer believes that any Adjustment is
necessary, the Buyer shall provide prompt notice thereof to Sellers prior to
Closing (the "Buyer's Adjustment Notice") for each such Adjustment, which
notice shall contain an explanation of the Buyer's basis for the Adjustment.
The Sellers shall have five (5) business days from receipt of such Buyer's
Adjustment Notice to accept or disapprove thereof. If Seller shall approve of
the Adjustment provided in such Buyer's Adjustment Notice, or shall fail to
notify Buyer of Sellers' disapproval thereof within said five (5) business day
period, then the Adjustment shown in such Buyer's Adjustment Notice shall be
the amount of the Adjustment for such Buyer's Adjustment Notice. If Sellers
shall disapprove of the amount of the Adjustment as shown on such Buyer's
Adjustment Notice, Sellers
5
<PAGE> 6
shall so notify Buyer within such five (5) business day period and shall
accompany such notice with Sellers' calculation of the Adjustment (the
"Sellers' Calculation"). The Buyer and Sellers shall negotiate in good faith
to resolve any dispute over the amount or existence of any Adjustment arising
from each Buyer's Adjustment Notice. If the Buyer and Sellers cannot resolve
their differences over the proposed Adjustment for any Buyer's Adjustment
Notice within ten (10) business days following receipt by Buyer of the Sellers'
Calculation, then the Sellers and the Buyer shall submit their disagreement to
Sno Engineering whose determination on the matter shall be final and conclusive
and binding on the parties hereto.
4.02 DEPOSIT.
Upon the execution of this Agreement Seven Hundred Fifty Thousand
Dollars ($750,000.00) (the "Deposit") shall be deposited with the Sellers either
in cash or in the form of an assignment of Vail Resorts, Inc. common stock
sufficient to generate a value of $750,000. Buyer shall initially place 25,000
shares of Vail Resorts, Inc. common stock on deposit with the Escrow Agent. In
the event the Sellers are entitled to retain the Deposit in accordance with the
terms of this Agreement and the Deposit Escrow Agreement referred to below, then
the number of shares, together with any cash portion of the Deposit, necessary
to generate a Deposit value of $750,000 shall be determined using the procedure
set forth below as of the date of the termination of this Agreement which
entitles the Sellers to retain the Deposit. Notwithstanding anything herein to
the contrary, the number of shares of Vail Resorts, Inc. common stock to be
deposited with the Escrow Agent or to be retained by the Sellers shall not
exceed 25,000. The value of Vail Resorts, Inc. common stock shall be determined
using the following procedure, in the order of priority specified:
(1) By mutual agreement of the parties;
(2) By independent appraisal performed by Bear, Stearns & Co.
Inc., which independent appraisal shall be final, binding and conclusive as to
the per share value of Vail Resorts, Inc. common stock.
Any common stock remaining in the Deposit after application of the number of
shares necessary to achieve a $750,000 Deposit value shall be reassigned to
Buyer. The Deposit shall be made pursuant to and in accordance with the terms
of the Deposit Escrow Agreement to be entered into by the Buyer, the Sellers,
George N. Gillett, Jr. and an escrow agent. The Deposit Escrow Agreement shall
be entered into on the date and in accordance with the terms provided for in
that certain Letter Agreement dated as of the date hereof by and among the
Buyer and the Sellers. The Escrow Agent under the Deposit Escrow Agreement
shall be acceptable to Buyer and Sellers (the "Escrow Agent"). The Deposit
shall be applied as follows:
(a) If the Closing shall occur, the cash portion of the Deposit
together with any earnings thereon to the Closing Date (as defined in Article V)
shall be applied as a credit against the Purchase Price as provided in Section
4.03(a). The parties hereto acknowledge that any Vail Resorts, Inc. stock
assigned pursuant to this Section 4.02 shall not be credited against
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the Purchase Price at Closing, but rather shall be re-assigned by Sellers to
Buyer upon payment of the full Purchase Price.
(b) If the Closing shall not occur by reason of a material
breach of this Agreement by Buyer, including by failing to close the
transactions contemplated hereby upon satisfaction by Sellers of the conditions
set forth in Article VIII hereof, and the Sellers are not in material breach of
this Agreement any and all of which breaches, if measurable as a diminution in
value, do not result in an Adjustment under Section 4.01 in excess of
$1,000,000, then upon termination of this Agreement Sellers shall be entitled to
retain the Deposit, together with any earnings thereon, for their own account as
liquidated damages in lieu of all claims, actions or remedies which Sellers may
have against Buyer arising out of such breach.
(c) If the Closing shall not occur for any reason other than
pursuant to clause (b) of this Section 4.02 (it being understood that
termination of this Agreement by Buyer or Sellers pursuant to Section 4.01(a) of
this Agreement shall be deemed pursuant to this Section 4.02(c), and not Section
4.02(b)), then upon termination of this Agreement the Deposit, together with any
earnings thereon, shall be returned to Buyer.
4.03 PAYMENT OF PURCHASE PRICE.
(a) The Deposit, together with any earnings thereon, shall be
credited as a payment against the Purchase Price; provided that any Vail
Resorts, Inc. stock assigned pursuant to Section 4.02 shall not be credited
against the purchase price at Closing, but rather shall be re-assigned by
Sellers to Buyer upon payment of the full purchase price.
(b) (i) Fourteen Million Seven Hundred Fifty Thousand
Dollars ($14,750,000), less .50 times the aggregate of any Adjustments and less
the credit provided for in Section 4.03(a) shall be paid by Buyer in cash by
wire transfer or other acceptable means of delivering same day good funds; and
(B) Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) less .50 times
the aggregate of any Adjustments shall be paid by a promissory note from Buyer
to Sellers. The note shall bear interest at the rate of 12% per annum, provide
for a seven and one-half year maturity with the principal due according to the
schedule below, and contain semi-annual interest payment dates, with the first
interest payment date occurring on the six month anniversary of the Closing.
The note will be secured by a second mortgage lien, security interest or
collateral assignment (as applicable) in all Purchased Assets, junior only to
Purchaser's senior credit facilities, Purchaser's purchase money financing and
certain other customary permitted liens, all to the extent consented to by the
senior lenders of Buyer. The note shall contain customary terms and provisions
including provision for payment of costs and collection. The required principal
payments shall be as follows:
Date Amount
---- ------
11/30/96 $250,000.00
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Date Amount
---- ------
1/31/98 100,000.00
1/31/99 150,000.00
1/31/00 200,000.00
1/31/01 250,000.00
1/31/02 300,000.00
1/31/03 350,000.00
Maturity Date Remaining Principal.
4.04 ADJUSTMENT FOR TAXES, PREPAYMENTS AND DEPOSITS.
Real property taxes, personal property taxes, other ad valorem taxes,
any governmental levies, charges or assessments, utilities, water, sewer and any
other charges attributable to the Purchased Assets for the fiscal year during
which the Closing Date occurs as well as any other prepayments and deposits with
respect to the Purchased Assets shall be prorated and adjusted as of the Closing
Date. All of such taxes, prepayments and deposits are listed on Schedule 4.02.
If the real property taxes or personal property taxes for the fiscal year during
which the Closing Date occurs are not finally determined, then such taxes for
the immediately prior fiscal year shall be used for the purposes of prorating
taxes on the Closing Date, with a further adjustment to be made after the
Closing Date as soon as such taxes are finalized. Installments of special taxes
or assessments with respect to the Purchased Assets which are payable for the
fiscal period in which the Closing Date occurs shall be prorated as of the
Closing Date. Sellers' and Buyer's obligation to make post-Closing Date
adjustments for taxes, prepayments and deposits shall survive the Closing.
4.05 ADJUSTMENT FOR UTILITIES.
Sellers shall cause all meters for electricity, gas, water, sewer and
other utility usage at the Ski Areas to be read on the Closing Date, and Sellers
shall pay all charges for such utilities which have accrued on or prior to the
Closing Date. If the utility companies are unable or refuse to read the meters
on the Closing Date, all charges for such utilities to the extent unpaid shall
be prorated and adjusted as of the Closing Date based on the most recent bills
therefor. The Sellers shall provide notice to Buyer within three (3) days
before the Closing Date setting forth (i) whether utility meters will be read as
of the Closing Date and (ii) a copy of the most recent bill for any utility
charges which are to be prorated and adjusted as of the Closing Date. If the
meters cannot be read as of the Closing Date and, therefore, the most recent
bill is used to prorate and adjust as of the Closing Date, then to the extent
that the amount of such prior bill proves to be more or less than the actual
charges for the period in question, a further adjustment shall be made
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after the Closing Date as soon as the actual charges for such utilities are
available, which Buyer shall have read as soon as possible after the Closing
Date. Sellers' and Buyer's obligation to make such post-Closing Date
adjustments for utilities shall survive the Closing.
4.06 TRANSFER TAXES.
Buyer, on the one hand, and the Sellers, on the other hand, shall each
pay 50% of any state or local transfer tax, deed excise tax (or any other tax
based upon the transfer of the Purchased Assets) and the recording fee for all
deeds imposed in connection with the purchase and sale.
4.07 ADJUSTMENT PAYMENT.
Within five (5) days of the date upon which the amount of each
adjustment is finally determined pursuant to this Article IV, payments required
thereby will be made by check or wire transfer payable to the appropriate party.
ARTICLE V
CLOSING
The closing (the "Closing") of the transaction contemplated by this
Agreement will take place at Pierce Atwood, One Monument Square, Portland,
Maine, at 10:00 a.m. local time on the fifth business day following the date
upon which all of the conditions precedent set forth in Articles VIII and IX of
this Agreement are satisfied or waived by the appropriate party hereto, subject
to Article XII of this Agreement, or at such other time and place as the parties
may agree in writing. The date of Closing is sometimes referred to herein as
the "Closing Date".
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Buyer as follows:
6.01 CORPORATE ORGANIZATION.
WVSAL is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire. CI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maine. American SKI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maine, Sellers and American SKI
have full power and authority to own or lease their properties and to carry on
their businesses as now conducted and to execute and deliver this Agreement and
to carry out the terms hereof.
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6.02 AUTHORIZATION OF AGREEMENT.
The execution and delivery of this Agreement and the agreements
contemplated hereby (the "Related Agreements") by Sellers and American SKI the
performance by Sellers and American SKI of the obligations to be performed
hereunder and thereunder have been duly authorized by all necessary and
appropriate action by the Board of Directors and stockholders of Sellers and
American SKI. The execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) conflict with, or result in a breach of, or
default under, or permit acceleration of any obligation under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
material agreement or other material instrument or obligation (including without
limitation its Articles of Incorporation and By-laws) to which Sellers or
American SKI are a party, or by which it or any of its properties or assets may
be bound or affected or (ii) violate any order, writ, injunction, decree or
statute, or any rule, regulation, permit, license or conditions thereto
(excepting the necessity of obtaining the approvals, transfers and reissuances
of Licenses and Permits described in Section 6.04 below), or (iii) result in the
creation or imposition of any lien, charge or encumbrance of any nature upon any
of the Purchased Assets. This Agreement and the Related Agreements are valid
and binding obligations of Sellers and American SKI enforceable in accordance
with their terms, subject to equitable principles and applicable bankruptcy and
other creditors' rights laws, regulations and rulings.
6.03 COMPLIANCE WITH LAWS.
Except as set forth in Schedule 6.03, Sellers are not in violation of
any applicable federal, state and local laws, rules, regulations, ordinances,
codes or orders ("Laws") governing the Purchased Assets and the operation of the
Ski Areas and has not received written notification of any asserted past or
present failure by it to operate the Ski Areas in accordance with any such law,
ordinance or regulation and to Sellers' knowledge no event has occurred which
with notice or the passage of time would constitute such a default.
6.04 LICENSES AND PERMITS.
(a) No permits, licenses, approvals, clearances or other
governmental consents are required for the transfer of the Purchased Assets to
Buyer pursuant to the terms of this Agreement except for:
(i) a receipt of all necessary approvals from the
USDOJ pursuant to the Consent Decree;
(ii) reissuance by the U.S. Forest Service of the
USFS Permit to Buyer;
(iii) the transfer or reissuance of the other
governmental licenses, permits, authorizations, approvals and certificates
listed in Schedule 1.05 and 6.04
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("Licenses and Permits") from Sellers to Buyer.
(b) The Sellers have not disposed of or permitted to lapse
any license, permit or other authorization from any federal, state or local
authorities related to the Purchased Assets or the operation of the Ski Areas.
(c) The Licenses and Permits listed on Schedule 6.04 are all
of the governmental licenses, permits, authorizations, approvals and
certificates known to Sellers which are needed to operate the Ski Areas at full
capacity.
6.05 ENVIRONMENTAL MATTERS; HEALTH AND SAFETY.
(a) Except as disclosed in Schedule 6.05, there are no
outstanding or, to Sellers' knowledge, threatened actions, claims, proceedings,
determinations or judgments by any party, including, but not limited to, any
governmental authority or agency, against or involving the Sellers, arising
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. 9601 et. seq. ("CERCLA") or any other federal, state, local
or other environmental, health or safety law, regulation, order or requirement.
Except as listed in Schedule 6.05, there are no outstanding or to Sellers'
knowledge threatened orders, determinations or notices of violation issued by
any federal, state, local or other governmental authority administering
environmental or health and safety laws in connection with operation of the Ski
Areas which have not been complied with or resolved to the satisfaction of such
governmental authority.
(b) Except as set forth in Schedule 6.05, Sellers
are operating the Ski Areas in compliance with all applicable federal, state,
and local environmental or health and safety laws, regulations and ordinances
governing the Ski Areas.
6.06 TITLE.
Except as set forth in Schedules 1.01(a) through 1.01(c), Sellers hold
good and clear record and marketable title to the Sellers' Real Estate, free of
all liens, restrictions and encumbrances, except applicable zoning and land use
laws, regulations, rules and ordinances and the sale of the Sellers' Real Estate
does not require the consent of any person or entity other than those listed in
Section 6.04. Except for those listed on Schedule 6.13, Sellers have no
outstanding leases, licenses, occupancy agreements or any contracts or
agreements with respect to the Sellers' Real Estate.
6.07 TITLE TO OTHER PURCHASED ASSETS.
Except as set forth in Schedule 6.07, Sellers hold and will transfer
to the Buyer good and marketable title to all Purchased Assets, other than
Sellers' Real Estate, free and clear of all encumbrances, liens, charges or
other restrictions of any kind. Except for those listed on Schedule 6.07,
Sellers have no outstanding contracts or agreements with respect to or affecting
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the Purchased Assets. None of the contracts or agreements listed in Schedule
6.07 shall be binding upon Buyer, unless listed in Schedule 3.01.
6.08 APPLICABLE ZONING AND USE.
The existing operations of the Ski Areas are permitted uses within the
zoning districts in which they are located or otherwise permitted under the USFS
Permit and other Licenses and Permits held by Sellers.
6.09 LITIGATION.
Except as provided in Schedule 6.09, there is no action, suit,
proceeding at law or in equity by any person or entity, or any arbitration or
any administrative or other proceeding by or before any governmental or other
instrumentality or agency, pending, or, to Sellers' knowledge, threatened,
against either of Sellers with respect to their respective businesses or any of
the Purchased Assets.
6.10 WARRANTY OF PURCHASED ASSETS.
(a) Except as provided in Schedule 6.01(a), all of the Purchased
Assets to be purchased, sold or otherwise transferred or assigned pursuant to
this Agreement, are in good condition and repair, ordinary wear and tear
excepted, and suitable for their intended use.
(b) Except as provided in Schedule 6.01(b), all of the rights,
properties and assets utilized or required by the Sellers in connection with the
ownership or operation of the Purchased Assets or the Ski Areas are included
fully in the Purchased Assets.
6.11 SELLERS NOT "FOREIGN PERSONS".
Sellers are not "foreign persons" as defined in Internal Revenue Code
(the "Code") Section 1445, and Sellers will execute and deliver to Buyer at
Closing an affidavit in compliance with Code Section 1445(b)(2).
6.12 TAXES.
Except as described in Schedule 6.12, Sellers have timely filed all
tax returns, tax information returns and reports required to be filed through
the Closing Date which relate to the Purchased Assets and have paid all taxes
and other charges which have become due pursuant to such returns and reports, or
pursuant to any assessment received by it, except for any taxes the validity of
which Sellers may be contesting in good faith in appropriate proceedings.
Sellers are not delinquent in the payment of any tax assessment or governmental
charge which relates to any of the Purchased Assets, no deficiencies for any
taxes which relate to any of the Purchased Assets have been proposed,
threatened, asserted or assessed against Sellers, and no requests for waivers of
the time to assess or pay any such tax are pending. There are no tax liens upon
any of the
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Purchased Assets and no such liens will arise as a result of the transaction
contemplated hereby. For the purposes of this Agreement, the term "tax" shall
include all federal, state, local and foreign income, property, sales, excise
and other taxes of any nature whatsoever. Sellers have withheld all required
amounts from their employees, agents, contractors, and nonresidents and
remitted such amounts to the proper agencies and have paid all employer
contributions and premiums in compliance with applicable laws, including ERISA
and the Code.
6.13 CONTRACTS AND COMMITMENTS.
Schedule 6.13 sets forth a description of all contracts, agreements
and commitments of Sellers, with respect to or affecting the Purchased Assets.
Each executed contract or commitment set forth in Schedule 6.13 hereto is in
full force and effect and, except as set forth in Schedule 6.13, the Sellers are
not in default under any such contract or commitment.
6.14 INTELLECTUAL PROPERTY.
Attached as Schedule 1.07 is a list of Sellers' trademarks (whether or
not registered), tradenames, servicemarks (whether or not registered),
copyrights (whether or not registered), trademark and service mark registrations
(and pending applications therefor). Sellers have not granted any outstanding
licenses or other rights to use any Intellectual Property Rights, and Sellers
are not liable, nor have Sellers made any contract or arrangement whereby it may
become liable, to any person for any royalty or other compensation for the use
of any Intellectual Property Rights. None of the rights of Sellers in, to or
under any Intellectual Property Rights will be adversely affected by the
consummation of the transactions contemplated hereby. Use of the Intellectual
Property Rights in the operation of the Ski Areas in the manner conducted by
Sellers prior to the Closing will not infringe any patent or copyright of any
third party, nor constitute a misappropriation of the trade secrets or other
proprietary rights of any third party.
6.15 EMPLOYEE BENEFIT PLANS.
All of the pension, retirement, profit sharing, savings, stock option,
severance, bonus, fringe benefit, insurance or other employee benefit plan or
arrangement of Sellers or applicable to their employees is listed in Schedule
6.15. Each of the above plans has been operated and administered in accordance
with applicable laws, including ERISA and the Code.
6.16 LABOR AND EMPLOYEE RELATIONS.
There are no agreements between any union, labor organization or other
bargaining agent in respect of any employee of Sellers who is employed in
Sellers' operation of the Ski Areas business ("Employee"). To the best
knowledge of the Sellers, (i) there are no labor trouble, dispute, grievance,
strike or request for union representation pending or threatened and (ii) none
of the Sellers' management personnel have given notice of resignation or
threatened to resign. At the Closing Date, all Employees will be free of all
employment obligations to Sellers and will be free to become the employees of
Buyer if Buyer so desires.
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6.17 ABSENCE OF CERTAIN DEVELOPMENTS.
Since the Balance Sheet Date the Sellers each has conducted its
business only in the ordinary course and has not:
(a) declared or paid any dividend or otherwise declared, paid or
distributed to any shareholder any property of any type or nature, other than in
cash, or purchased, redeemed, or otherwise acquired or agreed to purchase,
redeem, or otherwise acquire, any of its shareholders' capital stock other than
for cash prior to the Closing;
(b) made any loans or advances to, or guarantees for the benefit
of, any Person other than guarantees shown on Schedule 6.13 to be discharged at
Closing;
(c) except as provided in Schedule 6.17(c), increased the
annualized level of compensation of or granted any bonuses, benefits or other
forms of direct or indirect compensation to any employee, officer, director,
employee, agent or consultant other than routine increases in the ordinary
course of business, or increased any bonus, percentage compensation, service
award or other like benefit, granted made or agreed to for any such officer,
director, employee, agent or consultant, or increased any welfare, pension,
retirement or similar payment or arrangement made or agreed to which is greater
than any such bonus, percentage compensation, service award or other like
benefit or any welfare, pension retirement or similar payment or arrangement
existing or made pursuant to arrangements, agreements, or plans existing at the
Balance Sheet Date;
(d) experienced any theft, damage, destruction or loss of or to
any property or properties owned or used by it, whether or not covered by
insurance, adversely affecting the properties or business of either Seller;
(e) changed its accounting methods or practices (including,
without limitation, any change in depreciation or amortization methods,
policies, or rates or income recognition methods);
(f) entered into, amended or terminated any contract, commitment,
lease, license, collective bargaining agreement, employee benefit plan, or any
other material agreement, to which it is a party, or by which it or any of its
assets or properties are bound, except, in the ordinary course of business;
(g) waived, canceled or released any right, claim or debts, except
in the ordinary course of business;
(h) except as provided in Schedule 6.17(h), received notice of any
violation of any law, rule or regulation, of any governmental entity or agency;
(i) received any claim for damages arising out of actual or
alleged negligence or other tort, or breach of contract not fully covered by
insurance;
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(j) sold, assigned, mortgaged, pledged, leased, transferred, or
disposed of any of its assets, properties, or rights (tangible or intangible)
except in the ordinary course of business consistent with past practices;
(k) except the collateral interests established in connection with
American Ski's acquisition of S-K-I Limited, which are shown on Schedule 6.13 as
to be discharged at Closing, mortgaged, pledged, or subjected to any lien,
charge, or other encumbrance, any of its assets, except liens for current
property taxes not yet due and payable;
(l) except as provided in Schedule 6.17(l), made any capital
expenditures or commitments therefor that aggregate in excess of $100,000;
(m) revalued any of its assets; or
(n) agreed to do any of the things described in the preceding
clauses (a) through (m).
6.18 AFFILIATE TRANSACTIONS.
Except as set forth in Schedule 6.18, neither of the Sellers has any
business relationship with any of their affiliates.
6.19 FINANCIAL STATEMENTS AND RELATED MATTERS.
(a) The Financial Statements were prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
the financial position and results of operations of Sellers at the dates and for
the periods indicated therein.
(b) On the Balance Sheet Date, Seller had no liability of any
nature (whether accrued, absolute, contingent or otherwise) of the type which
should be reflected in balance sheets (including the notes thereto) prepared in
accordance with generally accepted accounting principles, which was not fully
disclosed, reflected or reserved against in the Balance Sheet; and except for
liabilities which have been incurred since the Balance Sheet Date in the
ordinary and regular course of the business of the Ski Areas or which are set
forth in Schedule 6.19, since the Balance Sheet Date, Sellers have not incurred
any liability of any nature (whether accrued, absolute, contingent or
otherwise).
(c) "Financial Statements" shall mean the financial statements
for WVSAL and CI for the twelve months ended April 28, 1996. The "Balance Sheet
Date" shall be April 28, 1996. The "Balance Sheet" shall be the balance sheet
contained in the Financial Statements.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
7.01 CORPORATE ORGANIZATION.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Delaware with full power and authority to own or
lease its property and to carry on its businesses as now conducted.
7.02 AUTHORIZATION OF AGREEMENT.
The execution and delivery of this Agreement and the Related
Agreements by Buyer and the performance by Buyer of the obligations to be
performed hereunder and thereunder have been duly authorized by all necessary
and appropriate action by the directors of Buyer and no shareholder approval is
required in connection therewith. The execution and delivery of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict with or result in a breach of,
or constitute a default under, the terms and conditions of Buyer's Certificate
of Incorporation, By-Laws, any court or administrative order or process by which
Buyer is bound, any agreement or instrument to which Buyer is a party or by
which any is bound, or any statute or regulation of any governmental agency.
This Agreement and the Related Agreements are the valid and binding obligations
of Buyer, enforceable in accordance with their terms, subject to equitable
principles and applicable bankruptcy and other creditors' rights, laws,
regulations and rulings.
7.03 REGULATORY APPROVALS.
Except as described in Section 6.04 to Buyer's knowledge no consents,
approvals, authorizations and other requirements prescribed by any law, rule or
regulation are required to be obtained or satisfied by Buyer in connection with
the execution, delivery or performance by Buyer of this Agreement or any
documents to be executed and delivered by Buyer in connection herewith. Buyer
will make an application as expeditiously as possible to the United States
Forest Service to have the USFS Permit reissued to Buyer in lieu of WVSAL and to
all other governmental agencies and authorities required in order to effect the
transfer or reissuance of the Licenses and Permits described in Section 6.04.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
BY BUYER ON THE CLOSING DATE
The obligations of Buyer to consummate the transactions contemplated by
this Agreement
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are subject to the satisfaction of each of the following conditions precedent
being satisfied on or before the Closing Date, subject to the right of Buyer to
waive any one or more of such conditions:
8.01 CLOSING DOCUMENTS.
Sellers shall have delivered or caused to be delivered to Buyer, or
Buyer shall have otherwise received, on or before the Closing Date, in a form
reasonably satisfactory to Buyer:
(a) Consents, waivers and authorizations of any Person to the
Assumption of the Assigned Contracts and other Purchased Assets by Buyer and to
the transactions contemplated by this Agreement, except for the USFS Permit and
the Assigned Permits, for which provision is made in Section 8.04.
(b) Deeds to Buyer conveying good and clear record and
marketable title to the Sellers' Real Estate, free and clear of any liens or
encumbrances except as described in Schedules 1.01(a) through 1.01(c) and except
for those leases, licenses, or occupancy agreements or other instruments which
have been assumed by the Buyer as Assumed Liabilities.
(c) An owner's or leasehold title insurance policy, issued at
Buyer's expense, dated the Closing Date on such ALTA Forms as are reasonably
acceptable to Buyer and its counsel with coverage identical in all respects to
the title coverage described in Schedules 1.01(a) through 1.01(c), covering the
Sellers' Real Estate, and Sellers shall have provided all statements,
affidavits, certificates, surveys (which surveys shall be at Buyer's expense)
and indemnity agreements, which are customarily required of sellers by title
insurance companies in order for the title insurance company to provide Buyer
with each of the title insurance policies (and related endorsements) described
in this Agreement.
(d) Bills of Sale conveying all Purchased Assets to Buyer
duly executed by Sellers (Sellers and Buyer hereby agreeing that neither the
representations and warranties nor the rights and remedies of any party
hereunder shall be deemed to be enlarged, modified or altered in any way by such
Bills of Sale);
(e) Certified copies of the resolutions adopted by Sellers'
Board of Directors (and stockholders where required) authorizing the sale of the
Purchased Assets to Buyer in accordance with this Agreement and Sellers'
execution and delivery of this Agreement;
(f) An affidavit, under penalty of perjury, indicating
Seller's United States taxpayer identification number and stating that Sellers
are not a foreign person, in a form sufficient to exempt Buyer from the
withholding provisions of Section 1445 of the Code; and
(g) A good standing certificate from the State of New
Hampshire of recent date for WVSAL, a good standing certificate of recent date
from the State of Maine for CI, and incumbency certificates of Sellers, together
with a certified copy of each Sellers' Certificates
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of Incorporation and By-Laws.
(h) An opinion of counsel to Sellers in form and substance
acceptable to Buyer's counsel.
(i) An Agreement to be entered into by Buyer, Sellers and
American Ski relating to the certain administrative and services to be provided
to Buyer on a transition basis, which services shall relate, without limitation,
to the Smart Ticket Technology, the AS 400 System and Ski Areas' Reservation
Systems.
(j) Within seven (7) business days after the date hereof,
Buyer shall be, in its reasonable judgment, satisfied with the management of the
Sellers, including their willingness to be employed by Buyer after the Closing.
8.02 FAILURE TO DELIVER THE PURCHASED ASSETS BY THE CLOSING DATE.
If Sellers are unable to deliver the Purchased Assets in accordance
with terms and conditions of this Agreement and in a condition substantially
similar to their condition as of the date hereof on the Closing Date because of
damage by fire or casualty, then Buyer shall have the right to terminate this
Agreement at any time thereafter.
8.03 LITIGATION AND REGULATORY ACTION.
No litigation or regulatory action shall have been filed or brought
against Sellers or the Purchased Asset which forbids or restricts the
transactions contemplated hereby.
8.04 PERMITS AND LICENSES.
Sellers shall have delivered or caused to be delivered to Buyer, or
Buyer shall have otherwise received, on or before the Closing Date, in a form
reasonably satisfactory to Buyer:
(a) All necessary USDOJ approvals of Buyer and the
transaction contemplated hereby under the Consent Decree.
(b) Reissuance of the USFS permit to Buyer upon Buyer's
application therefor, Buyer hereby agreeing to exercise its best efforts to
obtain such reissuance.
(c) All necessary agreements, waivers, authorizations and
consents to the assignments or reissuances of all Assigned Permits, and all
other consents, approvals, transfers and reissuances of Licenses and Permits
required in the operation of the Ski Areas or in connection with the Purchased
Assets.
8.05 OTHER DOCUMENTS.
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All such other documents as are required to be delivered in
connection with the consummation of this transaction by Sellers hereunder or as
Buyer or its counsel may reasonably request to carry out the purpose of this
Agreement have been so delivered.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING BY
SELLERS ON THE CLOSING DATE
The obligations of Sellers to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of each of the following
conditions precedent being satisfied on or before the Closing Date, subject to
the right of Sellers to waive any one or more of such conditions:
9.01 COMPLIANCE.
The representations and warranties of Buyer contained in this
Agreement or in any of the Schedules attached hereto or in any agreement or
document delivered in connection herewith shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of the
Closing Date. The Buyer shall have performed and complied with all of its
obligations and covenants required to be performed or complied with on or before
the Closing Date.
9.02 CLOSING DOCUMENTS.
Buyer shall have delivered to Sellers, in a form reasonably
satisfactory to counsel for Sellers:
(a) certified copies of the resolutions adopted by Buyer's
Board of Directors (and stockholders where required) authorizing the purchase of
the Purchased Assets from Sellers in accordance with this Agreement and Buyer's
execution and delivery of this Agreement;
(b) an assumption agreement or agreements in form acceptable
to Sellers with respect to the Assumed Liabilities;
(c) the promissory note required pursuant to Section
4.01(a)(ii) hereof and to the extent applicable, such mortgages, security
agreements, collateral assignments and other documents and agreements, in form
and substance satisfactory to Sellers, as may be required by Sellers to
establish and perfect the mortgage liens, security interests and collateral
assignments described in Section 4.03(b) hereof; and
(d) such other documents and certificates as are contemplated
hereby
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or as Sellers or their counsel may reasonably request.
(e) an opinion of Buyer's counsel in form and substance
acceptable to Seller's counsel.
9.03 PAYMENT OF MONEY.
Buyer shall have paid the cash portion of the Purchase Price to the
Sellers as provided in Section 4.03.
ARTICLE X
COVENANTS OF SELLERS AS TO INTERIM OPERATION
Sellers hereby covenant and agree with Buyer as follows:
10.01 CONDUCT OF BUSINESS.
From the date hereof to the Closing Date, Sellers will carry on its
Ski Area businesses and activities in substantially the same manner as they have
previously been carried out, in the ordinary course of business, and will not
employ methods of manufacture, purchase, sale, lease, management, accounting, or
operation that vary from those methods used by Sellers outside of the ordinary
course of business consistent with past practices recognizing that American Ski
has owned WVSAL since only June 28, 1996. Without limiting the foregoing except
as specifically contemplated in this Agreement, from the date of this Agreement
to the Closing, Sellers will:
(a) not engage in any transaction which would be inconsistent
with any representation, warranty or covenant of Sellers set forth herein or
which would cause a breach of any such representation, warranty or covenant;
(b) except as provided on Schedule 10.01(b) and in the
ordinary course of business, not sell, transfer, convey, assign, lease, license
or otherwise dispose of any of the Purchased Assets;
(c) not mortgage, pledge, subject to a lien, or grant a
security interest in, or otherwise encumber, any of the Purchased Assets;
(d) use reasonable efforts (without making any commitments on
behalf of Buyer) to keep its business organizations intact, keep available its
present employees and to preserve its present relationships with customers,
suppliers, employees and others having business relationships with Sellers;
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(e) not cause a breach of any contract or commitment,
collective bargaining agreement, employee benefit plan, or any other material
agreement to which either Seller is a party, or by which it or any of its assets
or properties are bound;
(f) not violate or fail to comply with laws applicable to it
or its properties or business;
(g) furnish within fifteen (15) days after the end of a
fiscal month an unaudited consolidated balance sheet and income statement of the
Sellers for such period, each such balance sheet and income statement to be
prepared in a manner consistent with the preparation of the Financial Statements
(subject to normal year-end adjustments);
(h) not amend, change, terminate or otherwise modify any
lease, contract, agreement or commitment other than in the ordinary course of
business;
(i) not enter into, or become obliged under, any contract,
agreement, lease or other commitment relating to the Ski Areas, other than any
contract, agreement, lease or other commitment having a term of one (1) year or
less and involving a payment by or to either Seller of less than $25,000 which
is entered into in the ordinary course of business;
(j) not commit any act or permit the occurrence of any event
or the existence of any condition of the type described in clauses (a) through
(n) of Section 6.17 hereof;
(k) upon obtaining knowledge of the existence of any matter
specific to Sellers' business or the Purchased Assets that could reasonably
likely result in a diminution of the Purchased Assets and or the business of
Sellers and or the Ski Areas , the Sellers shall promptly inform Buyer of such
matter;
(l) agree not to do any of the acts listed above (other than
pursuant to clauses (d), (g) and (k) or under the circumstances specified
above).
10.02 RISK OF LOSS.
Sellers shall bear the risk of loss, damage or destruction with
respect to the Purchased Assets from any casualty until the successful
consummation of the sale and purchase of the Purchased Assets on the Closing
Date. In the event of any such loss, damage or destruction, the proceeds of any
claim for any loss payable under any insurance policy covering such loss shall
be payable to Sellers. In the event of any such material loss or damage,
Sellers shall specify in writing to Buyer with particularity the loss or damage
incurred, the cause thereof, if known or reasonably ascertainable, and the
extent to which restoration, replacement and repair of the Purchased Assets lost
or destroyed will be reimbursed under any insurance policy with respect thereto.
Buyer's right to terminate this Agreement in such circumstances shall be
governed by Section 8.02 of this Agreement. To the extent that Buyer determines
not to terminate this Agreement, it shall be entitled to any insurance proceeds
provided with respect to such loss to the
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extent not used by Sellers to restore the Purchased Assets.
10.03 ACCESS TO INFORMATION.
From the date hereof to the Closing Date, Sellers will afford to the
representatives of Buyer, including its counsel, auditors, and potential lenders
and other sources of financing to Buyer, during normal business hours, access to
any and all of the Purchased Assets to the end that Buyer may have a reasonable
opportunity to make such a full investigation of the Purchased Assets and of
Sellers' Ski Area businesses in advance of the Closing Date as it shall
reasonably desire, and the officers of Sellers will confer with representatives
of Buyer and will furnish to Buyer, either orally or by means of such records,
documents, and memoranda as are available such information as Buyer may
reasonably request, and Sellers will furnish to Buyer's auditors all consents
and authority that they may reasonably request in connection with any
examination by Buyer.
10.04 CONSENT OF THIRD PARTIES.
Sellers shall use their best efforts to obtain, as soon as practicable
after the date hereof, but in any event prior to the Closing Date, the consent
in writing of all necessary persons to the transactions contemplated by this
Agreement, including but not limited to any and all governmental authorities as
set forth in Section 6.04; provided, however, that the parties hereto understand
and agree that, with respect to those authorities which require the reissuance
of permits to Buyer such as the USFS and the State Liquor Commission, Buyer must
initiate the application process for reissuance and Sellers shall be deemed to
be using its "best efforts" to the extent that it provides all cooperation which
Buyer reasonably requests.
10.05 INSURANCE COVERAGE.
Existing insurance coverages for the Purchased Assets shall be
maintained in effect by Sellers between the date hereof and the Closing Date.
10.06 MAINTENANCE OF PURCHASED ASSETS.
At all times from the execution of this Agreement to the Closing Date,
Sellers agree to maintain the Purchased Assets in good operation, condition and
repair, except for ordinary wear and tear. Sellers shall (i) not alter,
disassemble or remove any Purchased Assets from the Property or take any other
action in connection with the Purchased Assets which is inconsistent with the
transactions contemplated by this Agreement (except for removal of lift towers
resulting from the shortening of the High Country lift) and (ii) maintain in
full force and effect any and all contracts, permits and licenses which are
Purchased Assets or Assumed Liabilities. Sellers shall notify Buyer promptly of
any material change in the condition of the Purchased Assets.
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10.07 NO SOLICITATION; BREAK-UP FEE.
(a) Sellers shall not invite proposals concerning, or
entertain, solicit, encourage, cooperate with or facilitate (by way of
furnishing information, or otherwise) or accept or discuss any inquiries or
proposals (other than the transaction contemplated hereby) from any Person for
the acquisition of the stock, assets or business of, either Seller or the Ski
Areas or any proposed business combination or other extraordinary business
transaction involving either Seller or the Ski Areas (any such individually or
collectively shall be herein referred to as a "Company Sale"). The Sellers and
their respective officers, directors, representatives, agents and affiliates
immediately shall cease and cause to be terminated all existing discussions,
conversations, negotiations and other communications with any Persons heretofore
conducted with respect to any of the foregoing.
(b) If in breach this Agreement Sellers terminate or abandon
this Agreement in connection with, as a result of, or at a time in which there
exists a proposal of a Company Sale made to the Sellers or American Ski, or
either Sellers or American Ski accept any such Company Sale proposal and within
one (1) year of such termination or abandonment either Seller, American Ski or
its stockholders shall consummate or agree to consummate a Company Sale with a
third party, then the Sellers shall promptly pay to Buyer a fee equal to excess
of the purchase price received in such third party sale over the Purchase Price.
10.08 Further Assurances.
From and after the Closing Date, Sellers shall execute and
deliver to Buyer all such further assignments, endorsements and other documents
as Buyer may reasonably request for the purpose of effecting transfer of
Sellers' title to the Purchased Assets and/or carrying out the provisions of
this Agreement.
ARTICLE XI
INDEMNIFICATION
11.01 INDEMNIFICATION BY SELLERS AND AMERICAN SKI.
Subject to the provisions of Sections 11.03 through 11.06 hereof,
Sellers and American SKI shall, jointly and severally, indemnify and hold Buyer
harmless from and against all losses, liabilities, costs and expenses, including
reasonable attorneys' fees, actually suffered, incurred, paid or required under
penalty of law to be paid by Buyer (collectively referred to as "Buyer's
Damages") resulting in whole or in part from (i) any breach or violation of this
Agreement by Sellers, (ii) any inaccuracy in or breach of any representation,
warranty or covenant made by Sellers herein or in the Schedules attached hereto;
(iii) any inaccuracy or misrepresentation in the Schedules attached hereto or in
any certificate, document, instrument or affidavit delivered by Sellers in
accordance with the provisions of this Agreement; and (iv) any
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and all claims, debts, liabilities, taxes and other obligations of Sellers or
the Ski Resorts whether accrued, absolute, contingent or otherwise, not
expressly agreed to be assumed or undertaken by the Buyer pursuant to Section
3.01 of this Agreement.
11.02 INDEMNIFICATION BY BUYER.
Subject to the provisions of Sections 11.03 through 11.06
hereof, Buyer shall indemnify and hold Sellers harmless from and against all
losses, liabilities, costs and expenses, including reasonable attorneys' fees,
actually, suffered, incurred, paid or required under penalty of law to be paid
by Sellers (collectively referred to as "Sellers' Damages") resulting in whole
or in part from (i) any breach or violation of this Agreement by Buyer, (ii) any
inaccuracy in or breach of any representation, warranty or covenant made by
Buyer herein or in the Schedules attached hereto; (iii) any inaccuracy or
misrepresentation in the Schedules attached hereto or in any certificate,
document, instrument or affidavit delivered by Buyer in accordance with the
provisions of this Agreement; and (iv) any and all claims, debts, liabilities,
taxes and other obligations assumed by Buyer pursuant to Section 3.01 of this
Agreement.
11.03 NOTIFICATION OF CLAIM.
The party seeking indemnification (the "Indemnitee"), upon
obtaining knowledge of any claim or demand which has given rise to, or could
reasonably give rise to, a claim for identification hereunder, shall in writing
notify the other party (the "Indemnitor") of such claim, shall provide the
Indemnitor with a copy of such claim or other documents received, and shall
otherwise make available to the Indemnitor all relevant information material to
the defense of such claim and within the Indemnitee's possession. Subject to
the limitations set forth in Section 11.05, no failure or delay by the
Indemnitee in the performance of the foregoing shall reduce or otherwise affect
the obligation of the Indemnitor to indemnify and hold the Indemnitee harmless,
except to the extent that such failure or delay shall have adversely affected
Indemnitor's ability to defend against, settle or satisfy any liability, loss,
damage, expense, claim or demand for which Indemnitee is entitled to
indemnification hereunder. If the claim or demand set forth in the notice given
by Indemnitee is a claim or demand asserted by a third party, Indemnitor shall
have thirty (30) days after receipt of such notice to notify Indemnitee in
writing of its election to defend, at its sole cost and expense, against such
claim, either in its own name or in the name of the Indemnitee, as may be
required, and the Indemnitee, at its sole cost and expense, shall have the right
to participate in such defense. If Indemnitor elects to defend such third party
claim or demand, the Indemnitor shall have the right to settle any such claim,
except where such settlement would have an adverse effect on the Indemnitee in
which case the Indemnitor shall have the right to settle any such claim only
after obtaining the written consent of Indemnitee thereto. If the Indemnitor
elects not to defend such third party claim or demand or does not defend such
third party claim or demand in good faith, the Indemnitee may, at Indemnitor's
expense, elect to defend such third party claim or demand; provided, however,
that Indemnitee shall not have any obligation to participate in the defense of
or defend any such third party claim or demand and Indemnitee's defense of or
participation in the defense of any such third party claim or demand shall not
in any way diminish or lessen the obligations of Indemnitor under the agreements
of
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indemnification set forth herein. The Indemnitor shall have the right to
provide a defense under a reservation of rights regarding entitlement to
indemnity. The Indemnitee shall not settle or compromise the claim unless (a)
it shall first obtain the written consent of the Indemnitor, (b) suit shall
have been instituted against the Indemnitee and the Indemnitor shall have
failed, after the lapse of a reasonable time (not to exceed 20 days) after
written notice to it of such suit, to take action to defend the same, or (c)
Indemnitor shall have failed to notify Indemnitee in writing of its intention
to contest the claim within twenty (20) days after the above notice from
Indemnitee to Indemnitor.
11.04 BUFFER.
Except as provided in the following two sentences,
notwithstanding anything to the contrary contained hereinabove in this Article
XI, no claims for indemnification shall be made by one party against the other
except to the extent that all such claims by one party for the other party's
payment of indemnification claims hereunder shall aggregate in excess of Five
Hundred Thousand Dollars ($500,000.00), whereupon such parties shall be entitled
to indemnification hereunder for indemnification claims for all losses, damages
or expenses suffered in excess of such amount. The provisions of the
immediately preceding sentence shall not apply with respect to any Buyer's
Damages arising from a breach by the Sellers of the representations set forth in
Sections 6.05 and 6.12 of this Agreement or a breach by Sellers of the
provisions of Section 3.01 of this Agreement. The Buyer shall be entitled to
indemnification hereunder from the Sellers and American Ski for one-half of all
Buyer's Damages arising from a breach by the Sellers of the representation set
forth in Section 6.05 of this Agreement without regard to (a) the unlimited
scope of the indemnity described in Section 11.01, or (b) the $500,000 threshold
set forth above.
11.05 TIME LIMITATIONS.
No claim may be asserted under this Article XI after the
lapse of twelve (12) months from the Closing Date, except (a) any claim arising
from a breach of the representation, warranties and covenants set forth in
Section 6.12 hereof, in which case Buyer shall not be entitled to assert any
right of indemnification after the expiration of the statute of limitations
(including any extensions thereof) imposed by the Code, or any other applicable
law with respect to foreign, federal or state tax liability of Sellers for all
taxable years or periods ending on or prior to the Closing Date, (b) any claim
arising from a breach of the warranty, representation and covenants contained in
Section 6.05 hereof, in which case Buyer shall be entitled to assert any
indemnification claim relating thereto at any time prior to the three year
anniversary of the Closing Date, and (c) if there shall then be pending any
dispute, claim, proceeding or action at the end of the twelve (12) month period
from the Closing Date or, in the case of indemnification claims arising from
Sections 6.12 or 6.05 hereof, at the expiration of the applicable statute of
limitations or at the time of the three year anniversary of the Closing Date,
respectively, in which case Buyer shall continue to have the right to be
indemnified with respect to such indemnification, dispute, claims, proceeding or
action.
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11.06 LIMITATION.
Anything in this Article XI to the contrary notwithstanding,
the Sellers shall not be liable to the Buyer under Section 11.01 or otherwise
for any loss, cost, damage or expense of the Buyer arising after the Closing and
arising from the continuation by the Buyer of any course of dealing or
non-compliance with law or other commitments practiced by the Sellers prior to
the Closing, whether or not the Sellers' description thereof and this Agreement
and the Schedules attached hereto constituted a breach of a representation or
warranty.
11.07 MITIGATION OF DAMAGES.
The Buyer and the Sellers shall be obligated to take all
reasonable steps consistent with sound business practices (as determined by
Buyer or Sellers in its or their reasonable discretion) necessary to mitigate
their losses, costs, damages and expense, and nothing in this Article XI shall
excuse Buyer or Sellers from such obligation to mitigate such loss, cost, damage
or expense.
11.08 INTENTIONAL MISREPRESENTATIONS.
Nothing contained in the foregoing provisions shall relieve
any officer, member, shareholder, or director of Buyer or Sellers of any
liability which it may have on account of the delivery by one party hereto to
the other party of any certificate required to be delivered by any party hereto
under the terms hereof which said certificate is untrue in any respect and which
is at the Closing known by such person executing and delivering the same to be
untrue.
ARTICLE XII
TERMINATION
12.01 TERMINATION.
This Agreement may be terminated at any time prior to Closing:
(a) By the mutual written consent of Buyer and Sellers;
(b) By Buyer, upon written notice to Sellers, if
the Closing Date has not occurred on or before October 31, 1996 (which date
shall be automatically extended to November 27, 1996 to the extent necessary to
satisfy the condition precedent set forth in Section 8.04 hereof), or such
later date as the parties may agree in writing, provided that the Buyer is
notin breach or default under this Agreement;
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(c) By Sellers, upon written notice to Buyer, if the
Closing Date has not occurred on or before October 31, 1996 (which date shall be
automatically extended to November 27, 1996 if so extended under clause (b) of
this Section 12.01), or such later date as the parties may agree in writing,
provided that the Sellers are not in breach or default under this Agreement;
(d) By Sellers or Buyer pursuant to Section 4.01(a);
(e) By Buyer pursuant to Section 8.02 hereof;
provided, however, that no party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right is primarily
attributable to such party or to any affiliated party, and, provided further,
that the party terminating this Agreement shall give notice of its election to
terminate and shall specify in such notice the reason(s) therefor.
12.02 EFFECT OF OBLIGATIONS.
Termination of this Agreement pursuant to this Article shall
terminate all obligations of the parties hereunder, except for the obligations
under Sections 4.02, 10.07, 13.02 and 13.15 and the Escrow Agreement.
12.03 WAIVER.
At any time prior to the Closing, any party hereto may (a)
extend the time for performance of any of the obligations or other acts of any
other party hereto or (b) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations, in each case only to
the extent such obligations, agreements and conditions are intended for its
benefit.
ARTICLE XIII
MISCELLANEOUS
13.01 CONSENTS TO ASSIGNMENT BY THIRD PARTIES.
This Agreement shall not constitute an agreement to assign any asset,
claim, contract, permit, franchise, license or similar agreement or right if any
attempted assignment of the same without the consent of the other party thereto
would constitute a breach thereof or in any way affect the rights of Sellers or
Buyer thereunder.
13.02 CONFIDENTIALITY.
Buyer acknowledges that in the course of preparing this Agreement,
Buyer has
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obtained information concerning the business of Sellers which is of a
confidential and/or proprietary nature (the "Confidential Information"). Buyer
(including the directors, officers, employees and agents thereof) agrees to
retain in confidence and not to disclose any of the Confidential Information of
Sellers to any third party (other than Buyer's advisors, counsel, accountants
and potential financing sources) and if this Agreement is terminated and the
transactions contemplated hereby are not concluded, to promptly return all such
Confidential Information to Sellers and not retain or use any Confidential
Information or copies thereof for any purpose, except as disclosure may be
required by law or government regulation or order or regulatory process or
unless the information sought to be disclosed or used (i) is publicly known as
of the date hereof or becomes publicly known though no fault of Buyer, or (ii)
is lawfully received by Buyer from a third party not bound in a confidential
relationship to any party whose confidential information is to be protected
hereunder.
13.03 BROKERS.
Each of Buyer and Sellers represents and warrants to the other that
they have not engaged any brokers and there are no brokerage or finders' fees
payable in connection with the transactions contemplated hereby resulting from
any actions taken by them.
13.04 REPRESENTATIONS AND WARRANTIES.
Sellers and Buyer hereby agree that statements made in the Schedules
attached hereto and the certificates delivered in connection herewith shall be
representations and warranties for purposes of this Agreement. The
representations and warranties made in this Agreement shall only survive the
Closing to the extent specifically described herein.
13.05 FURTHER ASSURANCES.
From and after the Closing Date, upon the reasonable request of Buyer
from time to time, and at Buyer's expense, Sellers shall execute and deliver all
documents, make all rightful oaths, testify in any proceedings and do all other
acts which may be reasonably necessary or desirable in the opinion of Buyer to
protect or defend the right, title or interest of Buyer in and to the Purchased
Assets.
13.06 TAX MATTERS.
The aggregate purchase price for the Purchased Assets paid by Buyer in
accordance with this Agreement will be allocated among the Purchased Assets by
Buyer and Sellers in accordance with Section 1060 of the Code and the
regulations thereunder, as set forth in Schedule 13.06 attached hereto. Buyer
and Sellers covenant and agree that the Buyer and Sellers shall each timely file
(with the appropriate Internal Revenue Service) Form 8594 in substantially the
form attached to Schedule 13.06. The covenants and agreements of the Buyer and
Sellers set forth in this Section shall survive the Closing and shall continue
so long as the Buyer or Sellers (as the case may be) is obligated under the
Internal Revenue Code of 1986, as
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amended or the regulations or rulings promulgated thereunder, to file Form
8594, including any Supplemental Statement under Part IV of Form 8594. Buyer
and Sellers will furnish each other with a copy of the purchase price
allocation information they submit to the Internal Revenue Service, in
connection with the filing of their fiscal 1996 federal income tax returns.
[Subject to review].
13.07 AMENDMENT.
This Agreement may not be amended except by written agreement of
Sellers and Buyer.
13.08 GOVERNING LAW; SEVERABILITY.
This Agreement shall be construed in all respects in accordance with,
and governed by, the internal laws (as opposed to conflicts of laws provisions)
of Maine. If any provision, clause or part of this Agreement, or the
application thereof under certain circumstances, is held invalid, the remainder
of this Agreement, or the applications of each provision, clause or part under
other circumstances, shall not be affected thereby.
13.09 RETENTION OF BOOKS AND RECORDS.
Buyer and Sellers shall retain for a period of three (3) years from
the Closing all of their books and records (including such records as may be
stored in computer databases) relating to the Purchased Assets. During such
three-year period, each party will make such books and records available to the
other for purposes of inspection and copying, upon a proper purpose being
stated. If any party requires the original of any document in possession of the
other, such party shall provide the same, if available, subject to the providing
party's right to inspect and copy it. Each party will have the right to destroy
such books and records at any time after the end of such three-year period;
provided, however, that it shall give written notice to the other party prior to
the time it intends to destroy such books and records so that if the other party
wishes to take possession of all or some part of such books and records it may
do so, at its expense.
13.10 WAIVER.
The failure of Sellers or Buyer to insist, in any one or more
instances, upon performance of any of the terms or conditions of this Agreement,
shall not be construed as a waiver or relinquishment of any rights granted
hereunder or the future performance of any such term, covenant or condition.
13.11 HEADINGS.
The descriptive headings in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
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13.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
13.13 NOTICES.
Any notice to be given hereunder shall be given in writing and
delivered or mailed by registered or certified mail, return receipt requested,
in the case of Sellers, to:
American Skiing Company
Sunday River Access Road
P.O. Box 450
Bethel, ME 04217
Attention: Michael Krongel
with a copy to:
Christopher E. Howard, Esq.
Pierce Atwood
One Monument Square
Portland, ME 04101
and, in the case of Buyer, to
Booth Creek Ski Acquisition Corp.
1000 South Frontage Road, Suite 100
Vail, CO 81657
Attention: George N. Gillett, Jr.
with a copy to:
Bruce A. Toth, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
or to such other address as Sellers or Buyer may designate by notice in writing
to the other, provided that no party may designate that notices be sent to more
than two locations at any particular time.
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13.14 BENEFIT.
This Agreement may not be transferred, assigned, pledged or
hypothecated by any party hereto without the prior written consent of the other
parties hereto other than by Buyer to financing sources. Upon prior written
consent being obtained, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
13.15 EXPENSES.
Subject to the provisions of Section 10.07, all expenses incurred by,
on behalf of, or for the benefit of Sellers or Buyer in connection with the
closing of transactions contemplated hereby, including without limitation,
engineering, legal, advisory, investment banking and accounting fees, shall be
the responsibility of and for the account of the party or parties who ordered or
for whose benefit the particular service or particular expense was incurred.
13.16 PUBLIC ANNOUNCEMENT.
Except as required by law, prior to the Closing Date, no public
announcement of the transactions contemplated hereby shall be made by way of
press release, disclosure to the trade or otherwise, except as mutually agreed
upon by the parties hereto. Sellers may inform the citizens of the Towns of
Waterville Valley and North Conway of the existence of the Agreement and the
identity of Buyer.
13.17 THIRD PARTY BENEFICIARIES.
Each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto or their permitted assigns.
13.18 ENTIRE AGREEMENT.
This Agreement and the related closing documents executed and
delivered in connection herewith constitute the entire agreement between Sellers
and Buyer with respect to the transactions contemplated hereby, superseding all
prior understandings and agreements among Sellers and Buyer with respect to the
subject matter hereof.
13.19 SOLICITATION OF EMPLOYEES.
None of the Sellers or American SKI will prior to June 30, 1997
solicit for hire or hire any individual employed as of the date of this
Agreement by either of the Sellers or subsequently employed by either of the
Sellers.
31
<PAGE> 32
13.20 COLLECTION OF ACCOUNTS RECEIVABLE.
Sellers and Buyer shall each cooperate in the other's attempts and
efforts to collect the accounts receivable belonging to such party under the
terms of this Agreement. Upon receipt by either Seller or American Ski of any
payments of the accounts receivable which constitute Purchased Assets under
Section 1.10 hereof, whether such payments were received prior to or after the
Closing, Sellers and American Ski shall transfer such payments to Buyer. Upon
receipt by Buyer of any payments of the accounts receivable which constitute
Excluded Assets under Section 2.02 hereof, Buyer shall transfer such payments to
Sellers.
32
<PAGE> 33
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed under seal as of the day and year first above written.
BOOTH CREEK SKI ACQUISITION CORP.
By: /s/ George N. Gillett, Jr.
-------------------------------
Its: Chairman
-----------------------------
WATERVILLE VALLEY SKI AREA, LTD.
By: /s/ Leslie B. Otten
-------------------------------
Its:
------------------------------
AMERICAN SKIING COMPANY
By: /s/ Leslie B. Otten
-------------------------------
Its:
------------------------------
CRANMORE, INC.
By: /s/ Leslie B. Otten
-------------------------------
Its:
------------------------------
33
<PAGE> 34
SCHEDULES
SECTION
DESCRIPTION REFERENCE
- ----------- ---------
WVSAL REAL ESTATE 1.01(a)
CI REAL ESTATE 1.01(b)
EASEMENTS 1.01(c)
SKI AREAS IMPROVEMENTS 1.03
PERSONAL PROPERTY 1.04
LICENSES AND PERMITS 1.05
INTELLECTUAL PROPERTY RIGHTS 1.07
ASSUMED LIABILITIES 3.01
ADJUSTMENT FOR TAXES, PREPAYMENTS AND DEPOSITS 4.02
COMPLIANCE WITH LAWS 6.03
LICENSES AND PERMITS 6.04
ENVIRONMENTAL MATTERS; HEALTH AND SAFETY 6.05
TITLE TO OTHER PURCHASED ASSETS 6.07
LITIGATION 6.09
TAXES 6.12
CONTRACTS AND COMMITMENTS 6.13
EMPLOYEE BENEFIT PLANS 6.15
CARRY ON BUSINESS IN NORMAL MANNER 10.01
TAX MATTERS 13.06
S-1
<PAGE> 1
EXHIBIT 10.3
SUBORDINATED PROMISSORY NOTE
$2,750,000 Portland, Maine
November 27, 1996
FOR VALUE RECEIVED, the undersigned Booth Creek Ski Acquisition Corp.,
Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski Resort, Inc.
(collectively referred to as "maker") jointly and severally promise to pay to
the order of American Skiing Company (together with any subsequent holder of
this Note herein referred to as "holder"), a corporation organized and existing
under the laws of the State of Maine, with a principal place of business in the
Town of Newry, Maine, the principal sum of Two Million Seven Hundred Fifty
Thousand and 00/100 Dollars ($2,750,000) together with interest upon the
principal sum hereof from time to time outstanding, computed from the date
hereof at the rate of twelve percent (12%) per annum.
Subject to the terms and provisions hereinafter contained, interest
shall be payable semi-annually on December 31 and June 30 of each year beginning
June 30, 1997 and continuing until maturity.
Subject to the terms and provisions hereinafter contained, principal
shall be payable in installments as follows:
Date Principal Amount Due
---- --------------------
1/10/97 $250,000
1/31/98 $100,000
1/31/99 $150,000
1/31/00 $200,000
1/31/01 $250,000
1/31/02 $300,000
1/31/03 $350,000
6/30/04 Remaining Principal
Payments under this Subordinated Promissory Note (this "Note") shall
be applied as follows: (1) first to the interest on the unpaid balance of the
debt evidenced hereby and (2) then the remainder to the unpaid principal
balance of the debt until the same is paid in full.
Payments of principal and interest under this Note not made within
fifteen (15) days following the date due shall bear interest at a rate per
annum equal to 15% until so paid.
<PAGE> 2
This Note is subject to the condition that at no time shall the maker
be obligated or required to pay interest at a rate which could subject the
holder hereof to either civil or criminal liability, forfeiture or loss of
principal, interest or other sums as a result of being in excess of the maximum
interest rate which maker is permitted by law to pay. If by the terms of this
Note maker would at any time be required or obligated to pay interest at a rate
in excess of such maximum rate, then the rate of interest under this Note shall
be deemed to be immediately reduced to such maximum rate for so long as such
maximum rate shall be in effect and shall thereafter be payable at the rate
herein provided.
In case of failure to make payment within fifteen (15) days following
the due date of any installments of, principal of, or interest on, this Note or
in case of default (not cured within any applicable grace period) in the terms
or conditions of (i) the Second Mortgage Deed, Security Agreement and Financing
Statement dated as of the date hereof and executed by Waterville Valley Ski
Resort, Inc. in favor of holder (as amended or otherwise modified from time to
time, the "Waterville Mortgage") and (ii) the Second Mortgage Deed, Security
Agreement and Financing Statement dated as of the date hereof and executed by
Mount Cranmore Ski Resort, Inc. in favor of holder (as amended or otherwise
modified from time to time, the "Cranmore Mortgage" and, together with the
Waterville Mortgage, the "Mortgages"), subject to the terms and provisions
hereinafter contained the holder of this Note shall have the option, upon
delivery of written notice to the maker, to declare due and payable at once the
entire principal balance hereof together with accrued interest at the rates
hereinabove provided.
All payments due hereunder and any notice given by the maker to the
holder hereof shall be addressed to American Skiing Company, P.O. Box 450,
Sunday River Access Road, Bethel, Maine 04217, Attn: Chief Administrative
Officer unless written notice of another holder or address be given to the
maker. Any notice given by the holder to the maker shall be addressed to Booth
Creek Ski Acquisition Corp., 1000 South Frontage Road, Vail, Colorado 81657,
Attn: Chairman unless written notice of another address be given to the holder.
This Note evidences a loan for business and commercial purposes.
Each maker is jointly and severally liable for all obligations
hereunder. The maker and all other parties that may be or become liable
herefor, whether principal, guarantor, endorser or otherwise, hereby severally
waive demand, notice and protest, and waive all recourse to suretyship and
guarantorship defenses generally, including but not limited to, any extensions
of time for payment or performance which may be granted to the maker or to any
other party, any modification or amendments to this Note or any document
securing payment and performance hereof, any release of security, any release
of a liable party or parties, and all other indulgences of any type which may
be granted by the holder hereof to any or all of maker or any other party that
may be or become liable herefor, and do also agree to pay all reasonable costs
and expenses of any nature, whether incurred in or out of court, and whether
incurred before or after this Note shall become due at its maturity date or
otherwise, including but not limited to reasonable attorney's fees and costs,
which the holder hereof may deem necessary or proper in connection with the
collection or satisfaction of the indebtedness evidenced hereby or in the
administration, supervision, preservation or protection (including but not
limited to the maintenance of adequate insurance) of or realization upon any
collateral security herefor.
2
<PAGE> 3
Maker and all parties that may be or become liable herefor shall have
the right to prepay the principal hereof in full or in part together with
accrued interest to the date of payment on the principal amount being prepaid,
at any time and from time to time without premium or penalty.
The obligations of the maker hereunder are hereby made subordinate and
junior in right of payment, to the extent and in the manner provided herein, to
the prior payment in full in cash of all Senior Debt (as hereinafter defined)
of the maker (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed).
The following terms shall have the meanings hereinafter set forth:
"Insolvency or Liquidation Proceeding" means any insolvency or
bankruptcy or similar case or proceeding, or any reorganization, receivership,
liquidation, dissolution or winding up of maker, whether voluntary or
involuntary, or any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the maker.
"Post-Petition Interest" means all interest accrued or accruing on
such indebtedness after the commencement of any Insolvency or Liquidation
Proceeding against the obligor on such indebtedness in accordance with and at
the contract rate (including, without limitation, any rate applicable upon
default) specified in the agreement or instrument creating, evidencing or
governing such indebtedness, whether or not, pursuant to applicable law or
otherwise, the claim for such interest is allowed as a claim in such Insolvency
or Liquidation Proceeding.
"Representative" means, with respect to any Senior Debt, the agent or
other representative(s), if any, of holders of such Senior Debt.
"Senior Debt" means and includes all principal of, premium and
interest on, and any other penalties, premiums, fees, charges, obligations,
expense reimbursement or other liabilities (including, but not limited to,
Post-Petition Interest) existing from time to time under (i) any indebtedness
of maker (other than the Subordinated Obligation) incurred or established to
finance the purchase price payable under that certain Purchase and Sale
Agreement among Waterville Valley Ski Area, Ltd., Cranmore, Inc., American
Skiing Company and Booth Creek Ski Acquisition Corp. dated as of August 30,
1996, and including any amendments, restatements, supplements, modifications,
renewals and extensions thereof and any complete or partial refinancing and
replacements thereof, (ii) any indebtedness of maker incurred or established
with one or more financial institutions unrelated to maker to fund working
capital requirements for the Waterville Valley Ski Resort in Waterville Valley,
New Hampshire and/or the Mt. Cranmore ski resort in North Conway, New Hampshire
(the "Resorts") and including any amendments, restatements, supplements,
modifications, renewals and extensions thereof and any complete or partial
refinancing and replacements thereof, (iii) indebtedness of maker incurred or
established to finance the purchase or improvement, or any capitalized leases,
of property or assets to be used in the operation of the Resorts and including
any amendments, restatements, supplements, modifications, renewals and
extensions thereof and any complete or partial refinancings and replacements
thereof, and (iv) any other indebtedness of maker owing to the financial
institutions that provided the financing described in clauses (i), (ii) and
(iii) above, including their successors and assigns.
3
<PAGE> 4
"Subordinated Obligation" means this Note and all obligations of
payment hereunder and under the Mortgages including principal, interest,
premium and costs, expenses and other charges.
Upon any distribution of cash, securities or other property to
creditors of the maker in a liquidation or dissolution of the maker or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the maker or its property, in an assignment for the benefit of
creditors or any marshaling of the maker's assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive
payment in full in cash of all Senior Debt before the holder of this
Note shall be entitled to receive any payment with respect to this
Note; and
(2) until all Senior Debt (as provided in subsection (1)
above) is paid in full in cash, any distribution to which holders of
this Note would be entitled but for the subordination provisions of
this paragraph shall be made to holders of such Senior Debt, as their
interests may appear.
The maker may not make any payment or distribution to any holder of
this Note until all Senior Debt has been paid in full in cash; provided,
however, that the maker may make payments of principal and interest on this
Note unless:
(1) a default in the payment of the principal of or premium
or interest on Senior Debt (a "Payment Default") occurs and is
continuing; or
(2) a default, other than a Payment Default (a "Non-Payment
Default"), under any agreement, indenture, or other document governing
Senior Debt occurs and is continuing that permits holders of Senior
Debt as to which such default relates to accelerate its maturity and
the holder of this Note receives a notice of such default (a "Payment
Blockage Notice") from any holder of Senior Debt. If the holder of
this Note receives any such Payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this
subsection (2) unless and until at least 179 days shall have elapsed
since the delivery of the immediately prior Payment Blockage Notice.
No Non-Payment Default that existed or was continuing on the date of
delivery of any Payment Blockage Notice shall be, or made, the basis
for a subsequent Payment Blockage Notice.
The maker may and shall resume all payments on this Note upon:
(1) in the case of a default referred to in subsection (1)
above, the date upon which such default is cured or waived; or
(2) in the case of a default referred to in subsection (2)
above, the earlier of the date upon which the default is cured or
waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of such Senior Debt
has been accelerated.
4
<PAGE> 5
If payment of this Note is accelerated because of any default
hereunder or under the Mortgages, the maker shall promptly notify holders of
Senior Debt of the acceleration.
In the event that any holder of this Note receives any payment with
respect to this Note at a time when such payment is prohibited hereby, such
payment shall be held by such holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to the holders of
Senior Debt as their interests may appear under the indenture or other
agreement (if any) pursuant to which such Senior Debt may have been issued, as
their respective interests may appear or as directed by final, non-appealable
action of a court of competent jurisdiction for application to the payment of
all Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt
in full in accordance with its terms, after giving affect to any concurrent
payment or distribution to or for the holders of such Senior Debt.
With respect to the holders of Senior Debt, the holder hereof
undertakes to perform only such obligations as are specifically set forth
herein, and no implied covenants or obligations with respect to the holders of
such Senior Debt shall be read into this Note against the holder hereof. The
holder hereof shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt, and shall not be liable to any such holders if the holder hereof
shall accept or retain money or assets to which any holders of such Senior Debt
shall be entitled by virtue of this Note, except if such payment is made at a
time when the terms of this Note prohibit such payment.
The maker shall promptly notify the holder hereof in writing of any
facts known to the maker that would cause a payment under this Note to violate
this Note, but failure to give such notice shall not affect the subordination
of this Note to the Senior Debt of the maker as provided herein.
After all Senior Debt is paid in full in cash and until this Note is
paid in full the holder of this Note shall be subrogated to the rights of
holders of such Senior Debt to receive distributions applicable to such Senior
Debt to the extent that distributions otherwise payable to the holder hereof
have been applied to the payment of such Senior Debt. A distribution made
hereunder to holders of Senior Debt that otherwise would have been made to the
holder hereof is not, as between the maker and holder hereof a payment by the
maker.
The holder may not unilaterally commence proceedings to enforce any
rights or remedies that it may have against the maker of any of its assets
under this Note or the Mortgages or accelerate this Note until the passage of
360 days after the receipt by maker and the holders of the Senior Debt of
notice from the holder hereof that a default has occurred under this Note or
the Mortgages.
5
<PAGE> 6
The foregoing provisions defines the relative rights of the holder of
this Note and holders of Senior Debt of the maker. Nothing in this Note shall:
(1) impair, as between the maker, and the holder of this
Note, the obligation of the maker, which is absolute and
unconditional, to pay principal of and premium, interest and other
fees, charges and expenses, if any, on this Note in accordance with
its terms; or
(2) affect the relative rights of the holder of this Note
and creditors of the maker other than the rights of the holder of this
Note in relation to holders of the Senior Debt; or
(3) except as expressly limited hereunder, prevent the
holder of this Note from exercising its available remedies upon a
default hereunder or under the Mortgages, subject to the rights of
holders of such Senior Debt to receive distributions and payments
otherwise payable to the holder of this Note.
If the maker fails because of the foregoing provisions to pay
principal of or premium, interest or other fees, charges and expenses, if any,
on this Note on the due date, the failure shall none-the-less constitute a
default hereunder.
No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by this Note shall be impaired by any act or failure
to act by the maker or any holder of Senior Debt or the failure of the maker or
any holder to comply with this Note.
The holders of any Senior Debt of the maker may, at any time and from
time to time, without the consent of or notice to the holder hereof, without
incurring any liabilities to the holder hereof and without impairing or
releasing the subordination and other benefits provided herein or the
obligations of the holder of this Note to the holders of such Senior Debt, even
if any holder's right of reimbursement or subrogation or other right or remedy
is affected, impaired or extinguished thereby, do any one or more of the
following: (i) amend, renew, exchange, extend, modify, increase or supplement
in any manner such Senior Debt or any instrument evidencing or guaranteeing or
securing such Senior Debt or any agreement under which such Senior Debt is
outstanding (including, but not limited to, changing the manner, place or terms
of payment or changing or extending the time of payment of, or renewing,
exchanging, amending, increasing, releasing, terminating or altering any such
instrument or agreement); (ii) sell, exchange, release, surrender, realize
upon, enforce or otherwise deal with in any manner and in any order any
property pledged, mortgaged or otherwise securing such Senior Debt or any
liability of any obligor thereon, to such holder, or any liability incurred in
respect thereof; (iii) settle or compromise any such Senior Debt or any other
liability of any obligor of such Senior Debt to such holder or any security
therefor or any liability incurred in respect thereof and apply any sums by
whomsoever paid and however realized to any liability (including, without
limitation, payment of any Senior Debt) in any manner or order; and (iv)
release, terminate or otherwise cancel, or fail to take or to record or
otherwise perfect, for any reason or for no reason, any lien or security
interest securing such Senior Debt by whomsoever granted, exercise or delay in
or refrain from exercising any right or remedy against any obligor or any
guarantor or any other person, elect any remedy and otherwise deal freely with
any obligor and any security for such Senior Debt or any liability of any
obligor to the holders of such Senior Debt or any liability incurred in respect
to such Senior Debt.
6
<PAGE> 7
Upon any payment or distribution of assets of the maker referred to
herein, the holder of this Note shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction or upon any certificate of
an authorized representative of the holders of Senior Debt or the maker or of
the liquidating trustee or agent or other person making any distribution to the
holder of this Note for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Debt and other
indebtedness of the maker, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto.
For all purposes of this Note, a "payment or distribution on account
of Subordinated Obligations" shall include, without limitation, any direct or
indirect payment or distribution on account of the purchase, prepayment,
redemption, retirement, defeasance or acquisition of this Note, any recovery by
the exercise of any right of set-off, any direct or indirect payment of
principal, premium or interest with respect to or in connection with any
mandatory or optional redemption or purchase provisions, any direct or indirect
payment or distribution payable or distributable by reason of any Subordinated
Obligations, and any direct or indirect payment or recovery on any claim
relating to or arising under this Note.
If any obligation or portion of this promissory note is determined to
be invalid or unenforceable under law, it shall not affect the validity or
enforceability of the remaining obligations or portions hereof. If there is
more than one party signatory hereto, the liability of all such parties whether
principal, guarantor, endorser or otherwise hereunder shall be joint and
several. This Note shall be governed by and construed in accordance with the
laws of the State of Maine without regard to the conflicts of laws and
provisions thereof.
Maker hereby consents to and acknowledges the pledge and assignment of
this Note to Fleet National Bank, as agent, pursuant to that certain Security
Agreement among American Skiing Company certain subsidiaries thereof and Fleet
National Bank, as agent, dated June 28, 1996.
7
<PAGE> 8
The provisions of this Note regarding subordination and other matters
relating to the holders of Senior Debt are for the benefit of the holders of
Senior Debt and may be enforced directly by them against the holder of this
Note. The holder of this Note acknowledges and agrees, by acceptance hereof,
that the holders of the Senior Debt have relied upon and will continue to rely
upon the subordination provided for herein in entering into the transaction to
which they are a party and making the extensions of credit comprising the
Senior Debt. The holder of this Note hereby waives notice of or proof of
reliance hereon.
BOOTH CREEK SKI
ACQUISITION CORP.
By: /s/ Jeffrey J. Joyce
-----------------------------
Name:
---------------------------
Title:
--------------------------
WATERVILLE VALLEY SKI
RESORT, INC.
By: /s/ Jeffrey J. Joyce
-----------------------------
Name:
---------------------------
Title:
--------------------------
MOUNT CRANMORE SKI
RESORT, INC.
By: /s/ Jeffrey J. Joyce
-----------------------------
Name:
---------------------------
Title:
--------------------------
8
<PAGE> 1
EXHIBIT 10.4
Execution copy
STOCK PURCHASE AND INDEMNIFICATION AGREEMENT
AMONG
BOOTH CREEK SKI HOLDINGS, INC.,
FIBREBOARD CORPORATION,
TRIMONT LAND COMPANY, SIERRA-AT-TAHOE, INC. AND
BEAR MOUNTAIN, INC.
DATED AS OF NOVEMBER 26, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
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<S> <C> <C>
Section 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2 BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase and Sale of Acquired Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Deliveries and Actions Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Deliveries and Instructions at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Personal Property Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Assets Used in the Conduct of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.10 Customers' Passes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Personnel Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.12 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.15 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.16 Non-Foreign Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6 PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Notices and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Operation of Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Access to Employees and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Employees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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<TABLE>
<S> <C> <C>
Section 7 CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Conditions to Obligation of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Conditions to Obligation of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Termination of Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Disposition of the Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9 POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Litigation Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.5 Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10 INDEMNIFICATION AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Survival; Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification Provisions for Buyer's Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnification Provisions for Seller's Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Purchase "AS IS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Cross-indemnifications and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Indemnification of Buyer and Acquired Corporations by Seller . . . . . . . . . . . . . . . . . . . 31
(b) Indemnification and Release of Seller by Acquired Corporations and Buyer . . . . . . . . . . . . . 31
10.6 Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.7 Determination of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.8 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.8 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.12 Incorporation of Exhibits, Schedules and Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.13 Employee Benefits Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.14 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.15 Taxes and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.16 Payment of BML Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.17 Promotional Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.18 Nonsolicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.19 Guarantee by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<PAGE> 4
APPENDICES, EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
APPENDICES
- ----------
1 . . . . . . . . . . . . . . . Defined Terms
2 . . . . . . . . . . . . . . . Disclosure Schedule
3 . . . . . . . . . . . . . . . Acquired Assets
4 . . . . . . . . . . . . . . . Excluded Assets
5 . . . . . . . . . . . . . . . Consents
6 . . . . . . . . . . . . . . . Calculation of Net Working Capital at
October 26, 1996
EXHIBITS
- --------
A . . . . . . . . . . . . . . . Allocation Schedule
B . . . . . . . . . . . . . . . Escrow Agreement
C . . . . . . . . . . . . . . . Financial Statements
D . . . . . . . . . . . . . . . Opinion of Seller's Counsel
E . . . . . . . . . . . . . . . Form of Withholding Certificate
F . . . . . . . . . . . . . . . Opinion of Buyer's Counsel
G . . . . . . . . . . . . . . . Employment Agreements
SCHEDULES
- ---------
2.3 . . . . . . . . . . . . . . Adjustments to Net Working Capital
4.10 . . . . . . . . . . . . . . Customer Passes
4.11-A . . . . . . . . . . . . . Personnel Identification
4.11-B . . . . . . . . . . . . . Personnel on Leave
4.12 . . . . . . . . . . . . . . Employee Benefits Matters
11.16 . . . . . . . . . . . . . BML Earn-Out
</TABLE>
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<PAGE> 5
THIS STOCK PURCHASE AND INDEMNIFICATION AGREEMENT (this "Purchase
Agreement") is entered into as of November 26, 1996 (the "Effective Date"), by
and among BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation ("Buyer"),
FIBREBOARD CORPORATION, a Delaware corporation ("Fibreboard" or "Seller"),
TRIMONT LAND COMPANY, a California corporation doing business as
Northstar-at-Tahoe ("Northstar"), SIERRA-AT-TAHOE, INC., a Delaware corporation
("Sierra"), and BEAR MOUNTAIN, INC., a Delaware corporation ("Bear Mountain").
Northstar, Sierra and Bear Mountain are referred to collectively herein as the
"Acquired Corporations" or the "Resort Group," and Buyer, Fibreboard and
Acquired Corporations are referred to collectively herein as the "Parties."
WHEREAS, each of the Acquired Corporations is a wholly owned subsidiary
of Fibreboard; and
WHEREAS, Northstar is engaged in the ownership and operation of a ski
resort by the name of "Northstar-at-Tahoe," a golf course, a conference center
and other facilities and properties, all located near the City of Truckee,
California (the "Northstar Business"); and
WHEREAS, Bear Mountain is engaged in the ownership and operation of a
ski resort by the name of "Bear Mountain Ski Resort," a golf course by the name
of "Bear Mountain Golf Course" and other facilities and properties, all located
near the City of Big Bear Lake, California (the "Bear Mountain Business"); and
WHEREAS, Sierra is engaged in the ownership and operation of a ski
resort by the name of "Sierra-at-Tahoe Ski Resort" and other facilities and
properties, all located near the City of South Lake Tahoe, California (the
"Sierra Business"; together with the Northstar Business and the Bear Mountain
Business, the "Businesses"); and
WHEREAS, each Acquired Corporation owns or leases real property and
certain tangible and intangible assets used in its Business, including without
limitation, buildings and improvements, machinery and equipment, vehicles,
retail inventory, non-retail inventory, intellectual property, contract rights,
timber and water rights and prepaid expenses and receivables; and
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WHEREAS, each of Bear Mountain and Sierra has obtained a special use
permit (or permits) from the Department of Agriculture--Forest Service granting
the right to use certain real property in order to operate its Business; and
WHEREAS, Buyer desires to purchase all of the issued and outstanding
shares of capital stock of each of the Acquired Corporations ("Acquired
Shares") and to assume certain Liabilities associated with the Businesses, and
Fibreboard desires to sell and transfer to Buyer the Acquired Shares and to
accept responsibility for certain Liabilities associated with the Businesses,
all as more fully set forth below:
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows.
SECTION 1
DEFINED TERMS
-------------
Terms in this Purchase Agreement with initial letters capitalized shall
have their respective meanings as set forth in Appendix 1 attached hereto.
SECTION 2
BASIC TRANSACTION
-----------------
2.1 Purchase and Sale of Acquired Shares. On and subject to the terms
and conditions of this Purchase Agreement, Buyer agrees to purchase from
Fibreboard, and Fibreboard agrees to sell, transfer, convey and deliver to
Buyer all of the Acquired Shares at the Closing in exchange for the Purchase
Price, as adjusted pursuant to Section 2.3 of this Purchase Agreement.
2.2 Purchase Price. Buyer agrees to pay to Fibreboard (pursuant to
the provisions of Section 3) One Hundred Fourteen
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<PAGE> 7
Million dollars ($114,000,000.00) (the "Purchase Price") by delivery of
cash payable by wire transfer or delivery of other funds which shall be
immediately available to Fibreboard as of the Closing. The Purchase Price
reflects reimbursement to Fibreboard for prior real estate development costs in
the amount of Five Hundred Thousand Dollars ($500,000.00). Fibreboard
acknowledges receipt on September 6, 1996 (the "Deposit Date"), in accordance
with the terms of the Letter of Intent, of the deposit on behalf of Buyer with
Fibreboard of One Million Dollars ($1,000,000.00) (the "Deposit"), which sum,
together with simple interest thereon at six and one-half percent (6 1/2%) per
annum (beginning on the Deposit Date and ending on the Closing Date) shall be
applied in partial satisfaction of Buyer's obligations hereunder. The Purchase
Price shall also be subject to adjustment as provided in Section 2.3 below.
2.3 Purchase Price Adjustments.
--------------------------
(i) The Purchase Price shall be increased or decreased as the
case may be, on a dollar-for-dollar basis, to reflect a positive or negative
amount for Net Working Capital on the Closing Date. In addition if, but only
to the extent that, the calculation of Net Working Capital does not reflect the
following items the Purchase Price shall be reduced or increased, as
appropriate, by the amount not reflected in such calculation: (A) the full
remaining liability of Sierra to Doppelmayr USA, Inc. under that certain Sales
and Installation Contract, dated May 28, 1996 (the "Doppelmayr Contract"), with
respect to the installation of three detachable quad lifts at Sierra, (B) the
liability, on a discounted basis, for certain promotional items which Buyer is
obligated to honor under Section 11.17 of this Purchase Agreement, (C) an
allocation reflecting the cost of new uniforms for Resort Group employees as
born equally by Fibreboard and Buyer, and (D) the amount established by Sierra
as a reserve for environmental liability as of June 30, 1996, less any amounts
drawn on such reserve prior to Closing. In addition, if (for reasons of
impracticality of transferring assets prior to the Closing from an Acquired
Corporation to Fibreboard or a third party designated by Fibreboard) at the
Closing any Acquired Corporations own any Excluded Assets, after the
Closing,(I) Buyer agrees to cause, at Fibreboard's expense, such Acquired
Corporations to take all actions reasonably requested
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<PAGE> 8
by Fibreboard to convey such Excluded Assets to Fibreboard (or its designee)
without payment by Fibreboard of any consideration therefor and (II) at all
times prior to such conveyance, to cause the Acquired Corporations to hold any
such Excluded Assets in trust for the benefit of Fibreboard (with all benefits
of such Excluded Assets being conveyed by such Acquired Corporations to
Fibreboard and all Liabilities relating thereto being assumed by Fibreboard).
If after the Closing the Parties agree that it is not possible, on commercially
reasonable terms, to convey any such Excluded Assets form the Acquired
Corporations to Fibreboard (or its designee), the Parties shall endeavor to
agree to a value to be paid by the respective Acquired Corporations to
Fibreboard for such assets. In the event the Parties are unable to agree on a
value for any such assets, they shall submit the matter to Arbitration.
(ii) The Purchase Price shall be increased by the Seasonal
Adjustment.
(iii) Three (3) business days prior to the Closing Date,
Fibreboard shall deliver to Buyer (A) an estimated unaudited balance sheet of
the Resort Group as of the Closing Date (the "Estimated Closing Balance Sheet")
and (B) an estimate available at such time of the adjustments to the Purchase
Price required by clauses (i) and (ii) of this Section 2.3 (the "Price
Adjustment"), as determined on the basis of the Estimated Closing Balance
Sheet. Except as provided on Schedule 2.3 with respect to the calculation of
the Net Working Capital, the Estimated Closing Balance Sheet and the
calculations of the Estimated Price Adjustment shall be prepared and computed
in a manner consistent with the application of the accounting principles
applied in the preparation of the Financial Statements (the "Accounting
Principles"). Such estimate of the Price Adjustment is hereinafter referred to
as the "Estimated Price Adjustment." The Estimated Price Adjustment shall be
added to the Purchase Price set forth in Section 2.2 and the resulting amount
shall be paid by Buyer at the Closing (the "Closing Amount").
(iv) Fibreboard will prepare and deliver to Buyer, within
forty-five (45) days following the Closing Date, a statement certified by the
chief financial officer of Fibreboard (the "Closing Statement") of (A) a
balance sheet of the Resort Group
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<PAGE> 9
as of the Closing Date (the "Final Closing Balance Sheet"), (B) the Price
Adjustment, as determined on the basis of the Final Closing Balance Sheet, and
(C) the difference between the Price Adjustment and the Estimated Price
Adjustment (the "Final Adjustment"). The Final Closing Balance Sheet and
calculation of the Price Adjustment shall be prepared and computed in a manner
consistent with the application of the Accounting Principles. Buyer shall,
upon request, be allowed access to the working papers of Fibreboard (or its
accountants) used in preparing the Closing Statement. If the Final Adjustment
is a positive number, then Buyer will pay the difference to Fibreboard, and if
the Final Adjustment is a negative number then Fibreboard will pay the
difference to Buyer, with payment due prior to the expiration of thirty (30)
days following Fibreboard's delivery to Buyer of the Closing Statement.
Notwithstanding the foregoing, Buyer may object to the Closing Statement by
notifying Fibreboard within such 30-day period, which notice must contain a
statement of the basis of Buyer's objection(s). Buyer's failure to so object
shall be deemed Buyer's acceptance of the Closing Statement. If Buyer gives
such notice of objection, then the issues in dispute will be submitted for
resolution to Arbitration, and any required payment will be made prior to the
tenth business day following resolution of issues in dispute by Arbitration.
(v) Any payment of the Final Adjustment will be made together
with simple interest thereon at six and one-half percent (6 1/2%) per annum
(beginning on the Closing Date and ending on the date of payment). Payment
must be made in immediately available funds and shall result in appropriate
adjustments to the Purchase Price allocation schedule provided for in Section
11.15 below and to be attached hereto as Exhibit A.
SECTION 3
THE CLOSING
-----------
3.1 The Closing. The closing of the transactions contemplated by this
Purchase Agreement (the "Closing") shall take place at the offices of Winston &
Strawn in New York, New York,
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<PAGE> 10
commencing at 9:00 a.m. local time on (i) the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby or (ii) such other date as the
Parties may mutually agree in writing (the "Closing Date").
3.2 Deliveries and Actions Prior to Closing. Prior to the Closing:
(i) Fibreboard shall cause the Acquired Corporations to
distribute or otherwise assign to Fibreboard the Excluded Assets; provided,
however, if the Parties determine that an Excluded Asset cannot be transferred,
such asset shall remain within the Acquired Corporations in accordance with the
provisions of Section 2.3(i) above;
(ii) Fibreboard shall request that Lender deliver to
Fibreboard certificates representing the Acquired Shares in which Lender has a
Security Interest (the "Old Certificates"); and
(iii) Fibreboard shall (A) transfer to the applicable Acquired
Corporations all Acquired Assets owned by Fibreboard or to which Fibreboard is
a party, (B) cause all amounts owing to or from any Acquired Corporation by or
to Fibreboard or any Affiliate of Fibreboard (other than any other Acquired
Corporation) to be satisfied, waived or otherwise canceled and (C) repay or
cause to be repaid any and all long- term debts of the Acquired Corporations.
3.3 Deliveries and Instructions at Closing. At the Closing:
(i) Buyer shall deliver to Lender (A) the Closing Amount (less
$1,000,000) and (B) the Estimated Proration Amount, and Buyer shall deliver to
Escrow Holder $1,000,000 to be held in accordance with the Escrow Agreement;
(ii) Fibreboard shall cause the Lender to release the Old
Certificates;
(iii) Fibreboard shall deliver to Buyer certificates
representing all of the Acquired Shares (including the Old
-6-
<PAGE> 11
Certificates) duly endorsed to Buyer or accompanied by stock powers duly
executed;
(iv) The Acquired Corporations shall issue to Buyer new
certificates representing the Acquired Shares registered in the name of Buyer,
cancel the Old Certificates, and register the Acquired Shares in Buyer's name
as appropriate in the stock records of the Acquired Corporations;
(v) Fibreboard shall deliver to Buyer properly executed
releases (including termination statements on Form UCC-3) necessary or which
Buyer and its counsel reasonably may request in respect of the termination of
any Security Interest (other than Permitted Exceptions) on the Acquired Assets;
(vi) Fibreboard shall deliver to Buyer the certificate and
opinion referred to in Sections 7.1(v) and 7.1(viii) below, respectively;
(vii) Buyer shall deliver to Fibreboard the certificate and
opinion referred to in Sections 7.2(v) and 7.2(vii) below, respectively;
(viii) Fibreboard shall deliver to Buyer a certificate of its
Secretary or Assistant Secretary and of each Acquired Corporation's Secretary
or Assistant Secretary (A) certifying and attaching a true and complete copy of
each of the following: (x) such Person's certificate or articles of
incorporation; (y) such Person's By-Laws; and (z) resolutions duly adopted by
such Person's board of directors approving the execution, delivery and
performance of this Purchase Agreement, (B) certifying as to the incumbency and
specimen signature of the officers of such corporation who have executed this
Purchase Agreement and (C) with respect only to each Acquired Corporation,
certifying as to the incumbency of all of the officers of such corporation;
(ix) Fibreboard and each Acquired Corporation shall deliver to
Buyer a good standing certificate from the Secretary of State of California and
the jurisdiction of its incorporation, if different;
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<PAGE> 12
(x) Buyer shall deliver to Fibreboard a certificate of its
Secretary or Assistant Secretary (A) certifying and attaching a true and
complete copy of each of the following: (x) certificate of incorporation; (y)
By-Laws; and (z) resolutions duly adopted by Buyer's board of directors
approving the execution, delivery and performance of this Purchase Agreement
and the consummation of the transactions contemplated by this Purchase
Agreement, and (B) certifying as to the incumbency and specimen signatures of
the officers of Buyer who have executed this Purchase Agreement;
(xi) Buyer shall deliver to Fibreboard a good standing
certificate for Buyer from the Secretary of State of Delaware;
(xii) Fibreboard shall deliver to Buyer the resignations of
the directors and officers of the Acquired Corporations, such resignations to
take effect immediately after the Closing, and
(xiii) Buyer and Seller shall enter into an escrow agreement
in the form of Exhibit B (the "Escrow Agreement").
3.4 Timing. Closing shall be deemed to have occurred when all
deliveries contemplated by Section 3.3 have been made.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Fibreboard represents and warrants to Buyer that the statements
contained in this Section 4 are correct and complete as of the Effective Date
and will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the Effective Date
throughout this Section 4), except as set forth in the disclosure schedule
accompanying this Purchase Agreement as Appendix 2 (the "Disclosure Schedule").
4.1 Organization. Each of Fibreboard and the Acquired Corporations is
a corporation duly organized, validly existing
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<PAGE> 13
and in good standing under the laws of its jurisdiction of incorporation. Each
of Fibreboard and the Acquired Corporations is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of its business or the ownership or leasing of its properties
requires such qualification and the failure to so qualify would reasonably be
expected to have a material adverse effect on the Value of the Acquired Assets.
4.2 Authorization. Each of Fibreboard and the Acquired Corporations
has full corporate power and authority to execute and deliver this Purchase
Agreement and to perform its obligations hereunder, and such execution and
delivery have been approved by all necessary corporate action. This Purchase
Agreement constitutes the valid and legally binding obligation of each of the
Acquired Corporations and Fibreboard, enforceable in accordance with its terms
and conditions, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally.
4.3 Noncontravention.
(i) To the Knowledge of the Officers, neither the execution
and delivery of this Purchase Agreement nor the performance of Fibreboard's or
any of the Acquired Corporations' obligations hereunder will (A) violate any
law, statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which Fibreboard or any of the Acquired Corporations is subject or
any provision of the charter or bylaws of any of Fibreboard or the Acquired
Corporations, or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel or require any consent or notice
under, any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which any of the
Acquired Corporations is a party or by which any of the Acquired Corporations
is bound or to which any of their assets are subject (or result in the
imposition of any Security Interest upon any of the assets of any of the
Acquired Corporations).
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<PAGE> 14
(ii) To the Knowledge of the Officers and except as
contemplated by this Purchase Agreement with respect to USFS Permits and the
Hart-Scott-Rodino Act or as otherwise described on the Disclosure Schedule,
neither Fibreboard nor any of the Acquired Corporations need give any notice
to, make any filing with or obtain any authorization, consent or approval of
any government or governmental agency in order for Fibreboard and the Acquired
Corporations to perform their obligations under this Purchase Agreement.
4.4 Financial Statements. Attached hereto as Exhibit C are the
following combined financial statements for the Resort Group (collectively, the
"Financial Statements"):
(i) combined financial statements as of December 31, 1995 and
December 31, 1994 together with report of Arthur Andersen, independent public
accountants, which financial statements include balance sheets as of December
31, 1995 and December 31, 1994 and statements of operations for each of the
years ended December 31, 1993, 1994 and 1995;
(ii) interim balance sheet at June 30, 1996 (the "Interim Balance Sheet"); and
(iii) a statement of the combined operating results for the
six-month period ended June 30, 1996.
The Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby, and present fairly the financial position of the Resort Group
as of the dates thereof and the results of operations for the periods
indicated, with the exceptions noted in the Disclosure Schedule.
4.5 Disclosure. To the Knowledge of the Officers, Fibreboard has
disclosed or made available to representatives of Buyer all material
information in any Acquired Corporation's or Fibreboard's possession regarding
all Adverse Consequences, including Liabilities and obligations relating to or
arising in connection with Environmental Conditions, which could reasonably be
expected to have a material adverse effect on the Value of the Acquired Assets.
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4.6 Personal Property Assets. Except as discussed in the Disclosure
Schedule: The Acquired Corporations have good and marketable title to, or a
valid leasehold interest in, the Tangible Personal Property assets which
constitute a portion of the Acquired Assets free and clear of any Security
Interest.
4.7 Real Property. Appendix 3 attached hereto lists and describes
briefly all parcels of real property comprising the Real Property. With
respect to each such parcel:
(i) There are no pending or, to the Knowledge of the Officers,
threatened condemnation proceedings relating thereto;
(ii) There are no leases, subleases, licenses, concessions or
other agreements, written or oral, granting to any party or parties the right
of use or occupancy of any portion thereof which could reasonably be expected
to have a material adverse effect on the Value of the Acquired Assets;
(iii) There are no outstanding options or rights of first
refusal to purchase such parcel, or any portion thereof or interest therein,
exercise of which could reasonably be expected to have a material adverse
effect on the Value of the Acquired Assets; and
(iv) There are no Security Interests except for Permitted
Exceptions.
4.8 Insurance. Each of the Acquired Corporations has been covered
during the past five years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period.
4.9 Assets Used in the Conduct of the Business. All of the assets,
real properties, tangible personal properties and intangible properties used in
the conduct of the Businesses as presently conducted, other than the Excluded
Assets or as described on the Disclosure Schedule, are Acquired Assets and
neither Fibreboard nor any other affiliate of Fibreboard has any ownership
interest therein except through the Acquired Shares, provided that, without
qualifying any other representation by Fibreboard in this Purchase Agreement,
no representation is made hereby as to the Acquired Corporations' title to any
such asset.
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<PAGE> 16
4.10 Customer Passes. Schedule 4.10 contains a correct list of all
persons holding lifetime passes or other passes for skiing, golf or other
recreational activities provided by any Acquired Corporation, in any case
extending beyond the 1996-1997 ski season.
4.11 Personnel Identification. Schedule 4.11-A contains a list of the
names and titles of all current officers, directors, employees, agents and
representatives of Acquired Corporations or any of them. Fibreboard has
previously delivered to Buyer a true and correct schedule stating the rates of
compensation payable (or paid, as the case may be) to each such person.
Schedule 4.11-B contains a list of all employees of the Acquired Corporations
who are on disability leave or other approved leaves of absence.
4.12 Employee Benefits.
(i) Schedule 4.12 contains a true, complete and correct list of
each pension, retirement, profit sharing, savings, stock option, restricted
stock, severance, termination, bonus, fringe benefit, insurance, supplemental
benefit, medical, education reimbursement or other employee benefit plan,
program, agreement or arrangement, including each "employee benefit plan" as
defined in Section 3(3) of ERISA sponsored, maintained or contributed to or
required to be contributed to by the Acquired Corporations or any other member
of the Controlled Group for the benefit of current or former employees of the
Businesses or in which the Acquired Corporations participate at any time prior
to the Closing (each a "Plan").
(ii) None of the Plans is a multi-employer plan (as defined in
Section 3(37) of ERISA), and none provides any post-retirement medical or life
insurance benefits (other than COBRA continuation coverage).
(iii) Each Plan complies, in form and in operation in all material
respects, with all applicable requirements of any laws, including, to the
extent applicable, sections 401(a), 501(a) and 4980B of the Code, and, to
Fibreboard's knowledge, no event has occurred which will or could cause any
such Plan to fail to comply in all material respects with such requirements.
Seller and the Acquired Corporations have complied, and will comply for
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<PAGE> 17
all periods (or parts thereof) ending or prior to the Closing, in all material
respects with all applicable requirements of ERISA and all other laws
applicable to the Plans.
(iv) There are no actions (other than routine claims for benefits)
pending or to Fibreboard's knowledge threatened in writing involving any such
Plan or the assets thereof and, to Fibreboard's knowledge, no facts exist which
could give rise to any such actions (other than routine claims for benefits).
(v) Neither the Acquired Corporations nor any other member of the
Controlled Group has any liability (or material contingent liability) with
respect to a plan termination under Title IV of ERISA, a funding deficiency
under Section 412 of the Code or a withdrawal from a multi-employer plan (as
defined in Section 3(37) of ERISA) or a plan described in section 4063 of
ERISA.
4.13 Capitalization. The authorized capital stock of Northstar
consists of 10,000 shares of common stock, par value $100.00 per share, of
which 250 shares are issued and outstanding and constitute the "Northstar
Shares." The authorized capital stock of Sierra consists of 1,000 shares of
common stock, par value $.01 per share, of which 100 shares are issued and
outstanding and constitute the "Sierra Shares." The authorized capital stock of
Bear Mountain consists of 1,000 shares of common stock, par value $.01 per
share, of which 100 shares are issued and outstanding and constitute the "Bear
Mountain Shares." Taken together, the Northstar Shares, Sierra Shares and Bear
Mountain Shares constitute the Acquired Shares. Fibreboard is and will be on
the Closing Date the record and sole beneficial owner and holder of the
Acquired Shares, free and clear of all liens and encumbrances (other than those
security interests in favor of Lender which are to be released upon the Closing
as contemplated by this Purchase Agreement). Upon delivery to Buyer by Seller
of certificates representing the Acquired Shares and payment by Buyer to Seller
of the Purchase Price and assuming Buyer is acquiring the Acquired Shares as a
bona fide purchaser without notice of an adverse claim, Buyer will be the owner
of the Acquired Shares free and clear of all liens and encumbrances. There are
no options, warrants, calls, subscriptions or other rights or other agreements
or commitments obligating Fibreboard or any Acquired
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<PAGE> 18
Corporation to issue, transfer or sell any of the Acquired Shares or any other
securities convertible into or evidencing the right to subscribe for any such
shares or any obligation of Fibreboard or any Acquired Corporation to grant,
extend or enter into any such option, warrant, call, subscription, right or
agreement. All of the issued and outstanding shares of each Acquired
Corporation have been duly authorized and validly issued and are fully paid and
nonassessable. There are no shares of any Acquired Corporation held as
treasury stock. No Acquired Corporation owns, or on the Closing Date will own,
any securities or any other direct or indirect interest in any other Person,
except that Sierra owns, and on the Closing Date will own, twenty-five (25)
fully paid and non-assessable shares of Tahoe Airline Guarantee Corp.
4.14 Tax Matters.
-----------
(i) For the purposes of this Section 4.14, Acquired Corporations
shall be deemed to include (a) any predecessor to any Acquired Corporation or
any Person from which an Acquired Corporation incurs a liability for Taxes as a
result of transferee liability and (b) Fibreboard and any predecessor to
Fibreboard and any Person from which Fibreboard incurs a liability for Taxes as
a result of transferee liability.
(ii) Each Acquired Corporation has duly and timely filed (and prior to
the Closing Date will duly and timely file) true, correct and complete tax
returns, reports or estimates, all prepared in accordance with applicable
federal, state or local tax laws, for all years and periods (and portions
thereof), for all jurisdictions (whether federal, state, local or foreign) in
which any such returns, reports or estimates were due, and for all such
returns, reports and estimates which are required to be filed by any applicable
law on or prior to the Closing Date. All Taxes shown as due and payable on
such returns, reports and estimates have been paid (or will be paid), and there
is no current liability for any Taxes due and payable in connection with any
such returns. All applicable sales taxes, to the extent due, were paid by the
Acquired Corporations or Fibreboard when the Acquired Assets were acquired by
the Acquired Corporations or Fibreboard.
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<PAGE> 19
(iii) Each Acquired Corporation has (a) withheld all required amounts
from its employees, agents, contractors and nonresidents and remitted such
amounts to the proper authorities; (b) paid all employer contributions and
premiums; and (c) filed all federal, state, local and foreign returns and
reports with respect to employee income tax withholding, and social security
and unemployment taxes and premiums, all in compliance with the withholding
provisions of the Code, or any prior provision of the Code and other applicable
laws.
(iv) None of the Acquired Assets is tax exempt use property under
Section 168(h) of the Code. None of the Acquired Assets is property that
Fibreboard is required to treat as being owned by any other Person pursuant to
the safe harbor lease provision of former Section 168(f) of the Code.
(v) No portion of the cost of any of the Acquired Assets was financed
directly or indirectly from the proceeds of any tax exempt state or local
government obligation described in Section 103(a) of the Code.
(vi) None of the Acquired Corporations (other than Fibreboard) has
entered into an agreement relating to Taxes which affects any taxable year
ending after the Closing Date other than this Purchase Agreement.
(vii) None of the Acquired Corporations (other than Fibreboard) will
have any obligations under any tax sharing agreement or similar arrangement
after the Closing Date other than this Purchase Agreement.
(viii) None of the Acquired Corporations has ever been part of a
consolidated, combined or unitary group for federal, state, local or foreign
tax purposes other than the group controlled by Fibreboard.
4.15 Brokers' Fees. Neither any Acquired Corporation nor Fibreboard
has any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Purchase
Agreement.
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<PAGE> 20
4.16 Non-Foreign Persons. Neither any Acquired Corporation nor
Fibreboard is a "foreign person" as defined in Section 1445 of the Code.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Fibreboard that the statements
contained in this Section 5 are correct and complete as of the Effective Date
and will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the Effective Date
throughout this Section 5). Buyer also covenants with Fibreboard as set forth
in this Section 5.
5.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
5.2 Authorization of Transaction. Buyer has full corporate power and
authority to execute and deliver this Purchase Agreement and to perform its
obligations hereunder. This Purchase Agreement constitutes the valid and
legally binding obligation of Buyer, enforceable in accordance with its terms
and conditions, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally.
5.3 Noncontravention.
(i) To the Knowledge of Buyer, neither the execution and the
delivery of this Purchase Agreement nor the performance by Buyer of its
obligations hereunder will (A) violate any material statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge or other restriction
of any government, governmental agency or court to which Buyer is subject or
any provision of Buyer's certificate of incorporation or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in
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<PAGE> 21
any party the right to accelerate, terminate, modify or cancel or require any
consent or notice under any material contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other material
arrangement to which Buyer is a party or by which it is bound or to which any
of its material assets is subject.
(ii) To the Knowledge of Buyer, except as contemplated by this
Purchase Agreement with respect to the USFS Permits and the Hart-Scott-Rodino
Act, Buyer does not need to give any notice to, make any filing with, or obtain
any authorization, consent or approval of any government or governmental agency
in order for the Buyer to perform its obligations under this Purchase
Agreement.
5.4 Brokers' Fees. Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Purchase Agreement for which Fibreboard could
become liable or obligated.
5.5 Financing. Buyer has furnished Fibreboard with evidence of
binding commitments from Canadian Imperial Bank of Commerce ("CIBC") and John
Hancock Mutual Life Insurance Company ("John Hancock") to finance in full the
Purchase Price, as it may be increased by the maximum possible Seasonal
Adjustment. Such commitments shall remain in full force and effect through the
Closing Date. In the event Buyer, Acquired Corporations or Fibreboard is
notified as required by Section 6.5, verbally or in writing, by CIBC, John
Hancock or Buyer that (i) CIBC or John Hancock has withdrawn its financing
commitment or otherwise does not intend to provide financing for any reason,
(ii) the terms of either of the commitment letters are amended in a manner that
results in a delay of the Closing or in a manner otherwise materially adverse
to Fibreboard, or (iii) the aggregate amount committed to under both of the
commitment letters is reduced, Fibreboard or Acquired Corporations may
terminate this Purchase Agreement and retain the Deposit pursuant to Section
8.3.
5.6 Investment Intent. Buyer is acquiring the Acquired Shares for its
own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act of 1933, as amended.
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SECTION 6
PRE-CLOSING COVENANTS
---------------------
The Parties agree as set forth in this Section 6 with respect to the
period between the Effective Date and the Closing.
6.1 General. Each of the Parties shall use its reasonable efforts to
take all action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Purchase
Agreement (including satisfying the Closing conditions set forth in Section 7
below) so as to enable the Closing Date to occur at the earliest possible time.
6.2 Notices and Consents.
--------------------
(a) Buyer and Fibreboard shall cooperate in the giving of
notice to, and/or the seeking of the reissuance or transfer to the Acquired
Corporations on or prior to the Closing Date of the USFS Permits and all other
licenses, permits, franchises, certifications and other consents and approvals
of, any third parties, including the Forest Service and all other governmental
agencies and parties to Contracts with the Acquired Corporations, that may be
required in connection with the change in ownership of the Acquired Shares from
Fibreboard to Buyer, in order that the Acquired Corporations may continue to
conduct the Businesses without an adverse effect on the value of the Acquired
Assets.
(b) Each of Fibreboard and Buyer has prior to the date
hereof filed a Notification and Report Form and related material required to be
filed with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the Hart-Scott-Rodino Act. Each of
the Parties shall (i) use its reasonable efforts to obtain an early termination
of the applicable waiting period, and (ii) make any further filings pursuant
thereto that may be necessary, proper or advisable.
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6.3 Operation of Businesses. Except as contemplated by this Purchase
Agreement (including, without limitation, Sections 2.3(i), 3.2(i) and 11.13) or
instructions delivered from Buyer to Fibreboard, Fibreboard shall not permit
the Resort Group, insofar as the Acquired Assets are concerned, to engage in
any practice, take any action, embark on any course of inaction or enter into
any transaction outside the Ordinary Course of Business. Fibreboard shall not
cause or permit any Acquired Corporation to (a) amend or modify its articles or
certificate of incorporation or bylaws, (b) issue, sell or otherwise dispose of
any of its capital stock, stock options, bond, notes or other securities, (c)
merge or consolidate with any Person or (d) purchase or redeem any shares of
its capital stock or other outstanding securities.
6.4 Preservation of Business.
------------------------
(a) Except as contemplated by this Purchase Agreement
(including, without limitation, Sections 2.3(i), 3.2(i) and 11.13) or
instructions delivered from Buyer to Fibreboard, Fibreboard shall cause the
Resort Group, insofar as the Acquired Assets are concerned, to keep its
business and properties substantially intact, including its present
organization, operations, physical facilities, working conditions and
relationships with governmental authorities, lessors, licensors, suppliers,
customers, officers and employees.
(b) Fibreboard has furnished to Buyer an unaudited combined
balance sheet for the Resort Group at October 26, 1996 and a statement of the
combined operating results for the Resort Group for the ten-month period ended
October 26, 1996, in each case prepared in a manner consistent with the
preparation of the Financial Statements (subject to normal year-end
adjustments).
6.5 Notice of Developments. Fibreboard shall give prompt written
notice to Buyer of any material development adversely affecting the Value of
the Acquired Assets. Each Party shall give prompt written notice to the other
of any material development affecting the ability of such Party to consummate
the transactions contemplated by this Purchase Agreement, including
notification of any changes in the financing commitment as set forth in
Sections 5.5 and 8.1(iii). Any written notice provided by any Acquired
Corporation or Fibreboard to Buyer after the
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<PAGE> 24
Effective Date and prior to the Closing shall be deemed to supplement, and
thereby become a part of, the Disclosure Schedule.
6.6 Exclusivity. Fibreboard covenants and agrees with Buyer that it
shall not, and shall not authorize or direct any of its Related Parties to,
solicit proposals or offers from any Person (other than Buyer or its
Affiliates) relating to any acquisition of all or a substantial part of any
Business, the Acquired Assets or any Acquired Corporation or any acquisition of
the capital stock of any Acquired Corporation, including, without limitation,
any merger, consolidation, recapitalization or restructuring of any Acquired
Corporation (an "Alternative Transaction"), or participate in any discussions
or negotiations regarding, or furnish to any Person (other than Buyer or its
Affiliates or representatives) any information with respect to, an Alternative
Transaction. Fibreboard shall immediately notify Buyer if any proposal or
offer is received, or inquiry or contact with any Person is made, regarding an
Alternative Transaction.
6.7 Access to Employees and Information. Upon reasonable notice,
Fibreboard shall, and shall cause each of its and each of the Acquired
Corporations' officers, directors, employees, auditors and agents employed in
connection with the Businesses to: (i) afford the officers, employees and
authorized agents and representatives of Buyer reasonable access, during normal
business hours, to the offices, properties, books and records of the Businesses
and (ii) furnish to the officers, employees and authorized agents and
representatives of Buyer such additional financial and operating data and other
information regarding the assets, properties, goodwill and business of the
Businesses as Buyer may from time to time reasonably request; provided,
however, that such investigation shall not unreasonably interfere with any of
the businesses or operations of Fibreboard or any Acquired Corporation.
6.8 Employees and Compensation. Fibreboard shall permit Buyer free
access to communicate and meet with Acquired Corporations' employees at all
reasonable times for the purpose of discussing with such employees the
continued employment of such persons by the Acquired Corporations in connection
with the operation of the Businesses after the Closing.
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SECTION 7
CONDITIONS TO OBLIGATION TO CLOSE
---------------------------------
7.1 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions unless, in the
case of the conditions set forth in paragraphs (i), (ii), (iii), (v) or (ix) of
this Section 7.1, the failure of one or more of such conditions does not
result, in the aggregate, in an adverse effect on, or an adverse change in, the
Value of the Acquired Assets in an amount in excess of One Million dollars
($1,000,000):
(i) the representations and warranties set forth in Section 4
above shall be true and correct at and as of the Closing Date;
(ii) Fibreboard shall have performed and complied with all of
its covenants hereunder through the Closing;
(iii) all consents and approvals of third parties including
the Forest Service and all other governmental agencies required on or before
the Closing in connection with the change in ownership of the Acquired Shares
from Fibreboard to Buyer and listed on Appendix 5 shall have been obtained and
such consents and approvals shall not impose conditions that make it
impracticable for the Acquired Corporations to continue to conduct the
Businesses or result in an adverse effect on the Value of the Acquired Assets;
(iv) no action, suit or proceeding shall be overtly threatened
or pending before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge could reasonably be expected
to (A) prevent consummation of any of the transactions contemplated by this
Purchase Agreement, (B) cause any of the transactions contemplated by this
Purchase Agreement to be rescinded following consummation, or (C) affect
materially and adversely the right of Buyer to own the Acquired Shares and the
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right of any Acquired Corporation to own, operate or control the Acquired
Assets (and no such judgment, order, decree, stipulation, injunction or charge
shall be in effect);
(v) Fibreboard shall have delivered to Buyer on and dated as
of the Closing Date a certificate to the effect that each of the conditions
specified above in Sections 7.1(i), (ii) and (iv) is satisfied in all material
respects;
(vi) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(vii) the Title Agent shall be prepared to deliver to Buyer an
ALTA owner's title insurance policy (10-17-92 Form) dated the Closing Date,
covering the Owned Real Property, issued by the Title Agent insuring the fee
simple title of the Acquired Corporations in such real estate, subject only to
Permitted Exceptions;
(viii) Buyer shall have received from counsel to Fibreboard an
opinion addressed to Buyer and dated as of the Closing Date in the form
attached as Exhibit D;
(ix) except as set forth in the Disclosure Schedule as of the
Effective Date, there shall have been no adverse change in the Value of the
Acquired Assets as compared to the Effective Date;
(x) Fibreboard shall have delivered to Buyer an executed
withholding certificate in the form of Exhibit E;
(xi) Fibreboard shall have delivered to Buyer a pay-off letter
from Lender, in a form reasonably satisfactory to Buyer;
(xii) all actions to be taken by Fibreboard in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
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<PAGE> 27
Buyer may waive any condition specified in this Section 7.1 (other than Section
7.1(vi)) if Buyer executes and delivers to Fibreboard a writing so stating at
or prior to the Closing.
7.2 Conditions to Obligation of Seller. The obligation of Fibreboard
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 5
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) all consents and approvals of third parties including
the Forest Service and all other governmental agencies required on or before
the Closing in connection with the change in ownership of the Acquired Shares
from Fibreboard to Buyer and listed on Appendix 5 shall have been obtained or
the Buyer and the Acquired Corporations shall have waived their rights to
indemnification pursuant to Section 10.2 of this Purchase Agreement with regard
to those agreements for which such consents and approvals were not obtained;
(iv) no action, suit or proceeding shall be overtly threatened
or pending before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge could reasonably be expected
to (A) prevent consummation of any of the transactions contemplated by this
Purchase Agreement or (B) cause any of the transactions contemplated by this
Purchase Agreement to be rescinded following consummation (and no such
judgment, order, decree, stipulation, injunction or charge shall be in effect);
(v) Buyer shall have delivered to Fibreboard a certificate on
and dated as of the Closing Date to the effect that each of the conditions
specified above in Sections 7.2(i)-(iii) is satisfied in all material respects;
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<PAGE> 28
(vi) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(vii) Fibreboard shall have received from counsel to Buyer an
opinion addressed to Fibreboard and dated as of the Closing Date in the form
attached as Exhibit F;
(viii) Buyer shall have extended offers of continued
employment to the persons identified in Exhibit G attached hereto in accordance
with, at a minimum, the terms set forth in such Exhibit G; and
(ix) all actions to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Fibreboard.
Fibreboard may waive any condition specified in this Section 7.2 (other than
Section 7.2(vi)) if Fibreboard executes and delivers to Buyer a writing so
stating at or prior to the Closing.
SECTION 8
TERMINATION
-----------
8.1 Termination of Purchase Agreement. The Parties may terminate this
Purchase Agreement as provided below:
(i) Buyer and Fibreboard may terminate this Purchase Agreement
by mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Purchase Agreement by giving
written notice to Fibreboard at any time prior to the Closing in the event that
Fibreboard is in breach, and Fibreboard may terminate this Purchase Agreement
by giving written notice to Buyer at any time prior to the Closing in the event
that Buyer is in breach, of any material representation, warranty or covenant
contained in this Purchase Agreement in any
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<PAGE> 29
material respect and such breach is not substantially cured within ten business
days of the breaching Party's receipt of such notice; provided, however, that
if a Party is attempting to cure such breach with commercially reasonable
diligence on the tenth (10th) business day after receipt of such notice, such
period shall be extended to twenty (20) business days after receipt of such
notice so long as the breach is curable and the Party continues to attempt to
cure with commercially reasonable diligence;
(iii) As set forth in Section 5.5, Fibreboard may terminate
this Purchase Agreement and retain the Deposit pursuant to Section 8.3 if any
of the Acquired Corporations, Fibreboard or Buyer is notified, verbally or in
writing as required by Section 11.6, by CIBC, John Hancock or Buyer that (A)
CIBC or John Hancock has withdrawn its financing commitment or otherwise does
not intend to provide financing, for any reason, (B) the terms of either of the
commitment letters are amended in a manner that results in a delay of the
Closing or in a manner otherwise materially adverse to Fibreboard, or (C) the
aggregate amount committed to under both of the commitment letters is reduced;
(iv) Buyer may terminate this Purchase Agreement by giving
written notice to Fibreboard at any time prior to the Closing if the Closing
shall not have occurred on or before December 3, 1996 by reason of the failure
of any condition precedent under Section 7.1 hereof (unless the failure results
primarily from Buyer itself breaching any representation, warranty or covenant
contained in this Purchase Agreement); or
(v) Fibreboard may terminate this Purchase Agreement by giving
written notice to Buyer at any time prior to the Closing if the Closing shall
not have occurred on or before December 3, 1996 by reason of the failure of any
condition precedent under Section 7.2 hereof (unless the failure results
primarily from Fibreboard breaching any representation, warranty or covenant
contained in this Purchase Agreement).
8.2 Effect of Termination. If any Party terminates this Purchase
Agreement pursuant to Section 8.1 above, all obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any
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<PAGE> 30
Liability of any Party then in breach of this Purchase Agreement for such
breach of this Purchase Agreement).
8.3 Disposition of the Deposit. Notwithstanding Section 8.2 of
this Purchase Agreement, upon termination of this Purchase Agreement by either
party for any reason (except as set forth below), Fibreboard shall retain the
Deposit; provided, however, that in the event Buyer terminates this Purchase
Agreement under Section 8.1(ii) above as a result of a breach by Fibreboard or
an Acquired Corporation of its covenants under this Purchase Agreement or if
the Closing does not occur solely because Fibreboard failed to obtain the
consent of Bank of America NT & SA with regard to that certain financing
facility described in Appendix 2 or the Lender fails to deliver its pay-off
letter and the Old Certificates, then, and in such event, Fibreboard shall
deliver to Buyer the Deposit, together with interest thereon at the rate
specified in Section 2.2 of this Purchase Agreement (for the period beginning
on the Deposit Date and ending on the date paid).
SECTION 9
POST-CLOSING COVENANTS
----------------------
Fibreboard and Buyer agree as set forth in this Section 9 with respect
to the period following the Closing.
9.1 General.
-------
(a) In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Purchase
Agreement, each Party shall take such further action (including the execution
and delivery of such further instruments and documents) as any Party reasonably
may request, all at the sole cost and expense of the requesting Party (unless
the requesting Party is entitled to indemnification therefor under Section 10
below).
(b) If Buyer shall, at any time after the Closing, receive
any Excluded Asset or any payment with respect thereto, it shall promptly
deliver such Excluded Asset or payment to
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Fibreboard unless Fibreboard shall have received value for same at Closing. If
Fibreboard shall, at any time after the Closing, receive any Acquired Asset or
any payment with respect thereto, Fibreboard shall promptly deliver such
Acquired Asset or payment to Buyer.
(c) If requested by Buyer, Fibreboard agrees to prosecute
or otherwise enforce in its own name for the benefit of Buyer any claims,
rights or benefits that are intended to be transferred to Buyer by its
acquisition of the Acquired Corporations pursuant to this Purchase Agreement
and that require prosecution or enforcement in Fibreboard's name, provided
Buyer or any Acquired Corporation is legally prevented from prosecuting or
otherwise enforcing such claim. In the event Buyer or any Acquired Corporation
makes such a request of Fibreboard, Buyer will defend, indemnify and hold
Fibreboard harmless for any liabilities arising from such prosecution or
enforcement, unless the prosecution or enforcement is made necessary by a
breach of this Purchase Agreement by Fibreboard. Any prosecution or
enforcement of claims, rights or benefits under this Section shall be solely at
Buyer's expense, unless the prosecution or enforcement is made necessary by a
breach of this Purchase Agreement by Fibreboard.
9.2 Access. Without limiting the provisions of Section 9.1, upon
reasonable notice, Buyer shall cause the employees or former employees of the
Acquired Corporations who were previously responsible for preparing the
financial information of the Resort Group (to the extent such individuals
continue to be employed by the Acquired Corporations, Buyer or any Affiliate of
Buyer) to assist in the preparation of (i) the Final Adjustment and (ii) any
financial reports, audited financial statements and tax returns of any Acquired
Corporation, and Buyer shall permit Fibreboard and its representatives to have
such access (during normal business hours) to the premises, assets, records and
employees of the Acquired Corporations, Buyer and any Affiliate of Buyer as
shall be reasonably necessary for the preparation of (i) the Final Adjustment
and (ii) any financial reports, audited financial statements and tax returns
for periods prior to or including the Closing Date, all without cost to
Fibreboard and without material disruption to Buyer's or any Acquired
Corporation's operations.
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9.3 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim or demand in connection with
(i) any transaction contemplated under this Purchase Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction prior to the
Closing Date involving the Acquired Corporations or the Acquired Assets
(including, without limitation, any Adverse Consequences), each Party will
cooperate with the contesting or defending Party and its counsel in the contest
or defense, make available its personnel and provide such testimony and access
to its books and records as shall be requested and reasonable in connection
with the contest or defense and which shall not cause any material disruption
to such Party's operations, with all out-of-pocket costs to be borne by the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 10, 11.13, 11.14 or 11.15
below).
9.4 Transition. Except upon instructions delivered from Buyer to
Fibreboard, Fibreboard will refrain from taking any action that is designed or
intended to have the effect of discouraging any governmental authority, lessor,
licensor, customer, supplier or other business associate of any Business,
insofar as the Acquired Assets are concerned, from maintaining the same
business relationships with Buyer and the Acquired Corporations after the
Closing as it maintained with such Business prior to the Closing. Fibreboard
will promptly refer all customer inquiries relating to the businesses of the
Acquired Corporations, insofar as the Acquired Corporations and the Acquired
Assets are concerned, to Buyer from and after the Closing.
9.5 Corporate Names. Without limitation, Buyer expressly acknowledges
and agrees that the name "Fibreboard," and any derivation thereof shall not
constitute an Acquired Asset and shall remain the exclusive property of
Fibreboard. Neither Buyer nor any Affiliate of Buyer shall, in any way,
infringe upon Fibreboard's use or rights to such name (and any derivation
thereof).
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SECTION 10
INDEMNIFICATION AND REMEDIES
----------------------------
10.1 Survival; Exclusivity. All of the representations and warranties
of the Parties contained in this Purchase Agreement shall survive the Closing
(unless Buyer, on the one hand, or Fibreboard, on the other hand, knew of any
misrepresentation or breach of warranty or covenant of Fibreboard or Buyer, as
the case may be, at the time of Closing in which event the affected
representation(s) or warranty(ies), or relevant portion(s) thereof, shall not
survive the Closing), but shall continue in force and effect solely for a
period of one year thereafter (the "Survival Period"). The Parties hereto
agree that the sole recourse from and after the Closing for a breach of a
representation or warranty made in this Purchase Agreement shall be the
indemnities provided for in Sections 10.2 and 10.3 of this Purchase Agreement,
but nothing in such sections restricts any Party from enforcing other covenants
or agreements made in this Purchase Agreement.
10.2 Indemnification Provisions for Buyer's Benefit. In the event
that any of the representations or warranties of Fibreboard contained in this
Purchase Agreement are not true, and provided that (A) the particular
representation or warranty (or portion thereof) survives the Closing, (B) Buyer
makes a written claim for indemnification against Fibreboard within the
Survival Period, and (C) each such discrete claim has a value of at least Ten
Thousand Dollars ($10,000), then Fibreboard agrees to indemnify Buyer (and, as
of the Closing, any relevant Acquired Corporation) from and against any Adverse
Consequences Buyer (or, as of the Closing, any relevant Acquired Corporation)
reasonably may suffer through and after the date of the claim for
indemnification resulting from or caused by the breach; provided, however, that
Buyer shall not be entitled to indemnification under this Section 10.2 for any
indemnification claims until the amount of the aggregate claims required to be
indemnified by Fibreboard pursuant to this Section 10.2 exceeds Five Hundred
Thousand Dollars ($500,000) (said amount is hereinafter referred to as the
"Threshold"), whereupon Buyer shall be entitled to indemnification hereunder
from Fibreboard only for Adverse Consequences in excess of the Threshold. As
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used herein "discrete claim" means any claim involving a discrete or single
occurrence, site specific condition, act or other event, which causes Adverse
Consequences.
10.3 Indemnification Provisions for Seller's Benefit. In the event
Buyer breaches any of its representations or warranties contained in this
Purchase Agreement, and provided that the particular representation or warranty
(or portion thereof) survives the Closing and Fibreboard makes a written claim
for indemnification against Buyer within the Survival Period, then Buyer agrees
to indemnify Fibreboard from and against any Adverse Consequences it reasonably
may suffer through and after the date of the claim for indemnification
resulting from or caused by the breach.
10.4 Purchase "AS IS".
(i) Buyer acknowledges and agrees that Buyer has had the
opportunity to thoroughly inspect and review the Businesses, including the
Acquired Assets.
(ii) Buyer acknowledges and agrees that (A) Buyer (through its
officers and Affiliates) has substantial experience with the types of
businesses conducted by the Acquired Corporations, assets such as the Acquired
Assets (including the Real Property) and issues such as the Purchase
Considerations, and (B) except as otherwise expressly provided in this Section
10 of this Purchase Agreement, Buyer is acquiring the Acquired Shares
representing ownership of the Acquired Corporations containing the Acquired
Assets.
"AS-IS, WHERE-IS, WITH ALL FAULTS,"
---------------------------------
in their current condition, and solely in reliance on Buyer's own due
diligence, inspections and examinations of the Acquired Assets.
(iii) Buyer acknowledges and agrees that (A) except as
expressly set forth in Section 4 of this Purchase Agreement, neither Fibreboard
nor any Acquired Corporation nor any agent, representative or employee of
Fibreboard or any Acquired Corporation has made any representations or
warranties on which Buyer shall be in any way entitled to rely with respect to
the
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<PAGE> 35
Acquired Corporations, Acquired Assets or the Purchase Considerations, whether
direct or implied, verbal or written, including any warranty of merchantability
or fitness for a particular purpose, and (B) each of the Acquired Corporations
and Fibreboard may disclaim and has hereby expressly disclaimed any and all
representations and warranties which are not expressly set forth in Section 4
above.
(iv) Having taken into account the possibility that its
inspection of the Businesses, including the Acquired Assets, may not have
revealed adverse or undesirable Environmental Conditions, and except as
otherwise expressly provided in Section 10 of this Purchase Agreement, Buyer
hereby waives, releases and discharges forever Fibreboard and Fibreboard's
Related Parties from all present and future Adverse Consequences arising out of
or in any way connected with any Environmental Conditions (including, without
limitation, any Environmental Conditions resulting from the use, maintenance,
ownership or operation of the businesses by any of the Acquired Corporations or
Fibreboard). Buyer hereby waives the benefits of Section 1542 of the
California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
10.5 Cross-indemnifications and Release. The Parties agree as
follows:
(a) Indemnification of Buyer and Acquired Corporations by
Seller. Fibreboard shall defend, indemnify and hold Buyer (and as of the
Closing, any relevant Acquired Corporation) harmless from any Adverse
Consequences Buyer (or, after the Closing, any Acquired Corporation) reasonably
may suffer resulting from or caused by Seller's Liabilities.
(b) Indemnification and Release of Seller by Acquired
Corporations and Buyer. Buyer and Acquired Corporations agree jointly and
severally to defend, indemnify and hold Fibreboard harmless from and against
any Adverse Consequences Fibreboard
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reasonably may suffer resulting from or caused by the Assumed Liabilities.
Furthermore, Buyer and Acquired Corporations hereby waive, release and
discharge forever Fibreboard and Fibreboard's Related Parties from all present
and future Adverse Consequences arising out of or in any way connected with any
Environmental Conditions, except to the extent that any such Adverse
Consequences are indemnifiable by Seller in accordance with Section 10.2
hereof.
10.6 Matters Involving Third Parties. If any third party shall notify
Fibreboard, on the one hand, or Buyer on the other hand (the notified party is
hereinafter referred to as the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against the other (such
other party is hereinafter referred to as the "Indemnifying Party") under this
Section 10, then the Indemnified Party shall notify the Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is thereby damaged. Seller hereby
agrees that it is defending, and will continue to defend, in accordance with
the terms of this Purchase Agreement all litigation and actions pending against
Seller or any Acquired Corporation, including, without limitation, the actions
described in the Disclosure Schedule. In the event the Indemnifying Party
notifies the Indemnified Party within fifteen (15) days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming
the defense thereof, (A) the Indemnifying Party will defend the Indemnified
Party against the matter with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party, (B) the Indemnified Party may
retain separate co-counsel at the Indemnified Party's sole cost and expense
(except that the Indemnifying Party will be responsible for the reasonable fees
and expenses of the separate co-counsel to the extent the Indemnified Party
concludes reasonably that the Indemnified Party has an actual conflict of
interest with other parties represented by the counsel selected by the
Indemnifying Party, or such counsel otherwise has a conflict in its
representation of the Indemnified Party such that representation of the
Indemnified Party by such counsel would be inappropriate), and (C) neither the
Indemnified Party nor the Indemnifying Party
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will consent to the entry of any judgment or enter into any settlement with
respect to the matter without the written consent of the other Party (not to be
withheld unreasonably). In the event the Indemnifying Party does not notify
the Indemnified Party within fifteen (15) days after the Indemnified Party has
given notice of the matter that the Indemnifying Party is assuming the defense
thereof, then the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate (with the Indemnifying Party bearing responsibility for all Adverse
Consequences as set forth herein).
10.7 Determination of Loss. The Parties shall make appropriate
adjustments for Tax benefits (and losses) and insurance proceeds (reasonably
certain of receipt and utility in each case) and for the time value of money
(using the prime lending rate of Bank of America National Trust and Savings
Association as the discount rate) in determining the amount of Adverse
Consequences for purposes of this Section 10.
10.8 Payment. Except for third-party claims being defended in good
faith by the Indemnifying Party in accordance with Section 10.6, the
Indemnifying Party shall satisfy its obligations hereunder within fifteen (15)
days after its receipt of notice of a claim. Any amount not paid to the
Indemnified Party by such date shall bear interest at a rate equal to six and
one-half percent (6 1/2%) per annum from the date due until the date paid.
SECTION 11
MISCELLANEOUS
-------------
11.1 No Third-Party Beneficiaries. Except as expressly provided
herein, this Purchase Agreement shall not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted
assigns.
11.2 Entire Agreement. This Purchase Agreement (including the
Exhibits, Schedules and Appendices referred to herein) constitutes the entire
agreement between the Parties and super-
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sedes any prior understandings, agreements or representations by or between the
Parties, written or oral, that may have related in any way to the subject
matter hereof, including without limitation, the Letter of Intent; provided,
however, that the terms and provisions of that certain confidentiality letter
dated August 16, 1996 between Buyer and Fibreboard and executed in connection
with Buyer's due diligence review of the Resort Group shall remain in full
force and effect and shall not be amended as a result of this Purchase
Agreement.
11.3 Succession and Assignment. This Purchase Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party may assign either this Purchase
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the other Parties; provided, however, that, Buyer may
collaterally assign its rights under this Purchase Agreement to any Person or
Persons providing financing to Buyer with respect to the acquisition of the
Acquired Shares and such Person or Persons may, upon any foreclosure resulting
from such financing, further assign this Purchase Agreement and its rights
hereunder to any other Person.
11.4 Counterparts. This Purchase Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.5 Headings. The section headings contained in this Purchase
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Purchase Agreement.
11.6 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
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If to Seller (or the Acquired Corporations
------------------------------------------
before the Closing Date):
------------------------
Fibreboard Corporation
Texas Commerce Tower
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attention: Michael R. Douglas, Senior Vice
President, General Counsel and
Secretary
Copy to:
-------
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Terry M. Kee
If to Buyer (or the Acquired Corporations on or
-----------------------------------------------
after the Closing Date):
-----------------------
Booth Creek Ski Holdings, Inc.
100 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Copy to:
-------
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Patrick O. Doyle
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
individual for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
11.7 Governing Law. This Purchase Agreement shall be governed by and
construed in accordance with the laws of the State of California.
11.8 Amendments and Waivers. No amendment of any provision of this
Purchase Agreement shall be valid unless the same
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shall be in writing and signed by the Parties. No waiver by any Party of any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.9 Severability. Any term or provision of this Purchase Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Purchase Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
11.10 Expenses. Each Party shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with the negotiation
of this Purchase Agreement and the transactions contemplated hereby; provided,
however, that the costs of any preliminary title reports and any title insurance
premiums contemplated by Section 7.1(vii) of this Purchase Agreement will be
shared equally by Fibreboard and Buyer; and provided, further, that the filing
fees associated with the Hart-Scott-Rodino Act (as contemplated by Section 6.2
above) shall be borne by Buyer. Each Party shall bear its own costs and
expenses (including legal fees and expenses), associated with any further
filings or requests for information with respect to the Hart-Scott-Rodino Act.
11.11 Construction. The language used in this Purchase Agreement will
be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict
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construction shall be applied against any Party. Any reference to any federal,
state, local or foreign statute or law shall be deemed also to refer to all
amendments thereto and rules and regulations promulgated thereunder, unless the
context requires otherwise.
11.12 Incorporation of Exhibits, Schedules and Appendices. The
Exhibits, Schedules and Appendices identified in this Purchase Agreement are
incorporated herein by reference and made a part hereof.
11.13 Employee Benefits Matters.
(a) Effective immediately prior to the Closing, and contingent
on the Closing, Fibreboard shall terminate the participation of employees of
the Acquired Corporations in any Plan maintained by Fibreboard and fully vest
them in all profit sharing or pension plans. Effective immediately prior to
the Closing, and contingent on the Closing, Fibreboard shall cause Acquired
Corporations to terminate any Plan (and the participation of employees of the
Acquired Corporations in such Plan) maintained by the Acquired Corporations and
fully vest employees in all profit sharing or pension plans.
(b) Buyer shall ensure that (i) employees of the Acquired
Corporations who are employees of the Acquired Corporations, Buyer or any
Affiliate of Buyer from and after the Closing (collectively, "Affected
Employees") shall be entitled to participate fully in the employee benefit
plans of Buyer and (ii) such plans shall treat employment with (or within) the
Acquired Corporations (or the Controlled Group) prior to the Closing Date the
same as employment with any of Buyer or its ERISA affiliated group from and
after the Closing Date for purposes of eligibility and vesting, but not benefit
accrual.
(c) Prior to the Closing Date, Fibreboard shall cause the
Acquired Corporations to have paid (i), except to the extent such Liability or
obligation is reflected in calculation of the Net Working
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Capital, all bonuses earned by Affected Employees for all periods prior to the
Closing Date; and (ii) all contributions to all profit sharing and pension
Plans for all periods prior to the Closing Date. Except to the extent such
Liability or obligation is reflected in the calculation of the Net Working
Capital, Fibreboard shall be responsible for paying the Affected Employees for
any vacation, holiday and sick pay accrued prior to the Closing.
(d) Except to the extent such Liability or obligation is
reflected in the calculation of the Net Working Capital, Fibreboard shall
remain responsible for all labor and employment obligations of Fibreboard or
any Acquired Corporation, for the period prior to the Closing, including all
Liability or obligations arising from (A) workers' compensation claims and
coverage, both medical and disability, or other government-mandated programs,
which are associated with any employees of Fibreboard or the Acquired
Corporations for periods prior to the Closing or based on injuries occurring on
or prior to the Closing regardless of when such claims are filed and (B)
amounts owed to any employees of Fibreboard or any Acquired Corporation for
compensation for any period prior to the Closing or any termination by
Fibreboard or any Acquired Corporation of the employment of such employees
prior to the Closing. Buyer and the Acquired Corporations shall be solely
responsible for claims based on injuries occurring after the Closing. In
addition, except to the extent such Liability or obligation is reflected in
calculation of the Net Working Capital, Fibreboard shall remain responsible in
accordance with all Plans for the satisfaction of all claims for benefits,
including medical, dental, life insurance, health insurance, health, accident
or disability or severance benefits brought by or in respect of employees of
the Businesses under any Plan, and shall remain responsible for all Liability
arising under the Consolidated Omnibus Budget Reconciliation Act of 1985 with
respect to any employee terminated prior to the Closing or otherwise with
respect to any Plan that is covered thereby; provided, however, that the Buyer
shall cause the Acquired Corporations to reimburse Fibreboard for its actual
costs in providing continuing coverage for medical and dental benefits for
employees of the Acquired Corporations from and after the Closing and until the
end of the year.
(e) Except to the extent such Liability or obligation is
reflected in the calculation of the Net Working Capital, Fibreboard shall
indemnify and hold Buyer (and, as of the Closing, the Acquired Corporations)
harmless for all Liabilities arising under Title I or IV of ERISA or Chapter 43
of the Code
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by reason of all or any part of the Acquired Corporations having at some date
prior to the Closing been a part of Seller or the Seller's Controlled Group.
11.14 Employment. The Acquired Corporations and Buyer also agree to
extend offers of continued employment as of the Closing to the persons
identified in Exhibit G in accordance with, at a minimum, the terms set forth in
such Exhibit G. Nothing in this Purchase Agreement shall affect any of the
Acquired Corporations' rights to terminate the employment of any Affected
Employee after the Closing, with or without cause, provided that Buyer and the
Acquired Corporations shall indemnify and hold Fibreboard harmless from any
Liability to the extent arising out of (a) such a termination, (b) allegations
of discrimination as a result of or arising out of Buyer's employment of the
Affected Employees, or (c) the absence of any notice by Fibreboard, Buyer or
Acquired Corporations under Section 3(a) of the WARN Act with respect to the
transactions contemplated by this Purchase Agreement.
11.15 Taxes and Related Matters.
(i) Seller and Buyer shall jointly make the elections provided for by
Sections 338(g) and 338(h)(10) of the Code and any corresponding elections
under state, local, or foreign tax law (collectively, "Section 338 Elections")
with respect to the purchase and sale of the Acquired Shares, and Buyer shall
have the option, in its sole discretion, to make the election provided for by
Section 338(g) of the Code with respect to any Affiliate which is an eligible
target affiliate under Section 338 of the Code and applicable treasury
regulations. Buyer and Seller shall cooperate with each other to take all
actions necessary and appropriate (including executing and filing such forms,
returns, elections, schedules and other documents as may be required) to effect
and preserve timely Section 338 Elections. Seller and Buyer shall report the
purchase by Buyer of the Shares pursuant to this Purchase Agreement consistent
with the Section 338 Elections and shall take no Income Tax position
inconsistent therewith in any Income Tax return, any proceeding before any
taxing authority or otherwise.
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<PAGE> 44
(ii) The Purchase Price shall be allocated among the Acquired Shares
by Buyer as set forth in Exhibit A, which will be completed by mutual agreement
of the Parties and attached to this Purchase Agreement. Within 180 days of the
Closing Date, but in all events no later than 60 days prior to the last date
(determined without regard to extensions) on which a Section 338 Election may
be filed with any applicable federal, state or local governmental authority,
Buyer shall prepare and deliver to Seller a schedule (the "Shares Price
Allocation Schedule") allocating with the consent of the Seller (which consent
shall not be unreasonably withheld) the Modified Aggregate Deemed Sale Price
(as defined in Treasury Regulation section 1.338(h)(10)-1(e)(5)) among the
assets of the Acquired Corporations in accordance with the applicable treasury
regulations promulgated under Section 338 of the Code. At the time of delivery
of the Shares Price Allocation Schedule, Buyer shall provide Seller with a copy
of any appraisal report utilized by Buyer in the preparation of such schedule.
The costs of any appraisal shall be borne by the Buyer. Exhibit A and the
Shares Price Allocation Schedule shall be binding on the Buyer and Seller and
their Affiliates and all Parties agree to act in accordance with such Exhibit
and Schedule in the preparation, filing and audit of any Income Tax return.
(iii) Whenever it is necessary for purposes of this Purchase
Agreement to determine the Tax liability (or assessments, utilities, and
similar charges and expenses with respect to the Acquired Assets), of an entity
for a taxable year or period that begins before and ends on or after the
Closing Date, the determination shall be made as follows:
(A) in the case of Income Taxes, by apportioning the total
Tax liability for such taxable year or period on the assumption that
the taxable year or period includes and ends on the Closing Date, as
provided for in Treasury Regulation 1.1502-76(b)(1) (with respect to
any federal Income Tax liability), and with income (or other
applicable measure) apportioned as provided in Treasury Regulation
1.1502-76(b)(2) (or in the same manner, with respect to Income Taxes
other than federal Income Taxes), it being understood that Buyer is
responsible for all Income Taxes of the Resort Group attributable to
the periods (or portions thereof) beginning after the Closing Date
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(or deemed, pursuant to this section, to begin after the Closing Date), and
that Seller is responsible for all Income Taxes of the Resort Group
attributable to the periods (or portions thereof) ending on or prior to the
Closing Date (or deemed, pursuant to this section, to end on or prior to the
Closing Date), including specifically, without limitation, any Income Taxes
attributable to the Section 338 Elections;
(B) in the case or real or personal property, lease or license Taxes,
and in the case of any assessments, utilities, and similar charges and expenses
with respect to the Acquired Assets, by prorating between Fibreboard, on the one
hand, and Buyer, on the other hand, by apportioning such items on a per diem
basis, with Fibreboard liable for the period prior to and including the Closing
Date, and Buyer responsible for the period after the Closing Date (it being
understood that Buyer is responsible only for the portion of each such
obligation attributable to the number of days after the Closing in the relevant
assessment period and Seller is only responsible for the portion of each such
obligation attributable to the number of days prior to (and including) the
Closing in the relevant assessment period). Fibreboard and Buyer shall use
their respective best efforts to prepare a schedule of prorations, prior to the
Closing Date, which shall cover as many items to be prorated as practicable so
that such prorations can be made at the Closing (the resulting amount owed by
Buyer to Fibreboard is herein referred to as the "Estimated Proration Amount").
Such prorations shall be adjusted, if necessary, and completed after the Closing
as soon as final information becomes available. Fibreboard and Buyer agree to
cooperate and to use their best efforts to complete such prorations no later
than thirty (30) days after the Closing Date;
(C) in the case of any Taxes not specifically covered by subsections
(A) or (B) above, by apportioning the total Tax liability for such taxable year
or period on the assumption that the taxable year or period includes and ends on
the Closing Date, with income (or other applicable measure) apportioned in the
same manner as provided in Treasury Regulation 1.1502-76(b)(2), it being
understood
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that Buyer is responsible for all such Taxes of the Resort Group
attributable to the periods (or portions thereof) beginning after the
Closing Date (or deemed, pursuant to this section, to begin after the
Closing Date), and that Seller is responsible for all such Taxes of the
Resort Group attributable to the periods (or portions thereof) ending on or
prior to the Closing Date (or deemed, pursuant to this section, to end on or
prior to the Closing Date), provided, however, that any transfer, stamp,
sales or use Taxes assessed or imposed solely as a result of the
transactions contemplated by this Purchase Agreement shall be borne solely
by Buyer.
(iv) In connection with tax returns and information reports:
(A) Seller shall be responsible for the timely filing (taking
into account any extensions received from the relevant Tax authorities) of
all Tax returns and information reports required by law to be filed in any
jurisdiction in respect of the Resort Group on or prior to the Closing, and
shall promptly deliver copies of all such returns and reports to Buyer, and
Buyer shall be responsible for the timely filing (taking into account any
extensions received from the relevant Tax authorities) of all Tax returns
and information reports required by law to be filed in such jurisdiction in
respect of the Resort Group after the Closing;
(B) Control of any legal or administrative proceedings
concerning any such Taxes, and entitlement to any refunds or awards with
respect to any such Taxes, shall rest with the Party responsible for
payment therefor under this Purchase Agreement.
(C) In the event that any refund, rebate or similar payment is
received by Seller or Buyer in respect of the Resort Group, and which
payment pertains to the assessment period in which the Closing falls, the
Parties agree that such payment will be apportioned between Seller or Buyer
in accordance with the provisions of Section 11.15(iii); Seller shall
notify Buyer in writing within thirty (30) days as to any examination by or
disputes with taxing
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<PAGE> 47
authorities that relate to periods of operating through and including
the Closing Date and relate to the Resort Group which would affect the
liability for Taxes of Buyer or the Acquired Corporations for any
period after the Closing Date or that could result in Buyer owing
money to Seller under any provisions in this Purchase Agreement.
Buyer shall notify Seller in writing within thirty (30) days as to any
examination by or disputes with taxing authorities that relate to the
Resort Group which would affect the liability for Taxes of Seller or
the Resort Group for any period on or prior to the Closing Date or
that could result in Seller owing money to Buyer or the Resort Group
under any provisions in this Purchase Agreement; and
(D) The Parties shall cooperate, including, without
limitation, in connection with any audits by Tax authorities and in
the preparation of Tax returns, to avoid payment of duplicate or
inappropriate Taxes in respect of the Acquired Corporations, and each
party shall furnish, at the request of the other, proof of payment of
such Taxes and any other documentation that may be a prerequisite to
avoiding payment of a duplicate or inappropriate Tax.
11.16 Payment of BML Earn-Out. Buyer shall pay (or cause Bear
Mountain to pay) to Fibreboard the BML Earn-Out to the extent provided in the
terms set forth in Schedule 11.16.
11.17 Promotional Programs. From and after Closing Buyer will
cause the Acquired Corporations to honor all passes, discount coupons, Vertical
Plus program awards and other similar promotional items previously issued by
any of the Acquired Corporations (or their respective predecessors) prior to
the Closing Date (except to the extent indemnifiable by Seller in accordance
with Section 10.2 hereof).
11.18 Nonsolicitation of Employees. None of Fibreboard or any
Affiliates thereof shall, prior to the third anniversary of the Closing Date,
solicit any employee of Buyer, any Acquired Corporation or any Affiliate
thereof or of any successor or assign of Buyer to leave such employment if such
employee was at any time between the date hereof and the Closing an employee of
any Acquired Corporation or Fibreboard.
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<PAGE> 48
11.19 Guarantee by Buyer. Subject to Section 11.1 hereof, Buyer
hereby guarantees to Fibreboard the due and punctual payment and performance
of obligations owing to Fibreboard by Acquired Corporations after Closing under
this Purchase Agreement.
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<PAGE> 49
IN WITNESS WHEREOF, the Parties hereto have executed this Stock
Purchase and Indemnification Agreement as of the Effective Date.
BUYER:
BOOTH CREEK SKI HOLDINGS, INC.,
a Delaware corporation
By: /s/ Jeffrey J. Joyce
----------------------------
Title: Vice President
-------------------------
SELLER:
FIBREBOARD CORPORATION,
a Delaware corporation
By: /s/ Donald F. McAleenan
----------------------------
Title: Vice President
-------------------------
NORTHSTAR:
TRIMONT LAND COMPANY,
a California corporation
By: /s/ Donald F. McAleenan
---------------------------
Title: Vice President
-------------------------
SIERRA:
SIERRA-AT-TAHOE, INC.,
a Delaware corporation
By: /s/ Donald F. McAleenan
---------------------------
Title: Vice President
------------------------
BEAR MOUNTAIN:
BEAR MOUNTAIN, INC.,
a Delaware corporation
By: /s/ Donald F. McAleenan
---------------------------
Title: Vice President
------------------------
-45-
<PAGE> 1
EXHIBIT 10.5
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into as of the 3rd day of
December 1996, by and among FIBREBOARD CORPORATION, a Delaware corporation
("Seller"), BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation ("Buyer"),
and FIRST TRUST OF CALIFORNIA, a national association, San Francisco,
California (the "Escrow Agent"),
W I T N E S S E T H:
WHEREAS, concurrently herewith, pursuant to that certain Stock
Purchase and Indemnification Agreement among Seller, Buyer, Trimont Land
Company, a California corporation doing business as Northstar-at-Tahoe
("Northstar"), Sierra-at-Tahoe, Inc., a Delaware corporation ("Sierra"), and
Bear Mountain, Inc., a Delaware corporation ("Bear Mountain"), dated as of
November __, 1996 (the "Purchase Agreement"), Seller has sold all of the issued
and outstanding shares of Northstar, Sierra and Bear Mountain to Buyer; and
WHEREAS, the Parties have agreed to establish an escrow with respect
to indemnification by Seller of Buyer with regard to certain potential
Liabilities related to Section 2.6.5 of that certain asset purchase agreement
dated October 6, 1995, by and among Seller, Bear Mountain, Bear Mountain Ltd.
("BML") and S-K-I Ltd. (the "BML Agreement"), if the consent by BML has not
been received or waived by BML on or before the Closing Date, to be maintained
until consent has been received from BML or otherwise waived, unless earlier
terminated by a joint notice to the Escrow Agent substantially in the Form of
Exhibit A hereto signed by Buyer and Seller (the "Escrow Period");
NOW, THEREFORE, in consideration of the covenants hereinafter
contained, the parties hereto agree as follows:
1. Establishment of the Escrow. As of the date hereof, Buyer has
delivered to the Escrow Agent One Million dollars ($1,000,000) (together with
all interest earned thereon, the "Escrow Fund"). The Escrow Fund shall be held
by the Escrow Agent in escrow subject to the terms and conditions set forth
herein. The Escrow Agent shall deposit the Escrow Fund in a First Trust of
California Business Money Market Account.
2. Costs and Fees of Escrow Agent. Seller and Buyer shall each
pay one-half of all costs and fees of the Escrow Agent in connection with this
Agreement, as set forth on the Depository Escrow Fee Schedule attached as
Exhibit B hereto (the "Fee Schedule").
-1-
<PAGE> 2
3. Escrow Period. The Escrow Fund shall remain in existence
until the Escrow Period has expired. The Escrow Period shall be four (4) years
from the date first written above; provided, however, that in the event BML
files suit against Bear Mountain or Fibreboard within such four year period
alleging the violation of the provisions of Section 2.6.5 of the BML Agreement,
the Escrow Period shall be extended until such suit is dismissed, settled or
finally adjudicated.
4. Protection of Escrow Fund. The Escrow Agent shall hold and
safeguard the Escrow Fund during the Escrow Period, shall treat such fund as a
trust fund in accordance with the terms of this Agreement and not as the
property of Seller or Buyer, and shall hold and dispose of the Escrow Fund only
in accordance with the terms hereof.
5. Claims Upon Escrow Fund. If during the Escrow Period either
Seller or Buyer (the "Filing Party") intends to assert that it is entitled
to all or any portion of the Escrow Fund pursuant to the terms set forth in
Section 7 of this Escrow Agreement, the Filing Party shall, prior to the
expiration of the Escrow Period, file with the Escrow Agent a certificate
signed by the Chief Executive Officer, President, Chief Financial Officer or
General Partner of the Filing Party stating that the Filing Party is entitled
to all or any portion of the Escrow Fund, and specifying in reasonable detail
the nature of the Filing Party's claim of entitlement (a "Claim"). Upon
receipt of a Claim, the Escrow Agent shall proceed as set forth in Section 6.
6. Objections to Claims.
a. Upon receipt by the Escrow Agent of a Claim filed during the
Escrow Period, the Escrow Agent shall deliver a duplicate copy of the Filing
Party's Claim to the other party (the "Non-Filing Party") in the manner
provided in Section 12 and for a period of fifteen (15) calendar days after
such delivery, the Escrow Agent shall make no delivery of Escrow Funds to
either party. If the Non-Filing Party objects to such Claim, such Claim shall
constitute a "Disputed Claim." To timely object, a Non-Filing Party shall
object in a written statement and such statement shall be delivered to the
Escrow Agent and the Filing Party prior to the expiration of such fifteen (15)
calendar day period, and shall set forth the basis for the objection in
reasonable detail.
b. If the Non-Filing Party has not filed an objection by the
expiration of said fifteen (15) calendar day period, the Escrow Agent shall
deliver the Escrow Fund or the claimed portion thereof to the Filing Party.
-2-
<PAGE> 3
c. If the Non-Filing Party has timely filed an objection, the
Escrow Agent shall maintain the Disputed Claim in escrow.
7. Terms of Entitlement to Escrow Fund.
The Escrow Fund will be held by the Escrow Agent until such time as:
a. Seller receives consent as required under Section 2.6.5 of the
BML Agreement and Buyer and Bear Mountain are provided with reasonably
satisfactory evidence of the same;
b. BML waives the requirement for consent under Section 2.6.5 of
the BML Agreement pursuant to formal or informal settlement proceedings with
Fibreboard and BML provides to Bear Mountain an unconditional release from any
and all Liabilities under Section 2.6.5 of the BML Agreement, in form
reasonably satisfactory to Bear Mountain and Buyer; or
c. a judgment or order is entered by any court or tribunal
requiring Bear Mountain or Buyer to make a payment as the result of a breach of
Section 2.6.5 of the BML Agreement and such judgment or order is not stayed.
Following the occurrence of either of the events described in clauses (a) or
(b) above, the Escrow Fund shall be payable to Seller in accordance with the
terms hereof. Following the occurrence of the event described in clause (c)
above, the Escrow Fund shall be payable to Bear Mountain in accordance with the
terms hereof, to the extent necessary to satisfy such judgment.
8. Resolution of Conflicts; Arbitration.
a. The Non-Filing Party and the Filing Party shall attempt in good
faith to agree upon the rights of the respective parties with respect to any
Disputed Claim. If the Non-Filing Party and the Filing Party should so agree,
a memorandum setting forth such agreement, including the distribution of the
Escrow Fund and the delivery of the relevant document, shall be prepared and
signed by both parties and shall be furnished to the Escrow Agent. The Escrow
Agent shall be entitled to rely on any such memorandum and distribute the
assets from the Escrow Fund in accordance with the terms thereof.
b. If no such agreement can be reached after good faith negotiation
within thirty (30) calendar days after filing by the Non-Filing Party of its
objection with the Escrow Agent, either the Non-Filing Party or the Filing
Party may demand arbitration of the matter and the matter shall be settled by
arbitration conducted by three arbitrators. The Non-Filing Party and the
Filing Party shall each select one arbitrator, and the two
-3-
<PAGE> 4
arbitrators so selected shall select a third arbitrator. The decision of the
arbitrators so selected as to the validity and amount of any Claim shall be
final, binding and conclusive upon the parties to this Agreement, and,
notwithstanding anything in Section 6 hereof, the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith, if applicable.
c. Judgment upon any award rendered by the arbitrators may be entered
in any court having jurisdiction. Any such arbitration shall be held in the
City of San Francisco, California under the commercial arbitration rules then
in effect of the American Arbitration Association. The non-prevailing party to
an arbitration shall pay its own expenses, the fees of each arbitrator and the
administrative fee of the American Arbitration Association. If neither party
is deemed by the arbitrators to have prevailed, each party shall pay one-half
of the fees and costs of each arbitrator and such administrative fee.
9. Lack of Breach; Termination of Escrow Period. In the event that no
Claim and no joint notice has been received by the Escrow Agent on or prior to
the end of the Escrow Period, one hundred percent (100%) of the Escrow Fund,
including all interest earned thereon, shall be distributed by the Escrow Agent
to Seller as promptly as practicable.
10. Escrow Agent's Duties.
a. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for any act done or omitted
hereunder as Escrow Agent while acting in good faith and in the exercise of
reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith.
b. The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto which are not in compliance
with the provisions of Sections 5 and 6 or by any other person, excepting only
notices from any arbitrator in compliance with Section 8 or orders or process
of courts of law, and is hereby expressly authorized to comply with and obey
notices from such arbitrators or orders, judgments or decrees of any court. In
case the Escrow Agent obeys or complies with any such notice from an arbitrator
or order, judgment or decree of any court, the Escrow Agent shall not be liable
to any of the parties hereto or to any other person by reason of such
compliance, notwithstanding any such
-4-
<PAGE> 5
notice from an arbitrator or order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
c. The Escrow Agent shall not be liable in any respect on account of
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
d. The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to this Agreement or any
documents deposited with the Escrow Agent.
11. Escrow Provisions. The provisions of the escrow shall be as set
forth herein, the Fee Schedule and the "General Provisions for Corporate Escrow
Agreement" attached hereto as Exhibit C (the "General Provisions"). In the
event of any conflict between this Agreement and the General Provisions or the
Fee Schedule, the General Provisions and the Fee Schedule shall govern.
12. Notices. Any notice or demand desired or required to be given
hereunder shall be in writing and deemed given when personally delivered, sent
by overnight courier, next day delivery or deposited in the mail, postage
prepaid, sent certified or registered, return receipt requested, and addressed
as set forth below or to such other address as either party shall have
previously designated by such a notice. Any notice so delivered personally
shall be deemed to be received on the date of delivery; any notice so sent by
overnight courier shall be deemed to be received one (1) business day after the
date sent; and any notice so mailed shall be deemed to be received on the date
stamped on the receipt (rejection or other refusal to accept or inability to
deliver because of a change of address of which no notice was given shall be
deemed to be receipt of the notice).
i. Fibreboard Corporation
Texas Commerce Tower
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attention: Michael R. Douglas, Senior Vice
President, General Counsel and
Secretary
With a copy to:
Pillsbury Madison & Sutro
235 Montgomery Street
Attn: Terry M. Kee, Esq.
Telephone: (415) 983-1724
-5-
<PAGE> 6
ii. Booth Creek Ski Holdings, Inc.
100 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Patrick O. Doyle
iii. First Trust of California, National Association
Escrow Depository Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Mary Lou Fuette
Telephone: (415) 273-4533
13. Binding Agreement. This Escrow Agreement shall be binding
upon, and inure to the benefit of, the heirs, executors, successors and
assignees of the parties hereto, and no other person shall have any right,
benefit or obligations hereunder.
14. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the internal laws of the State of California.
15. Forum. Seller and Buyer hereby absolutely and irrevocably
consent and submit to the jurisdiction of the courts of the State of California
and of any federal court located therein in connection with any actions or
proceedings brought against Seller and Buyer by the Escrow Agent arising out of
or relating to this Escrow Agreement. In any such action or proceeding, Seller
and Buyer each hereby absolutely and irrevocably waive personal service of any
summons, complaint, declaration or other process and hereby absolutely and
irrevocably agree that the service thereof may be made by certified or
registered first-class mail directed to Seller or Buyer, as the case may be, at
their respective addresses in accordance with Section 11 hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Escrow
Agreement to be executed under seal on its behalf as of the day and year first
above written.
BOOTH CREEK SKI HOLDINGS, INC.,a
Delaware corporation
By: /s/ Jeffrey J. Joyce
------------------------
Vice President
-6-
<PAGE> 7
FIBREBOARD CORPORATION,
a Delaware corporation
By: /s/ Donald F. McAleenan
------------------------
Title: Vice President
-------------------
FIRST TRUST OF CALIFORNIA, a
national association Global
Escrow Depository Services
By /s/ Mary Lou Fuette
---------------------
Its Trust Officer
----------------------
-7-
<PAGE> 8
EXHIBIT A
FORM OF NOTICE
FIRST TRUST OF CALIFORNIA
Global Escrow Depository Services
One Embarcadero Center, Twentieth Floor
San Francisco, CA 94111
Attn:
Re: Your Escrow No. ____________
Ladies and Gentlemen:
Please refer to the Escrow Agreement (the "Escrow Agreement") dated
as of November __, 1996, among you and the undersigned, relating to the escrow
account described therein (the "Escrow Account"). Pursuant to Section __ of
the Escrow Agreement, you are hereby instructed to make a payment of that
portion of the Escrow Account, including all interest earned thereon, in the
amounts and to the parties set forth below. Such payment should be made by
wire transfer in accordance with the instructions below:
<TABLE>
<CAPTION>
Amount of
Name of Payee Escrow Fund Wire Instructions
------------- ----------- -----------------
<S> <C> <C>
FIBREBOARD CORPORATION $1,000,000 (plus Funds should be wired to:
accrued interest) ________ Bank
Phone #
Routing #
For account:
Fibreboard Corporation
Very truly yours,
FIBREBOARD CORPORATION
By __________________________________
Its _________________________________
BOOTH CREEK SKI HOLDINGS, INC.
By __________________________________
Its __________________________________
</TABLE>
<PAGE> 9
EXHIBIT B
FEE SCHEDULE
[attached]
<PAGE> 10
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION Esc-4
GLOBAL ESCROW DEPOSITORY SERVICES
FEE SCHEDULE
FOR HOLDING (DEPOSITORY) ESCROWS
I. ACCEPTANCE FEE:
Covers the escrow agent's examination of governing instruments and all
supporting documentation as well as set up of required records and accounts.
Payable at opening.
Consideration FEES
$0 - 499,999 $ 500
$500,000 - 999,999 $1,000
$1.0 - 2.49 million $2,000
$2.5 - 4.9 million $3,000
$5.0 - 9.99 million $4,000
$10.0 million and above $5,000
PLUS $0.10 PER $1,000
OVER $10 MILLION
$1,000
II. ANNUAL ADMINISTRATION FEE:
Covers ordinary escrow agent services, such as maintenance of records,
examination of notices to determine compliance with the governing instrument,
and preparation and distribution of accounting statements. Payable annually in
advance.
III. INVESTMENT PROCESSING FEES:
First Bank System investments NO CHARGE
Outside investments 50 BASIS PTS. OF INCOME EARNED
(MINIMUM $250)
IV. ACTIVITY FEES:
Deposits and/or Disbursements (per transaction) $20
Wire transfers (incoming or outgoing) $25
(Note: Deposits & Disbursement charges are waived if utilizing wire transfers)
Off-site Closing (CA) $500
Out-of-State Closing AT COST
V. OUT-OF-POCKET EXPENSES: BILLED AT COST
Expenses including but not limited to stationery, postage, telephone,
insurance, shipping, Telex/Telegram, services of outside counsel and agents.
(Plus indirect out-of-pocket at 3% of annual administration fees.)
VI. EXTRAORDINARY SERVICES AND EXPENSES:
Charges for performing other escrow services not specifically covered in this
schedule will be determined by an appraisal of the services rendered.
ALL ESCROW FEES ARE NON-PRORATABLE AND NON-REFUNDABLE
THE FEES SHOWN IN THIS SCHEDULE MAY BE INCREASED UPON THIRTY (30) DAYS NOTICE.
June 1996
<PAGE> 11
EXHIBIT C
GENERAL PROVISIONS OF CORPORATE
ESCROW AGREEMENT
[attached]
<PAGE> 12
Global Escrow Depository Services
General Provisions for Corporate Escrow Agreements
LIABILITY OF ESCROW SERVICES
- -------------------------------------------------------------------------------
In performing any duties under the Escrow Agreement ("Agreement"), Escrow Agent
("Agent") shall not be liable to any Party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the Agent.
Agent shall not incur any such liability for (I) any act or failure to act made
or omitted in good faith, or (II) any action taken or omitted in reliance upon
any instrument, including any written statement or affidavit provided for in
this Agreement that Agent shall in good faith believe to be genuine, nor will
Agent be liable or responsible for forgeries, fraud, impersonations, or
determining the scope of any representative authority. In addition, Agent may
consult with legal counsel in connection with Agent's duties under this
Agreement and shall be fully protected in any act taken, suffered, or permitted
by him/her in good faith in accordance with the advice of counsel. Agent is not
responsible for determining and verifying the authority of any person acting or
purporting to act on behalf of any party to this Agreement.
FEES AND EXPENSES
- -------------------------------------------------------------------------------
It is understood that the fees and usual charges agreed upon for services of
Agent shall be considered compensation for ordinary services as contemplated by
this Agreement. In the event that the conditions of this Agreement are not
promptly fulfilled, or if Agent renders any service not provided for in this
Agreement, or if the Parties request a substantial modification of its terms, or
if any controversy arises, or if Agent is made a Party to, or intervenes in, any
litigation pertaining to this escrow or its subject matter, Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, including allocated costs of in-house counsel, and
expenses occasioned by such default, delay, controversy or litigation and Agent
shall have the right to retain all documents and/or other things of value at any
time held by Agent in this escrow until such compensation, fees, costs, and
expenses are paid. The Parties jointly and severally promise to pay these sums
upon demand. Unless otherwise provided, the Parties each will pay one-half of
all Agent's usual charges and Agent may deduct such sums from the funds
deposited.
CONTROVERSIES
- -------------------------------------------------------------------------------
If any controversy arises between the Parties to this Agreement, or with any
other Party, concerning the subject matter of this Agreement, its terms or
conditions. Agent will not be required to determine the controversy or to take
any action regarding it. Agent may hold all documents and funds and may wait
for settlement of any such controversy by final appropriate legal proceedings
or other means as, in Agent's discretion. Agent may require, despite what may
be set forth elsewhere in this Agreement. In such event, Agent will not be
liable for interest or damage. Furthermore, Agent may at its option, file an
action of interpleader requiring the Parties to answer and litigate any claims
and rights among themselves. Agent is authorized to deposit with the clerk of
the court all documents and funds held in escrow, except all costs, expenses,
charges and reasonable attorney fees incurred by Agent due to the interpleader
action and which the Parties jointly and severally agree to pay. Upon
initiating such action, Agent shall be fully released and discharged of and
from all obligations and liability imposed by the terms of this Agreement.
INDEMNIFICATION OF ESCROW AGENT
- -------------------------------------------------------------------------------
The Parties and their respective successors and assigns agree jointly and
severally to indemnify and hold Agent harmless against any and all losses,
claims, damages, liabilities, and expenses, including reasonable costs of
investigation, counsel fees, including allocated costs of in-house counsel and
disbursements that may be imposed on Agent
<PAGE> 13
General Provisions for Corporate Escrow Agreements Page 2 of 2
or incurred by Agent in connection with the performance of his/her duties under
this Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter. Agent shall have a first lien on the
property and papers held under this Agreement for such compensation and
expenses.
INVESTMENT INSTRUCTIONS
- ------------------------------------------------------------------------------
For the purpose of investing funds held in escrow, Agent may accept and act upon
the oral instructions of ____________ ("Authorized Caller"), Agent will confirm
all oral investment instructions in writing within 3 business days. If there is
any discrepancy between any oral instructions and a written confirmation of that
instruction, Agent's records of the oral investment instructions shall govern.
The parties shall indemnify and hold Agent harmless from any and all liability
for acting on an oral investment instruction purported to be given by an
Authorized Caller. Agent shall not be responsible for the authenticity of any
instructions, or be in any way liable for any unauthorized instruction or for
acting on such an instruction, whether or not the person giving the
instructions was, in fact, an Authorized Caller. In no event shall Agent be
liable to the Parties for any consequential, special, or exemplary damages,
including but not limited to lost profits, from any cause whatsoever arising
out of, or in any way connected with acting upon oral instructions believed by
Agent to be genuine.
Agent will act upon investment instructions the day that such instructions are
received, provided the requests are communicated within a sufficient amount of
time to allow Agent to make the specified investment. Instructions received
after an applicable investment cutoff deadline will be treated as being
received by Agent on the next business day, and Agent shall not be liable for
any loss arising directly or indirectly, in whole or in part, from the
inability to invest funds on the day the instructions are received. Agent shall
not be liable for any loss incurred by the actions of third parties or by any
loss arising by error, failure, or delay in making of an investment which is
caused by circumstances beyond Agent's reasonable control.
FUNDS INVESTED DURING ESCROW
- -------------------------------------------------------------------------------
The Parties acknowledge that payment of any interest earned on the funds
invested in this escrow will be subject to backup withholding penalties unless a
properly completed Internal Revenue Service form W8 or W9 certification is
submitted to Escrow Agent.
RESIGNATION OF ESCROW AGENT
- -------------------------------------------------------------------------------
Agent may resign at any time upon giving at least thirty (30) days written
notice to the Parties; provided, however, that no such resignation shall become
effective until the appointment of a successor escrow agent which shall be
accomplished as follows: The Parties shall use their best efforts to mutually
agree on a successor escrow agent within thirty (30) days after receiving such
notice. If the Parties fail to agree upon a successor escrow agent within such
time, Agent shall have the right to appoint a successor escrow agent authorized
to do business in the state of California. The successor escrow agent shall
execute and deliver an instrument accepting such appointment and it shall,
without further acts, be vested with all the estates, properties, rights,
powers, and duties of the predecessor escrow agent as if originally named as
escrow agent. Agent shall be discharged from any further duties and liability
under this Agreement.
AUTOMATIC SUCCESSION
- -------------------------------------------------------------------------------
Any company into which the Agent may be merged or with which it may be
consolidated, or any company to whom Agent may transfer a substantial amount of
its Global Escrow business, shall be the Successor to the Agent without the
execution or filing of any paper or any further act on the part of any of the
Parties, anything herein to the contrary notwithstanding.
GOVERNING LAW
- -------------------------------------------------------------------------------
This Agreement is to be construed and interpreted according to California law.
Prepared by First Trust of California, National Association, Global Escrow
Depository Services.
November 1995
<PAGE> 14
<PAGE> 1
EXHIBIT 10.6
PURCHASE AGREEMENT
Agreement (the "Agreement") made as of the 11th day of February, 1997
by and among Booth Creek Ski Holdings, Inc., a Delaware corporation with its
principal office at 1000 South Frontage Road, Vail, Colorado (the "Buyer"), and
Grand Targhee, Incorporated, a Delaware corporation with its principal office
at Alta, Wyoming (the "Company"), Moritz O. Bergmeyer, and Carol Mann Bergmeyer
(individually, a "Seller" and collectively, the "Sellers").
Preliminary Statement
A. Each of Carol Mann Bergmeyer ("CMB") and Moritz O. Bergmeyer
("MOB") owns 50% of the issued and outstanding shares of the common stock, $.01
par value per share (the "Company Shares"), of the Company.
B. The Company operates the Grand Targhee Ski and Summer Resort
in Alta, Wyoming (the "Resort") under a special use permit (the "Forest Service
permit") issued by the United States Department of Agriculture - Forest Service
(the "U.S. Forest Service").
C. The Company, as lessor, is party to a sublease with CMB, as
lessee, (the "Sublease"), which provides CMB the right to use and occupy a
portion of the land covered by the Forest Service Permit through May, 2000.
The Company, as lessee, is party to a lease with CMB, as lessor (the "Teewinot
Lease"), whereby the Company has leased from CMB the Teewinot Lodge located on
the property which is the subject of the Sublease, also through May, 2000. The
assets of the Teewinot Lodge are owned by CMB.
D. CMB and MOB each owns 50% of the issued and outstanding shares
of common stock, no par value (the "HMT Shares") of High Mountain Travel, Inc.,
a Wyoming corporation ("HMT").
E. This Agreement contemplates a transaction in which (i) the
Buyer will purchase from CMB, and MOB and CMB and MOB will sell to the Buyer,
all of the outstanding capital stock of the Company, (ii) CMB and MOB will
cause HMT to assign substantially all of its assets to the Company, and (iii)
(a) the Buyer will purchase from CMB, and CMB will sell to the Buyer, or (b)
immediately following the acquisition of the Company Shares the Buyer will
cause the Company to purchase from CMB and CMB will sell to the Company, all of
the assets which comprise the Teewinot Lodge.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
<PAGE> 2
1. Purchase and Sale of the Company Shares, the HMT Rights and the
Teewinot Assets
1.01 Basic Transaction. On and subject to the terms and
conditions of this Agreement, (a) the Buyer agrees to purchase and accept from
the Sellers, and the Sellers agree to sell, transfer, convey, assign and
deliver to the Buyer (or, with respect to the Teewinot Assets, to the Company
if the Buyer so elects), (i) all of the Company Shares and (ii) all of the
assets constituting the Teewinot Lodge including without limitation, the real
property (other than the real property interest of the United States Forest
Service), fixtures and furnishings (collectively, the "Teewinot Assets"), and
(b) the Sellers will cause HMT to assign to the Company the assets described
in Section 8.10 (the "HMT Rights"). The Company Shares, the HMT Rights and the
Teewinot Assets are collectively referred to as the "Property".
1.02 Purchase Price. The Buyer agrees to pay the
following aggregate purchase price for the Property (the "Purchase Price"):
(a) Cash consideration of Three Million Eight
Hundred Seventy-Two Thousand Six Hundred Seventy-Eight Dollars ($3,872,678) of
which (A) One Hundred Thousand Dollars ($100,000) has been paid in cash on the
date hereof to each of MOB and CMB, and (B) the balance of Three Million Six
Hundred Seventy-Two Thousand Six Hundred Seventy-Eight Dollars ($3,672,678)
less the Deposit described in Section 15 shall be paid at Closing, by wire
transfer or delivery of other immediately available federal funds to an account
designated by each Seller and allocated between them as they instruct in
writing prior to Closing, and in the absence of such instructions by such wire
transfer to Hale and Dorr;
(b) a contingent payment (the "Development
Contingent Payment") on development of additional resort dwelling units, as set
forth in the Development Contingent Payment Agreement substantially in the form
attached hereto as Exhibit A; and
(c) the provision of a right to each of the
Sellers, and to the children of each of the Sellers, and to certain guests when
accompanied by the Sellers, to use the lifts at the Resort, and to have living
accommodations at the Resort for two weeks each year on a space-available basis
as determined by the Buyer in good faith, all without further charge, as
provided in agreements with each of the Sellers to be delivered at the Closing
substantially in the form attached to this Agreement as Exhibit B; and
(d) contingent payments ("Skier Contingent
Payments") payable as follows: (i) an aggregate contingent payment to MOB and
CMB collectively, of $500,000 if the number of skiers at the Resort in the
1997-1998 ski season equals or exceeds 117,000; (ii) an aggregate contingent
payment to MOB and CMB collectively, of $35.71 for each skier at the Resort from
234,000 to 248,000 skiers during the cumulative period encompassing the
1997-1998 and 1998-1999 ski seasons
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<PAGE> 3
(the "Two Season Period"); and (iii) an aggregate contingent payment to MOB
and CMB collectively, of $31.25 for each skier at the Resort in excess of
248,000 up to and including 280,000 skiers during the Two Season Period. The
calculation for the number of skiers shall be consistent with the Company's
historical accounting method, described on Schedule 1.02(d) attached hereto,
and payments hereunder shall be made within forty-five (45) days after the
close of the relevant ski season. Sellers shall have reasonable access to the
books, records and materials used by Buyer and the Company and to their
appropriate respective personnel to calculate the amount paid to Sellers under
paragraph 1.02(d) of this Agreement. Such access shall be granted to Seller
after such payments are made and only for the purpose of confirming amounts
payable under this paragraph.
1.03 Closing Date Adjustments to Purchase Price.
(a) (i) The cash portion of the Purchase Price
payable pursuant to Section 1.02(a) shall be increased by the net amount of
$6540. with respect to the Company Owned Basket Assets identified on Exhibit C
which the Sellers elect to retain (and which are to be distributed by the
Company to the Sellers prior to Closing) and the Seller Owned Basket Assets
identified on Exhibit D that are to be conveyed by Sellers to Company prior to
Closing (the "Seller Owned Basket Assets") and (ii) the cash portion of the
Purchase Price payable pursuant to Section 1.02(a) shall be reduced (A) as
described in Section 8.08, (B) by the amount payable to Alexander F. Gillett
(or his assignee) in satisfaction of the promissory note of CMB in the
principal amount of $50,000, which amount shall be paid at the Closing by the
Buyer on behalf of CMB directly to Alexander F. Gillett (or his assignee) and
(C) by the amount (which on the date hereof is $35,000) owing by CMB to the
Company in satisfaction of such amount owing. In the event that the Closing
occurs after March 31, 1997, Buyer agrees that it shall pay to the Sellers an
additional amount, in aggregate, equal to the product of (I) $1,000 and (II)
the number of days from and including March 31, 1997 to but not including the
Closing Date.
(b) Nelson Engineering, Inc. has performed the
so-called "Phase II, Part 2" environmental review described in Schedule 1.03(b)
attached hereto with respect to that certain diesel contaminant plume in
proximity to the maintenance shed located at the Resort (the "Diesel
Contaminant Plume"). The Company, the Sellers and Nelson Engineering, Inc.
have formulated a plan of remediation for the Diesel Contaminant Plume,
including an estimation of the cost of implementing such a plan (the
"Remediation Plan") which has been submitted to the Wyoming Department of
Environmental Quality ("DEQ") by letter from Nelson Engineering, Inc. dated
October 7, 1996 and reviewed by DEQ in its letter to Nelson Engineering, Inc.
dated October 11, 1996. On the date of the Closing, the Sellers shall deposit
in a designated escrow account, with Bank of Jackson Hole, with offices located
in Jackson, Wyoming as escrow agent (the "Escrow Agent"), pursuant to an escrow
agreement reasonably acceptable to the parties and acceptable to said Escrow
Agent, the amount of $32,978, equal to the estimated cost of Remediation Plan
(the "Escrowed Funds") and reflecting the actions set forth on Schedule
1.03(b). After the
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<PAGE> 4
date of the Closing, the Sellers shall direct, control and be responsible for
the implementation of Remediation Plan. The Company shall submit to the Escrow
Agent copies of invoices or other documentation evidencing all costs of
remediation of the Diesel Contaminant Plume actually incurred by the Company
pursuant to the Remediation Plan (the "Actual Remediation Costs"). Upon
receipt of the evidence of the Actual Remediation Costs, the Escrow Agent shall
pay to the Company the Escrowed Funds until the Company is reimbursed in full
for such Actual Remediation Costs. To the extent the Escrowed Funds exceed the
Actual Remediation Costs, the excess funds shall be paid over to the Sellers.
To the extent that the Escrowed Funds are insufficient to fully reimburse the
Company for the Actual Remediation Costs (the "Deficiency Amount"), the Escrow
Agent shall immediately notify the Sellers of the Deficiency Amount. The
Sellers shall pay to the Company the Deficiency Amount as soon as reasonably
practicable after notification by the Escrow Agent that such Deficiency Amount
exists.
1.04 Allocation of Purchase Price. The parties agree that
of the consideration to be delivered at the Closing, (i) One Million Five
Hundred Thousand Dollars ($1,500,000) of the cash consideration shall be
allocated to the Teewinot Assets (ii) $6540. shall be attributable to the
Seller Owned Basket Assets, (iii) Two Thousand Dollars ($2,000) shall be
allocated to the use of lifts and living accommodations by the Sellers, and
(iv) the balance of the consideration to the Company Shares. The Development
Contingent Payment and the Skier Contingent Payments shall be allocated to the
Company Shares. The parties recognize that the HMT Rights are of negligible
value.
1.05 Closing. The Closing shall take place at the offices
of Holland & Hart, Jackson Wyoming at 10:00 a.m., Mountain Time, on March 27,
1997 or at such other place, time or date (prior or subsequent to March 27,
1997, subject to Section 11.01) as may be mutually agreed upon in writing by
the parties (the "Closing Date"). The transfer of the Property by the Sellers
to the Buyer shall be deemed to occur at 9:00 a.m., Mountain Time, on the
Closing Date.
1.06 Transfer Charges. The Sellers shall be responsible
for taxes and similar charges on transfer of the Property, if any, and Buyer
shall be responsible for filing fees, if any.
2. Representations of the Sellers Regarding the Property
Each Seller severally represents and warrants to the Buyer as follows:
(a) CMB has good title to the Company Shares and
Teewinot Assets which are to be sold to the Buyer by CMB pursuant hereto, MOB
has good title to the Company Shares which are to be sold to Buyer by MOB
pursuant hereto, in each case free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever except as set
forth on Schedule 2 attached hereto.
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<PAGE> 5
(b) Each of the Sellers has the full right, power
and authority to enter into this Agreement and to sell, transfer, convey,
assign and deliver the Property to the Buyer at the Closing and, upon
consummation of the transactions contemplated hereby, the Buyer will acquire
from the Sellers good title to the Property, free and clear of all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever except as set
forth on Schedule 2.
(c) None of the Sellers is a party to, subject to
or bound by any agreement or any judgment, order, writ, prohibition, injunction
or decree of any court or other governmental body which would prevent the
execution or delivery of this Agreement by such Seller or the transfer,
conveyance and sale of the Property to be sold by such Seller to the Buyer
pursuant to the terms hereof.
(d) Except as set forth in Section 13 hereof, no
broker or finder has acted for the Sellers in connection with this agreement or
the transactions contemplated hereby, and no broker or finder is entitled to
any brokerage or finder's fee or other commissions in respect of such
transactions based upon agreements, arrangements or understandings made by or
on behalf of the Seller.
3. Representations of the Sellers and the Company Regarding the Company
Each of the Sellers and the Company, jointly and severally, represent
and warrant to the Buyer that:
3.01 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority (corporate and other) to
own its properties, to carry on its business as now being conducted, to execute
and deliver this Agreement and the agreements contemplated herein, and to
consummate the transactions contemplated hereby and thereby. The Company is
duly qualified to do business and in good standing in all jurisdictions in
which its ownership of property or the character of its business requires such
qualification. Certified copies of the Certificate of Incorporation and Bylaws
of the Company, as amended to date, have been previously delivered to the
Buyer, are complete and correct, and no amendments have been made thereto or
have been authorized since the date thereof.
3.02 Capitalization of the Company. The Company's
authorized capital stock consists of Six Hundred Thousand (600,000) shares of
Common Stock, $.01 par value per share, of which Four Hundred Fifty Thousand
(450,000) shares are issued and outstanding on the date hereof all of which are
held of record by CMB and MOB. CMB and MOB each owns 225,000 Company Shares.
The Company Shares have been and on the Closing Date will be duly and validly
issued and are fully paid and non-assessable. There are not, and on the
Closing Date there will not
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<PAGE> 6
be, outstanding (i) any options, warrants, conversion rights or other rights to
purchase from the Company any shares of capital stock of the Company; (ii) any
securities convertible into or exchangeable for shares of such capital stock;
or (iii) any other commitments of any kind for the issuance of additional
shares of capital stock or options, warrants or other securities of the
Company. The Company Shares constitute all of the issued and outstanding
shares of capital stock of the Company. The Company owns no equity interest in
any entities.
3.03 Capitalization of HMT. HMT's authorized capital
stock consists of 50,000 shares of Common Stock, no par value per share, of
which 50,000 shares are issued and outstanding on the date hereof all of which
are held of record by CMB and MOB. CMB and MOB each owns 25,000 HMT Shares.
3.04 Authorization. The execution and delivery by the
Company of this Agreement and the agreements provided for herein, and the
consummation by the Company of all transactions contemplated hereunder and
thereunder by the Company, have been duly authorized by all requisite corporate
action. This Agreement has been duly executed by the Company and the Sellers.
This Agreement and all other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which
either of the Sellers or the Company is a party constitute the valid and
legally binding obligations of the Sellers and the Company, respectively,
enforceable against them in accordance with their respective terms. The
execution, delivery and performance by the Company and the Sellers of this
Agreement and the agreements provided for herein, and the consummation by the
Company and the Sellers of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Company or any of the Sellers; (b) violate the provisions of the Certificate of
Incorporation or Bylaws of the Company; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute
a default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Company
pursuant to, any contract, lease, license, permit, indenture, mortgage, deed of
trust or other instrument or agreement to which the Company or any Seller is a
party or by which the Company or any Seller or any of the Company's properties
is or may be bound. Schedule 3.04 attached hereto sets forth a true, correct
and complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Company and the Sellers of
the transactions contemplated by this Agreement.
3.05 Financial Statements. The Sellers have previously
delivered to the Buyer the audited balance sheet of the Company as of May 31,
1995 (the "Audited Balance Sheet") and the related statements of income,
shareholders' equity, retained earnings and changes in cash flow of the Company
for the fiscal year then ended (collectively, the "Audited Financial
Statements"). The Sellers have also previously delivered to the Buyer the
unaudited balance sheet of the Company as of May 31,
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<PAGE> 7
1996 and the related statement of income for the fiscal year then ended (the
"Fiscal 1996 Financial Statements") as well as the unaudited balance sheet of
the Company as of November 30, 1996 (the "Current Balance Sheet") and the
related statements of income of the Company for the six-month period then ended
(collectively, the "Current Financial Statements") and will provide within 30
days after the date hereof the audited financial statements of the Company as
of May 31, 1996 (the "Audited 1996 Statements"). The Audited Financial
Statements, the Fiscal 1996 Financial Statements and the Current Financial
Statements hereof (collectively, the "Financial Statements") have (except as
set forth on Schedule 3.05) been (and in the case of the Audited 1996
Statements will be) prepared in accordance with generally accepted accounting
principles applied consistently with past practices and present (and will
present) fairly the financial condition and results of operations of the
Company as of such dates and for such periods and are (and will be) consistent
with the books and records of the Company (provided, however, that the Current
Financial Statements are subject to normal year-end adjustments (which will not
be material in the aggregate) and that the Fiscal 1996 Financial Statements and
the Current Financial Statements do not include footnotes and other
presentation items) and, in the case of the Audited Financial Statements, have
been (and in the case of the Audited 1996 Statements will be) certified without
qualification by Feldhake & Associates, P.C., the Company's independent public
accountants, and, in the case of the Fiscal 1996 Financial Statements and the
Current Financial Statements, have been certified by the Stockholders. The
date of the Audited Balance Sheet is hereinafter referred to as the "Balance
Sheet Date."
3.06 Absence of Undisclosed Liabilities. Except as and to
the extent (a) reflected and reserved against in the Audited Financial
Statements or the Current Balance Sheet, (b) set forth on Schedule 3.06
attached hereto, or (c) incurred in the ordinary course of business after the
date of the Current Balance Sheet and not material in amount, either
individually or in the aggregate, the Company has no liability or obligation,
secured or unsecured, whether accrued, absolute, or contingent, which is
material to the condition (financial or otherwise) of the assets, properties,
business or prospects of the Company taken as a whole.
3.07 Litigation. Except as set forth on Schedule 3.07
attached hereto (a) there is no action, suit or proceeding to which the Company
is a party (either as a plaintiff or defendant) pending or, to the knowledge of
the Sellers, threatened before any court or governmental agency, authority,
body or arbitrator and, to the knowledge of the Sellers, there is no basis for
any such action, suit or proceeding; (b) neither the Company nor any of the
Subsidiaries, nor, to the knowledge of the Sellers, any officer, director or
employee of any of the foregoing, has been permanently or temporarily enjoined
by any order, judgment or decree of any court or any governmental agency,
authority or body from engaging in or continuing any conduct or practice in
connection with the business, assets, or properties of the Company; and (c)
there is not in existence on the date hereof any order, judgment or decree of
any court, tribunal or agency enjoining or requiring the Company to take any
action of any kind with respect to its business, assets or properties.
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<PAGE> 8
3.08 Insurance. Schedule 3.08 attached hereto sets forth
a true, correct and complete list of all fire, theft, casualty, general
liability, workers compensation, business interruption, environmental
impairment, product liability, automobile and other insurance policies
maintained by the Company, specifying the type of coverage, the amount of
coverage, the premium, the insurer and the expiration date of each such policy
(collectively, the "Insurance Policies") and all claims made under such
Insurance Policies since June 1, 1991. True and correct summary copies of all
Insurance Policies have been previously delivered by the Sellers or the Company
to the Buyer. The Insurance Policies are in full force and effect and are in
amounts of a nature which are adequate and customary for the Company's
business. All premiums due on the Insurance Policies or renewals thereof have
been paid, and there is no default under the Insurance Policies. Except as set
forth on Schedule 3.08, the Company has not received any notice or other
communication from any issuer of the Insurance Policies since the date of the
Current Balance Sheet canceling or materially amending any of the Insurance
Policies, materially increasing any deductibles or retained amounts thereunder,
or materially increasing the annual or other premiums payable thereunder, and,
to the knowledge of the Sellers, no such cancellation, amendment or increase of
deductibles, retainages or premiums is threatened. Except as set forth on
Schedule 3.08, the Company has no outstanding claims or any dispute with any
insurance carrier regarding claims, settlements or premiums and the Company has
not failed to give any notice or present any claim under any Insurance Policy
in due and timely fashion.
3.09 Tangible Property. Schedule 3.09 attached hereto
sets forth (i) a true, correct and complete list of all items of tangible
personal property owned by the Company as of the date hereof having either a
net book value per unit or an estimated fair market value per unit in excess of
Two Thousand Five Hundred Dollars ($2500); or not owned by the Company but in
the possession of or used or useful in the business of the Company and having
rental payments therefor in excess of One Thousand Dollars ($1000) per month or
Ten Thousand Dollars ($10,000) per year (collectively, the "Personal
Property"); and (ii) a description of the owner of, and any agreement relating
to the use of, each item of Personal Property not owned by the Company and the
circumstances under which such Property is used. Except as disclosed in
Schedule 3.09:
(a) the Company has good title to each item of
Personal Property purported to be owned by it free and clear of all liens,
leases, encumbrances, claims under bailment and storage agreements, equities,
conditional sales contracts, security interests, charges and restrictions,
except for liens, if any, for personal property taxes not due;
(b) no officer, director, stockholder or employee
of the Company nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the Personal Property
described in Schedule 3.09 except as listed thereon and on Schedule D;
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<PAGE> 9
(c) the Personal Property now used and necessary
in the operation of the business is adequate for the operation of the business
of the Company in the ordinary course as currently carried on; and
(d) except as set forth in Exhibit D, the Company
owns or otherwise has the right to use all of the Personal Property now used
and necessary in the operation of its business or the use of which is necessary
for in the performance of any material contract, letter of intent or proposal
to which it is a party.
(e) The Company owns no land. To the extent its
property may be deemed to be real property, except as described in Schedule
3.09 and Schedule 2 it owns such property free and clear of liens and
encumbrances.
3.10 Intangible Property. Except as otherwise disclosed
in Schedule 3.10, to the knowledge of the Sellers, the Company owns or has the
right to use all items of intangible property used in connection with the
business of, the Company including, but not limited to, trade secrets,
know-how, any other confidential information of the Company, United States and
foreign patents, trade names, trademarks, trade name and trademark
registrations, copyrights and copyright registrations, and applications for any
of the foregoing (the "Intangible Property"). Schedule 3.10 attached hereto
sets forth a true, correct and complete list of all licenses or similar
agreements or arrangements to which the Company is a party, either as licensee
or licensor, with respect to the Intangible Property. Except as otherwise
disclosed in Schedule 3.10:
(a) to the knowledge of the Sellers, the Company
has the right and authority to use, and to continue to use after the Closing,
the Intangible Property in connection with the conduct of its business in the
manner presently conducted, and such use or continuing use does not and will
not conflict with, infringe upon or violate any rights of any other person,
corporation or entity;
(b) neither the Company nor any of the Sellers
has received notice of, nor have the Sellers any knowledge of, a pleading or
threatened claim, interference action or other judicial or adversarial
proceeding against the Company that any of the operations, activities,
products, services or publications of the Company or distributors infringes or
will infringe any patent, trademark, trade name, copyright, trade secret or
other property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or property rights of others;
(c) no officer, director, stockholder or employee
of the Company or any Subsidiary, nor any spouse, child or other relative or
affiliate thereof, owns directly or indirectly, in whole or in part, any of the
Intangible Property.
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3.11 The Forest Service Permit and Master Development
Plan.
(a) The Forest Service Permit delivered to the
Buyer and attached as Exhibit E to this Agreement is a true, correct and
complete copy and, except as otherwise indicated on Schedule 3.11:
(i) The Forest Service permit is legal, valid, binding, enforceable, and in
full force and effect;
(ii) Assuming the requisite U.S. Forest Service
approval of this Agreement and the transactions contemplated hereby, the Forest
Service permit will continue to be legal, valid, binding, enforceable, and in
full force and effect following the consummation of the transactions
contemplated hereby;
(iii) all facilities comprising the Resort
(including without limitation the Teewinot Lodge) have been constructed,
operated and maintained in all material respects in compliance with the Forest
Service Permit and the Master Development Plan; and
(b) The Master Development Plan was duly approved by the
U.S. Forest Service, is in full force and effect and the Sellers and the
Company are in full material compliance with all its terms and conditions. The
Master Development Plan delivered to the Buyer prior to Closing represents the
full and complete copy and has not been amended or modified in any respect
since the date of the Permit of the U.S. Forest Service dated May 22, 1995.
3.12 Accounts Receivable. All accounts or notes receivable of the
Company and except for reserves for doubtful accounts reflected on the
Financial Statements and the books and records of the Company, are valid
obligations owing to the Company by account debtors subject to no set-offs or
counterclaims, and to the knowledge of Sellers are collectible consistent with
prior experience.
3.13 Tax Matters.
(a) Except as set forth on Schedule 3.13 attached hereto
or in the Financial Statements:
(i) Within the times and in the manner prescribed
by law, the Company has filed all federal, state and local tax returns and all
tax returns for foreign countries, provinces and other governing bodies having
jurisdiction to levy taxes upon them which are required to be filed;
(ii) The Company has paid all taxes, interest,
penalties, assessments and deficiencies which have become due or which have
been claimed to be due, including without limitation income, franchise, real
estate, sales and withholding taxes and other employee benefits, taxes and
imports;
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(iii) To the knowledge of the Sellers, all tax
returns filed by the Company for the taxable years ending May 31, 1991 through
May 31, 1996 constitute complete and accurate representations of the respective
tax liabilities of the Company for such years and accurately set forth all
items (to the extent required to be included or reflected in such returns)
relevant to their future tax liabilities, including the tax bases of their
properties and assets;
(iv) The Company has not waived or extended any
applicable statute of limitations relating to the assessment of federal, state,
local or foreign taxes;
(v) No examinations of the federal, state, local
or foreign tax returns of the Company is currently in progress nor, to the
knowledge of the Sellers, threatened and no deficiencies have been asserted or
assessed against the Company as a result of any audit by the Internal Revenue
Service or any state or local taxing authority and no such deficiency has been
proposed or threatened;
(vi) The Company has not filed a consent pursuant
to Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code")
relating to collapsible corporations nor has such corporation agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(f)(4) of the Code); and
(b) Schedule 3.13 attached hereto sets forth for years
since May 31, 1989 those taxable years for which the tax returns of the Company
have been reviewed or audited by applicable federal, state, local and foreign
taxing authorities and those tax years for which said tax returns have received
clearances or other indications of approval from applicable federal, state,
local and foreign taxing authorities.
3.14 Contracts and Commitments.
(a) Schedule 3.14 attached hereto contains a true,
complete and correct list and description of the following contracts and
agreements, whether written or oral (collectively, the "Contracts"):
(i) all loan agreements, indentures, mortgages
and guaranties to which the Company is a party or by which the Company or any
of its property is bound;
(ii) all pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, personal
property leases and lease purchase agreements to which the Company is a party
or by which the Company or any of its property is bound;
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(iii) all contracts, agreements, commitments,
purchase orders or other understandings or arrangements to which the Company is
a party or by which the Company or any of its property is bound which (A)
involve payments or receipts by the Company of more than Ten Thousand Dollars
($10,000) in the case of any single contract, agreement, commitment,
understanding or arrangement under which full performance (including payment)
has not been rendered by all parties thereto or (B) which may materially
adversely affect the condition (financial or otherwise) or the properties,
assets, business or prospects of the Company;
(iv) all collective bargaining agreements,
employment and consulting agreements, executive compensation plans, bonus
plans, deferred compensation agreements, pension plans, retirement plans,
employee stock option or stock purchase plans and group life, health and
accident insurance and other employee benefit plans, agreements, arrangements
or commitments to which the Company is a party or by which the Company or any
of its property is bound;
(b) Except as set forth on Schedule 3.14:
(i) each Contract is a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, and the Company does not have any knowledge that any Contract is not
a valid and binding agreement of the other parties thereto;
(ii) the Company has fulfilled all material
obligations required pursuant to the Contracts to have been performed by the
Company prior to the date hereof;
(iii) to the best knowledge of the Sellers, there
is no existing material breach or default by any other party to any Contract;
and
(iv) he Company has not received notice that any
party to any of the Contracts intends to cancel or terminate any of such
Contracts.
(c) True, correct and complete copies of all written
Contracts have previously been delivered by the Company or the Sellers to the
Buyer.
3.15 Compliance with Agreements and Laws.
(a) To the knowledge of Sellers, the Company has all
material requisite licenses, permits and certificates, including environmental,
health and safety permits, from federal, state and local authorities necessary
to conduct its business as currently conducted and own and operate its assets
(collectively, the "Permits"). To the knowledge of Sellers, except as set
forth on Schedule 3.15, the Company is not in violation of any law, regulation
or ordinance relating to environmental, disposal of hazardous substances, land
use or similar matters material to the conduct of its business. To the
knowledge of the Sellers, except as set forth on Schedule 3.15, the
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business of the Company does not violate, in any material respect, any federal,
state, local or foreign laws, regulations or orders (including, but not limited
to, any of the foregoing relating to employment discrimination, occupational
safety, environmental protection, hazardous waste, or conservation), the
enforcement of which would have a material adverse effect on the results of
operations, condition (financial or otherwise), assets, properties business or
prospects of the Company. Except as set forth on Schedule 3.15, the Company
has not had notice or communication from any federal, state or local
governmental or regulatory authority or otherwise since July 1, 1991 of any
such violation or noncompliance.
(b) For purposes of this Subsection 3.15, "hazardous
waste" means "hazardous waste" as defined in the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6921 et. seq., and the regulations
adopted pursuant thereto.
3.16 Employee Relations.
(a) The Company is in material compliance with all
federal, state and municipal laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and is not
engaged in any unfair labor practice, and there are no arrears in the payment
of wages or social security taxes. Schedule 3.16 attached hereto contains a
list of all employment contracts and collective bargaining agreements to which
the Company is a party or by which the Company is bound. All such contracts
and agreements are in full force and effect and neither the Company nor any
party thereto is in default under any such contract or agreement.
(b) Except as set forth on Schedule 3.16 attached hereto:
(i) none of the employees of the Company is
represented by any labor union;
(ii) there is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board or any
state or local agency;
(iii) there is no pending labor strike or other
material labor trouble affecting the Company;
(iv) the Company has no continuing obligation for
health, life, medical insurance or other similar fringe benefits to any former
employee of the Company.
(c) Schedule 3.16 sets forth a true, correct and complete
list of the current employees of the Company , including the job descriptions
and salary or wage rates of each of its employees, showing separately for each
such person who received an annual salary in excess of Twenty Five Thousand
Dollars ($25,000) the
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maximum amounts paid or payable as salary and bonus payments for the fiscal
year ended May 31, 1996.
3.17 Employee Benefit Plans.
(a) Employee Plans. Schedule 3.17 attached hereto
contains a true, correct and complete list of all pension, benefit, profit
sharing, retirement, deferred compensation, welfare, insurance, disability,
bonus, vacation pay, severance pay and other similar plans, programs and
agreements, whether reduced to writing or not, other than any "multiemployer
plan" as such term is defined in Section 4001(a)(3) of ERISA, relating to the
Company's employees, or maintained at any time since June 1, 1991 by the
Company or by any other member (hereinafter, "Affiliate") of any controlled
group of corporations, group of trades or businesses under common control, or
affiliated service group (as defined for purposes of Section 414(b), (c) and
(m), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code")) (the "Employee Plans") and, except as set forth on Schedule 3.17
attached hereto, the Company has no obligations, contingent or otherwise, past
or present, under applicable law or the terms of any Employee Plan.
(b) Prohibited Transactions. Neither the Company nor any
of its Affiliates, directors, officers, employees or agents, or any "party in
interest" or "disqualified person," as such terms are defined in Section 3 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4975 of the Code has, with respect to any Employee Plan, engaged in or
been a party to any nonexempt "prohibited transaction," as such term is defined
in Section 4975 of the Code or Section 406 of ERISA, in connection with which,
directly or indirectly, the Company, the Buyer or any of their respective
Affiliates, directors or employees or any Employee Plan or any related funding
medium could be subject to either a penalty assessed pursuant to Section 502(i)
of ERISA or a tax imposed by Section 4975 of the Code.
(c) Compliance. With respect to all Employee Plans, the
Company and its Affiliates are in compliance in all material respects with the
requirements prescribed by any and all statutes, orders or governmental rules
or regulations currently in effect, including, but not limited to, ERISA and
the Code, applicable to such Employee Plans. The Company and its Affiliates
have in all material respects performed all obligations required to be
performed by them under, and is not in violation in any material respect of,
and there has been no default or violation by any other party with respect to,
any of the Employee Plans. Except as set forth on Schedule 3.17 attached
hereto: (i) none of the Employee Plans which are subject to Title IV of ERISA
has been or will be terminated in whole or in part within the meaning of ERISA
or the Code; (ii) no liability has been incurred to, nor has any event or
circumstance occurred, nor will any event or circumstance occur prior to the
Closing Date, which could result in such a liability being asserted by, the
Pension Benefit Guaranty Corporation ("PBGC") with respect to any Employee Plan
(other than the payment of annual premiums under Section 4007 of ERISA or
benefits
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payable in accordance with the terms of such Employee Plan); (iii) no Employee
Plan that is subject to Part 3 of Subtitle B of Title I of ERISA or Section 412
of the Code, or both, incurred any "accumulated funding deficiency" (as defined
in ERISA), whether or not waived; (iv) neither the Company nor any Affiliate
has failed to pay any amounts due and owing as required by the terms of any
Employee Plan; (v) there has been no "reportable event" within the meaning of
Section 4043(b)(1)-(9) of ERISA, or any event described in Section 4063(a) of
ERISA, with respect to any Employee Plan, other than as disclosed herein or on
accompanying schedules; (vi) neither Company nor any Affiliate has failed to
make any payment to an Employee Plan required under Section 302 of ERISA nor
has any lien ever been imposed under Section 302(f) of ERISA; (vii) neither the
Company nor any Affiliate has adopted an amendment to any Employee Plan which
requires the provision of security under Section 307 of ERISA, (viii) the PBGC
has not instituted any proceedings to terminate an Employee Plan pursuant to
Section 4042 of ERISA.
(d) Multiemployer Plans. Schedule 3.17 lists each and
every multiemployer plan to which the Company or its Affiliates contribute, are
required to contribute, or have ever been required to contribute. No
multiemployer plan listed in Schedule 3.17 is in "reorganization" (as defined
in Section 4241 of ERISA) or "insolvent" (as defined in Section 4245 of ERISA).
Neither the Company nor any Affiliate has withdrawn or is reasonably expected
to withdraw from a multiemployer plan in a complete or partial withdrawal which
has resulted or will result in "withdrawal liability," as defined for purposes
of Part I of Subtitle E of Part IV of ERISA, with respect to any such plan
which has not been satisfied in full. The Company and its Affiliates have made
all contributions to any such plan as are required through the Closing Date
under the terms of any such plans or applicable statutes, regulations, rulings
and other applicable law; and no event has occurred, or can occur prior to the
Closing Date, which could give rise to any other liability (other than a
continuing obligation to contribute to such plan(s) under the terms of any
applicable collective bargaining agreements) on the part of the Company or the
Buyer, or their Affiliates, officers, employees or directors with respect to
such plan(s).
(e) Retiree Benefits. Except as set forth in Schedule
3.17, no Employee Plan provides health or life insurance benefits for retirees
and no such plan contains any provisions, and no commitments or agreements
exist, which in any way would limit or prohibit the Buyer from amending any
such plan to reduce or eliminate such retiree benefits.
(f) Copies of Employee Plans and Related Documents. The
Company has previously delivered to the Buyer true, correct and complete copies
of all Employee Plans which have been reduced to writing and written
descriptions of all Employee Plans which have not been reduced to writing, and
all agreements, including trust agreements and insurance contracts, related to
such Employee Plans, and the Summary Plan Description and all modifications
thereto for each Employee Plan communicated to employees. With respect to each
Employee Plan that is a "defined benefit plan," as such term is defined in
Section 3(35) of ERISA (the "Defined
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<PAGE> 16
Benefit Plans"), true, correct and complete copies of (i) the annual actuarial
valuation reports for the last five years, (ii) the Form 5500 and Schedule A or
B thereto, or both, filed for the last five years and (iii) any filings made
with the Pension Benefit Guaranty Corporation, Internal Revenue Service or
Department of Labor, or any correspondence with or from such agencies,
regarding the termination of any such Defined Benefit Plan, have been delivered
to the Buyer.
(g) Qualifications. Each Employee Plan intended to
qualify under Section 401(a) of the Code has been determined by the Internal
Revenue Service to so qualify, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501(a). Each
Employee Plan which is a funded welfare benefit plan intended to be exempt from
tax under the provisions of Section 501(c)(9) of the Code has been determined
by the Internal Revenue Service to be so exempt. Copies of all determination
letters with respect to each such Employee Plan have been previously delivered
by the Company to the Buyer, and nothing has since occurred, or will occur
prior to the Closing Date, which might cause the loss of such qualification or
exemption, no such Employee Plan has been operated in a manner which would
cause it to be disqualified in operation, and all such Employee Plans have been
administered in compliance with and consistent with all applicable requirements
of the Code and ERISA, including, without limitation, all reporting, notice,
and disclosure requirements.
(h) Funding Status, Etc.
(i) Except as set forth on Schedule 3.17, neither
the Company nor any corporation or trade or business (whether or not
incorporated) which would be treated as a member of the controlled group of the
Company under Section 4001(a)(14) of ERISA would be liable for (A) any amount
pursuant to Section 4062, 4063, 4064, 4068 or 4069 of ERISA if any of the
Employee Plans which are subject to Title IV of ERISA were to terminate or (B)
any amount pursuant to Section 4201 of ERISA if a complete or partial
withdrawal from any multiemployer plan listed on Schedule 3.17 occurred before
the Closing. Except as set forth on Schedule 3.17, all Employee Plans which
are subject to Title IV of ERISA have no unfunded benefit liabilities, as
defined in Section 4001(a)(18) of ERISA. There is no unpaid contribution due
with respect to the plan year of any such Defined Benefit Plan ended prior to
the Closing Date, as required under the minimum funding requirements of Section
412 of ERISA. To the extent not heretofore satisfied or accrued on the Current
Balance Sheet, the Sellers shall be responsible for, and shall cause to be paid
without using any of the Company's assets, a pro rata portion of any minimum
funding liability for the plan year in which the Closing Date falls.
(ii) With respect to each Employee Plan which is a
qualified defined contribution pension, profit-sharing or stock bonus plan, as
defined in ERISA, all employer contributions accrued for plan years ending
prior to the Closing Date under the Plan terms and applicable law have been
made by the Company. To the extent not heretofore satisfied or accrued on the
Current Balance
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<PAGE> 17
Sheet, the Sellers shall be responsible for, and shall cause to be paid without
using any of the Company's assets, a pro rata portion of the employer
contribution for the plan year in which the Closing Date falls.
(iii) All premiums or other payments required by
the terms of any group or individual insurance policies and programs maintained
by the Company and covering any present or former employees of the Company with
respect to all periods up to and including the Closing Date have been fully
paid for the length of the obligation. To the extent not heretofore satisfied
or accrued on the Current Balance Sheet, the Sellers shall be responsible for,
and shall cause to be paid without using any of the Company's assets, any
welfare benefits not fully covered by third-party insurance policies or
programs relating to claims incurred by present or former employees of the
Company on or before the Closing Date.
(i) Claims and Litigation. Except as set forth on
Schedule 3.17, there are no threatened or pending claims, suits or other
proceedings by present or former employees of the Company or its affiliates,
plan participants, beneficiaries or spouses of any of the above, the Internal
Revenue Service, the PBGC, or any other person or entity involving any Employee
Plan including claims against the assets of any trust, involving any Employee
Plan, or any rights or benefits thereunder, other than ordinary and usual
claims for benefits by participants or beneficiaries including claims pursuant
to domestic relations orders.
(j) No Implied Rights. Nothing expressed or implied
herein shall confer upon any past or present employee of the Company, his or
her representatives, beneficiaries, successors and assigns, nor upon any
collective bargaining agent, any rights or remedies of any nature, including,
without limitation, any rights to employment or continued employment with the
Company, the Buyer, or any successor or affiliate.
(k) Continuation, Transfer and Termination. At the
Buyer's election, the Company shall take any actions as may be necessary or
appropriate under all applicable laws and the terms of the Employee Plans to
establish the Buyer, or an affiliate of the Buyer, as having all rights and
obligations with respect to any of the Employee Plans which Buyer elects to
continue including, without limitation, rights with respect to all annuity or
insurance contracts which form a part of any of such Employee Plans, together
with all other Employee Plan assets. The Company shall obtain as of the
Closing Date any and all consents from trustees required to effect any transfer
of any trust(s) related to such assumed Employee Plans to such trustee(s) as
may be appointed by the Buyer.
3.18 Absence of Certain Changes or Events.
(a) Except as set forth on Schedule 2 and Schedule 3.18
attached hereto, since the Balance Sheet Date, the Company has not entered into
any
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transaction which is not in the usual and ordinary course of business, and,
without limiting the generality of the foregoing, the Company has not:
(i) incurred any material obligation or liability
for borrowed money;
(ii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability other than current liabilities
reflected in the Current Balance Sheet;
(iii) mortgaged, pledged or subjected to lien,
charge or other encumbrance any of their respective properties or assets;
(iv) sold or purchased, assigned or transferred
any of its tangible assets or cancelled any debts or claims, except in the
ordinary course of business;
(v) made any material amendment to or termination
of any Contract or done any act or omitted to do any act which would cause the
breach of or material default under any Contract;
(vi) suffered any losses of personal or real
property, whether insured or uninsured, and whether or not in the control of
the Company or the relevant Subsidiary, as the case may be, in excess of Ten
Thousand Dollars ($10,000) in the aggregate, or waived any rights of any value;
(vii) authorized any declaration or payment of
dividends by the Company or paid any such dividends, or authorized any transfer
of assets of any kind whatsoever by the Company to the Sellers with respect to
any shares of their capital stock;
(viii) received notice of any litigation, warranty
claim or products liability claims;
(ix) made any material change in the terms, status
or funding condition of any Employee Plan, as defined in Section 3.17 hereof;
(x) engaged any new employee for a salary in
excess of Twenty Five Thousand Dollars ($25,000) per annum except as set forth
on Schedule 3.18;
(xi) made, or committed to make, any changes in
the compensation payable to any officer or director of the Company or any bonus
payment or similar arrangements made to or with any of such officers or
directors nor done any of the following with respect to any employee or agent
except in the usual course of business;
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(xii) incurred any capital expenditure in excess of
in any instance or Fifty Thousand Dollars ($50,000) in the aggregate; or
(xiii) made any material alteration in the manner of
keeping the books, accounts or records of the Company or any Subsidiary, or in
the accounting practices therein reflected; or
3.19 Prepayments and Deposits. Schedule 3.19 attached
hereto sets forth all prepayments and deposits, which have been received by the
Company as of the date hereof, from customers for products to be shipped, or
services to be performed, after the Closing Date.
3.20 Indebtedness to and from Officers, Directors,
Employees and Sellers. Except as set forth on Schedule 3.20 attached hereto,
the Company is not indebted, directly or indirectly, to any person who is an
officer, director, employee or stockholder of the Company in any amount
whatsoever other than for salaries for services rendered or reimbursable
business expenses, all of which have been reflected on the Current Financial
Statements, and no such officer, director, employee, stockholder or affiliate
is indebted to the Company except for advances made to employees of the Company
in the ordinary course of business to meet reimbursable business expenses
anticipated to be incurred by such obligor.
3.21 Banking Facilities. Schedule 3.21 attached hereto
sets forth a true, correct and complete list of:
(a) each bank, savings and loan or similar
financial institution in which the Company has an account or safety deposit
box; and
(b) the names of all persons authorized to draw
on each such account or to have access to any such safety deposit box facility,
together with a description of the authority (and conditions thereof, if any)
of each such person with respect thereto.
3.22 Powers of Attorney and Suretyships. Except as set
forth on Schedule 3.22 attached hereto, the Company has no general or special
powers of attorney outstanding (whether as grantor or grantee thereof) or has
any obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity, except as endorser or
maker of checks or letters of credit, respectively, endorsed or made in the
ordinary course of business.
3.23 Conflicts of Interest. Except as set forth on
Schedule 3.23 attached hereto, no officer, director or stockholder of the
Company nor, to the best
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knowledge of the Sellers, any affiliate of any such person has, either directly
or indirectly:
(a) an equity or debt interest in any
corporation, partnership, joint venture, association, organization or other
person or entity which furnishes or sells services or products to the Company,
or purchases from the Company any goods or services, or otherwise does business
with the Company; or
(b) a beneficial interest in any contract,
commitment or agreement to which the Company is a party or under which it is
obligated or bound or to which any of its property may be subject, other than
contracts, commitments or agreements between the Company and such persons in
their capacities as employees, officers or directors of the Company which are
set forth on Schedule 3.23 attached hereto.
3.24 Disclosure. None of the representations and
warranties made by the Sellers in this Agreement contains or on the Closing
Date will contain any untrue statement of a material fact, or omits any
material fact the omission of which would make the statements made therein
misleading.
4. Representations of the Buyer
The Buyer represents and warrants to each of the Sellers as follows:
4.01 Organization and Authority. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority
(corporate and other) to own its properties and to carry on its business as now
being conducted. The Buyer has full power to execute and deliver this
Agreement and the agreements contemplated herein, and to consummate the
transactions contemplated hereby and thereby. Certified copies of the
Certificate of Incorporation and the Bylaws of the Buyer, as amended to date,
have been previously delivered to the Sellers, are complete and correct, and no
amendments have been made thereto or have been authorized since the date
thereof.
4.02 Authorization. The execution and delivery of this
Agreement by the Buyer, and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
have been duly authorized by all requisite corporate action. This Agreement
and all such other agreements and written obligations entered into and
undertaken in connection with the transactions contemplated hereby constitute
the valid and legally binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms. The execution, delivery and
performance of this Agreement and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or
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regulation applicable to the Buyer; (b) violate the provisions of the Buyer's
Certificate of Incorporation or Bylaws; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute
a default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Buyer pursuant
to, any indenture, mortgage, deed of trust or other agreement or instrument to
which the Buyer is a party or by which the Buyer is or may be bound. Schedule
4.02 attached hereto sets forth a true, correct and complete list of all
consents and approvals of third parties that are required in connection with
the consummation by the Buyer of the transactions contemplated by this
Agreement.
4.03 Investment Representation. The Buyer is acquiring
the Company Shares and HMT Shares for its own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the same.
4.04 Disclosure. None of the representations and
warranties made by the Buyer in this Agreement contains or on the Closing Date
will contain any untrue statement of a material fact, or omits any material
fact the omission of which would make the statements made therein misleading.
5. Access to Books and Records; Public Announcements
5.01 Access to Books and Records.
(a) The Buyer has concluded its environmental
review and has concluded that it is satisfied as to the state of asbestos,
hazardous wastes and any other environmental problems concerning the Company
and the Property.
(b) At any time prior to the Closing, the Sellers
and the Company shall afford the officers, attorneys, accountants and other
authorized representatives of the Buyer access upon reasonable notice and
during normal business hours to the Company's officers and books and records.
The Sellers and the Company shall furnish to the Buyer such financial and
operating data and other information as to the business of the Company as the
Buyer shall reasonably request.
5.02 Confidentiality.
(a) The Company and the Sellers have furnished
and may continue to furnish the Buyer and Booth Creek, Inc. ("BCI") with
certain information which is either non-public, confidential or proprietary in
nature. All such information furnished to the Buyer or BCI, their directors,
officers, employees, agents or representatives, including, without limitation,
attorneys, accountants, consultants, potential lenders, investors and financial
advisors (collectively "representatives"), by the Company, the Sellers, or any
of their respective representatives, and all analyses,
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compilations, data, studies or other documents prepared by the Buyer or BCI or
their representatives containing or based in whole or in part on any such
furnished information or reflecting the Buyer's or BCI's review of, or interest
in, the Company is hereinafter referred to as "Information."
(b) Subject to the requirements of applicable
law, Buyer hereby agrees to use, and to cause BCI to use, the Information
solely in connection with the consummation of the transactions contemplated by
this Agreement and to transmit the Information only to those representatives of
the Buyer who need to know the Information. In the event the Closing does not
take place, all Information (and copies thereof) in whatever form shall be
returned to the Company or shall be destroyed by Buyer and BCI and Buyer shall
certify such delivery and/or destruction to the Company.
5.03 Public Announcements. The parties agree that prior
to the Closing Date any and all general public pronouncements or other general
public communications concerning this Agreement and the purchase and sale of
the Shares by the Buyer, and the timing, manner and content of such
disclosures, shall be subject to the mutual agreement of the Company and the
Buyer.
6. Pre-Closing Covenants of the Sellers and the Company.
From and after the date hereof and until the Closing Date:
6.01 Conduct of Business. Each of HMT and the Company
shall carry on its business substantially in the same manner as heretofore
except as agreed to in writing by the Buyer. All of the property of the
Company and HMT shall be used, operated, and maintained in a normal business
manner consistent with past practice.
6.02 Absence of Material Changes. Without the prior
written consent of the Buyer, except as set forth on Schedule 6.02, the Company
shall not:
(a) take any action to amend its charter
documents or bylaws;
(b) issue any stock, bonds or other corporate
securities or grant any option or issue any warrant to purchase or subscribe
for any of such securities or issue any securities convertible into such
securities;
(c) incur any obligation or liability (absolute
or contingent), except current liabilities incurred and obligations under
contracts entered into in the ordinary course of business;
(d) declare or make any payment or distribution
to its stockholders with respect to its stock or purchase or redeem any shares
of its capital stock;
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(e) mortgage, pledge, or subject to any lien,
charge or any other encumbrance any of its respective assets or properties;
(f) sell, assign, or transfer any of its assets,
except for inventory sold in the ordinary course of business, at a normal
profit margin, and for not less than replacement cost;
(g) cancel any debts or claims, except in the
ordinary course of business;
(h) merge or consolidate with or into any
corporation or other entity;
(i) make, accrue or become liable for any bonus,
profit sharing or incentive payment, except for accruals under existing plans,
if any, or increase the rate of compensation payable or to become payable by it
to any of its officers, directors or employees,other than increases in the
ordinary course of business consistent with past practice;
(j) make any election or give any consent under
the Code or the tax statutes of any state or other jurisdiction or make any
termination, revocation or cancellation of any such election or any consent or
compromise or settle any claim for past or present tax due;
(k) waive any rights of material value;
(l) modify, amend, alter or terminate any of its
Contracts of a material value or which are material in amount;
(m) enter into any lease, contract, agreement or
understanding, other than those entered into in the ordinary course of business
calling for payments which in the aggregate do not exceed Ten Thousand Dollars
($10,000) for each such lease, contract, agreement or understanding;
(n) incur any capital expenditure in excess of
Ten Thousand Dollars ($10,000) in an instance or Fifty Thousand Dollars
($50,000) in the aggregate;
(o) engage any new employee for a salary in
excess of Twenty Five Thousand Dollars ($25,000) per annum;
(p) materially alter the terms, status or
funding condition of any Employee Plan; or
(q) commit or agree to do any of the foregoing in
the future.
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6.03 Exclusive Dealing. Neither the Sellers nor the
Company will, directly or indirectly, through any officer, director, agent or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any person relating to an acquisition or purchase of all or a material
portion of the Property of or an equity interest in the Company or any merger,
consolidation or business combination with the Company, or (b) participate in
any negotiations regarding any of the foregoing.
6.04 Reports, Taxes. The Company will duly and timely
file all reports or returns required to be filed with federal, state, local and
foreign authorities and will promptly pay all federal, state, local and foreign
taxes, assessments and governmental charges levied or assessed upon it or any
of its properties (unless contesting such in good faith and adequate provision
has been made therefor).
6.05 Notification. Sellers shall notify Buyer promptly
upon occurrence of a material adverse change in the business or finances of the
Resort, provided however that failure to comply with the terms of this Section
shall not give rise to a claim by the Buyer for monetary damages.
6A. Post-Closing Covenants of Buyer.
(i) Unless the Buyer has caused the Company to purchase the
Teewinot Assets directly from CMB, promptly after the Closing, Buyer will cause
the Teewinot Assets to be transferred to the Company;
(ii) At such time as the Company shall intend to offer lots
for sale, CMB shall have the option to purchase from the Company a lot of her
choice among those to be offered to the general public at fair market value
prior to any such offering to the general public.
7. Best Efforts to Obtain Satisfaction of Conditions
The Sellers, the Company, and the Buyer covenant and agree to use
their best efforts to obtain the satisfaction of the conditions specified in
this Agreement.
8. Conditions to Obligations of the Buyer
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date (or such other time as may be provided for in
this Agreement), of the following conditions precedent, each of which may be
waived in writing in the sole discretion of the Buyer:
8.01 Continued Truth of Representations and Warranties of
the Sellers and the Company; Compliance with Covenants and Obligations. The
representations and warranties of the Sellers and the Company shall be true on
and as of the Closing Date as though such representations and warranties were
made on and as of such date (even though they purport to have been given on a
date prior to
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the Closing Date), except for any changes since the date hereof occurring in
the ordinary course of business or changes permitted by the terms hereof or
consented to in writing by the Buyer. The Sellers and the Company shall have
performed and complied with all terms, conditions, covenants, obligations,
agreements and restrictions required by this Agreement to be performed or
complied with by each of them prior to or at the Closing Date. At the Closing,
the Sellers and the Company shall have delivered to the Buyer a certificate
signed by each such Seller, as to their compliance with the provisions of this
Subsection.
8.02 Corporate Proceedings; Termination of Teewinot
Leases; Contribution of Assets. All corporate and other proceedings required
to be taken on the part of the Company to authorize or carry out this Agreement
shall have been taken. The Teewinot Lease and the Sublease shall have been
terminated. The Seller Owned Basket Assets shall have been transferred to the
Company free and clear of all liens and encumbrances.
8.03 Governmental Approvals. All governmental agencies,
department, bureaus, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation by the Sellers and the Company of the
transactions contemplated by this Agreement and the operation of the business
of the Company by the Buyer shall have consented to, authorized, permitted or
approved such transactions.
8.04 Consent of Other Third Parties. The Sellers and the
Company shall have received all requisite consents and approvals of all other
third parties whose consent or approval is required in order for the Sellers
and the Company to consummate the transactions contemplated by this Agreement.
8.05 Adverse Changes or Proceedings.
(a) There shall have occurred no material
adverse change to the business or finances of the Resort. Neither (i) losses
incurred prior to the date hereof, nor (ii) delays in installation or operation
of the new so-called Quad Lift, resolved prior to the Closing, shall be taken
into account in determining the existence of a material adverse change.
(b) No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by
any governmental body or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of the Buyer to own the Property or to own or operate
the business of the Company after the Closing.
8.06 Opinion of Counsel. The Buyer shall have received
(a) an opinion of Hale and Dorr, counsel to the Sellers and the Company dated
as of the Closing Date, and (b) an opinion of Holland & Hart, special Wyoming
counsel to the
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Sellers and the Company dated as of the Closing Date in each case reasonably
acceptable to the Buyer. Hale and Dorr may rely on Holland and Hart as to
certain matters reasonably acceptable to the Buyer.
8.07 Consulting Contract. The Buyer and the Company shall
have executed a consulting contract with MOB in the form attached hereto as
Exhibit F.
8.08 Repayment of Indebtedness. On the Closing Date,
certain of the indebtedness of the Company to Sellers in the amount of Four
Hundred Thirteen Thousand Three Hundred Twenty-Six Dollars ($413,326) shall be
satisfied by payment from the Company to the Sellers with a corresponding
reduction to the Purchase Price.
8.09 Closing Deliveries. The Buyer shall have received at
or prior to the Closing such documents, instruments or certificates as the
Buyer may reasonably request including, without limitation:
(a) bill of sale for the Teewinot Assets, and the
stock certificates representing the Company Shares duly endorsed in accordance
with Subsection 1.01 of this Agreement;
(b) a certificate of the Secretary of State of
the State of Delaware as to the legal existence and good standing (including
tax) of the Company;
(c) certificates of the Secretary of the Company
attesting to the incumbency of the Company's officers, the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement, and
the authenticity and continuing validity of the charter documents delivered
pursuant to Subsection 3.01;
(d) certificate of the Secretary of State of the
State of Wyoming as to the due qualification and good standing (including tax)
of the Company in such jurisdiction;
(e) written resignations of all members of the
Company's Board of Directors and Company officers;
(f) the original corporate minute books and
stock transfer records of the Company and all corporate seals; and
(g) The Development Contingent Payment Agreement,
as contemplated by Section 1.02 (b); and
(h) evidence of deposit of escrow funds and
execution of escrow agreement as contemplated by Section 1.03.
(i) a cross receipt executed by the Buyer
and the Sellers.
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8.10 Evidence of Transfer of Rights. The Buyer shall
receive such documents as it may reasonably request showing that substantially
all assets and rights of HMT, including any and all contractual rights of HMT
to arrange for transport passengers with Louis Centrella (Llama Louis) and
All-Trans, have been transferred to the Company free and clear of liens and
encumbrances (other than obligations to be performed after the Closing Date
pursuant to the terms of such contracts).
9. Conditions to Obligations of the Sellers
The obligations of the Sellers under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each
of which may be waived in writing in the sole discretion of the Sellers.
9.01 Continued Truth of Representations and Warranties of
the Buyer; Compliance with Covenants and Obligations. The representations and
warranties of the Buyer in this Agreement shall be true on and as of the
Closing Date as though such representations and warranties were made on and as
of such date, except for any changes since the date hereof occurring in the
ordinary course of business or changes consented to in writing by the Sellers.
The Buyer shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date. At the
Closing, the Buyer shall have delivered to the Sellers a certificate signed by
the President and Chief Financial Officer of Buyer as to its compliance with
the provisions of this Subsection.
9.02 Corporate Proceedings. All corporate and other
proceedings required to be taken on the part of the Buyer to authorize or carry
out this Agreement shall have been taken.
9.03 Governmental Approvals. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent,
authorization or approval of which is necessary under any applicable law, rule,
order or regulation for the consummation by the Buyer of the transactions
contemplated by this Agreement shall have consented to, authorized, permitted
or approved such transactions.
9.04 Adverse Proceedings. No action or proceeding by or
before any court or other governmental body shall have been instituted or
threatened by any governmental body or person whatsoever which shall seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement or which might affect the right of the Sellers to transfer the
Property.
9.05 Opinion of Counsel. The Sellers shall have received
an opinion of Winston & Strawn, counsel to the Buyer, dated as of the Closing
Date and reasonably acceptable to the Sellers.
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9.06 Consulting Contract. The Buyer and the Company shall
have executed a consulting contract with MOB in the form attached hereto as
Exhibit F.
9.07 Repayment of Indebtedness. On the Closing Date, the
indebtedness of the Company to Sellers described in Section 8.08 shall be
satisfied by wire transfer or delivery of other immediately available federal
funds by the Company to an account designated by each Seller and allocated
between them as they instruct in writing prior to the Closing, and in the
absence of such instructions by such wire transfer to Hale and Dorr.
9.08 Release of Guarantees. Each of the Sellers shall be
released from the guarantees to Bank of Jackson Hole, referred to on Schedule
9.08, of obligations of the Company, and shall have received from the Buyer an
indemnity against all claims against the Sellers or either of them with respect
to guarantees of obligations of the Company, except for matters for which the
Buyer has a right of indemnification under Section 10.01 without regard to the
limitations set forth in the first proviso to Section 10.01 or in Section 10.4.
9.09 Closing Deliveries. The Sellers shall have received
at or prior to the Closing such documents, instruments or certificates as the
Sellers may reasonably request including, without limitation:
(a) such certificates of the Buyer's officers and
such other documents evidencing satisfaction of the conditions specified in
this Section 9 as the Sellers shall reasonably request;
(b) a certificate of the Secretary of State of
the State of Delaware as to the legal existence and good standing (including
tax) of the Buyer;
(c) a certificate of the Secretary of the Buyer
attesting to the incumbency of the Buyer's officers, the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement, and
the authenticity and continuing validity of the charter documents and by-laws
delivered pursuant to Subsection 4.01;
(d) payment of the Purchase Price payable at the
Closing as contemplated by Section 1.02(a), and as adjusted under section 1.03
hereof);
(e) the Development Contingent Payment Agreement,
as contemplated by Section 1.02(b); and
(f) a cross receipt executed by the Buyer and
the Sellers.
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10. Indemnification
10.01 By the Sellers. If the Closing occurs, the Sellers,
jointly and severally, hereby indemnify and hold harmless the Buyer and the
Company from and against all claims, damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any legal,
accounting or other expenses for investigating or defending any actions or
threatened actions) (collectively, the "Losses") in connection with each and
all of the following, not waived by the Buyer
(a)any misrepresentation or breach of any
representation or warranty made by the Sellers or the Company in this Agreement
(a "Breach of Warranty"):;
(b)any breach of any covenant, agreement or
obligation of the Sellers or the Company contained in this Agreement (provided,
that Sellers shall have no liability for failure of conditions under Section 8,
unless such failure otherwise constitutes a breach of such covenant, agreement
or obligation),
provided, however, that the Sellers shall be obligated to indemnify and hold
harmless the Buyer and the Company from Breaches of Warranty only to the
extent, if any, that the liability of Buyer and/or the Company for claims
arising from one or more Breaches of Warranty, (including breach of any
covenant, agreement or obligation which also constitutes a Breach of Warranty),
other than representations made with actual knowledge of their falsity, exceeds
One Hundred Thousand Dollars ($100,000) in the aggregate, and provided,
further, that in no event shall any Seller have any responsibility under this
Section 10 for any alleged nondisclosure of information actually provided to
Buyer by the Sellers or the Company, or as to which the Buyer has actual
knowledge, nor for any alleged breach of any covenant, agreement or obligation,
information as to which has actually been provided to Buyer by the Sellers or
the Company, or as to which the Buyer has actual knowledge, nor shall the
responsibility of any Seller under this Section 10 exceed in the aggregate the
aggregate cash payments received by such Seller pursuant to Section 1.02 of
this Agreement.
10.02 Claims for Indemnification. Whenever any claim shall
arise for indemnification under this Section 10, the Buyer or the Company, as
the case may be, seeking indemnification (the "Indemnified Party"), shall
promptly notify the Sellers of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent, which shall not be unreasonably withheld or delayed, of the Sellers
provided, however, that if suit shall have been instituted against the
Indemnified Party and the Sellers shall not have undertaken to defend or
compromise such suit
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within fifteen (15) days after notification thereof as provided in Subsection
10.03 of this Agreement, the Indemnified Party shall have the right to settle
or compromise such claim upon giving notice to the Sellers as provided in
Section 10.03.
10.03 Defense by the Sellers. In connection with any claim
which may give rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the Indemnified Party, the
Sellers, at the sole cost and expense of the Sellers, may, upon written notice
to the Indemnified Party, assume the defense of any such claim or legal
proceeding if the Sellers acknowledge to the Indemnified Party in writing the
obligation of the Sellers to indemnify the Indemnified Party with respect to
such claim. If the Sellers assume the defense of any such claim or legal
proceeding, the Sellers shall select counsel reasonably acceptable to the
Indemnified Party to conduct the defense of such claims or legal proceedings
and at the sole cost and expense of the Sellers shall take all steps necessary
in the defense or settlement thereof. Hale and Dorr and Holland & Hart are
acceptable counsel for these purposes. The Sellers shall not consent to a
settlement of, or the entry of any judgment arising from, any such claim or
legal proceeding, without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld or delayed). The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense. If the Sellers do
not assume the defense of any such claim or litigation resulting therefrom
within fifteen (15) days after the date such claim is made: (a) the
Indemnified Party may defend against such claim or litigation in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Sellers, on such terms as
the Indemnified Party may deem appropriate, and (b) the Sellers shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the Sellers or the Sellers thereafter
seek to question the manner in which the Indemnified Party defended such third
party claim or the amount or nature of any such settlement, the Sellers shall
have the burden to prove by a preponderance of the evidence that the
Indemnified Party did not defend or settle such third party claim in a
reasonably prudent manner.
10.04 Survival of Representations; Claims for
Indemnification. All representations and warranties made by the Sellers and
the Company in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby, shall
survive the Closing and any investigation at any time made by or on behalf of
the Indemnified Party (a) indefinitely with respect to any representation and
warranty concerning ownership of the Company Shares and the Teewinot Assets,
(b) for a period of thirty (30) days after the expiration of all applicable
statutes of limitation with respect to the representations in Section 3.13, and
(c) with respect to all other matters for a period ending on March 31, 1998.
All such representations and warranties shall expire as provided, except for
claims, if any, asserted in writing prior to the indicated expiration date
identified as a claim for indemnification pursuant to this Section 10.
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10A Oil Pit Potential Remediation. In the event the Company
determines it may be obligated to remediate pollution for material in the
so-called oil pit and floor drains in the Company's maintenance shed, the
Sellers will reimburse the Company for its actual costs for such remediation up
to a maximum amount of $50,000 provided (a) the Company will provide the
Sellers with information currently as to any proposed remediation and will
consult with Sellers as to an appropriate remediation plan, and (b) the Sellers
shall direct and control the implementation of the remediation.
11. Termination of Agreement; Option to Proceed; Damages
11.01 Termination by Lapse of Time. This Agreement shall
terminate at 5:00 p.m., Mountain Time, on April 30, 1997, if the transactions
contemplated hereby have not been consummated, unless such date is extended by
the written consent of the Company, the Buyer and the Sellers.
11.02 Termination by Agreement of the Parties. This
Agreement may be terminated by the mutual written agreement of the parties
hereto. In the event of such termination by agreement, the Buyer shall have no
further obligation or liability to the Sellers or the Company under this
Agreement, and the Sellers shall have no further obligation or liability to the
Buyer under this Agreement, other than, in each case, pursuant to Section 20.
11.03 Termination by Reason of Breach. This Agreement may
be terminated by the Sellers, if at any time prior to the Closing there shall
occur a breach of any of the representations, warranties or covenants of the
Buyer or the failure by the Buyer to perform any condition or obligation
hereunder, and may be terminated by the Buyer, if at any time prior to the
Closing there shall occur a breach of any of the representations, warranties or
covenants of the Sellers or the Company or the failure of the Sellers or the
Company to perform any condition or obligation hereunder (such a breach by the
Sellers or the Company shall be referred to herein as a "Pre-Closing Breach").
Damages payable by the Sellers and/or the Company for Pre-Closing Breach(es)
shall not exceed One Hundred Fifty Thousand Dollars ($150,000) in the
aggregate. Damages payable by the Buyer for Pre-Closing Breach(es) shall not
exceed the amount of $150,000 (or $250,000 as the case may be) plus interest,
if any, as contemplated by Section 15(c).
11.04 Option to Proceed.
(a) Notwithstanding a Pre-Closing Breach by the
Sellers, the Company or the inability of the Sellers to give title, make
conveyance or deliver possession of any of the Property, or to satisfy all of
the terms and conditions precedent to Closing as set forth in this Agreement,
all as herein stipulated, the Buyer may elect by written notice given to the
Sellers at or prior to the Closing Date either to (i) terminate this Agreement,
or (ii) extend the scheduled Closing Date by 30 days, during which period the
Sellers shall use their best efforts to remove all
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encumbrances, if any, not permitted by the terms of this Agreement, and shall
use reasonable efforts to remove all other defects in title, and to deliver
possession and good, clear and marketable title to the Property and to satisfy
all other conditions to closing as provided herein, and to make the assets of
the Company conform to the provisions herein, as the case may be. If the
Sellers are unable, upon expiration of such 30-day period, to remove all such
encumbrances and defects and to satisfy all such conditions to Closing, the
Buyer may elect, by written notice given to the Sellers, to (i) terminate this
Agreement, or (ii) waive such encumbrances and defects and take title to the
Property.
11.05 Availability of Remedies. In the event this
Agreement is terminated by the Buyer or the Sellers, pursuant to the provisions
of this Section 11, the exclusive remedies of the parties hereto shall be for
the damages described in Section 11.03 determined in accordance with Section
12.
12. Dispute Resolution
12.01 General. In the event that any dispute should arise
between the parties hereto with respect to any matter covered by this
Agreement, including, without limitation, the occurrence of a Pre-Closing
Breach, the parties hereto shall resolve such dispute in accordance with the
procedures set forth in this Section 12.
12.02 Consent of the Parties. In the event of any dispute
between the parties with respect to any matter covered by this Agreement, the
parties shall first use their best efforts to resolve such dispute among
themselves. If the parties are unable to resolve the dispute within 30
calendar days after the commencement of efforts to resolve the dispute, the
dispute will be submitted to arbitration in accordance with Subsection 12.03
hereof.
12.03 Arbitration.
(a) Either the Buyer or the Sellers may submit
any matter referred to in Subsection 12.02 hereof to arbitration by notifying
the other party hereto, in writing, of such dispute. Within 10 days after
receipt of such notice, the Buyer and the Sellers shall designate in writing
one arbitrator mutually agreeable to the Buyer and the Sellers to resolve the
dispute; provided, that if the parties hereto cannot agree on an arbitrator
within such 10-day period, the arbitrator shall be selected by the American
Arbitration Association. The arbitrator so designated shall not be an
employee, consultant, officer, director or stockholder of any party hereto or
any Affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the
arbitrator, the arbitrator, the Buyer and the Sellers shall meet, at which time
the Buyer and the Sellers shall be required to set forth in writing all
disputed issues and a proposed ruling on each such issue.
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(c) The arbitrator shall set a date for a
hearing, which shall be no later than 30 days after the submission of written
proposals pursuant to paragraph (b) above, to discuss each of the issues
identified by the Buyer and the Sellers. Each such party shall have the right
to be represented by counsel. The arbitration shall be governed by the rules
of the American Arbitration Association; provided, that the arbitrator shall
have sole discretion with regard to the admissibility of evidence.
(d) The arbitrator shall use his best efforts to
rule on each disputed issue within 30 days after the completion of the hearings
described in paragraph (c) above. The determination of the arbitrator as to
the resolution of any dispute shall be binding and conclusive upon all parties
hereto. All rulings of the arbitrator shall be in writing and shall be
delivered to the parties hereto and the Escrow Agent.
(e) The arbitrator may award to the prevailing
party in any arbitration an amount representing all or a portion of reasonable
attorneys' fees incurred in connection with the arbitration, the fees of the
arbitrator and the costs and expenses of the arbitration.
(f) Any arbitration pursuant to this Subsection
12.03 shall be conducted in Jackson, Wyoming. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and the
parties hereby consent and commit themselves to the jurisdiction of the courts
of the State of Wyoming and the United States District Court for Wyoming for
purposes of the enforcement of any arbitration award.
13. Brokers
13.01 For the Sellers and the Company. The Sellers agree
to pay all fees, expenses and compensation owed to any person, firm or
corporation who has acted in the capacity of broker or finder on their behalf
or on behalf of the Company to bring about the negotiation of this Agreement.
Each of the Sellers and the Company represent and warrant that except as set
forth on Schedule 13.01, no person, firm or corporation has acted in the
capacity of broker or finder on its behalf to bring about the negotiation of
this Agreement. The Sellers jointly and severally agree to indemnify and hold
harmless the Buyer and the Company against any claims or liabilities asserted
against either of them by any person acting or claiming to act as a broker or
finder on behalf of the Sellers or the Company.
13.02 For the Buyer. The Buyer agrees to pay all fees,
expenses and compensation owed to any person, firm or corporation who has acted
in the capacity of broker or finder on its behalf or on behalf of BCI to bring
about the negotiation of this Agreement. The Buyer represents and warrants
that except as set forth on Schedule 13.02, no person, firm or corporation has
acted in the capacity of broker or finder on its behalf or on behalf of BCI to
bring about the negotiation of this
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Agreement. The Buyer agrees to indemnify and hold harmless the Sellers against
any claims or liabilities asserted against it by any person acting or claiming
to act as a broker or finder on behalf of the Buyer or BCI.
13A. Lift Financing.
Buyer hereby agrees that it shall assume the responsibilities
of BCI under the terms of the letter agreement attached as Exhibit G and the
parties hereto agree to comply with such terms. In the event that the Closing
fails to take place, paragraph (vi) of such letter agreement will be deemed
modified such that the Company shall repay to the Buyer amounts advanced by the
Buyer to GARAVENTA CTEC within 90 days after (a) the earlier of (i) the date of
notice of termination of this Agreement given by the Buyer or the Sellers and
(ii) the date of termination set forth in Section 11.01 (as it may be amended)
or (b) such other date agreed to by the Buyer and the Sellers, together with
interest at the rate of 8.75% per annum from such date and, if not paid within
90 days after such date, at the rate of 11% per annum thereafter.
14. Notices
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by Federal Express
or other reputable and nationally known overnight delivery service, registered
or certified mail, postage prepaid, addressed as follows or to such other
address of which the parties may have given notice:
To the Buyer George N. Gillett, Jr.
Chairman
Booth Creek Ski Holdings, Inc.
1000 South Frontage Road
Vail, CO 81657
With a copy to: Bruce A. Toth, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
and to: J.F. DePree, Jr.
580 North Western Avenue
Suite 200
Lake Forest, IL 60045
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To the Sellers: Moritz O. Bergmeyer
Mail Boxes, Etc.
Box 30513
970 West Broadway, Suite E
Jackson, WY 83001
Carol Mann Bergmeyer
Mail Boxes, Etc.
Box 30117
970 West Broadway, Suite E
Jackson, WY 83001
With a copy to: S. Donald Gonson, Esq.
Hale and Dorr
60 State Street
Boston, MA 02109
To Escrow Agent: Bank of Jackson Hole
Box 7000
990 West Broadway
Jackson, WY 83001
Attn: Jeff Fueschsel, President
With a copy to: S. Donald Gonson, Esq.
Hale and Dorr
60 State Street
Boston, MA 02109
and to: Bruce A. Toth, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Unless otherwise specified herein, such notices or other communications shall
be deemed received (a) on the date delivered, if delivered personally, or (b)
three business days after being sent, if sent by registered or certified mail.
15. Deposit.
(a) Buyer has delivered to Sellers the sum of Four
Hundred Thousand Dollars ($400,000) (together with interest earned thereon, if
any, the "Deposit"). The Deposit. together with the $200,000 delivered to the
Sellers on the date hereof, shall be (a) applied against the Purchase Price at
the Closing or (b) returned to Buyer if the Closing fails to occur because of
the failure of Sellers to perform their obligations under this Agreement
(including the failure to satisfy one or more of the conditions to performance
by Buyer) or (c) to the extent of One
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Hundred Fifty Thousand Dollars ($150,000) (Two Hundred Fifty Thousand Dollars
($250,000) if the Agreement is not terminated on or before March 31, 1997) plus
the proportion of interest earned thereon, if any, forfeited to Sellers, and
the balance of the Deposit together with the $200,000 delivered to the Sellers
on the date hereof, returned to Buyer, if the Closing fails to occur for any
reason other than such failure of the Sellers to perform.
(b) As of the date hereof, the Sellers have made the
Deposit available to the Company as working capital. To the extent that the
Deposit is in the possession of the Company at the Closing, the Buyer will
cause the Company to pay the Deposit to the Sellers at the Closing.
16. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Sellers and the Company on the other hand, may
not assign their respective obligations hereunder without the prior written
consent of the other party; provided, however, that the Buyer may assign this
Agreement, and its rights and obligations hereunder, to an Affiliate of BCI or
George N. Gillett, Jr. An "Affiliate" is an entity at least 51% of the
ownership interests of which are owned directly or indirectly, by the Buyer,
BCI or George N. Gillett, Jr. Any assignment in contravention of this
provision shall be void. No assignment shall release the Buyer, BCI, the
Sellers or the Company from any obligation or liability under this Agreement.
17. Entire Agreement; Amendments; Attachments
(a) This Agreement, all Schedules and Exhibits
hereto, and all agreements and instruments to be delivered by the parties
pursuant hereto represent the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior oral and written and all contemporaneous oral negotiations, commitments
and understandings between such parties. The Buyer and the Sellers may amend
or modify this Agreement, in such manner as may be agreed upon, by a written
instrument executed by the Buyer and by CMB and MOB.
(b) If the provisions of any Schedule or Exhibit
to this Agreement are inconsistent with the provisions of this Agreement, the
provisions of the Agreement shall prevail. The Exhibits and Schedules attached
hereto or to be attached hereafter are hereby incorporated as integral parts of
this Agreement.
(c) Future looking statements and future looking
information provided by the Sellers or the Company are based on assumptions
which are currently believed to be reasonable. These statements and
information do not constitute representations as to future operations, results
or events, or as to the
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assumptions on which such statements and information are based. Variations
could be material and adverse.
18. Severability
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
19. Knowledge of the Parties
Knowledge of a party means actual knowledge after reasonable inquiry
but without necessity of investigation with respect thereto.
20. Expenses
Except as otherwise expressly provided herein, the Buyer will pay all
fees and expenses (including, without limitation, legal and accounting fees and
expenses) incurred by it, and the Sellers will pay (i) all fees and expenses of
the Sellers incurred in connection with the transactions contemplated hereby,
and (ii) all fees and expenses of the Company incurred in connection with the
transactions contemplated hereby, other than those fees and expenses incurred
in the ordinary course of business or in connection with actions taken at the
request of the Buyer.
21. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Wyoming.
22. Section Headings
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
23. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
37
<PAGE> 38
24. Further Assurances
Subsequent to the Closing, the parties shall take all actions and
provide all further instruments and documents reasonably requested of them to
evidence and effectuate the transactions contemplated by this Agreement.
38
<PAGE> 39
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
BUYER:
Booth Creek Ski Holdings, Inc.
By: /s/ JEFFREY J. JOYCE
---------------------------
Title: VICE PRESIDENT
------------------------
COMPANY:
Grand Targhee, Inc.
By: /s/ CAROL MANN BERGMEYER
---------------------------
Title: President
------------------------
SELLERS:
/s/ CAROL MANN BERGMEYER
------------------------------
CAROL MANN BERGMEYER
/s/ MORITZ O. BERGMEYER
------------------------------
MORITZ O. BERGMEYER
<PAGE> 1
EXHIBIT 10.7
PROMISSORY NOTE
$1,585,626.00
February 11, 1997
Teton County, Wyoming
FOR VALUE RECEIVED, the undersigned, GRAND TARGHEE,
INCORPORATED, a Delaware corporation (the "Maker"), hereby promises to pay to
BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (the "Payee"), or its
successors or assigns, the principal sum of ONE MILLION FIVE HUNDRED
EIGHTY-FIVE THOUSAND SIX HUNDRED TWENTY-SIX DOLLARS AND NO CENTS
($1,585,626.00).
This Promissory Note has been executed and delivered in
connection with the execution and delivery of that certain Purchase Agreement
dated as of the date hereof (as amended, modified or supplemented, the
"Purchase Agreement") among Maker, Payee, Moritz O. Bergmeyer and Carol Mann
Bergmeyer. This Promissory Note evidences the obligation of Maker to reimburse
Payee for certain amounts paid by Payee on behalf of Maker to CTEC Garaventa
Inc. ("CTEC") on the date hereof in accordance with the terms of that certain
letter agreement dated November 19, 1996 among CTEC, Maker, Payee (as assignee
of Booth Creek, Inc.), Bank of Jackson Hole, Moritz O. Bergmeyer and Carol Mann
Bergmeyer. Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
The entire balance of principal and interest hereunder shall
be due and payable upon the earlier of (i) the date ninety (90) days
immediately following the earlier of (the "Purchase Agreement Termination
Date") (A) the date of notice of termination of the Purchase Agreement given by
Payee or the "Sellers" thereunder and (B) the date of termination set forth in
Section 11.01 of the Purchase Agreement and (ii) the three year anniversary of
the date hereof.
The outstanding principal balance of this Promissory Note
shall bear no interest from the date hereof until the earlier of (I) the
Purchase Agreement Termination Date and (II) the Closing Date. From the
earlier of the Purchase Agreement Termination Date and the Closing Date, the
outstanding principal balance of this Promissory Note shall bear interest at a
rate equal to 8.75% per annum, which interest shall be payable on the last
business day of each month. All payments of interest shall be computed on the
basis of a 365-day year. In the event that any amount of principal or interest
is not paid when due, interest shall accrue on such unpaid amount at a rate
equal to 11% per annum from and including the date due to but not including the
date paid.
If this Promissory Note or any part of the indebtedness
evidenced hereby is not paid when due, Maker promises to pay all reasonable
costs of collection, including, without limitation, reasonable attorneys' fees
and expenses incurred by the holder hereof in connection therewith, whether or
not any suit or proceeding is filed hereon.
<PAGE> 2
Both the principal of and the interest on this Promissory Note
shall be payable in lawful money of the United States by wire transfer of
immediately available funds to an account designated by Payee, or to such other
account in the continental United States as the Payee or any subsequent holder
hereof may direct in writing to Maker.
This Promissory Note may be prepaid, in whole or in part, at
any time and from time to time without premium or penalty.
Maker waives presentment for payment, protest and demand,
notice of protest, demand and dishonor and nonpayment of any part or of the
whole of the indebtedness evidenced by this Promissory Note.
The obligations of Maker set forth in this Promissory Note are
secured by a pledge by Maker of collateral as set forth in the Security
Agreement and Subordination of Security Interest executed in connection with
this Promissory Note and dated the date hereof among the Maker, Payee, Bank of
Jackson Hole and CTEC.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been given when
delivered by hand or received by first class registered or certified mail,
postage prepaid, addressed at the addresses of the Maker and Payee set forth in
the Purchase Agreement, or at such other address as the Maker or Payee shall
have furnished to the other in writing.
GRAND TARGHEE, INCORPORATED
By: /s/ Carol Mann Bergmeyer
-------------------------------
Name: CAROL MANN BERGMEYER
-------------------------------
Title: President
-------------------------------
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<PAGE> 1
EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 21, 1997
BY AND BETWEEN
THE PERSONS IDENTIFIED HEREIN AS SELLERS,
THE REPRESENTATIVE AS IDENTIFIED HEREIN
AND
BOOTH CREEK SKI HOLDINGS, INC.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2
1.1 General. . . . . . . . . . . . . . . . . . . 2
1.2 Definitions. . . . . . . . . . . . . . . . . 2
1.3 Interpretation . . . . . . . . . . . . . . . 8
ARTICLE II
SALE AND PURCHASE OF SHARES . . . . . . . . . . . . . 8
2.1 Sale and Purchase of Shares. . . . . . . . . 8
2.2 Payment of the Purchase Price. . . . . . . . 8
2.3 Purchase Price Adjustments . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . . . 10
3.1 Corporate Status; Authority of Sellers;
Enforceability . . . . . . . . . . . . . . . 10
3.2 Accounts Receivable. . . . . . . . . . . . . 11
3.3 Trade Names, Trademarks and Copyrights . . . 11
3.4 No Patent Rights . . . . . . . . . . . . . . 11
3.5 Passes . . . . . . . . . . . . . . . . . . . 11
3.6 Contracts. . . . . . . . . . . . . . . . . . 11
3.7 Compliance with Laws . . . . . . . . . . . . 12
3.8 Litigation . . . . . . . . . . . . . . . . . 12
3.9 Personnel Identification and Compensation. . 12
3.10 Existing Employment Contracts. . . . . . . . 12
3.11 Capitalization; Subsidiaries . . . . . . . . 12
3.12 Title to Purchased Shares. . . . . . . . . . 13
3.13 Forest Service Permits . . . . . . . . . . . 13
3.14 Environmental. . . . . . . . . . . . . . . . 13
3.14.1 Definitions . . . . . . . . . . . . . . . . . 13
3.14.2 Compliance with Environmental Laws. . . . . . 14
3.14.3 Handling of Hazardous Substances. . . . . . . 14
3.14.4 No Release of Hazardous Substances. . . . . . 14
3.14.5 Permits . . . . . . . . . . . . . . . . . . . 15
3.14.6 No Proceedings. . . . . . . . . . . . . . . . 15
3.14.7 No Tanks, Asbestos or PCB's . . . . . . . . . 15
3.14.8 Lists and Liens . . . . . . . . . . . . . . . 15
3.14.9 Documents . . . . . . . . . . . . . . . . . . 16
3.15 Certain Transactions. . . . . . . . . . . . . 16
3.16 Employee Benefit Matters. . . . . . . . . . . 16
3.17 Tax Matters . . . . . . . . . . . . . . . . . 17
3.18 Inventories . . . . . . . . . . . . . . . . . 19
3.19 Title to Assets . . . . . . . . . . . . . . . 19
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<PAGE> 3
3.20 Real Property. . . . . . . . . . . . . . . . . . . 20
3.21 Condition of Assets. . . . . . . . . . . . . . . . 21
3.22 Zoning . . . . . . . . . . . . . . . . . . . . . . 21
3.23 No Commitments . . . . . . . . . . . . . . . . . . 21
3.24 Continued Use of Real Property . . . . . . . . . . 21
3.25 Water Rights . . . . . . . . . . . . . . . . . . . 21
3.26 [INTENTIONALLY BLANK]. . . . . . . . . . . . . . . 21
3.27 Consents . . . . . . . . . . . . . . . . . . . . . 21
3.28 Licenses and Permits . . . . . . . . . . . . . . . 22
3.29 No Alternative Transactions. . . . . . . . . . . . 22
3.30 Occupational Safety and Health . . . . . . . . . . 22
3.31 Insurance. . . . . . . . . . . . . . . . . . . . . 22
3.32 Financial Statements . . . . . . . . . . . . . . . 22
3.33 Undisclosed Liabilities. . . . . . . . . . . . . . 23
3.34 Conduct of Business Since Reference Balance Sheet
Date . . . . . . . . . . . . . . . . . . . . . . . 23
3.35 Broker's or Consultant's Fees. . . . . . . . . . . 23
3.36 Banking Arrangements . . . . . . . . . . . . . . . 24
3.37 Powers of Attorney . . . . . . . . . . . . . . . . 24
3.38 Disclosure . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . 24
4.1 Corporate Status . . . . . . . . . . . . . . . . . 24
4.2 Due Authorization. . . . . . . . . . . . . . . . . 24
4.3 Authority of Purchaser . . . . . . . . . . . . . . 24
4.4 Enforceability . . . . . . . . . . . . . . . . . . 25
4.5 Consents . . . . . . . . . . . . . . . . . . . . . 25
4.6 Broker's or Consultant's Fees. . . . . . . . . . . 25
4.7 Investment . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Title Expenses . . . . . . . . . . . . . . . . . . 25
5.2 Code Section 1445 Withholding. . . . . . . . . . . 25
5.3 Pre-Closing Taxes. . . . . . . . . . . . . . . . . 26
5.4 Tax Reports; Returns . . . . . . . . . . . . . . . 26
5.5 Transfer Taxes . . . . . . . . . . . . . . . . . . 26
5.6 Limitation on Liens. . . . . . . . . . . . . . . . 26
5.7 Restricted Payments. . . . . . . . . . . . . . . . 26
5.8 UCC Releases . . . . . . . . . . . . . . . . . . . 27
5.9 Ordinary Course of Business. . . . . . . . . . . . 27
5.10 Affiliate Transactions . . . . . . . . . . . . . . 27
5.11 Required Signatures. . . . . . . . . . . . . . . . 27
5.12 Developmental Real Estate. . . . . . . . . . . . . 27
5.13 Moffett Indebtedness . . . . . . . . . . . . . . . 27
-ii-
<PAGE> 4
ARTICLE VI
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Closing Transactions . . . . . . . . . . . . . . . 27
6.2 Deliveries by Sellers to Purchaser . . . . . . . . 28
6.3 Deliveries by Purchaser to Sellers . . . . . . . . 30
ARTICLE VII
OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . 32
7.1 Further Assurance. . . . . . . . . . . . . . . . . 32
7.2 Confidentiality. . . . . . . . . . . . . . . . . . 32
7.3 Employment Matters . . . . . . . . . . . . . . . . 32
7.4 Employee Benefits. . . . . . . . . . . . . . . . . 33
7.5 Indemnification for Employment Matters . . . . . . 33
7.6 Non-Competition Agreement. . . . . . . . . . . . . 33
7.7 Accounts Receivable. . . . . . . . . . . . . . . . 34
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 35
8.1 Indemnification by Sellers . . . . . . . . . . . . 35
8.2 Indemnification by Purchaser . . . . . . . . . . . 36
8.3 Procedure for Indemnification. . . . . . . . . . . 37
8.4 Limitations on Sellers' Liability . . . . . . . . 38
8.5 Payment. . . . . . . . . . . . . . . . . . . . . . 38
8.6 Set-Off. . . . . . . . . . . . . . . . . . . . . . 38
8.7 Escrow Account . . . . . . . . . . . . . . . . . . 38
ARTICLE IX
SELLERS' REPRESENTATIVE . . . . . . . . . . . . . . . . 39
9.1 Appointment. . . . . . . . . . . . . . . . . . . . 39
9.2 Authorization. . . . . . . . . . . . . . . . . . . 39
9.3 Irrevocable Appointment. . . . . . . . . . . . . . 40
9.4 Resignation. . . . . . . . . . . . . . . . . . . . 40
9.5 Purchaser's Reliance . . . . . . . . . . . . . . . 40
9.6 Exculpation and Indemnification. . . . . . . . . . 40
ARTICLE X
DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . 41
10.1 Dispute Resolution . . . . . . . . . . . . . . . . 41
10.2 Arbitration Award. . . . . . . . . . . . . . . . . 41
10.3 Procedures . . . . . . . . . . . . . . . . . . . . 41
10.4 Attorneys' Fees. . . . . . . . . . . . . . . . . . 41
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . 42
11.1 Post-Closing Deliveries. . . . . . . . . . . . . . 42
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . 42
11.3 Assignment . . . . . . . . . . . . . . . . . . . . 43
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<PAGE> 5
11.4 Benefit of the Agreement . . . . . . . . . . 43
11.5 Exhibits and Schedules . . . . . . . . . . . 43
11.6 Headings . . . . . . . . . . . . . . . . . . 43
11.7 Entire Agreement . . . . . . . . . . . . . . 43
11.8 Modifications and Waivers . . . . . . . . . . 43
11.9 Counterparts . . . . . . . . . . . . . . . . 44
11.10 Severability. . . . . . . . . . . . . . . . . 44
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . 44
11.12 Expenses. . . . . . . . . . . . . . . . . . . 44
11.13 Closing Date. . . . . . . . . . . . . . . . . 44
EXHIBITS
Exhibit A Form of Promissory Note
Exhibit B Form of Opinion of Sellers' Counsel
Exhibit C Form of Opinion of Purchaser's Counsel
Exhibit D Form of Consulting and Non-Compete Agreement
Exhibit E Form of Withholding Certificate
Exhibit F Form of Escrow Agreement
SCHEDULES
Schedule 1.1 Outstanding Preferred Stock Balance
Schedule 1.2 Description of Assets
Schedule 3.2 Accounts Receivable
Schedule 3.5 Customers and Vendors
Schedule 3.7 Compliance with Laws
Schedule 3.8 Litigation
Schedule 3.9 Personnel Identification and Compensation
Schedule 3.10 Existing Employment Contracts
Schedule 3.12 Title to Purchased Shares
Schedule 3.14 Environmental
Schedule 3.16 Employee Benefit Matters
Schedule 3.17 Consolidated Groups
Schedule 3.19 Title to Assets
Schedule 3.20 Real Property Exceptions
Schedule 3.22 Zoning
Schedule 3.23 Commitments
Schedule 3.25 Water Rights
Schedule 3.27 Consents
Schedule 3.28 Licenses and Permits
Schedule 3.31 Insurance
Schedule 3.32 Financial Statements
-iv-
<PAGE> 6
Schedule 3.34 Conduct of Business
Schedule 3.36 Banking Arrangements
Schedule 8.1 ENVIRON Report
-v-
<PAGE> 7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of this 21st day of
February, 1997 by and between BOOTH CREEK SKI HOLDINGS, INC., a Delaware
corporation (together with its successors and permitted assigns, "Purchaser"),
the individuals identified on the signature page hereto as "Sellers" (each, a
"Seller", and collectively, the "Sellers") and the Representative (as hereafter
defined).
RECITALS
WHEREAS, Sellers, collectively, own all of the issued and outstanding
shares of capital stock of Ski Lifts, Inc., a Washington corporation (the
"Company"), consisting of (i) 1,000 shares of common stock, no par value (the
"Shares"), and (ii) 28,000 shares of preferred stock, no par value;
WHEREAS, the Company is engaged in the ownership and operation of a ski
resort by the name of "Alpental Ski Resort", and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Alpental Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Snoqualmie Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Snoqualmie Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Hyak Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Hyak Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Ski Acres Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Ski Acres Business", and together with the Alpental Business, the
Snoqualmie Business and the Hyak Business, the "Business");
WHEREAS, on or prior to the date hereof, and in connection with the
transactions contemplated hereby, Sellers have caused the Company to contribute
substantially all of the Developmental Real Estate (as hereinafter defined) to
DRE, L.L.C., a newly-formed, Delaware limited liability company ("DRE,
L.L.C."), in consideration for 99% of the membership interest therein;
WHEREAS, Purchaser holds the other 1% membership interest in DRE,
L.L.C.;
WHEREAS, concurrently with the execution and delivery of this
Agreement, DRE, L.L.C. is entering into the Preferred Stock Purchase Agreement
(as hereafter defined) with Sellers, pursuant to which DRE, L.L.C. has agreed
to purchase from Sellers all of the issued and outstanding Preferred Stock (as
hereafter defined);
<PAGE> 8
WHEREAS, Purchaser desires to purchase the Shares from Sellers and
Sellers desire to sell and transfer to Purchaser the Shares, all subject to the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. Each term defined in the first paragraph of this
Agreement and in the Recitals shall have the meaning set forth above whenever
used herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions. As used herein, the following terms shall have the
meanings ascribed to them in this Section 1.2:
Accounts Receivable. All present and future rights to payment for
goods sold or services rendered whether or not earned by performance,
including, without limitation, all accounts or notes receivable owned or held
by the Company.
Adverse Consequences. All actions, suits, proceedings, hearings,
investigations, claims, judgments, orders, decrees, stipulations, injunctions,
damages, dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, Taxes, interest, Liens, losses, expenses and fees, including all
accounting, consultant and attorneys' fees and court costs, costs of expert
witnesses and other expenses of litigation.
Affiliate. As set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement. This Stock Purchase Agreement, together with all
Exhibits and Schedules referred to herein, as amended, modified or supplemented
from time to time in accordance with the terms hereof.
Alpental Business. As defined in the Recitals hereto.
Amended Articles. The Amended and Restated Articles of
Incorporation of the Company filed on the date hereof with the Secretary of
State of the State of Washington.
Assignment Agreement. As defined in Section 6.2(q).
Authority. Any governmental, regulatory or administrative body,
agency or authority, any court of judicial authority, any arbitrator or any
public, private or industry regulatory authority, whether foreign, federal,
state or local.
Business. As defined in the Recitals hereto.
<PAGE> 9
CERCLA. Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq.
Claim Notice. As defined in Section 8.3.
Closing. The actual conveyance, transfer, assignment and delivery
of the certificates representing the Shares to Purchaser in exchange for the
consideration payable to Sellers pursuant to this Agreement.
Closing Receivables. As defined in Section 7.7(e).
Code. Internal Revenue Code of 1986.
Company. As defined in the Recitals hereto.
Confidential Information. As defined in Section 7.2.
Contracts. All contracts, leases, subleases, arrangements,
commitments and other agreements of the Company, including all customer
agreements, vendor agreements, purchase orders, installation and maintenance
agreements, computer software licenses, hardware lease or rental agreements,
contract claims and all other arrangements and understandings related to the
Business, including, without limitation, those items which are listed on
Schedule 1.2 to this Agreement under the heading "Contracts".
Developmental Real Estate. The parcels of land identified by
asterisk in Schedule 3.20 of this Agreement under the heading "Owned Real
Property" including the unplatted land described therein.
DRE Deed. As defined in Section 6.2(v).
DRE, L.L.C. As defined in the Recitals hereto.
Employment Agreement. As defined in Section 6.2(h).
ENVIRON Report. The Environmental Site Assessment Report dated
January 20, 1997, prepared by ENVIRON Corporation with respect to the Real
Property.
Environmental Claims. As defined in Section 3.14.6.
Environmental Laws. As defined in Section 3.14.1(a).
Equipment and Improvements. All ski lifts, pylons, towers,
ski-lift machinery and equipment, snow-cats, snow-making machinery and
equipment, lighting equipment, ski trail improvements, mountain restaurants,
signs, snow-making facilities and other facilities and structures, buildings,
installations, fixtures, improvements, betterments and additions located on or
within the Real Property, machinery, equipment, service trucks, shuttle busses,
golf carts, snowmobiles, vehicles, tractors, spare tires and parts, tools,
appliances, furniture, office furniture,
-3-
<PAGE> 10
fixtures, office supplies and office equipment, computers, computer terminals
and printers, computer software, telephone systems, telecopiers and
photocopiers, and other tangible personal property of every kind and
description that are located upon or within the Real Property, which are owned
or leased by the Company, or are utilized in connection with the Company's
operations upon or within the Real Property, including, without limitation, the
items listed on Schedule 1.2 to this Agreement under the heading "Equipment and
Improvements".
ERISA. Employee Retirement Income Security Act of 1974.
Escrow Account. As defined in Section 8.7.
Escrow Agreement. As defined in Section 8.7.
Financial Statements. The Reference Balance Sheet and the audited
balance sheets and income statements of the Company for the three (3) year
period ended September 30, 1996, copies of which are attached hereto as
Schedule 3.32.
Forest Service. The United States Forest Service.
Hazardous Substances. As defined in Section 3.14.1(b).
Hyak Business. As defined in the Recitals hereto.
Indemnified Party. As defined in Section 8.3.
Indemnifying Party. As defined in Section 8.3.
Intangibles. All trade names, trademarks, service marks, copyrights,
trade secrets, registrations and applications for any thereof, and all
technical know-how and other intellectual property rights or intangibles used
by the Company in the operation of the Business, including, without limitation,
those listed on Schedule 1.2 to this Agreement under the heading "Intangibles",
and all goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto and rights thereunder, remedies against
infringement thereof and rights to protection of interests therein under all
applicable Laws.
Inventories. All of the Company's retail inventory (including, without
limitation, all inventories of food and beverages and inventory customarily
sold by the Company in new or used condition to the public) and non-retail
inventory (including, without limitation, all inventories of ski rental
equipment and employee and ski patrol jackets, parkas, pants and other uniform
items, other than those which are customarily sold by the Company in new or
used condition to the public and which are included in the Company's retail
inventory), consumable supplies, spare parts and repair materials and any and
all other inventories of the Company, an approximate summary of which retail
and non-retail inventories currently on hand is set forth on Schedule 1.2 to
this Agreement under the heading "Inventories".
IRS. Internal Revenue Service.
<PAGE> 11
Key Bank Credit Documents. (i) That certain Revolving Line of Credit
Agreement dated September 1, 1993, between the Company and Key Bank N.A., as
amended, (ii) that certain Reducing Revolving Term Loan Agreement dated
September 30, 1994, between the Company and Key Bank N.A., as amended, (iii)
that certain Promissory Note from the Company to KeyCorp Leasing, Ltd. dated
May 19, 1993, in the original principal amount of $129,000 and (iv) that
certain Lease Agreement between the Company and KeyCorp Leasing, Ltd. dated
July 26, 1991, together with all other documents, instruments and certificates
delivered in connection therewith.
Law. Any law, statute, regulation, rule, ordinance, requirement,
announcement or other binding action or requirement of an Authority.
Leased Real Property. Those certain parcels of land more fully
described on Schedule 1.2 to this Agreement under the heading "Leased Real
Property".
Letter of Intent. The letter of intent dated November 7, 1996 between
Booth Creek, Inc. and the Company relating to the transactions contemplated by
this Agreement, as amended by the Addendum thereto dated December 6, 1996.
Liabilities. Any obligation or liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated and whether due or to become
due), including, without limitation, any liability for Taxes.
Lien. Any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or lessor under any
conditional sale, capitalized lease or other title retention agreement).
Moffett Indebtedness. The aggregate amount of principal and interest
due and owing as of the date hereof by the Company to W.W. Moffett, Inc.
pursuant to that certain Promissory Note dated January 1, 1997.
ODCX. ODC X, a Washington general partnership.
Operating Agreement. As defined in Section 6.2(p).
Order. Any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by an Authority.
Ordinary Course of Business. The ordinary course of business of the
Company in accordance with past custom and practice (including with respect to
quantity and frequency).
Outstanding Preferred Stock Balance. On the date of determination, the
amount set forth on Schedule 1.1 with respect to such date; provided, however,
that if any indemnification obligation hereunder is limited in amount by
reference to the Outstanding Preferred Stock Balance and such indemnification
obligation survives beyond the last date indicated on Schedule 1.1, the
Outstanding Preferred Stock Balance shall be deemed to equal $125,00043
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<PAGE> 12
Owned Real Property. Those certain parcels of land more fully
described on Schedule 1.2 to this Agreement under the heading "Owned Real
Property" (including, without limitation, the Developmental Real Estate
identified thereunder by asterisk), together with all timber and water rights
and other privileges and appurtenances thereto and all plants, buildings,
structures, installations, fixtures, fittings, improvements, betterments and
additions situated thereon and together with all easements and rights-of-way
used or useful in connection therewith.
Permits. As defined in Section 3.28.
Person. Any natural person, corporation, limited liability company,
partnership, firm, joint venture, joint-stock company, trust, association,
Authority, unincorporated entity or organization of any kind.
Plan. As defined in Section 3.16(a).
Preferred Stock. The preferred stock, no par value of the Company.
Preferred Stock Purchase Agreement. As defined in Section 6.2(j).
Purchase Price. As defined in Section 2.2.
Purchaser Warranty Claim. As defined in Section 8.1(a).
RCRA. Resource Conservation and Recovery Act, 42 U.S.C. Section 9201,
et seq.
Real Property. Collectively, the USFS Permitted Property, the Owned
Real Property and the Leased Real Property.
Real Property Leases. All leases to the Leased Real Property.
Recapitalization Plan. As defined in Section 6.2(r).
Receivable Reserve. As defined in Section 7.7(e).
Records. All books of account, ledgers, forms, records, documents,
files, invoices, vendor or supplier lists, plans and other data which are
necessary to or desirable for the ownership, use, maintenance or operation of
the Business and which are owned or used by the Company, including, without
limitation, all blueprints and specifications, all Tax, personnel, payroll,
payroll tax and labor relations records, all environmental control records,
environmental impact reports, statements, studies and related documents,
handbooks, technical manuals and data, engineering specifications and work
papers, ski trail design specifications and improvement records, all pricing
and cost information, all sales records, all accounting and financial records,
all sales and use tax returns, reports, files and records, asset history
records and files, all data entry and accounting systems used to conduct the
day-to-day operations of the Business, all maintenance and repair records, all
correspondence, notices, citations and all other documents received from, sent
to or in
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<PAGE> 13
the Company's possession in connection with any Authorities (including, without
limitation, federal, state, county or regional environmental protection, air or
water quality control, occupational health and safety, land use, planning or
zoning, Forest Service, and any alcohol, beverage or fire prevention
Authorities), all plans, maps and surveys of the Real Property, and all plans
and designs of buildings, structures, fixtures and equipment.
Reference Balance Sheet. The audited balance sheet for the Business
dated the Reference Balance Sheet Date.
Reference Balance Sheet Date. September 30, 1996.
Release. As defined in Section 3.14.1(c).
Representative. David R. Moffett, or any successor thereto in
accordance with Section 9.1.
Section 1445 Withholding. As defined in Section 5.2.
Seller Warranty Claim. As defined in Section 8.2(a).
Sellers' Knowledge. David R. Moffett's actual knowledge after review
of the books and records of the Company and after interviewing the principal
managers and officers of the Company.
Shares. As defined in the Recitals hereto.
Ski Acres Business. As defined in the Recitals hereto.
Ski Lifts Promissory Note. As defined in Section 2.2(a).
Snoqualmie Business. As defined in the Recitals hereto.
Taxes. As defined in Section 3.17(a).
Territory. As defined in Section 7.6(a)(i).
$300,000 Company Note. As defined in Section 6.2(k).
$650,000 Company Note. As defined in Section 6.2(k).
Title Company. As defined in Section 6.2(l).
Title Policies. As defined in Section 6.2(l).
USFS Permits. The special use permits issued by the Forest Service,
each of which is described on Schedule 1.2 to this Agreement under the heading
"USFS Permits".
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<PAGE> 14
USFS Permitted Property. The land described in the USFS Permits and the
plants, buildings, structures, installations, fixtures, improvements,
betterments and additions situated thereon.
1.3 Interpretation. Unless otherwise expressly provided or unless the
context requires otherwise, (a) all references in this Agreement to Articles,
Sections, Schedules and Exhibits shall mean and refer to Articles, Sections,
Schedules and Exhibits of this Agreement; (b) all references to statutes and
related regulations shall include all amendments of the same and any successor
or replacement statutes and regulations; (c) words using the singular or plural
number also shall include the plural and singular number, respectively; (d)
references to "hereof", "herein", "hereby" and similar terms shall refer to
this entire Agreement (including the Schedules and Exhibits hereto); and (e)
references to any Person shall be deemed to mean and include the successors and
permitted assigns of such Person (or, in the case of an Authority, Persons
succeeding to the relevant functions of such Person).
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations, warranties,
covenants and agreements made in this Agreement by Sellers and Purchaser,
Purchaser hereby purchases and accepts from Sellers, and Sellers hereby sell,
transfer, convey, assign and deliver to Purchaser, the Shares. At the Closing,
each Seller shall deliver to Purchaser the certificates evidencing the Shares
owned by such Seller.
2.2 Payment of the Purchase Price. (a) The aggregate purchase price
(as adjusted pursuant to Section 2.3, the "Purchase Price") payable by
Purchaser to Sellers in consideration for the Shares shall be TEN MILLION
EIGHTEEN THOUSAND DOLLARS ($10,018,000) payable on the date hereof in the
following manner:
(i) $9,818,000 by issuance of a promissory note (the "Ski
Lifts Promissory Note") substantially in the form of the
promissory note attached hereto as Exhibit A from the Company
to the Representative on behalf of Sellers; and
(ii) $200,000 in cash to the Representative on behalf of
Sellers representing, among other things, amounts due and owing
by Sellers (A) to the State of Washington Department of
Revenue for payment of real estate excise taxes and (B) to the
Title Company pursuant to Section 55.1.
(b) The Representative shall distribute all cash received by him from
Purchaser pursuant to the terms hereof or from the Company pursuant to the
terms of the Ski Lifts Promissory Note to Sellers based on each Seller's
pro rata share of the Purchase Price.
(c) The amounts paid in cash at Closing or pursuant to the terms of
the Ski Lifts Promissory Note shall be by wire transfer of immediately
available federal funds to an account designated in writing to Purchaser
by the Representative in writing prior to the Closing.
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<PAGE> 15
2.3 Purchase Price Adjustments.
(a) Accruals. For the period ending September 30, 1996, Company has
accrued $112,204 with respect to USFS Permit fees potentially owed for
such period, $49,502 with respect to workers' compensation claims
potentially owed for such period, and $142,124 with respect to third-party
liability claims potentially owed for such period. If the amounts accrued
exceed the amounts actually owed for such period, then the Purchase Price
shall be increased by the excess amount. If the amounts accrued for such
period are less than the amounts actually owed during such period, then
the Purchase Price shall be decreased by the deficiency. Accordingly, the
parties agree that such Purchase Price adjustments shall be made (i) with
respect to USFS Permit fees owed for such period, upon a final
determination of USFS Permit fees owed for such period; and (ii) with
respect to workers compensation and third-party liability claims owed for
such period, no earlier than three (3) years after the date of this
Agreement. Purchaser shall deliver a Purchase Price adjustment
calculation to the Representative no later than forty-five (45) days after
the end of the relevant periods set forth in clauses (i) and (ii) above.
If the Representative does not deliver written acceptance of such
calculation to Purchaser within seven (7) days after receipt thereof, the
parties agree that a mutually acceptable independent accounting firm of
national standing shall determine the appropriate adjustment no later than
thirty (30) days after demand by either Purchaser or the Representative.
Each Purchase Price adjustment hereunder shall be paid to the party
entitled thereto by the party responsible hereunder no later than five (5)
days after final determination thereof by such independent accounting firm
or acceptance by the Representative, as the case may be.
(b) Tax Adjustment. In the event Sellers are obligated to pay any
income taxes imposed on or attributable to the income of the Company for
any period from and after October 1, 1996 (the "Tax Period"), then
Purchaser shall indemnify and reimburse Sellers for such obligation
(including all related interest and penalties) by increasing the Purchase
Price hereunder by an amount equal to (i) the aggregate amount of such
income multiplied by (ii) .63, which amount shall be paid promptly;
provided, such amount owed by Purchaser shall take into account any tax
benefit of Sellers attributable to the increase in the basis of the Shares
as a result of payment of such amount. Representative shall notify
Purchaser no later than five (5) days after Sellers receive notice from
any Authority assessing income taxes for the Tax Period. Purchaser shall
have the right, but not the obligation, at its own expense, to compromise
or defend any such assessment. In the event Purchaser undertakes to
compromise or defend such assessment, it shall promptly notify
Representative of its intention to do so. The Sellers shall fully
cooperate with Purchaser and its counsel in the defense or compromise of
such assessment, and no settlement of such assessment shall be made by
Purchaser or Sellers without the prior written consent of the
Representative and Purchaser, respectively, which consents shall not be
unreasonably withheld. Such reimbursement obligation of Purchaser shall
survive until all tax returns of the Company for the fiscal year beginning
October 1, 1996 have been closed by the applicable statute of limitations.
(c) ODCX Adjustment. In the event the aggregate amount of capital
gains taxes due and owing by the Company from the sale of the Company's
partnership interest in ODCX is (i) greater than $27,000, then Sellers
shall reimburse the Company for such amount
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<PAGE> 16
greater; or (ii) less than $27,000, then Purchaser shall reimburse Sellers
for such amount lesser based on each Seller's pro rata share of the
Purchase Price.
(d) Any payment required pursuant to this Section 2.3 shall be deemed
an adjustment to the Purchase Price and shall be by certified or cashier's
check, or at the option of the recipients, by the transfer of immediately
available federal funds for credit to the recipient at a bank account
designated by such recipient in writing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into and perform its obligations
under this Agreement, and in consideration of the covenants of Purchaser
contained herein, Sellers, jointly and severally (subject to the limitations
set forth in Sections 8.1 and 8.4), hereby make representations and warranties
to Purchaser as set forth below. Such representations and warranties shall
survive the date hereof (subject to Sections 8.1 and 8.4) regardless of what
examinations, inspections, audits and other investigations Purchaser has
heretofore made, or may hereafter make, with respect to such representations
and warranties; provided, Sellers shall have no liability for matters expressly
disclosed to Purchaser in this Agreement or in the Schedules hereto unless
expressly provided for in this Agreement. Subject to the foregoing, Sellers,
jointly and severally, represent and warrant as follows:
3.1 Corporate Status; Authority of Sellers; Enforceability.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Washington and in each
other jurisdiction where the failure to so qualify could have a material
adverse effect on the business, operations or condition of the Company or
the Business. The Company has the corporate power and authority necessary
to own, lease, operate or otherwise hold its properties and assets and to
carry on its business as presently conducted.
(b) Each Seller has the capacity to execute and deliver this Agreement
and to perform his or her obligations hereunder. This Agreement is
binding upon, and enforceable against, each Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and by general principles of equity
(whether in a proceeding at law or in equity).
(c) Neither the execution or delivery of this Agreement by any Seller
nor the performance by any Seller of its obligations under this Agreement
will (assuming the receipt of all consents referred to in Section 3.27),
conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any contract, lease, license, franchise,
permit, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which such Seller or the Company is a party or
is bound, the articles of incorporation or by-laws of the Company or any
applicable Law or Order to which such Seller or the Company is a party or
by which such Seller or the Company is bound.
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<PAGE> 17
3.2 Accounts Receivable. Except as reserved against on the Reference
Balance Sheet, the Accounts Receivable reflected thereon: (a) were acquired by
the Company in the Ordinary Course of Business and represent fully completed
bona fide transactions that require no further act on the part of the Company
to make such Accounts Receivable payable by the account debtors; (b) are not
subject to any material claim, counterclaim, set-off or deduction; (c)
represent valid obligations owing to the Company by account debtors that are
not Affiliates of the Company, which are enforceable in accordance with their
respective terms; and (d) are owned by the Company free and clear of all Liens.
3.3 Trade Names, Trademarks and Copyrights. Schedule 1.2 to this
Agreement, under the heading "Intangibles", contains a true and complete list
of all trademarks, service marks, trade names and copyrights and their
registrations or applications, if any, owned by the Company or in which the
Company has any rights or licenses, together with a brief description of each.
To the Sellers' Knowledge, there is no infringement or alleged infringement by
any Person of any such trademark, service mark, trade name or copyright. To
the Sellers' Knowledge, the Company has not infringed, nor is now infringing on
any trademark, service mark, trade name or copyright belonging to any other
Person. The Company is not a party to any license, agreement or arrangement,
whether as licensor, licensee, franchisor, franchisee or otherwise, with
respect to any trademarks, service marks, trade names or any copyrights or any
applications therefor. The Company owns or holds adequate licenses or other
rights to use all trademarks, service marks, trade names and copyrights
necessary for the Business as now conducted, including, without limitation,
those listed on Schedule 1.2 to this Agreement under the heading "Intangibles."
3.4 No Patent Rights. The Company does not own, hold, or have any
right, license or immunity with respect to any patents, inventions, industrial
models, processes, designs, formulas or applications for patents. To the
Sellers' Knowledge, the Company has not infringed, nor is the Company now
infringing, on any patent or other right belonging to any Person. The Company
is not a party to any license, agreement or arrangement, whether as licensee,
licensor or otherwise, with respect to any patent, application for patent,
invention, design, model, process, trade secret or formula.
3.5 Passes. Schedule 3.5 contains a true and complete list of all
persons holding pass privileges beyond the 1996-1997 ski season or other passes
for activities of the Business extending beyond the 1996-1997 ski season.
3.6 Contracts. Schedule 1.2 to this Agreement, under the heading
"Contracts", contains a complete list of all Contracts for amounts exceeding
$5,000 to which the Company is party or by which the Company is currently bound
and copies of such written Contracts have been provided to Purchaser or its
counsel. The Company is not a party to any Contract not entered into in the
Ordinary Course of Business. To the Sellers' Knowledge, all Contracts are
valid and binding upon the parties thereto except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally.
To the Sellers' Knowledge, there is no default or event that with notice or
lapse of time, or both, would constitute a default by any party to any of the
Contracts. The Company has not received notice that any party to any of the
Contracts intends to cancel or terminate any of such agreements or to exercise
or not exercise any options under any of such agreements.
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<PAGE> 18
3.7 Compliance with Laws. Except as set forth on Schedule 3.7, neither
the Company nor the Sellers have received any notice to the contrary, and to
the Sellers' Knowledge (i) the Company has complied with all, and is not in
violation of any, applicable Laws or Orders (including, without limitation, any
applicable building, zoning, wetlands, environmental protection, water use,
occupational health and safety, employment, disability rights or food service
facilities law, ordinance or regulation) affecting its properties or the
operation of the Business and (ii) no material capital expenditures will be
required for compliance with applicable Laws now in force. No accusation of
any state or local alcohol or beverage commission is pending against the
Company as a holder of any alcoholic beverage license and, to the Sellers'
Knowledge, no investigation is now in progress by any state or local alcohol or
beverage commission concerning any act or omission that could result in an
accusation, claim or proceeding being filed against the Company.
3.8 Litigation. Schedule 3.8 sets forth a brief description of all
suits, actions, arbitrations, and legal, administrative and other proceedings
and governmental investigations pending or, to the Sellers' Knowledge,
threatened against or affecting the Company or the Business. To the Sellers'
Knowledge, none of the matters set forth in Schedule 3.8, if decided adversely
to the Company, could reasonably be expected to have a material adverse effect
on the Business. The Company is not presently engaged in any legal action to
recover moneys due to it or damages sustained by it.
3.9 Personnel Identification and Compensation. Schedule 3.9 contains
a true and complete list of the names, addresses and titles of all current
officers, directors, employees, agents and representatives of the Company and
all seasonal employees employed during the 1995-1996 ski season. The Sellers
have previously delivered to Purchaser a true and correct schedule stating the
rates of compensation payable (or paid, as the case may be) to each such
person.
3.10 Existing Employment Contracts. There are no employment contracts
or collective bargaining agreements to which the Company is a party or by which
the Company is bound. There is no pending or, to the Sellers' Knowledge,
threatened labor dispute, strike or work stoppage affecting the Business.
3.11 Capitalization; Subsidiaries. (a) The total number of shares of
capital stock and the par value thereof which the Company is authorized to
issue and the number of such shares which are issued and outstanding are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Issued and
Class Authorized Shares Outstanding Shares
- -----------------------------------------------------------------------------
<S> <C> <C>
Common Stock, no par value 1,000 1,000
- -----------------------------------------------------------------------------
Preferred Stock, no par value 28,000 28,000
- -----------------------------------------------------------------------------
</TABLE>
No shares of the Company's capital stock are held as treasury stock.
(b) There are no outstanding options, conversion rights, warrants or
other rights in existence to acquire from the Company any of its shares of
capital stock.
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<PAGE> 19
(c) The Shares have been duly and validly issued and are fully paid
and nonassessable and are not subject to any preemptive rights; and there
are no voting trust agreements or other contracts, agreements or
arrangements restricting voting or dividend rights or transferability with
respect to the Shares.
(d) The Company has not violated in any material respect any federal,
state or local Law in connection with the offer for sale or sale and
issuance of its outstanding shares of capital stock or any other
securities.
(e) The Company does not own any securities or any other direct or
indirect interest in any other Person except for (i) the securities
described in notes 4 and 5 to the Reference Balance Sheet and (ii) its
interest in DRE, L.L.C.
3.12 Title to Purchased Shares. Each Seller owns the number of shares
of capital stock of the Company set forth in Schedule 3.12, free and clear of
any Liens. The persons listed as "Sellers" on the signature pages of this
Agreement are all of the record and beneficial owners of the Common Stock of
the Company. The Shares constitute all of the issued and outstanding shares of
Common Stock of the Company and upon delivery of and payment by the Purchaser
to each Seller of his or her proportionate share of the Purchase Price in
respect of the Shares owned by such Seller, the Purchaser will acquire good and
marketable title to the Shares free and clear of all Liens.
3.13 Forest Service Permits. Schedule 1.2 to this Agreement, under the
heading "USFS Permits", contains a complete and accurate description of the
real property which the Company is entitled to use to conduct its business
pursuant to and for the terms set forth in the USFS Permits. The USFS Permits
are valid and in full force. Neither the Company nor the Sellers have received
any notice to the contrary, and to the Sellers' Knowledge there does not exist
any default or event that with notice or lapse of time, or both, would
constitute a default under the USFS Permits. Subject to possible adjustments
set forth in Section 2.3, all fees and charges which the Company has received
notice of as being due and owing by the Company pursuant to the USFS Permits
have been properly computed and fully paid, or have been reserved for on the
Reference Balance Sheet, and no such fees or charges have been deferred or are
due and owing which have not been reserved for on the Reference Balance Sheet.
3.14 Environmental.
3.14.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) The term "Environmental Law(s)" means each and every Law, Order,
Permit, or similar requirement of each and every Authority, pertaining to
(i) the protection of human health, safety, the environment, natural
resources and wildlife, (ii) the protection or use of surface water,
groundwater, rivers and other bodies of water, (iii) the management,
manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement,
removal, remediation or handling of, or exposure to, any Hazardous
Substance or (iv) pollution, including without limitation, as amended,
CERCLA, the Solid Waste Disposal Act, 42 U.S.C. Section 6901 et seq., the
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<PAGE> 20
Clean Air \Act, 42 U.S.C. Section 7401 et seq., and the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251, et seq.
(b) The term "Hazardous Substance(s)" means any substance which is (i)
defined as a hazardous substance, hazardous material, hazardous waste,
pollutant or contaminant under any Environmental Law, (ii) a petroleum
hydrocarbon, including crude oil or any fraction thereof, (iii) hazardous,
toxic, corrosive, flammable, explosive, infectious, radioactive or
carcinogenic, or (iv) regulated pursuant to any Environmental Law.
(c) The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including without limitation the
abandonment or discarding of barrels, containers and other receptacles
containing any Hazardous Substance).
(d) For purposes of this Section 3.14, the Company shall be deemed to
include any predecessor to the Company and any Persons from which the
Company has assumed liabilities by operation of Law.
3.14.2 Compliance with Environmental Laws. Except as disclosed in
Schedule 3.14 or in the ENVIRON Report, neither Sellers nor the Company have
received any notice to the contrary, nor to the Sellers' Knowledge (i) has any
violation or liability arising under any Environmental Law, with respect to the
Real Property or Business, or any use or condition thereof, been alleged; (ii)
has any violation or liability arising under any Environmental Law, with
respect to formerly owned or operated real property, or any use or condition
thereof, been alleged; or (iii) in the case of clauses (i) or (ii), are there
any facts or circumstances upon which such allegations could be based. Except
as disclosed in Schedule 3.14 or in the ENVIRON Report, to the Sellers'
Knowledge, the Real Property, and all uses and conditions of the Real Property
and the Business, have been and are in compliance with all Environmental Laws.
3.14.3 Handling of Hazardous Substances. Except as set forth in
Schedule 3.14 or in the ENVIRON Report, neither the Company nor the Sellers
have received any notice to the contrary and, to the Sellers' Knowledge,
neither the Company nor any other present or former owner, tenant, occupant or
user of the Real Property has used, handled, generated, produced, manufactured,
treated, stored, transported or Released any Hazardous Substance on, under,
about, to or from the Real Property or any real property formerly owned or
operated by the Company or otherwise related to the Business in violation of or
in a manner that may form the basis of liability under any Environmental Law,
including, without limitation, the offsite disposal of any Hazardous Substance.
3.14.4 No Release of Hazardous Substances. Except as set forth in
Schedule 3.14 or in the ENVIRON Report, neither the Company nor the Sellers
have received any notice to the contrary and, to the Sellers' Knowledge, there
is no Release or threatened Release of any Hazardous Substance existing on,
beneath or from the surface, subsurface or ground water associated with the
Real Property, nor is there or has there been any Release or threatened Release
of Hazardous Substances adjacent to, from or in the vicinity of the Real
Property currently occurring or occurring at any time in the past.
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<PAGE> 21
3.14.5 Permits. Except as set forth in Schedule 3.14 or in the
ENVIRON Report, neither the Company nor the Sellers have received any notice to
the contrary and, to the Sellers' Knowledge, (i) all Permits required by or
issued pursuant to any Environmental Law for the ownership, use or operation of
the Real Property or the Business have been obtained in a timely manner and are
presently maintained in full force and effect and (ii) the Real Property and
the operations of the Company are in full compliance with all terms and
conditions of the Permits described in clause (i). To Sellers' Knowledge,
Schedule 3.14 contains a true and complete listing of the Permits described in
clause (i).
3.14.6 No Proceedings. Except as set forth in Schedule 3.14 or in
the ENVIRON Report, neither the Company nor the Sellers have received any
notice of the existence of any written Order or any demand, allegation, suit,
claim, proceeding, citation, directive, summons, investigation, information
request, notice of violation or other notice pending or, to the Sellers'
Knowledge, threatened pursuant to any Environmental Law relating to (i) the
ownership, lease, occupation or use of the Real Property or any formerly owned,
leased, occupied or used real property by the Company or any other present or
former owner, tenant, occupant or user of the Real Property, (ii) any alleged
violation of or liability under any Environmental Law by the Company, (iii) the
suspected presence, Release or threatened Release of any Hazardous Substance
on, under, in or from the surface, subsurface, or groundwater associated with
the Real Property, or any formerly owned, leased, occupied or used real
property, (iv) any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment (collectively referred to herein
as "Environmental Claims") nor, to the Sellers' Knowledge, does there exist any
valid basis for any such Environmental Claims.
3.14.7 No Tanks, Asbestos or PCB's. Except as set forth in Schedule
3.14 or in the ENVIRON Report, neither the Company nor the Sellers have
received any notice to the contrary, and to the Sellers' Knowledge there (i)
are and were no aboveground or underground storage tanks currently or formerly
located on the Real Property used or formerly used for the purpose of storing
any Hazardous Substance except in compliance with Environmental Laws; (ii) is
no asbestos-containing building material on the Real Property, and no asbestos
abatement or remediation work has been performed on the Real Property; and
(iii) is no PCB-containing equipment or PCB-containing material located on the
Real Property.
3.14.8 Lists and Liens. Except as disclosed in Schedule 3.14 or in
the ENVIRON Report, neither the Company nor the Sellers have received any
notice to the contrary and, to the Sellers' Knowledge, the Real Property and
any real property formerly owned, operated, leased, or used by the Company (i)
is not listed on any or nominated for listing on the National Priority List
promulgated by the United States Environmental Protection Agency pursuant to
CERCLA or any analogous state remedial priority list promulgated or published
pursuant to any comparable state law, (ii) is not subject to any restriction on
the ownership, occupancy, use or transferability of the Real Property,
including, without limitation, any Liens, and (iii) is not subject to any such
imminent restrictions or Liens that are reasonably likely to be imposed upon
the Real Property.
3.14.9 Documents. Sellers have provided to Purchaser any and all
documents, correspondence, pleadings, reports, assessments, analytical results,
Permits or other records concerning Environmental Laws or Hazardous Substances
as are in the Company's or any Seller's possession.
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<PAGE> 22
3.15 Certain Transactions. All purchases and sales or other
transactions, if any, between the Company, on the one hand, and any officer,
director, shareholder or key employee or Affiliate thereof, on the other hand,
within the three (3) years immediately preceding the date hereof have been made
on the basis of prevailing market rates and terms such that from the
prospective of the Company, all such transactions have been made on terms no
less favorable than those which would have been available from unrelated third
parties. Except with respect to the real property owned by, and leased from,
ODCX, neither any officer, nor any director or employee of the Company, nor any
spouse, child or other relative of any of such persons, owns, or has any
interest, directly or indirectly, in any of the real or personal property owned
by or leased to the Company or any copyrights, patents, trademarks, trade names
or trade secrets owned or licensed by the Company.
3.16 Employee Benefit Matters.
(a) Schedule 3.16 contains a true, complete and correct list of each
pension, retirement, profit sharing, savings, stock option, restricted stock,
severance, termination, bonus, fringe benefit, insurance, supplemental benefit,
medical, education reimbursement or other employee benefit plan, program,
agreement or arrangement, including each "employee benefit plan" as defined in
Section 3(3) of ERISA, sponsored, maintained or contributed to or required to
be contributed to by the Company for the benefit of current or former employees
of the Business (each a "Plan").
(b) True, complete and correct copies of the following items relating
to each Plan, where applicable, have been delivered to Purchaser:
(i) the most recent determination letter received from the IRS
with respect to each such Plan that is intended to be qualified under
Section 401 of the Code; and
(ii) the most recent summary plan description, summary of
material modifications and all material communications to
participants.
(c) Each of the Plans has been operated and administered in
accordance with the applicable provisions of ERISA and the Code, including
COBRA, and all other applicable Laws.
(d) Each of the Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified.
(e) The Company does not have any liability with respect to a plan
termination under Title IV of ERISA, a funding deficiency under Section 412 of
the Code or Section 302 of ERISA or a withdrawal from a "multiemployer plan" as
defined in (f) below or under Section 4063 of ERISA.
(f) None of the Plans is a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA.
(g) The Company is not, and has never been, a member of a "controlled
group of corporations" within the meaning of Section 414(b) of the Code or a
member of a group under "common control" within the meaning of Section 414(c)
of the Code.
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3.17 Tax Matters.
(a) The term "Taxes" means all net income, capital gains, gross
income, gross receipts, sales, use, transfer, ad valorem, franchise, profits,
license, capital, withholding, payroll, employment, excise, goods and services,
severance, stamp, occupation, premium, property, assessments or other
governmental charges of any kind whatsoever, together with any interest, fines
and any penalties, additions to tax or additional amounts incurred or accrued
under applicable federal, state, local or foreign tax law or assessed, charged
or imposed by any Authority, domestic or foreign, provided that any interest,
penalties, additions to tax or additional amounts that relate to Taxes for any
taxable period (including any portion of any taxable period ending on or before
the date hereof) shall be deemed to be Taxes for such period, regardless of
when such items are incurred, accrued, assessed or charged. For the purposes
of this Section 3.17, the Company shall be deemed to include any predecessor to
the Company and any Person from which the Company incurs a liability for Taxes
as a result of transferee liability.
(b) The Company has duly and timely filed true, correct and complete
Tax returns, reports or estimates, all prepared in accordance with applicable
Laws, for all years and periods (and portions thereof), for all jurisdictions
(whether federal, state, local or foreign) in which any such returns, reports
or estimates were due, and for all such returns, reports and estimates which
are required to be filed by any applicable Law on or prior to the date hereof.
All Taxes shown as due and payable on such returns, reports and estimates have
been paid, and there is no current liability for any Taxes due and payable in
connection with any such returns. Any charges, accruals and reserves for Taxes
provided for on the Financial Statements are adequate. There are no existing
liens for Taxes upon any of the Company's assets. The Sellers have provided to
Purchaser copies of all federal, state and foreign tax returns filed by the
Company for the past five (5) years. All applicable sales Taxes, to the extent
due, were paid by the Company when its assets were acquired by the Company.
(c) The Company has (i) based upon W-4's and similar available
information, withheld all required amounts from its employees, agents,
contractors and nonresidents and remitted such amounts to the proper
Authorities; (ii) paid all employer contributions and premiums; and (iii) filed
all federal, state, local and foreign returns and reports with respect to
employee income Tax withholding, and social security and unemployment Taxes and
premiums, all in compliance with the withholding provisions of the Code, or any
prior provision of the Code and other applicable Laws.
(d) None of the Company's assets is tax exempt use property under Code
Section 168(h). None of the Company's assets is property that the Company is
required to treat as being owned by any other Person pursuant to the safe
harbor lease provision of former Code Section 168(f)(8).
(e) No portion of the cost of any of the Company's assets was financed
directly or indirectly from the proceeds of any tax exempt state or local
government obligation described in Code Section 103(a).
(f) The Company has no (and has not previously had any) permanent
establishment in any foreign country and the Company does not engage (and has
not previously
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<PAGE> 24
engaged) in a trade or business within the meaning of the Code relating to the
creation of a permanent establishment in any foreign country.
(g) The Company is not a foreign person within the meaning of Code
Section 1445.
(h) Neither the Code nor any other provision of Law requires Purchaser
to withhold any portion of the Purchase Price.
(i) Immediately prior to the Closing, the Company was taxable as an S
Corporation for federal income tax purposes and the corresponding provisions
under the Laws of the State of Washington and has been so since October 1,
1994. All income tax returns have been filed in a manner consistent with the
Company's status as an S Corporation. Except in connection with the
transactions contemplated hereunder, this election has never been revoked and
no event has occurred that would terminate the Company's S Corporation status.
No taxing authority has challenged the effectiveness of this election.
(j) The Company has never been a member of any consolidated, combined
or unitary group for federal, state, local or foreign Tax purposes except as
described on Schedule 3.17.
(k) The Company is not a party to any joint venture, partnership or
other arrangement that could be treated as a partnership for federal income Tax
purposes except for the Company's partnership interest in ODCX.
(l) The federal income Tax returns of the Company have been examined
by the IRS, or have been closed by the applicable statute of limitations, for
all periods through 1992; the state Tax returns of the Company have been
examined by the relevant agencies or such returns have been closed by the
applicable statute of limitations for all periods through June 30, 1992; no
deficiencies or reassessments for any Taxes have been proposed, asserted or
assessed against the Company by any federal, state, local or foreign taxing
authority.
(m) The Company has not executed or filed with any taxing authority
(whether federal, state, local or foreign) any agreement or other document
extending or having the effect of extending the period for assessment,
reassessment or collection of any Taxes, and no power of attorney granted by
the Company with respect to any Taxes is currently in force other than as
disclosed in Section 3.37.
(n) No federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are presently
pending with regard to any Taxes or Tax returns of the Company and no, to the
Sellers' Knowledge, additional issues are being asserted against the Company in
connection with any existing audits of the Company.
(o) The Company has not entered into any agreement relating to Taxes
which affects any taxable year ending after the date hereof.
(p) The Company has not agreed to and it is not required to make any
adjustment by reason of a change in accounting methods that affects any taxable
year ending after the date
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hereof. Neither the IRS nor any other agency has proposed any such adjustment
or change in accounting methods that affects any taxable year ending
after the date hereof. The Company has no application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to its business or operations and that affects any taxable year ending
after the date hereof.
(q) The Company is not and never has been a party to any Tax sharing
agreement or similar arrangement for the sharing of Tax liabilities or
benefits.
(r) The Company has not consented to the application of Code section
341(f).
(s) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company that, individually or collectively,
could give rise to the payment by the Company of any amount that would not be
deductible by reason of Code section 280G.
3.18 Inventories. The Inventories consist of items of a quality and
quantity useable or saleable in the Ordinary Course of Business, except for
obsolete or slow moving items and items below standard quality, all of which
have been written down on the books of the Company to net realizable market
value or have been provided for by adequate reserves. All items included in
the Inventories are the property of the Company, except for sales made in the
Ordinary Course of Business; for each of these sales either the purchaser has
made full payment or the purchaser's liability to make payment is reflected in
the books of the Company. No items included in the Inventories have been
pledged as collateral (other than pursuant to the Key Bank Credit Documents),
or are held by the Company on consignment from third parties. The Company's
inventories shown on the balance sheets included in the Financial Statements
are based on quantities determined by physical count or measurement, taken
within the preceding twelve (12) months, and are valued at the lower of cost
(determined on a first-in, first-out basis) or market value and on a basis
consistent with prior years. The quantities of items included in the Company's
ski rental inventory, including, without limitation, skis, ski boots, bindings,
ski poles and snow boards, (i) are not lower than the quantities of such items
(compared on an item-by-item basis) on hand at the end of the 1995-1996 ski
season, and (ii) are sufficient to meet the normal and expected demand of the
1996-1997 ski season.
3.19 Title to Assets. The Company has good and marketable title to all
of its assets (other than the Real Property), free and clear of all Liens
(other than as described in Schedule 3.19 or pursuant to the Key Bank Credit
Documents). To the Sellers' Knowledge, the Company owns or otherwise has the
right to use all of the assets and rights used or necessary in the operation of
the Business.
3.20 Real Property.
(a) To the Sellers' Knowledge, (i) Schedule 1.2 to this Agreement,
under the heading "Real Property", contains complete and accurate legal
descriptions of each parcel of Real Property owned, leased or occupied under
permit;and (ii) the Real Property constitutes all of the real property owned,
leased or occupied pursuant to permit by the Company. Except as set forth in
Schedule 3.20, neither the Company nor the Sellers have received any notice to
the contrary and, to the Sellers' Knowledge, all of the Real Property Leases
are valid and in full force, and there does
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not exist any default or event that with notice or lapse of time, or both,
would constitute a default under any of the Real Property Leases.
(b) Except as set forth in Schedule 3.20, neither the Company nor the
Sellers have received any notice to the contrary and, to the Sellers'
Knowledge, (i) all of the buildings, fixtures and leasehold improvements used
by the Company in the Business are located on the Real Property; (ii) each
parcel of Real Property abuts on at least one side a public street or road in a
manner so as to permit reasonable, customary and adequate vehicular and
pedestrian ingress, egress and access to such parcel, or has adequate easements
across intervening property to permit reasonable, customary and adequate
vehicular and pedestrian ingress, egress and access to such parcel from a
public street or road; and (iii) there are no restrictions on entrance to or
exit from the Real Property to adjacent public streets and no conditions which
will result in the termination of the present access from the Real Property to
existing highways or roads.
(c) Except as disclosed in Schedule 3.20, neither the Company nor the
Sellers have received any notice to the contrary and, to the Sellers'
Knowledge, (i) the Company has good and marketable fee simple title to the
Owned Real Property, and good and marketable leasehold interests to the Leased
Real Property, in each case, free and clear of all Liens; (ii) except for the
Real Property Leases, there is no unrecorded or undisclosed legal or equitable
interest in any Real Property owned or claimed by any Person; (iii) subject to
the Real Property Leases, the Company has enjoyed the continuous and
uninterrupted quiet possession, use and operation of its Real Property without
any material complaint or objection by any Person and (iv) there exists no
unfulfilled obligation on the part of the Company to dedicate or grant an
easement or easements over any portion or portions of any of the Real Property
to any Authority.
(d) Except as set forth in Schedule 3.20, all real estate taxes and
assessments with respect to the Real Property which the Company has received
notice of as due and payable have been paid.
(e) Neither the Company nor the Sellers have received any notice of
any special tax assessment affecting any property owned or leased in connection
with the Business, and to the Sellers' Knowledge, no such assessments are
pending or threatened except for that certain Road Improvement District
assessment in the preliminary amount of $65,096, which amount shall be paid by
the Company.
(f) Sellers make no representations or warranties regarding, and shall
not be liable for, the impact of wetlands (or laws relating to wetlands) on
future development of the Real Property.
3.21 Condition of Assets. The Equipment and Improvements are agreed to
be "as is, where is and with all faults," and Sellers make no representation or
warranty as to their physical condition or fitness. Neither the Company nor
the Sellers have received any notice to the contrary, and to the Sellers'
Knowledge neither the Real Property nor the use, occupancy, or transfer to
Purchaser thereof violates in any way any applicable Laws, Orders or covenants,
conditions and restrictions, whether federal, state, local or private.
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3.22 Zoning. Except as disclosed in Schedule 3.22, neither the Company
nor the Sellers have received any notice to the contrary and, to the Sellers'
Knowledge, (i) the zoning of each parcel of Real Property permits the presently
existing improvements and the continuation of the business presently being
conducted on such parcel; (ii) there is no pending or contemplated rezoning of
any Real Property; (iii) all the Real Property is in compliance with applicable
state law and local subdivision ordinances; and (iv) no final subdivision or
parcel map is required in connection with the transfer of the Real Property to
Purchaser other than certain steps necessary to segregate portions of the
Developmental Real Estate.
3.23 No Commitments. Except as disclosed in Schedule 3.23, neither the
Company nor the Sellers have received any notice to the contrary, and to the
Sellers' Knowledge, there are no outstanding, defaulted or unsatisfied
contracts, commitments, agreements (including, without limitation, developer
agreements) or understandings which have been made by the Company to, with or
for the benefit of any utility companies, school districts, water districts,
improvement districts or other Authorities which could reasonably be expected
to impose any obligation, liability or condition on the Company, to grant any
easements or to make any payments, contributions or dedications of money or
land or to construct, install or maintain or to contribute to the construction,
installation or maintenance of any improvements of a public or private nature,
whether on or off the Real Property.
3.24 Continued Use of Real Property. Neither the Company nor the
Sellers have received any notice to the contrary and, to the Sellers'
Knowledge, there are no presently pending or threatened, proceedings to (i)
condemn, take or demolish the Real Property or any part thereof, (ii) declare
the Real Property or any part of it a nuisance or (iii) exercise the power of
eminent domain or a similar power with respect to all or any part of the Real
Property.
3.25 Water Rights. Except as disclosed in Schedule 3.14 or in the
ENVIRON Report, neither the Company nor the Sellers have received any notice to
the contrary, and to the Sellers' Knowledge, (i) the Company has all necessary
Permits, property rights and other necessary approvals to use the water it has
historically used in the operation of the Business, and its water use has
otherwise been in compliance with all applicable Laws and Orders; and (ii) no
event has occurred or failed to occur which presently, or upon the giving of
notice or lapse of time, or both, could reasonably be expected to materially
adversely affect or decrease the current supply of water to the Company's
premises. Schedule 3.25 sets forth a description of the Company's water rights
at each of the Businesses.
3.26 [INTENTIONALLY BLANK]
3.27 Consents. Except as contemplated by this Agreement with respect
to the USFS Permits or as otherwise disclosed on Schedule 3.27, to the Sellers'
Knowledge, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Authority or any other Person is required to be
obtained or made by the Sellers or the Company in connection with the execution
and delivery of this Agreement or the performance by the Sellers of their
respective obligations hereunder.
3.28 Licenses and Permits. Except as disclosed in Schedule 3.14 or in
the ENVIRON Report, neither the Company nor the Sellers have received any
notice to the contrary, and to the Sellers' Knowledge, (i) Schedule 3.28 lists
and describes all qualifications, registrations, filings,
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<PAGE> 28
privileges, franchises, immunities, licenses, permits, authorizations and
approvals of Authorities which are used or required in order for the Company to
own and operate the Business, including, without limitation, all certificates
of occupancy and certificates, licenses and permits relating to zoning,
building, housing, safety, Environmental Laws, fire and health (collectively,
the "Permits"); and (ii) each Permit is in good standing, valid and subsisting,
and in full force and effect in accordance with its terms.
3.29 No Alternative Transactions. Neither the Company nor any Seller
is a party to or otherwise bound by any agreement contemplating or providing
for any merger, acquisition, purchase or sale of all or substantially all of
the assets or any business combination or change in control of the Business.
3.30 Occupational Safety and Health. Neither the Company nor the
Sellers have received any notice, citation, claim, assessment or proposed
assessment as to or alleging any violation of any federal, state or local
occupational safety and health laws. Neither the Company nor the Sellers have
received any notice to the contrary and, to the Sellers' Knowledge, the Company
has not been subject to any investigation by any federal, state or local
occupational safety and health agency within the three (3) years preceding the
date hereof and, to the Sellers' Knowledge, no such violation exists. The
Company is not a party to any dispute with respect to compliance with any
federal, state or local occupational safety and health law.
3.31 Insurance.
(a) Schedule 3.31 sets forth a list and brief description of all
insurance policies maintained by the Company.
(b) Neither the Company nor the Sellers have received any notice to
the contrary, and to the Sellers' Knowledge, (i) the Company is not in default
with respect to any provision contained in any such insurance policy, nor has
it failed to give any notice or present any claim thereunder in a due and
timely fashion; and (ii) no material alterations to the Real Property, the
facilities located thereon or the Business are required by any such insurance
carrier.
3.32 Financial Statements. The Financial Statements attached hereto as
Schedule 3.32 were prepared by the Company from the books and records of the
Business and in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position and results of
operations of the Company at the dates and for the periods indicated therein.
3.33 Undisclosed Liabilities. To the Sellers' Knowledge, (i) on the
Reference Balance Sheet Date, the Company had no liability with respect to the
Business of any nature (whether accrued, absolute, contingent or otherwise) of
the type which should be reflected in balance sheets (including the notes
thereto) prepared in accordance with generally accepted accounting principles
which was not fully disclosed, reflected or reserved against in the Reference
Balance Sheet; and (ii) except for liabilities which have been incurred since
the Reference Balance Sheet Date in the Ordinary Course of Business, since the
Reference Balance Sheet Date, the Company has not incurred any liability of any
nature (whether accrued, absolute, contingent or otherwise).
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3.34 Conduct of Business Since Reference Balance Sheet Date. Except as
disclosed in Schedule 3.34, since the Reference Balance Sheet Date:
(a) the Business has been conducted only in the Ordinary Course of
Business;
(b) except for equipment, inventory and supplies purchased, sold or
otherwise disposed of in the Ordinary Course of the Business, the Company has
not purchased, sold, leased, mortgaged, pledged or otherwise acquired or
disposed of any properties or assets;
(c) the Company has not sustained or incurred any physical loss or
damage with respect to the Business (whether or not insured against) on account
of fire, flood, accident or other calamity which has interfered with or
affected, or may interfere with or affect, the operation of the Business;
(d) the Company has not increased the rate of compensation of any
officer or other employee of the Business, except in the Ordinary Course of
Business and has not declared any dividends on its capital stock or made any
distributions to its stockholders (other than distributions to Sellers for
Sellers' payment of income taxes on income earned by the Company after
September 30, 1996);
(e) to the Sellers' Knowledge, there has been no material adverse
change in or with respect to the condition (financial or otherwise),
operations, business, prospects, rights, properties, assets or liabilities of
the Business or the Company's relations with Authorities or its employees,
creditors, advertisers, suppliers, distributors, customers or others having
business relationships with the Company;
(f) the Company has not canceled any of its debts or claims owned to
it;
(g) the Company has not changed any accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates); or
(h) the Company has not agreed to take any of the actions described in
paragraphs (b), (d), (f) or (g) above.
3.35 Broker's or Consultant's Fees. Each Seller represents and
warrants that it has dealt with no broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to the
Sellers' Knowledge, no Person is entitled to any commission or finder's fee in
connection with the sale of the Shares to Purchaser other than a fee in the
aggregate amount of $75,000 to Charles D. Lewis, L.L.C., which shall be paid by
Sellers.
3.36 Banking Arrangements. Except as set forth in Schedule 3.36, the
Company has no banking, borrowing or depository relationship, or accounts or
deposits of funds, and all persons authorized as signatories on each such
account are listed in Schedule 3.36.
3.37 Powers of Attorney. Except for Coopers & Lybrand, LLP, no Person
holds any power of attorney from the Company.
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3.38 Disclosure. To the Sellers' Knowledge, (i) none of the
representations and warranties made by Sellers in this Agreement or in any
letter, certificate or memorandum furnished or to be furnished by Sellers, or
on their behalf, contains or will contain any untrue statement of a material
fact, or omits any material fact the omission of which would make the
statements made therein misleading; and (ii) except for facts or circumstances
affecting the ski resort industry generally, there is no fact which materially
adversely affects, or is reasonably likely to materially adversely affect, the
condition (financial or otherwise), assets, liabilities, business, operations
or prospects of the Business, the value or utility of the Company's assets or
the ability of each Seller to consummate the transactions contemplated hereby
that has not been set forth herein or heretofore communicated to Purchaser in
writing pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Sellers to enter into and perform their obligations
under this Agreement, and in consideration of the covenants of Sellers
contained herein, Purchaser (subject to the limitations set forth in Section
8.2) hereby makes representations and warranties to Sellers as set forth below.
Such representations and warranties shall survive the date hereof (subject to
Section 8.2) regardless of what examinations, inspections, audits and other
investigations Sellers have heretofore made, or may hereafter make, with
respect to such representations and warranties; provided, Purchaser shall have
no liability for matters expressly disclosed to Sellers in this Agreement
unless expressly provided for in this Agreement. Subject to the foregoing,
Purchaser represents and warrants as follows:
4.1 Corporate Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Due Authorization. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized and approved by all necessary corporate
action on the part of Purchaser.
4.3 Authority of Purchaser. Purchaser has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Neither the execution or delivery of this Agreement by Purchaser
nor the performance by Purchaser of its obligations under this Agreement will
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any contract, lease, license, franchise, permit,
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which Purchaser is a party or is bound, its certificate of
incorporation, by-laws or any applicable Law or Order to which Purchaser is a
party or by which Purchaser is bound.
4.4 Enforceability. This Agreement is binding upon, and enforceable
against, Purchaser in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights generally
and by principles of equity (whether in a proceeding at law or in equity).
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4.5 Consents. Except as contemplated by this Agreement with respect
to the USFS Permits or as otherwise contemplated by this Agreement, to
Purchaser's knowledge, no consent, approval, Order or authorization of, or
registration, declaration or filing with, any Authority or any other Person is
required to be obtained or made by Purchaser in connection with its execution
and delivery of this Agreement or the performance by it of its obligations
hereunder.
4.6 Broker's or Consultant's Fees. Purchaser represents and warrants
that it has dealt with no broker, finder or consultant in connection with any
of the transactions contemplated by this Agreement, and, to its knowledge, no
Person is entitled to any commission or finder's fee in connection with the
sale of the Shares to Purchaser.
4.7 Investment. The Shares are being acquired by Purchaser for its
own account, for investment and not with a view to resale or distribution.
ARTICLE V
COVENANTS
5.1 Title Expenses. The costs and expenses of the Title Policies and
any related searches, filings and recordings hereunder shall be paid by Sellers
in an amount not to exceed that which would have been incurred in connection
with the delivery of Title Policies containing "standard" coverage. The amount
of the costs and expenses of the Title Policies directly attributable to the
delivery of "extended" coverage shall be paid by Purchaser. In addition,
Sellers agree to pay for any transfer or similar taxes, and any additional
title fees and costs arising in connection with the proper recordation of, and
issuance of a final title policy with respect to, real estate parcels bearing
tax account numbers H092211-9001-02 and 22-11-0500-0001. Any determination of
such fees and expenses shall be calculated by the Title Company in its sole
discretion.
5.2 Code Section 1445 Withholding. Sellers shall take all actions as
may be necessary to comply with Sections 897 and 1445 of the Code and any
rules, regulations and orders which may be promulgated thereunder. In the
event that Sellers fail to provide to Purchaser, at or prior to the Closing,
either (i) an affidavit in form acceptable to Purchaser, or (ii) evidence
satisfactory to Purchaser's counsel that the transaction contemplated by this
Agreement is exempt from any Taxes which may apply by reason of Section 897 of
the Code, Purchaser shall have the right to withhold ten percent (10%) of the
Purchase Price (the "Section 1445 Withholding"), and Purchaser shall hold and
dispose of the Section 1445 Withholding in accordance with the requirements of
such Section. The amount of the Section 1445 Withholding shall be credited
against the Purchase Price otherwise due and payable hereunder by Purchaser to
Sellers at the Closing and Sellers shall have no recourse against Purchaser
therefor.
5.3 Pre-Closing Taxes. Sellers shall be jointly and severally liable,
based on their pro rata percentage of ownership of the Shares, for all income
and capital gains taxes attributable to income or capital gains of the Company
for any taxable period ending before October 1, 1996.
5.4 Tax Reports; Returns. Sellers and Purchaser shall provide each
other with such assistance as may reasonably be requested by the others in
connection with the preparation of any return or report of Taxes, any audit or
other examination by any taxing authority, or any judicial or
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administrative proceedings relating to liabilities for Taxes. Sellers and
Purchaser will retain for the full period of any statute of limitations and
provide the others with any records or information which may be relevant to
such preparation, audit, examination, proceeding or determination. Sellers
shall be responsible for causing the Company, at the Company's expense, to file
all Tax returns and reports of the Company due on or prior to the date hereof,
which such returns and reports shall be prepared and filed timely and on a
basis consistent with existing procedures for preparing such returns or reports
and consistent with prior practice with respect to the treatment of specific
items on the returns or reports.
5.5 Transfer Taxes. Sellers shall pay the cost of any transfer,
stamp, excise or similar tax imposed under the laws of the United States, or
any state or political subdivision thereof, which arises out of the transfer of
any of the Shares.
5.6 Limitation on Liens. From the date hereof until all obligations
under the Ski Lifts Promissory Note are paid in full, Purchaser will not permit
or cause the Company to create or incur, or suffer to be incurred or to exist,
(a) any Lien on its property or assets, whether now owned or hereafter
acquired, with respect to indebtedness for borrowed money; or (b) any other
Lien on its property or assets, whether now owned or hereafter acquired, except
only with respect to this clause (b):
(i) Liens for taxes, assessments or governmental charges being
contested in good faith;
(ii) Liens arising in the Ordinary Course of Business;
(iii) Liens disclosed on the Title Policies or similar
encumbrances or charges which do not interfere with the market value
or use of the Business; and
(iv) Liens existing on the date hereof or incurred in favor of
the Representative for the benefit of Sellers in connection with the
obligations under the Ski Lifts Promissory Note.
5.7 Restricted Payments. From the date hereof until all obligations
under the Ski Lifts Promissory Note are paid in full, Purchaser will not cause
or permit the Company to declare or pay dividends on or make any distributions
with respect to any shares of its capital stock.
5.8 UCC Releases. Concurrently with the payment in full of all
obligations under the Ski Lifts Promissory Note, the Representative shall
release to Purchaser any and all UCC releases, financing statements,
certificates and other assurances or instruments necessary to release and
discharge any and all Liens on the assets or real property of the Company held
by the Representative on behalf of Sellers.
5.9 Ordinary Course of Business. From the date hereof until all
obligations under the Ski Lifts Promissory Note are paid in full, Purchaser
shall cause the Company to (i) operate and maintain the Business in the
Ordinary Course of Business and (ii) use all commercially reasonable efforts
to preserve and protect
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the Business' goodwill, rights, properties and assets, and to protect the
Business' relationships with its employees, officers, suppliers, customers,
creditors and others having business relationships with it.
5.10 Affiliate Transactions. From the date hereof until all
obligations under the Ski Lifts Promissory Note are paid in full, Purchaser
shall not cause or permit the Company to enter into any transaction with, or
make any payment or transfer to, any Affiliate except (i) in the Ordinary
Course of Business and (ii) pursuant to terms no less favorable to the Company
than it would obtain in a comparable arms-length transaction.
5.11 Required Signatures. It is the intent of the parties hereto that
all cash received by the Company in connection with the operation of the
Business following the date hereof (until all of the obligations under the Ski
Lifts Promissory Note are paid in full) be retained by the Company unless
disbursed in the Ordinary Course of Business. From the date hereof until all
obligations under the Ski Lifts Promissory Note are paid in full, Purchaser
shall not cause or permit the Company to transfer any funds (or issue or
execute a check or money order) in excess of $5,000 without the approval of the
Representative.
5.12 Developmental Real Estate. Purchaser hereby covenants and agrees
to use all commercially reasonable efforts to effectuate the transfer by the
Company to DRE, L.L.C. of the Developmental Real Estate owned by the Company on
the date hereof including, without limitation, the platting of such
Developmental Real Estate and delivery and filing of all necessary deeds of
transfer. All costs and expenses associated with such platting and transfer
shall be paid by Purchaser.
5.13 Moffett Indebtedness. Concurrent with the payment in full of the
obligations outstanding under the Ski Lifts Promissory Note, Purchaser hereby
covenants and agrees to cause the Company to repay the Moffett Indebtedness in
full.
ARTICLE VI
CLOSING
6.1 Closing Transactions. The actual sale, transfer, conveyance,
assignment and delivery of the Shares to Purchaser in exchange for the Purchase
Price shall not be considered to have been taken or made unless and until all
actions and deliveries set forth in this Article VI have been completed or
waived in writing. All documents and other instruments required to be
delivered hereunder shall be regarded as having been delivered simultaneously,
and no document or other instrument shall be regarded as having been delivered
until all have been delivered.
6.2 Deliveries by Sellers to Purchaser. Prior to and as a condition
precedent to the effectiveness of the transactions contemplated hereunder,
Purchaser shall have received and/or Sellers shall deliver or cause to be
delivered to Purchaser:
(a) certificates representing all of the purchased Shares which
certificates shall be either duly endorsed or accompanied by stock powers
duly endorsed, executed together with evidence satisfactory to the
Purchaser that any Lien on such purchased Shares has been released or
terminated;
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(b) the by-laws of the Company certified by the Secretary or Assistant
Secretary of the Company;
(c) certificates of existence for the Company from the State of
Washington and any state where the Company's failure to be qualified to
transact business as a foreign corporation would have a material adverse
effect on the Company or its business or financial condition;
(d) the legal opinion of Carney, Badley, Smith & Spellman, counsel for
Sellers and the Company, substantially in the form attached hereto as
Exhibit B;
(e) an executed original of each consent, approval, order,
authorization, registration, declaration and filing described on Schedule
3.27 in form reasonably satisfactory to Purchaser including, without
limitation, any (i) consent of the Forest Service or reissuance of each
USFS Permit to the Company required upon consummation of sale and purchase
of the Shares and (ii) necessary authorizations, agreements and consents
of any Persons or Authorities to the consummation of the transactions
contemplated by this Agreement, or otherwise pertaining to the matters
covered by it, shall be in full force and effect as of the date hereof,
and no such authorizations, agreements and consents shall impose any
burdensome or, in Purchaser's reasonable determination, unsatisfactory
conditions or requirements on Purchaser or Purchaser shall have entered
into new contracts or agreements which permit the continued use or supply
of the property, products, technology or services provided for by the
Company's existing contracts or agreements on terms no less favorable to
the Company than the prior contract or agreement of the Company as to such
property, products, technology or services;
(f) the letter dated February 7, 1997 from the Forest Service
regarding the USFS Permits and all other Permits issued or reissued in the
name of the Company;
(g) an affidavit of the President or a Vice President of the Company
stating, under penalty of perjury, the Company's United States taxpayer
identification number and that the Company is not a foreign person,
pursuant to Section 1442(b)(2) of the Code;
(h) the Employment and Non-Compete Agreement substantially in the form
of Exhibit D attached hereto executed by David R. Moffett and the Company
(the "Employment Agreement");
(i) all releases necessary to terminate and discharge any Liens on the
Shares and the Company's assets;
(j) an executed copy of the Preferred Stock Purchase Agreement dated
the date hereof between DRE, L.L.C., the Representative and Sellers (the
"Preferred Stock Purchase Agreement");
(k) (i) a promissory note in the aggregate principal amount of
$300,000 (the "$300,000 Company Note") and (ii) a promissory note in the
aggregate principal amount of $650,000 (the "$650,000 Company Note"),
each dated the date hereof from the Company
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to Purchaser due one year from the date hereof, evidencing Purchaser's
advance to the Company on the date hereof of $950,000 in cash to satisfy
certain obligations of the Company under the Key Bank Credit Documents and
under other currently existing third-party obligations;
(l) with respect to each parcel of Owned Real Property, an owner's
title insurance policy on ALTA 1992 Owner's Form B (the "Title Policies")
issued by First American Title Insurance Company or another title
insurance company reasonably acceptable to Purchaser (the "Title
Company"), insuring the fee simple title of the Company in such real
estate, subject only to exceptions which are reasonably satisfactory to
Purchaser, and including extended coverage (other than to survey matters),
a zoning 3.1 with parking endorsement, a non-imputation endorsement, an
owner's comprehensive endorsement and such other endorsements or coverages
deemed necessary or advisable in the reasonable judgment of Purchaser;
(m) a GAP undertaking and all other documents deemed reasonably
necessary by the Title Company for purposes of delivering the Title
Policies;
(n) a withholding certificate, in the form of Exhibit E executed by
each Seller;
(o) a certified copy of the Amended Articles from the Secretary of
State of the State of Washington;
(p) an executed copy of the Operating Agreement of DRE, L.L.C., dated
the date hereof (the "Operating Agreement");
(q) an executed copy of the two Purchase Agreements between the
Company and certain Sellers relating to the sale of the Company's
partnership interest in ODCX (the "Assignment Agreement");
(r) an executed copy of the Agreement and Plan of Recapitalization
between the Company and Sellers (the "Recapitalization Plan");
(s) evidence that Sellers have (i) caused the Company to contribute
$162,911 to the Company's current employees either through a bonus or a
contribution to the employees' 401(k) Plan and (ii) advised such employees
that such contribution is made on an equal basis by Purchaser, on the one
hand, and Sellers, on the other hand;
(t) evidence that Sellers have designated David R. Moffett as
Representative in accordance with Section 9.1 of the Agreement;
(u) a report, in form and substance satisfactory to Purchaser, as to
the results of an examination of financing statements filed under the
Uniform Commercial Code, and tax lien and judgment records, in each office
in each such jurisdiction as Purchaser shall reasonably request, and such
report shall indicate no material security interests, tax liens, judgments
or other Liens not previously disclosed in writing to Purchaser;
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(v) an executed deed evidencing the transfer of the Developmental Real
Estate from the Company to DRE, L.L.C. (the "DRE Deed");
(w) a copy of the final appraisal of the Developmental Real Estate as
of January 31, 1997, from Bruce C. Allen & Associates dated February 18,
1997, in form and substance satisfactory to Purchaser;
(x) evidence of resignations of all directors and officers of the
Company; and
(y) such other instruments and documents as are: (i) required by any
other provisions of this Agreement to be delivered by Sellers to
Purchaser; or (ii) reasonably necessary, in the opinion of Purchaser, to
effect the performance of this Agreement by Sellers.
6.3 Deliveries by Purchaser to Sellers. Prior to and as a condition
precedent to the effectiveness of the transactions contemplated hereunder,
Sellers shall have received and/or Purchaser shall deliver or cause to be
delivered to Sellers:
(a) the Ski Lifts Promissory Note issued by Purchaser in favor of the
Representative for the benefit of Sellers in accordance with Section
2.2(i) and the cash payment required by Section 2.2(a)(ii);
(b) the legal opinion of Winston & Strawn, special counsel for
Purchaser, substantially in the form attached hereto as Exhibit C;
(c) a certificate of the Secretary or an Assistant Secretary of
Purchaser, of the date hereof, certifying to (i) the by-laws of Purchaser;
(ii) resolutions of the Board of Directors of Purchaser approving the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby; and (iii) incumbency and
signatures of the officers of Purchaser executing this Agreement and any
other certificate or document delivered in connection herewith;
(d) certificate of incorporation of Purchaser certified by the
Secretary of State of the State of Delaware;
(e) an executed copy of the pledge agreement dated the date hereof
from Purchaser to the Representative for the benefit of Sellers, securing
the obligations of the Company under the Ski Lifts Promissory Note by
pledge of the Shares;
(f) the Employment Agreement executed by the Company;
(g) an executed copy of the Preferred Stock Purchase Agreement;
(h) an executed copy of the security agreement, UCC-1 financing
statement, and deed of trust from DRE, L.L.C. in favor of the
Representative for the benefit of Sellers securing the obligations of DRE,
L.L.C. under the Preferred Stock Purchase Agreement;
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(i) a certified copy of the Amended Articles from the Secretary of
State of the State of Washington;
(j) a certified copy of the Certificate of Formation from the
Secretary of State of the State of Delaware evidencing the creation of
DRE, L.L.C.;
(k) an executed copy of the Operating Agreement;
(l) an executed copy of the Assignment Agreement;
(m) evidence of repayment in full of obligations under Key Bank Credit
Documents and release of personal guaranty of David R. Moffett;
(n) an executed copy of the Recapitalization Plan;
(o) an executed copy of a security agreement, UCC-1 financing
statement, and deed of trust between the Company and the Representative
for the benefit of Sellers, securing the obligations of the Company under
the Ski Lifts Promissory Note;
(p) an executed copy of the DRE Deed;
(q) evidence of Purchaser's funding of the loans evidenced by the
$300,000 Company Note and the $650,000 Company Note; and
(r) such other instruments and documents as are: (i) required by any
other provisions of this Agreement to be delivered by Purchaser to
Sellers; or (ii) reasonably necessary, in the opinion of Sellers, to
effect the performance of this Agreement by Purchaser.
ARTICLE VII
OTHER AGREEMENTS
7.1 Further Assurance. At any time and from time to time from and
after the Closing, Sellers and Purchaser will, at the request of the other
parties hereto, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments and other documents and perform or
cause to be performed such acts and provide such information, as may reasonably
be required to evidence or effectuate the sale, conveyance, transfer,
assignment and delivery to Purchaser of the Shares or for the performance by
Sellers or Purchaser of any of their other respective obligations under this
Agreement. Each party hereto shall be liable for its own expenses incurred
pursuant to this Section 7.1.
7.2 Confidentiality.
(a) The parties hereto agree with respect to the terms and conditions
of this Agreement, including, without limitation, the Purchase Price, and all
information that is furnished or disclosed by the other party (collectively,
"Confidential Information"), that (i) such Confidential
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Information is confidential and/or proprietary to the furnishing/disclosing
party and entitled to and shall receive treatment as such by the receiving
party; (ii) the receiving party will hold in confidence and not disclose nor
use (except in respect of the transactions contemplated by this Agreement) any
such Confidential Information, treating such Confidential Information with the
same degree of care and confidentiality as it accords its own confidential and
proprietary information; provided, however, that the receiving party shall not
have any restrictive obligation with respect to any Confidential Information
which (A) is contained in a printed publication available to the general
public, (B) is or becomes publicly known through no wrongful act or omission of
the receiving party, or (C) is known by the receiving party without any
proprietary restrictions by the furnishing/disclosing party at the time of
receipt of such Confidential Information; and (iii) all such Confidential
Information furnished to either party by the other, unless otherwise specified
in writing, shall remain the property of the furnishing/disclosing party, and
in the event this Agreement is terminated, shall be returned to it, together
with any and all copies made thereof, upon request for such return by it
(except for documents submitted to an Authority with the consent of the
furnishing/disclosing party or upon subpoena and which cannot be retrieved with
reasonable effort).
(b) Each party hereto acknowledges that the remedy at law for any
breach by either party of its obligations under Section 7?(a) is inadequate and
that the other party shall be entitled to equitable remedies, including an
injunction, in the event of breach of any other party.
7.3 Employment Matters.
(a) At the Closing, Purchaser may, but shall not be obligated to,
cause the Company to retain the employees of the Company engaged full-time or
part-time in the conduct of the Business as Purchaser may determine, in its
sole discretion. Sellers shall be responsible for the payment of all
compensation and other benefits payable to, or accrued in respect of, all such
employees for all times prior October 1, 1996. Sellers shall retain all
Liabilities arising prior to October 1, 1996, with respect to all of its
employees and former employees (including any and all beneficiaries thereof)
who are not retained by the Company as employees of the Company, except to the
extent Purchaser has wrongfully terminated any such employee.
(b) Sellers shall be solely responsible for any severance claims or
any other claims or causes of action that relate to or arise out of employment
with the Company prior to October 1, 1996.
7.4 Employee Benefits.
(a) Subject to Section 2.3(a), Sellers shall remain solely responsible
for Liability arising from workers' compensation claims, both medical and
disability, or other government-mandated programs which are based on injuries
occurring prior to October 1, 1996, regardless of when such claims are filed.
The Company and not the Sellers shall be solely responsible for such claims
based on injuries occurring after October 1, 1996.
(b) Sellers shall remain solely responsible for the satisfaction of
all claims for medical, dental, life insurance, health, accident, disability or
other benefits brought by or in respect of employees under any of the Company's
welfare benefit plans where the claims were incurred prior to October 1, 1996,
regardless of when such claims are filed.
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(c) Sellers shall be solely responsible for all Liabilities arising
prior to October 1, 1996 in connection with claims for benefits brought by or
in respect of all employees and former employees of the Company not retained by
the Company under any of the Company's welfare benefit plans with respect to
medical, dental, life insurance, health, accident or disability or other
benefits, including without limitation continuation coverage pursuant to
Section 4980B of the Code and Part 6 of Title I of ERISA.
7.5 Indemnification for Employment Matters. Sellers (severally and
jointly) and Purchaser each agree to indemnify, defend and hold the other
harmless from and against any and all loss, damage and expense, including
without limitation attorneys' fees, arising out of any claims, causes of
action, liabilities, benefits or other obligations for which it is responsible
under Sections 7.3 and 7.4, without regard to the limitations set forth in
Sections 88.1 and 8.2.
7.6 Non-Competition Agreement.
(a) From the date hereof until April 30, 2000, each Seller shall not,
directly or indirectly, or as the agent of another Person or through other
Persons as an agent:
(i) engage, directly or indirectly, within a geographical area
covering a one hundred (100) mile radius from any of the Businesses
(the "Territory"), in a business the same as, or substantially
similar to, the Business;
(ii) own, manage or operate any other business directly or
indirectly engaged in the promotion, sale or distribution, within the
Territory, of products or services competitive with those of the
Business, except that an interest of less than five percent (5%) of a
publicly-held corporation that is engaged in a business competitive
with the Business within the Territory shall be permitted; or
(iii) solicit for employment or employ any employee of the
Business within the Territory, or request, induce or advise any
employee to leave the employ of the Business, unless Purchaser
consents to said employee leaving the employ of the Business.
(b) The necessity of protection against the competition of Sellers
against Purchaser and the nature and scope of such protection has been
carefully considered by the parties hereto. The parties hereto agree and
acknowledge that the duration, scope and geographic areas applicable to the
covenant not-to-compete described in this Section 7.6 are fair, reasonable and
necessary and that adequate compensation has been received by Sellers for such
obligations. If, however, for any reason any court determines that the
restrictions in this Section 7.6 are not reasonable or that consideration is
inadequate, such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in this
Section 7.6 as will render such restrictions valid and enforceable.
(c) In the event of a breach or threatened breach of this Section
7.6, Purchaser shall be entitled, without the posting of a bond, to an
injunction restraining such breach. Nothing herein contained shall be
construed as prohibiting any party from pursuing any other remedy available to
it for such breach or threatened breach.
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7.7 Accounts Receivable.
(a) Purchaser may elect to convey to Sellers any of the Closing
Receivables which remain uncollected for a period of one hundred twenty (120)
days after the date any such Closing Receivables becomes due and payable.
Subject to paragraph (b) below, Sellers shall pay to Purchaser the aggregate
amount of all uncollected Closing Receivables (in excess of the Receivable
Reserve) returned to Sellers within ten (10) days after the date of return.
(b) Unless the aggregate of the uncollected Closing Receivables
returned to Sellers pursuant to clause (a) above exceeds the Receivable
Reserve, Sellers shall not have any payment obligations to Purchaser pursuant
hereto.
(c) Purchaser agrees to execute such bills of sale or other
assignment documents reasonably requested by Sellers to effect a sale to
Sellers, without recourse, of the uncollected Closing Receivables returned to
Sellers pursuant to this Section 7.7.
(d) Purchaser agrees to use all commercially reasonable efforts
to collect the Closing Receivables. To the extent Purchaser receives a payment
from an account debtor of a Closing Receivable who also has an account
receivable owing to Purchaser resulting from post-Closing transactions,
Purchaser agrees to apply such payment to the oldest invoice first unless such
customer specifically otherwise designates the application of such payment.
(e) For purposes of this Section 7.7, the following terms shall
have the meanings ascribed to them below:
(i) "Closing Receivables" shall mean all accounts and notes
receivable reflected on the Reference Balance Sheet.
(ii) "Receivable Reserve" shall mean an amount equal to the
reserve for Accounts Receivable reflected on the
Reference Balance Sheet.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Sellers. Sellers, jointly and severally, agree
to indemnify, defend, hold harmless and waive any claim for contribution
against Purchaser, the Company and all of their officers, directors,
shareholders, Affiliates, employees and agents (the "Purchaser Indemnified
Persons") after the Closing from and against any Adverse Consequence arising
out of or resulting from:
(a) any misrepresentation or breach as of the date hereof of any
representation or warranty of Sellers contained in this Agreement or Schedules
hereto (each a "Purchaser Warranty Claim"); provided, however, that the
Purchaser Indemnified Persons' rights to indemnification for Purchaser Warranty
Claims shall be subject to the limitations set forth in Section 8.4 and the
following:
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(b) such Purchaser Warranty Claims shall expire fifteen (15)
months following the date hereof, except with respect to claims (A)
under Sections 3.7, 3.16, 3.17 and 3.28 as to which the
indemnification obligation shall survive until thirty (30) days after
the expiration of any applicable statute of limitations; (B) under
Section 3.14 as to which the indemnification obligation shall survive
until seven (7) years after the date hereof; and (C) under Sections
3.1, 3.11, 3.12, 3.19 and clauses (i) and (ii) of Section 3.20(c) as
to which there shall be no expiration date; provided, that if at the
stated expiration of any indemnification obligation there shall then
be pending any indemnification claim by a Person, such Person shall
continue to have the right to such indemnification with respect to
such claim notwithstanding such expiration;
(c) no Purchaser Indemnified Person shall be entitled to
indemnification for Purchaser Warranty Claims unless and until the
aggregate Adverse Consequences suffered by all Purchaser Indemnified
Persons collectively exceeds $50,000, whereupon the Purchaser
Indemnified Persons shall be entitled to indemnification hereunder
from Sellers for all Adverse Consequences suffered by Purchaser
Indemnified Persons in excess of such threshold amount.
(d) the failure by any Seller to perform any of its covenants or
obligations under Sections 2.3, 5.1, 5.2, 5.4, 5.5, 5.8, 7.1, 7.2, 7.6,
7.7 and 11.1; provided the indemnification obligations of Sellers under
this Section 8.1(b) with respect to Sections 2.3, 5.1, 5.2, 5.5, 5.8, 7.1,
7.2, 7.6, 7.7 and 11.1 shall expire on the thirty-ninth (39th) month
anniversary of the date hereof (and, with respect to Section 5.4 shall
expire on the fifth year anniversary of the date hereof), except for any
pending indemnification claim by a Purchaser Indemnified Person which
shall continue notwithstanding such expiration;
(e) any brokers' commissions, finders' fees or other like payments
incurred or alleged to have been incurred by Sellers in connection with
the sale of the Shares or the consummation of the transactions
contemplated by this Agreement;
(f) any and all third-party claims and any and all assessments of
fines and penalties by any Authority relating to Liabilities arising prior
to October 1, 1996 with respect to the Company, the Shares or the
Business; provided, the indemnification obligations of Sellers under this
Section 8.1(d) shall expire on the third year anniversary of the date
hereof, except for any pending indemnification claim by a Purchaser
Indemnified Person which shall continue notwithstanding such expiration;
(g) all Taxes attributable to the Company for the period ending on or
before October 1, 1996 (provided that such indemnification shall take into
account any tax benefits received by the Company on account thereof); and
(h) the matters disclosed in Schedule 8.1; provided, the
indemnification obligations of Sellers under this Section 8.1(f) shall
expire on the seventh year anniversary
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of the date hereof, except for any pending indemnification claim by a
Purchaser Indemnified Person which shall continue notwithstanding such
expiration.
Notwithstanding anything else in this Agreement to the contrary,
Sellers shall not be obligated to indemnify, defend or hold Purchaser harmless
from and against any Adverse Consequence arising out of matters disclosed in
Schedule 3.14 or the ENVIRON Report (other than those items contained therein
set forth in Schedule 8.1).
8.2 Indemnification by Purchaser. Purchaser agrees to indemnify,
defend and hold harmless Sellers after the Closing from and against any Adverse
Consequences arising out of or resulting from:
(a) any misrepresentation or breach as of the date hereof of any
representation or warranty of Purchaser contained in this Agreement (each
a "Seller Warranty Claim"); provided, however, that the Sellers' rights to
indemnification for Seller Warranty Claims shall be subject to the
following limitations:
(i) such Seller Warranty Claims shall expire fifteen (15)
months following the date hereof; provided, that if at the stated
expiration of any indemnification obligation there shall then be
pending any indemnification claim by a Seller, said Seller shall then
continue to have the right to such indemnification with respect to
such claim notwithstanding such expiration;
(ii) Purchaser's maximum aggregate liability to Sellers for
indemnification shall not exceed the Outstanding Preferred Stock
Balance; and
(iii) Sellers shall not be entitled to indemnification for
Seller Warranty Claims unless and until the aggregate Adverse
Consequences suffered by Sellers exceeds $50,000, whereupon Sellers
shall be entitled to indemnification hereunder from Purchaser for all
Adverse Consequences suffered by Sellers in excess of such threshold
amount.
(b) the failure by Purchaser to perform any of its covenants or
obligations under Sections 2.3, 5.1, 5.2, 5.4, 5.6, 5.7, 5.9, 5.10, 5.11,
5.12, 5.13, 7.1, 7.2 and 7.7;
(c) the operation of the Business after October 1, 1996 (except for or
with respect to any Adverse Consequences for which any Purchaser
Indemnified Person is entitled to indemnification hereunder or under the
Preferred Stock Purchase Agreement, without regard to any of the
limitations set forth in Sections 8.1 or 8.4); or
(d) any brokers' commissions, finders' fees or other like payments
incurred or alleged to have been incurred by Purchaser in connection with
the sale of the Shares or the consummation of the transactions
contemplated by this Agreement.
8.3 Procedure for Indemnification. If any Person shall claim
indemnification (the "Indemnified Party") hereunder for any claim, the
Indemnified Party shall promptly give written
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notice to the other party from whom indemnification is sought (the
"Indemnifying Party") of the nature and amount of the claim. If an Indemnified
Party shall claim indemnification hereunder arising from any claim or
demand, the Indemnified Party shall promptly give written notice (a "Claim
Notice") to the Indemnifying Party of the basis for such claim or demand,
setting forth the nature of the claim or demand in detail. If the claim is by
a third-party, the Indemnifying Party shall have the right to compromise or, if
appropriate, defend at its own cost and through counsel of its own choosing,
any claim or demand set forth in a Claim Notice giving rise to such claim for
indemnification. In the event the Indemnifying Party undertakes to compromise
or defend any such claim or demand, it shall promptly (and in any event, no
later than fifteen (15) days after receipt of the Claim Notice) notify the
Indemnified Party in writing of its intention to do so and shall give the
Indemnified Party such security in that regard as the Indemnified Party
reasonably may request. The Indemnified Party shall fully cooperate with the
Indemnifying Party and its counsel in the defense or compromise of such claim
or demand. After the assumption of the defense by the Indemnifying Party, the
Indemnified Party shall not be liable for any legal or other expenses
subsequently incurred by the Indemnifying Party, in connection with such
defense, but the Indemnified Party may participate in such defense at its own
expense. No settlement of a third party claim or demand defended by the
Indemnifying Party shall be made without the written consent of the Indemnified
Party, such consent not to be unreasonably withheld. The Indemnifying Party
shall not, except with written consent of the Indemnified Party, consent to the
entry of a judgment or settlement which does not include as an unconditional
term thereof, the giving by the claimant or plaintiff to the Indemnified Party
of an unconditional release from all liability in respect of such third party
claim or demand.
8.4 Limitations on Sellers' Liability. (a) Notwithstanding anything
else in this Agreement to the contrary, the relative liability of each Seller
with respect to any claim for indemnification pursuant to this Agreement and
the Preferred Stock Purchase Agremeent shall be limited to such Seller's pro
rata share of the sum of (i) the Purchase Price plus (ii) the "Purchase Price"
under the Preferred Stock Purchase Agreement.
(b) Sellers' maximum aggregate liability to Purchaser Indemnified
Persons for indemnification of (i) Purchaser Warranty Claims pursuant to
Sections 3.1, 3.11, 3.12, 3.19 and clauses (i) and (ii) of Section 3.20(c)
shall not exceed the sum of (A) the Purchase Price plus (B) the "Purchase
Price" under the Preferred Stock Purchase Agreement; and (ii) claims pursuant
to Sections 8.1(b), (d) and (f) and for Purchaser Warranty Claims (other than
those set forth in clause (i)) shall not exceed the Outstanding Preferred Stock
Balance.
8.5 Payment. Except for third-party claims being defended in good
faith by the Indemnifying Party in accordance with Section 8.3 or claims being
disputed by either Sellers or Purchaser in accordance with Article X, the
Indemnifying Party shall satisfy its obligations hereunder within fifteen (15)
days after receipt of a claim notice. Any amount not paid to the Indemnified
Party by such date shall bear interest at a rate equal to nine percent (9%) per
annum from the date due until the date paid.
8.6 Set-Off. If any Seller fails to make any payment with respect to
any indemnification claim in accordance with this Article VIII, Purchaser may,
in addition to any other rights hereunder, set-off the amount of such claim
against any amounts payable by Purchaser, the Company or their Affiliates to
any Seller under the Preferred Stock Purchase Agreement. Any amounts Purchaser
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determines it is entitled to set-off pursuant to this Section 8.6 shall be paid
into the Escrow Account (as defined herein) on the date otherwise due to
Sellers.
8.7 Escrow Account. In the event Purchaser is entitled to set-off the
amount of any claim for indemnification pursuant to Section 8.6, Purchaser
shall be obligated to deposit all amounts to be set-off into an escrow account
(the "Escrow Account") with a banking institution of national standing
reasonably acceptable to Representative and Purchaser pursuant to the terms and
conditions of an escrow agreement in substantially the form of Exhibit F
attached hereto (the "Escrow Agreement"). Such Escrow Agreement will provide,
without limitation, for the release of such amount only upon (i) the mutual
consent of the Representative and Purchaser or (ii) the order of an arbitrator
issued in accordance with Article X hereof. Representative and Purchaser agree
to act in good faith to promptly take any actions reasonably required to enter
into the Escrow Agreement and to establish the Escrow Account should the Escrow
Agreement be called for by terms of this Agreement. Upon deposit of any such
amount into the Escrow Account, the Representative shall deliver written notice
to Purchaser acknowledging that the payment into the Escrow Account satisfies
DRE, L.L.C's payment obligation under the Preferred Stock Purchase Agreement to
the extent of such amount, as the case may be.
ARTICLE IX
SELLERS' REPRESENTATIVE
9.1 Appointment. Sellers hereby irrevocably make, constitute and
appoint David R. Moffett as their agent and representative (the
"Representative") for all purposes under this Agreement. In the event of the
death, resignation or incapacity of the Representative, Sellers shall promptly
designate another individual to act as their representative under this
Agreement so that at all times there will be a Representative with the
authority provided in this Article IX. Such successor Representative shall be
designated by Sellers by an instrument in writing signed by Sellers (or their
successors in interest) holding a majority of the Shares, and such appointment
shall become effective as to the successor Representative when such instrument
shall have been delivered to him or her and a copy thereof delivered to
Purchaser.
9.2 Authorization. Sellers hereby authorize the Representative, on
their behalf and in their name, to:
(a) Receive all notices or documents given or to be given to Sellers
by the Purchaser pursuant hereto or in connection herewith and to receive
and accept service of legal process in connection with any suit or
proceeding arising under this Agreement. The Representative shall
promptly forward a copy of such notice of process to each Seller;
(b) Deliver at the Closing the certificates for the Shares of the
Sellers in exchange for their respective portion of the consideration
payable with respect to such securities;
(c) Upon confirmation of the receipt of the Ski Lifts Promissory
Note, sign and deliver to Purchaser at the Closing a receipt for Sellers'
portion of the consideration and forward such amount to Sellers;
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(d) Deliver to Purchaser at the Closing all certificates and documents
to be delivered to Purchaser by Sellers pursuant to this Agreement,
together with any other certificates and documents executed by Sellers and
deposited with the Representative for such purpose;
(e) Engage counsel, and such accountants and other advisors for
Sellers and incur such other expenses on behalf of Sellers in connection
with this Agreement and the transactions contemplated hereby as the
Representative may deem appropriate; and
(f) Take such action on behalf of Sellers as the Representative may
deem appropriate in respect of:
(i) waiving any inaccuracies in the representations or
warranties of Purchaser contained in this Agreement or in any
document delivered by Purchaser pursuant hereto;
(ii) waiving the fulfillment of any of the conditions
precedent to Sellers' obligations hereunder, except with respect to
Purchaser's payment of the Purchase Price to be paid to
Representative for the benefit of Sellers pursuant to Section 2?;
(iii) taking such other action as the Representative is
authorized to take under this Agreement;
(iv) receiving all documents or certificates and making all
determinations, on behalf of Sellers, required under this Agreement;
(v) all such other matters as the Representative may deem
necessary or appropriate to consummate this Agreement and the
transactions contemplated hereby; and
(vi) taking all such action as may be necessary after the date
hereof to carry out any of the transactions contemplated by this
Agreement.
9.3 Irrevocable Appointment. The appointment of the Representative
hereunder is irrevocable and any action taken by the Representative pursuant to
the authority granted in this Article IX shall be effective and absolutely
binding on each Seller notwithstanding any contrary action of, or direction
from, a Seller, except for actions taken by the Representative which are in bad
faith or grossly negligent. The death or incapacity of a Seller shall not
terminate the prior authority and agency of the Representative.
9.4 Resignation. The Representative may resign at any time by giving
notice to Sellers, and such resignation shall be effective upon the appointment
and qualification of a successor. The Representative may be discharged, and
replaced by another person to act as his or her successor, by an instrument in
writing signed by Sellers (or their successors in interest) holding a majority
of the Shares.
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9.5 Purchaser's Reliance. Purchaser shall not be obliged to inquire
into the authority of the Representative, and Purchaser shall be fully
protected in dealing with the Representative in good faith.
9.6 Exculpation and Indemnification.
(a) In performing any of his or her duties as Representative under
this Agreement, the Representative shall not incur any Liability to any Person,
except for Liability caused by the Representative's willful misconduct or gross
negligence. Accordingly, the Representative shall not incur any such Liability
for (i) any action that is taken or omitted in good faith regarding any
questions relating to the duties and responsibilities of the Representative
under this Agreement, or (ii) any action taken or omitted to be taken in
reliance upon any instrument that the Representative shall in good faith
believe to be genuine, to have been signed or delivered by a proper person or
persons and to conform with the provisions of this Agreement.
(b) Sellers, jointly and severally, shall indemnify, defend and hold
harmless the Representative against, from and in respect of any Adverse
Consequence arising out of or resulting from the performance of his or her
duties hereunder or in connection with this Agreement (except for Liabilities
arising from the gross negligence or willful misconduct of the Representative).
ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. Any controversy, claim or dispute arising out
of or relating to this Agreement, or the alleged breach hereof shall be
resolved by binding arbitration by one arbitrator subject to the sole
jurisdiction of the Judicial Arbitration and Mediation Service of King County,
Washington (J.A.M.S.). Either Purchaser or Representative may submit any such
controversy, claim or dispute to such arbitration by notifying the other, in
writing, of such election. Within ten (10) days after receipt of such notice,
Purchaser and Representative shall designate in writing one (1) arbitrator
mutually agreeable to each; provided, that if Purchaser and Representative are
unable to agree on one (1) arbitrator within such ten-day period, an arbitrator
shall be selected by the American Arbitration Association, subject to the last
two (2) sentences of this Section 10.1. The arbitrator shall permit a period
of open and free discovery, including the taking of depositions, and will
promptly conduct an arbitration hearing. It is the intent of the parties
hereto that an arbitration hearing be concluded within ninety (90) days of the
appointment of the arbitrator. The arbitrator shall have broad authority to
fashion any legal or equitable remedy including the authority to award specific
performance. The arbitrator will render a final and binding decision within
ten (10) days of the conclusion of the arbitration hearing. Such arbitrator
shall, at the sole election of Purchaser, be a resident of, or maintain a
principal place of business in, the City of San Francisco, State of California.
In no event shall such arbitrator be a resident of, or maintain a principal
place of business in, the State of Washington unless Purchaser otherwise
agrees.
10.2 Arbitration Award. After the arbitration award being rendered, it
may be entered in any court of competent jurisdiction and shall constitute a
final adjudication of all matters submitted to arbitration.
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10.3 Procedures. If any party at any time subsequent to execution of
this Agreement refuses to comply with the arbitration provisions of this
Article X, any party may make specific application to the Superior Court of
King County, Washington to compel the party to submit to arbitration in
accordance with the terms of this Article. Nothing in this Article X, however,
shall deprive a court of competent jurisdiction of the authority to apply a
temporary restraining order or preliminary injunction prohibiting a violation
of this Agreement prior to any arbitration proceeding.
10.4 Attorneys' Fees. It if shall be necessary for any party to this
Agreement to employ an attorney to enforce their rights pursuant to this
Agreement because of the default of another party(s), the defaulting party(s)
shall reimburse the prevailing party(s) for reasonable attorneys' fees and
expenses.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Post-Closing Deliveries. After the Closing, any monies, checks,
instruments, invoices, bills, receipts, notices, mail and other communications
received by one party but directed toward or due to another shall be promptly
delivered to the other party. Sellers shall cooperate with Purchaser after the
Closing to ensure the orderly transition of the operation of the Business from
Sellers to Purchaser and to minimize any disruption in the business of
Purchaser that might result from the transactions contemplated hereby.
11.2 Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have
been duly received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a business day
and during normal business hours of the recipient, and otherwise on the next
business day following transmission, (b) if given by certified or registered
mail, return receipt requested, postage prepaid, three (3) business days after
being deposited in the U.S. mails and (c) if given by courier or other means,
when received or personally delivered, and, in any such case, addressed as
follows:
(i) if to Purchaser:
c/o Booth Creek, Inc.
1000 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Facsimile: (970) 479-0291
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Bruce A. Toth
Facsimile: (312) 558-5700
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<PAGE> 48
(ii) if to Sellers or Representative:
c/o David R. Moffett
3626 W. Mercer Way
Mercer Island, WA 98040
with a copy to:
Carney, Badley, Smith & Spellman
2200 Columbia Center
701 Fifth Avenue
Seattle, WA 98104-7091
Attention: Stephen C. Sieberson
Facsimile: (206) 467-8215
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the
provisions of this Section 11.2.
11.3 Assignment. No party may assign or transfer any or all of its
rights or obligations under this Agreement without the prior written approval
of all the other parties; provided, however, that Purchaser may assign or
transfer all (but not less than all) of its rights and obligations under this
Agreement (a) to any Person that is wholly-owned, directly or indirectly, by
Purchaser or (b) after the Closing, to any Person to whom Purchaser sells the
Business and substantially all of the Company's assets; and, provided further,
that Purchaser may collaterally assign its rights hereunder to any Person or
Persons providing financing to Purchaser in connection with the transactions
contemplated hereby.
11.4 Benefit of the Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement shall not be construed so as to confer
any right or benefit upon any Person, other than the parties hereto and their
respective successors and permitted assigns.
11.5 Exhibits and Schedules. The Exhibits and Schedules hereto shall
be construed with and as an integral part of this Agreement to the same effect
as if the contents thereof had been set forth verbatim herein.
11.6 Headings. The headings used in this Agreement are for convenience
of reference only and shall not be deemed to limit, characterize or in any way
affect the interpretation of any provision of this Agreement.
11.7 Entire Agreement. This Agreement contains the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
no other representations, promises, agreements or understandings regarding the
subject matter hereof (including, without limitation, the Letter of Intent)
shall be of any force or effect unless in writing, executed by the party to be
bound thereby and dated on or after the date hereof.
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11.8 Modifications and Waivers. No change, modification or waiver of
any provision of this Agreement shall be valid or binding unless it is in
writing, dated subsequent to the date hereof and signed by Purchaser and each
Seller. No waiver of any breach, term or condition of this Agreement by any
party shall constitute a subsequent waiver of the same or any other breach,
term or condition.
11.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.10 Severability. In case any one or more of the provisions
contained herein for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WASHINGTON.
11.12 Expenses. Except as otherwise expressly provided herein,
each party hereto shall pay all of its own costs and expenses incurred or to be
incurred in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement; provided, Sellers
shall be liable to pay all costs and expenses incurred in connection with the
preparation and delivery of the ENVIRON Report.
11.13 Closing Date. The parties hereto acknowledge and agree that
all benefits and burdens of ownership of the Business were conveyed by Sellers
to Purchaser as of January 15, 1997, and, therefore, upon consummation of the
transactions contemplated hereunder including, without limitation, all actions
and deliveries set forth in Article VI, the Closing shall be deemed to have
taken effect at the close of business on January 15, 1997; provided, however,
all representations and warranties delivered in connection herewith are given
as of the date hereof.
[signature page follows]
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
PURCHASER: BOOTH CREEK SKI HOLDINGS, INC.
By: /s/ George N. Gillett, Jr.
-----------------------------
Title: Chairman
--------------------------
SELLERS:
/s/ William W. Moffett, Jr.
--------------------------------
William W. Moffett, Jr.
/s/ David R. Moffett
--------------------------------
David R. Moffett
/s/ Laurie M. Padden
--------------------------------
Laurie M. Padden
/s/ Laurie M. Padden
--------------------------------
Laurie M. Padden, as custodian
for Christina Padden
/s/ Laurie M. Padden
--------------------------------
Laurie M. Padden, as custodian
for Jennifer Padden
/s/ Laurie M. Padden
--------------------------------
Laurie M. Padden, as custodian
for Mary M. Padden
/s/ Stephen R. Moffett
--------------------------------
Stephen R. Moffett
/s/ Katharine E. Moffett
--------------------------------
Katharine E. Moffett
/s/ Frances J. DeBruler
--------------------------------
Frances J. DeBruler, individually
and as representative of the
Estate of Jean S. DeBruler, Jr.,
deceased
/s/ Peggy Westerlund
--------------------------------
Peggy Westerlund
REPRESENTATIVE
/s/ David R. Moffett
--------------------------------
David R. Moffett
<PAGE> 1
EXHIBIT 10.9
PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 21, 1997
BY AND BETWEEN
THE PERSONS IDENTIFIED HEREIN AS SELLERS,
THE REPRESENTATIVE AS IDENTIFIED HEREIN
AND
DRE, L.L.C.
Execution Copy
Preferred Stock Purchase Agreement
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 General . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . 2
1.3 Interpretation . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
SALE AND PURCHASE OF SHARES . . . . . . . . . . . . . . . . . 5
2.1 Sale and Purchase of Shares . . . . . . . . . . . . . 5
2.2 Payment of the Purchase Price . . . . . . . . . . . . 5
2.3 Purchase Dates . . . . . . . . . . . . . . . . . . . . 6
2.4 Business Day . . . . . . . . . . . . . . . . . . . . . 7
2.5 Deductions . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Prepayment . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Default . . . . . . . . . . . . . . . . . . . . . . . 7
2.7.1 Events of Default . . . . . . . . . . . . . . . 7
2.7.2 Consequences of Default . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . 9
3.1 Authority of Sellers; Enforceability . . . . . . . . . 9
3.2 Capitalization; Subsidiaries . . . . . . . . . . . . . 9
3.3 Title to Purchased Shares . . . . . . . . . . . . . . 10
3.4 Consents . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Broker's or Consultant's Fees . . . . . . . . . . . . 10
3.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . 11
4.1 Corporate Status . . . . . . . . . . . . . . . . . . . 11
4.2 Due Authorization . . . . . . . . . . . . . . . . . . 11
4.3 Authority of Purchaser . . . . . . . . . . . . . . . . 11
4.4 Enforceability . . . . . . . . . . . . . . . . . . . . 11
4.5 Consents . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Proceedings . . . . . . . . . . . . . . . . . . . . . 12
4.7 Indebtedness . . . . . . . . . . . . . . . . . . . . . 12
4.8 Membership Interests . . . . . . . . . . . . . . . . . 12
4.9 No Default . . . . . . . . . . . . . . . . . . . . . . 12
4.10 No Agreements . . . . . . . . . . . . . . . . . . . . 12
4.11 Financial Information . . . . . . . . . . . . . . . . 12
Execution Copy
Preferred Stock Purchase Agreement
i
<PAGE> 3
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Broker's or Consultant's Fees . . . . . . . . . . . . 13
4.14 Investment . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Transfer Taxes . . . . . . . . . . . . . . . . . . . . 13
5.2 Reservation Agreement . . . . . . . . . . . . . . . . 13
5.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4 Sale of Assets . . . . . . . . . . . . . . . . . . . . 13
5.5 Merger; Corporate Existence . . . . . . . . . . . . . 13
5.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . 13
5.7 Affiliate Transactions . . . . . . . . . . . . . . . . 14
5.8 Limitation on Liens . . . . . . . . . . . . . . . . . 14
ARTICLE VI
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Closing Transactions . . . . . . . . . . . . . . . . . 14
6.2 Deliveries by Sellers to Purchaser . . . . . . . . . . 15
6.3 Deliveries by Purchaser to Sellers . . . . . . . . . . 15
ARTICLE VII
OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Further Assurance . . . . . . . . . . . . . . . . . . 16
7.2 Confidentiality . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Indemnification by Sellers . . . . . . . . . . . . . . 17
8.2 Indemnification by Purchaser . . . . . . . . . . . . . 18
8.3 Procedure for Indemnification . . . . . . . . . . . . 19
8.4 Limitations on Liability . . . . . . . . . . . . . . . 20
8.5 Payment . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Set-Off . . . . . . . . . . . . . . . . . . . . . . . 20
8.7 Escrow Account . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
SELLERS' REPRESENTATIVE . . . . . . . . . . . . . . . . . . . 21
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . 21
9.2 Authorization . . . . . . . . . . . . . . . . . . . . 21
9.3 Irrevocable Appointment . . . . . . . . . . . . . . . 22
9.4 Resignation . . . . . . . . . . . . . . . . . . . . . 22
9.5 Purchaser's Reliance . . . . . . . . . . . . . . . . . 22
9.6 Exculpation and Indemnification . . . . . . . . . . . 22
Execution Copy
Preferred Stock Purchase Agreement
ii
<PAGE> 4
ARTICLE X
DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . 23
10.1 Dispute Resolution . . . . . . . . . . . . . . . . . . 23
10.2 Arbitration Award . . . . . . . . . . . . . . . . . . 23
10.3 Procedures . . . . . . . . . . . . . . . . . . . . . . 23
10.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 24
11.1 Post-Closing Deliveries . . . . . . . . . . . . . . . 24
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 24
11.3 Assignment . . . . . . . . . . . . . . . . . . . . . . 25
11.4 Benefit of the Agreement . . . . . . . . . . . . . . . 25
11.5 Exhibits . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . 25
11.7 Entire Agreement . . . . . . . . . . . . . . . . . . . 25
11.8 Modifications and Waivers . . . . . . . . . . . . . . 26
11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . 26
11.10 Severability . . . . . . . . . . . . . . . . . . . . . 26
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 26
11.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . 26
11.13 Liquidated Damages . . . . . . . . . . . . . . . . . . 26
EXHIBITS
- --------
Exhibit A Form of Opinion of Sellers' Counsel
Exhibit B Form of Opinion of Purchaser's Counsel
Exhibit C Form of Escrow Agreement
SCHEDULES
- ---------
Schedule 1.1 Outstanding Preferred Stock Balance
Execution Copy
Preferred Stock Purchase Agreement
iii
<PAGE> 5
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is entered into as of this
21st day of February, 1997 by and between DRE, L.L.C., a Delaware limited
liability company (together with its successors and permitted assigns,
"Purchaser"), the individuals identified on the signature page hereto as
"Sellers" (each, a "Seller", and collectively, the "Sellers") and the
Representative (as hereafter defined).
RECITALS
WHEREAS, Sellers, collectively, own all of the issued and outstanding
shares of capital stock of Ski Lifts, Inc., a Washington corporation (the
"Company"), consisting of (i) 1,000 shares of common stock, no par value, and
(ii) 28,000 shares of preferred stock, no par value (the "Shares");
WHEREAS, the Company is engaged in the ownership and operation of a
ski resort by the name of "Alpental Ski Resort," and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Alpental Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Snoqualmie Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Snoqualmie Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Hyak Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Hyak Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Ski Acres Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Ski Acres Business", and together with the Alpental Business, the
Snoqualmie Business and the Hyak Business, the "Business");
WHEREAS, on or prior to the date hereof, and in connection with the
transactions contemplated hereby, Sellers have caused the Company to contribute
substantially all of the Developmental Real Estate (as hereinafter defined) to
Purchaser in consideration for 99% of the membership interest therein;
WHEREAS, Booth Creek Ski Holdings, Inc., a Delaware corporation ("Ski
Holdings"), holds the other 1% membership interest in Purchaser;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Ski Holdings is entering into the Holdings Purchase Agreement (as
hereafter defined) with Sellers, pursuant to
Execution Copy
Preferred Stock Purchase Agreement
<PAGE> 6
which Ski Holdings is agreeing to purchase from Sellers all of the issued and
outstanding common stock of the Company;
WHEREAS, Purchaser desires to purchase the Shares from Sellers and
Sellers desire to sell and transfer to Purchaser the Shares, all subject to the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. Each term defined in the first paragraph of this
Agreement and in the Recitals shall have the meaning set forth above whenever
used herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions. As used herein, the following terms shall have
the meanings ascribed to them in this Section 1.2:
Adverse Consequences. All actions, suits, proceedings,
hearings, investigations, claims, judgments, orders, decrees, stipulations,
injunctions, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, Taxes, interest, Liens, losses, expenses and fees,
including all accounting, consultant and attorneys' fees and court costs, costs
of expert witnesses and other expenses of litigation.
Affiliate. As set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement. This Preferred Stock Purchase Agreement, together
with all Exhibits and Schedules referred to herein, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
Alpental Business. As defined in the Recitals hereto.
Amended Articles. The Amended and Restated Articles of
Incorporation of the Company filed on the date hereof with the Secretary of
State of the State of Washington.
Authority. Any governmental, regulatory or administrative
body, agency or authority, any court of judicial authority, any arbitrator or
any public, private or industry regulatory authority, whether foreign, federal,
state or local.
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Booth Creek Guaranty. That certain Booth Creek Guaranty dated
the date hereof by Ski Holdings in favor of the Representative for the
"Sellers" identified in the Holdings Purchase Agreement.
Business. As defined in the Recitals hereto.
Business Day. A day on which banks are open for business in
New York, New York.
Certificate of Formation. As defined in Section 6.2(e).
Claim Notice. As defined in Section 8.3.
Common Stock Deed of Trust. That certain Common Stock
Purchase Deed of Trust dated the date hereof by the Company in favor of the
Representative for the "Sellers" identified in the Holdings Purchase Agreement.
Common Stock Pledge Agreement. That certain Common Stock
Pledge Agreement dated the date hereof by Ski Holdings in favor of the
Representative for the "Sellers" identified in the Holdings Purchase Agreement.
Common Stock Security Agreement. That certain Common Stock
Purchase Security Agreement dated the date hereof by the Company in favor of
the Representative for the "Sellers" identified in the Holdings Purchase
Agreement.
Company. As defined in the Recitals hereto.
Confidential Information. As defined in Section 7.2.
DRE Deed. As defined in Section 6.2(g).
Escrow Account. As defined in Section 8.7.
Escrow Agreement. As defined in Section 8.7.
Holdings Purchase Agreement. As defined in Section 6.2(d).
Hyak Business. As defined in the Recitals hereto.
Indemnified Party. As defined in Section 8.3.
Indemnifying Party. As defined in Section 8.3.
Law. Any law, statute, regulation, rule, ordinance,
requirement, announcement or other binding action or requirement of an
Authority.
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Liabilities. Any obligation or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated and whether
due or to become due), including, without limitation, any liability for Taxes.
Lien. Any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
Operating Agreement. As defined in Section 6.2(f).
Order. Any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by an Authority.
Ordinary Course of Business. The ordinary course of business
of the Company in accordance with past custom and practice (including with
respect to quantity and frequency).
Outstanding Preferred Stock Balance. On the date of
determination, the amount set forth on Schedule 1.1 with respect to such date.
Person. Any natural person, corporation, limited liability
company, partnership, firm, joint venture, joint-stock company, trust,
association, Authority, unincorporated entity or organization of any kind.
Preferred Stock. The preferred stock, no par value, of the
Company.
Preferred Stock Purchase Deed of Trust. As defined in Section
6.3(e).
Preferred Stock Purchase Security Agreement. As defined in
Section 6.3(e).
Purchase Date(s). The purchase date or dates described in
Section 2.3.
Purchase Price. As defined in Section 2.2
Purchaser Warranty Claim. As defined in Section 8.2(a).
Recapitalization Plan. As defined in Section 6.2(h).
Representative. David R. Moffett, or any successor thereto
in accordance with Section 9.1.
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Security Documents. The Preferred Stock Purchase Security
Agreement, the Preferred Stock Purchase Deed of Trust, the Common Stock Pledge
Agreement, the Common Stock Deed of Trust, the Booth Creek Guaranty and the
Common Stock Security Agreement.
Seller Warranty Claim. As defined in Section 8.2(a).
Sellers' Knowledge. David R. Moffett's actual knowledge after
review of the books and records of the Company and after interviewing the
principal managers and officers of the Company.
Shares. As defined in the Recitals hereto.
Ski Acres Business. As defined in the Recitals hereto.
Ski Holdings. As defined in the Recitals hereto.
Snoqualmie Business. As defined in the Recitals hereto.
1.3 Interpretation. Unless otherwise expressly provided or
unless the context requires otherwise, (a) all references in this Agreement to
Articles, Sections and Exhibits shall mean and refer to Articles, Sections and
Exhibits of this Agreement; (b) all references to statutes and related
regulations shall include all amendments of the same and any successor or
replacement statutes and regulations; (c) words using the singular or plural
number also shall include the plural and singular number, respectively; (d)
references to "hereof", "herein", "hereby" and similar terms shall refer to
this entire Agreement (including the Schedules and Exhibits hereto); and (e)
references to any Person shall be deemed to mean and include the successors and
permitted assigns of such Person (or, in the case of an Authority, Persons
succeeding to the relevant functions of such Person).
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties, covenants and agreements made in this Agreement by Sellers and
Purchaser, Purchaser shall purchase and accept from Sellers, and Sellers shall
sell, transfer, convey, assign and deliver to Purchaser, the Shares on the date
hereof and on each of the other Purchase Dates. On the date hereof and on each
other Purchase Date, each Seller shall deliver to Purchaser, upon receipt of
the payment required to be made on such date pursuant to Section 2.3 the
certificates evidencing the Shares owned by such Seller to be sold on such
date.
2.2 Payment of the Purchase Price.
(a) The aggregate purchase price (the "Purchase Price")
payable by Purchaser to Sellers in consideration for the Shares shall be THREE
MILLION FIVE HUNDRED THOUSAND
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DOLLARS ($3,500,000) plus all accrued and unpaid dividends on such Shares. The
Purchase Price shall be payable in cash to the Representative for the benefit
of Sellers. For purposes of calculating the amount of accrued and unpaid
dividends due hereunder, all such dividends shall be deemed to be accrued and
unpaid from January 15, 1997 to the date of payment; provided, however, that
the dividends accrued on the Shares purchased on the date hereof shall be paid
on January 15, 1998 instead of on the date hereof, and the dividends accrued on
the Shares to be purchased on the date described in Section 2.3(ii) hereof
shall be paid on January 15, 1998 instead of on such date described therein.
(b) The Representative shall distribute all cash received
by him from Purchaser pursuant to the terms hereof to Sellers based on such
Seller's pro rata share of the Purchase Price.
(c) The amounts paid hereunder shall be by wire transfer
of immediately available federal funds to an account designated in writing to
Purchaser by the Representative in writing prior to the date hereof. Place of
payment may be altered with ten (10) days prior written notice to Purchaser.
2.6 Purchase Dates. Purchaser shall purchase and accept from
Sellers, and Sellers shall transfer, convey, assign and deliver to Purchaser
(i) on the date hereof, 2,000 Shares in exchange for $250,000 plus secured and
unpaid dividends thereon (provided that such amount of dividends shall not be
payable until January 15, 1998); (ii) on the earlier of (A) the date the Ski
Lifts Promissory Note (as defined in the Holdings Purchase Agreement) is paid
in full or (B) April 30, 1997, 1,000 Shares in exchange for $125,000 plus
accrued and unpaid dividends thereon (provided that such amount of dividends
shall not be payable until January 15, 1998); and (iii) the number of Shares,
in exchange for the allocable portion of the Purchase Price plus accrued and
unpaid dividends thereon, as set forth below:
Purchase Dates Number of Shares Purchase Price
-------------- ---------------- --------------
January 15, 1998 1,000 $ 125,000
April 15, 1998 1,000 $ 125,000
July 15, 1998 1,000 $ 125,000
October 15, 1998 1,000 $ 125,000
January 15, 1999 1,000 $ 125,000
April 15, 1999 1,000 $ 125,000
July 15, 1999 1,000 $ 125,000
October 15, 1999 1,000 $ 125,000
January 15, 2000 1,000 $ 125,000
April 15, 2000 1,000 $ 125,000
July 15, 2000 1,000 $ 125,000
October 15, 2000 1,000 $ 125,000
January 15, 2001 1,000 $ 125,000
April 15, 2001 1,000 $ 125,000
July 15, 2001 1,000 $ 125,000
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October 15, 2001 1,000 $ 125,000
January 15, 2002 9,000 $1,125,000
2.4 Business Day. If any Purchase Date is not a Business Day,
payment shall be made on the next succeeding Business Day.
2.5 Deductions. Except for offsets by Purchaser pursuant to
Section 8.6 and Ski Holdings pursuant to Section 8.6 of the Holdings Purchase
Agreement, Purchaser shall timely make all payments to Sellers free and clear
of any offsets, restrictions or conditions and free and clear of, and without
deduction for, any taxes or withholding of any nature, present or future.
2.6 Prepayment. Purchaser may prepurchase the Shares in whole or
in part, at any time, without penalty, upon giving of three (3) Business Days'
written notice to the Representative. Prepurchases shall be in integral
multiples of $125,000 and shall be credited against scheduled purchases in
chronological order.
2.7 Default.
2.7.1 Events of Default. Each of the following shall be an
"Event of Default" under this Agreement:
(a) Purchaser fails to pay any amount due hereunder
on the relevant Payment Date; provided, no Event of Default shall be deemed to
exist under this Section 2.7.1(a) if amounts due and owing under this Agreement
are deposited into the Escrow Account pursuant to Section 8.7 or Section 8.7 of
the Holdings Purchase Agreement.
(b) Any material default shall occur under the terms
of this Agreement, the Holdings Purchase Agreement or any of the Security
Documents.
(c) It becomes unlawful for (i) Purchaser to make
the payments required under Section 2.3 hereof; (ii) Purchaser to
fulfill any material covenants or obligations contained in any of the Security
Documents and the collateral thereunder is materially impaired thereby; or
(iii) Sellers to exercise in any material respect their rights, powers, or
remedies, or any of them, vested in them under any of the Security Documents,
or otherwise.
(d) Any representation or warranty made or deemed to
be made pursuant to Article IV or any other provision of this Agreement or any
of the Security Documents proves to have been incorrect when made in any
respect reasonably considered by the Representative to be material.
(e) Purchaser, Ski Holdings or the Company files or
there is filed against any of them any petition seeking relief under bankruptcy
or insolvency laws, and such petition is not dismissed within sixty (60) days.
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(f) Any order is made and not dismissed within sixty
(60) days by any competent court or other appropriate authority, or any
resolution is passed by Purchaser, Ski Holdings or the Company for bankruptcy,
dissolution or winding-up, or analogous proceedings, or for the appointment of
a liquidator, receiver or trustee of Purchaser, Ski Holdings or the Company or
all or a substantial part of the assets of any of them, except for the purposes
of merger or consolidation (not involving or arising out of insolvency) which
does not impair Sellers' security under the Security Document.
(g) Purchaser, Ski Holdings or the Company stops
payment to creditors generally, or is unable or admits inability to pay its
debts as they fall due, or enters into any composition or other arrangement
with its creditors generally or is adjudicated or found bankrupt or insolvent.
(h) Ski Holdings or the Company ceases or threatens
to cease to carry on business or, a substantial part of the respective
businesses, properties or assets of Purchaser, Ski Holdings or the Company is
seized or appropriated; or an encumbrancer shall take possession, or a receiver
is appointed of the whole or a material part of the assets or undertakings of
Purchaser, Ski Holdings or the Company, or a distress or execution shall be
levied or enforced upon and sued out against a material part of the property
and assets of any of them and is not discharged or satisfied within sixty (60)
days.
(i) Any judgment or order is made, the effect of
which would be to render this Agreement or any of the Security Documents
ineffective or invalid.
(j) The "beneficial owners" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) of Ski
Holdings existing on the date hereof cease to own, directly or indirectly, 50%
or more of Purchaser.
2.7.2 Consequences of Default. If an Event of Default has
occurred and is continuing, then the Representative on behalf of Sellers may,
unless the such Event of Default is earlier cured (after five (5) days in any
circumstance described in Section 2.7.1(a), and after fifteen (15) days notice
to Purchaser in any circumstance described in subsections (b) or (d) of Section
2.7.1, by notice in writing to Purchaser, declare that the aggregate amounts
remaining to be paid under this Agreement are immediately due and payable with
interest thereon at a per annum rate equal to 12% to the date of actual
payment. If an Event of Default described in any of subsections (c), (e), (f),
(g), (h), (i) or (j) of Section 2.7.1 occurs, all amounts remaining to be paid
under this Agreement shall be deemed, automatically and without any further
action or passage of time whatsoever, due and payable with interest thereon at
a per annum rate equal to 12% to the date of actual payment. Furthermore,
Sellers may exercise from time to time all other legal and equitable rights to
which Sellers may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive. All of such rights and
remedies shall be in addition to any other rights and remedies contained in
this Agreement or any of the Security Documents. Notwithstanding any payment
made or other action taken by Sellers, an Event of Default will not be deemed
cured unless cured to the reasonable satisfaction of the Representative. The
failure or delay of
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Sellers to exercise or enforce any rights, liens, powers or remedies hereunder
or under any of the Security Documents, shall not operate as a waiver of any
such liens, rights, powers or remedies, but all such liens, rights, powers and
remedies shall continue in full force and effect until the aggregate amounts to
be paid under this Agreement have been indefeasibly paid in full.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into and perform its
obligations under this Agreement, and in consideration of the covenants of
Purchaser contained herein, Sellers, jointly and severally (subject to the
limitations set forth in Sections 8.1 and 8.4), hereby make representations and
warranties to Purchaser as set forth below. Such representations and
warranties shall survive the date hereof (subject to Sections 8.1 and 8.4)
regardless of what examinations, inspections, audits and other investigations
Purchaser has heretofore made, or may hereafter make, with respect to such
representations and warranties; provided, Sellers shall have no liability for
matters expressly disclosed to Purchaser in this Agreement unless expressly
provided for in this Agreement. Subject to the foregoing, Sellers, jointly and
severally, represent and warrant as follows:
3.1 Authority of Sellers; Enforceability.
(a) Each Seller has the capacity to execute and deliver
this Agreement and to perform his or her obligations hereunder. This Agreement
is binding upon, and enforceable against, each Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and by general principles of equity
(whether in a proceeding at law or in equity).
(b) Neither the execution or delivery of this Agreement
by any Seller nor the performance by any Seller of its obligations under this
Agreement will conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any contract, lease, license,
franchise, permit, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which such Seller or the Company is a party or is
bound, the articles of incorporation or by-laws of the Company or any
applicable Law or Order to which such Seller or the Company is a party or by
which such Seller or the Company is bound.
3.2 Capitalization; Subsidiaries.
(a) The total number of shares of capital stock and the
par value thereof which the Company is authorized to issue and the number of
such shares which are issued and outstanding are as follows:
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Issued and Outstanding
Class Authorized Shares Shares
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Common Stock, no par value 1,000 1,000
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Preferred Stock, no par value 28,000 28,000
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No shares of the Company's capital stock are held as treasury stock.
(b) There are no outstanding options, conversion rights,
warrants or other rights in existence to acquire from the Company any of its
shares of capital stock.
(c) The Shares have been duly and validly issued and are
fully paid and nonassessable and are not subject to any preemptive rights; and
there are no voting trust agreements or other contracts, agreements or
arrangements restricting voting or dividend rights or transferability with
respect to the Shares.
(d) The Company has not violated in any material respect
any federal, state or local Law in connection with the offer for sale or sale
and issuance of its outstanding shares of capital stock or any other
securities.
(e) The Company does not own any securities or any other
direct or indirect interest in any other Person except for (i) the securities
described in notes 4 and 5 to the Reference Balance Sheet (as defined in the
Holdings Purchase Agreement) and (ii) its interest in Purchaser.
3.3 Title to Purchased Shares. Each Seller owns the number of
shares of capital stock of the Company set forth in Schedule 3.12 to the
Holdings Purchase Agreement, free and clear of any Liens. The persons listed
as "Sellers" on the signature pages of this Agreement are all of the record and
beneficial owners of the Preferred Stock of the Company. The Shares constitute
all of the issued and outstanding shares of Preferred Stock of the Company and
upon delivery of and payment by the Purchaser to each Seller of his or her
proportionate share of the Purchase Price in respect of the Shares owned by
such Seller, the Purchaser will acquire good and marketable title to the Shares
free and clear of all Liens.
3.4 Consents. To the Sellers' Knowledge, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Authority or any other Person is required to be obtained or made by the Sellers
or the Company in connection with the execution and delivery of this Agreement
or the performance by the Sellers of their respective obligations hereunder.
3.5 Broker's or Consultant's Fees. Each Seller represents and
warrants that it has dealt with no broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to Sellers'
Knowledge, no Person is entitled to any commission or finder's fee in
connection with the sale of the Shares to Purchaser other than a fee in the
aggregate amount of $75,000 to Charles D. Lewis, L.L.C., which shall be paid by
Sellers.
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3.6 Disclosure. To the Sellers' Knowledge, none of the
representations and warranties made by Sellers in this Agreement or in any
letter, certificate or memorandum furnished or to be furnished by Sellers, or
on their behalf, contains or will contain any untrue statement of a material
fact, or omits any material fact the omission of which would make the
statements made therein misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Sellers to enter into and perform their
obligations under this Agreement, and in consideration of the covenants of
Sellers contained herein, Purchaser (subject to the limitations set forth in
Section 8.2) hereby makes representations and warranties to Sellers as set
forth below. Such representations and warranties shall survive the date hereof
(subject to Section 8.2) regardless of what examinations, inspections, audits
and other investigations Sellers have heretofore made, or may hereafter make,
with respect to such representations and warranties; provided, Purchaser shall
have no liability for matters expressly disclosed to Sellers in this Agreement
unless expressly provided for in this Agreement. Subject to the foregoing,
Purchaser represents and warrants as follows:
4.1 Corporate Status. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
4.2 Due Authorization. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized and approved by all necessary corporate
action on the part of Purchaser.
4.3 Authority of Purchaser. Purchaser has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Neither the execution or delivery of this Agreement by Purchaser
nor the performance by Purchaser of its obligations under this Agreement will
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any contract, lease, license, franchise, permit,
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which Purchaser is a party or is bound, its certificate of
formation, operating agreement or any applicable Law or Order to which
Purchaser is a party or by which Purchaser is bound.
4.4 Enforceability. This Agreement is binding upon, and
enforceable against, Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws affecting creditors'
rights generally and by principles of equity (whether in a proceeding at law or
in equity).
4.5 Consents. To Purchaser's knowledge, no consent, approval,
Order or authorization of, or registration, declaration or filing with, any
Authority or any other Person is required to be
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obtained or made by Purchaser in connection with its execution and delivery of
this Agreement or the performance by it of its obligations hereunder which has
not been made or obtained.
4.6 Proceedings. To Purchaser's knowledge, no material
litigation, arbitration or administrative proceeding before or of any court,
tribunal, arbitrator or governmental authority is pending or threatened against
Purchaser or any of its assets or properties.
4.7 Indebtedness. Purchaser does not have any material
indebtedness of any kind including, without limitation, contingent liabilities,
liabilities for taxes, long-term leases, or unusual forward or long-term
commitments, which have not been disclosed in writing to Sellers, and Purchaser
does not know or have reasonable grounds to know of any basis for the assertion
against it of any material indebtedness or any kind not disclosed in writing to
Sellers.
4.8 Membership Interests. The Company holds a 99% membership
interest in Purchaser and Ski Holdings holds the other 1% membership interest
in Purchaser. There are no outstanding options, conversion rights, warrants or
other rights in existence to acquire from Purchaser any of the membership
interests. The Purchaser does not own any securities or any other direct or
indirect interest in any other entity.
4.9 No Default. To Purchaser's knowledge, no event has occurred
which constitutes or would with the giving of notice or lapse of time, or both,
constitute an Event of Default.
4.11 No Agreements. Purchaser is not a party to any management,
marketing or operational agreement relating to its properties or assets, or to
any other contract other than contracts described in this Agreement or in the
Security Documents.
4.12 Financial Information. To Purchaser's knowledge, Purchaser
has (i) no liability with respect to its business of any nature (whether
accrued, absolute, contingent or otherwise) of the type which should be
reflected in balance sheets (including the notes thereto) prepared in
accordance with generally accepted accounting principles other than the
liabilities under this Agreement and the Security Documents and (ii) no other
assets other than the Developmental Real Estate (as defined in the Holdings
Purchase Agreement) owned by Purchaser and the personal property situated
thereon.
4.13 Disclosure. To Purchaser's knowledge (i) none of the
representations and warranties made by Purchaser in this Agreement or in any of
the Security Documents or in any letter, certificate or memorandum furnished or
to be furnished by Purchaser, or on its behalf, contains or will contain any
untrue statement of a material fact, or omits any material fact the omission of
which would make the statements made therein misleading; and (ii) except for
facts or circumstances affecting the ski resort industry generally or as
otherwise disclosed to Sellers, there is no fact which materially adversely
affects, or is reasonably likely to materially adversely affect, the condition
(financial or otherwise), assets, liabilities, business, operations or
prospects of the Purchaser's business, the value or utility of Purchaser's
assets or the ability of Purchaser to consummate the transactions contemplated
hereby that has not been set forth herein or otherwise disclosed to Sellers.
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4.13 Broker's or Consultant's Fees. Purchaser represents and
warrants that it has dealt with no broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to its
knowledge, no Person is entitled to any commission or finder's fee in
connection with the sale of the Shares to Purchaser.
4.14 Investment. The Shares are being acquired by Purchaser for
its own account, for investment and not with a view to resale or distribution.
ARTICLE V
COVENANTS
5.1 Transfer Taxes. Sellers shall pay the cost of any transfer,
stamp, excise or similar tax imposed under the laws of the United States, or
any state or political subdivision thereof, which arises out of the transfer of
any of the Shares.
5.2 Reservation Agreement. Purchaser hereby covenants and agrees
to exercise its option to purchase the Developmental Real Estate (as defined in
the Holdings Purchase Agreement) pursuant to the terms and conditions of the
Reservation Agreement as soon as such option becomes exercisable.
5.3 Notice. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
promptly inform Representative of any Event of Default, or any event, which
upon the giving of notice or lapse of time or determination of Representative
might constitute an Event of Default, or of any other material occurrence which
might entitle Sellers to make a claim hereunder or under any related document,
or which materially adversely affects the ability of Purchaser to fully perform
any of its obligations under this Agreement or the Security Documents.
5.4 Sale of Assets. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
not sell or otherwise dispose of any part, interest in, or control of any of
its material assets (material in the reasonable opinion of the Representative)
without the prior written consent of the Representative (which consent shall
not be unreasonably withheld), unless all of the net proceeds of such
disposition is applied to the prepurchase of the Shares.
5.5 Merger; Corporate Existence. From and after the date hereof
until all the obligations of Purchaser hereunder have been satisfied in full,
Purchaser shall preserve and maintain its existence and qualification to do
business as a Delaware limited liability company and not merge or consolidate
with any entity.
5.6 Indebtedness. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
not incur any other debts or obligations except
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in the ordinary course of business or which are expressly subordinate in right
and payment to the obligations of Purchaser under this Agreement and the
Security Documents, and shall not issue any guaranties or make any new
investment, without the prior written consent of the Representative (which
consent shall not be unreasonably withheld), and any such obligations (other
than those incurred in the ordinary course of business) shall in any event be
subordinate to the obligations of Purchaser under this Agreement and the
Security Documents.
5.7 Affiliate Transactions. From and after the date hereof until
all the obligations of Purchaser hereunder have been satisfied in full,
Purchaser shall not make any loans to any of its members, officers, directors,
owners or managers, or to any related person or entity, without the prior
written consent of the Representative (which consent shall not be unreasonably
withheld), and shall not borrow monies from any member, officer, director,
owner or manager or from any related person or entity, except if such loans are
subordinated to the obligations of Purchaser under this Agreement and the
Security Documents.
5.8 Limitation on Liens. From and after the date hereof until all
obligations of Purchaser hereunder have been satisfied in full, Purchaser will
not create or incur, or suffer to be incurred or to exist, (a) any Lien on its
property or assets with respect to indebtedness for borrowed money; or (b) any
Lien on its property or assets, whether now owned or hereafter acquired, except
only with respect to this clause (b):
(i) Liens for taxes, assessments or governmental
charges being contested in good faith;
(ii) Liens arising in the ordinary course of
business;
(iii) Liens of the type disclosed in the Title
Policies (as defined in the Holdings Purchase
Agreement) or similar encumbrances or charges
which do not interfere with the market value
or use of the Business; and
(iv) Liens existing on the date hereof or incurred
in favor of the Representative for the
benefit of Sellers in connection with the
obligations under this Agreement.
ARTICLE VI
CLOSING
6.1 Closing Transactions. The obligations of the parties hereto
shall not be considered to be in effect unless and until all actions and
deliveries set forth in this Article VI have been completed or waived in
writing. All documents and other instruments required to be delivered
hereunder shall be regarded as having been delivered simultaneously, and no
document or other instrument shall be regarded as having been delivered until
all have been delivered.
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6.2 Deliveries by Sellers to Purchaser. Prior to and as a
condition precedent to the effectiveness of the transactions contemplated
hereunder, Purchaser shall have received and/or Sellers shall deliver or cause
to be delivered to Purchaser:
(a) certificates representing 2,000 of the purchased
Shares which certificates shall be either duly endorsed or accompanied
by stock powers duly endorsed, executed together with evidence
satisfactory to the Purchaser that any Lien on such purchased Shares
has been released or terminated;
(b) the legal opinion of Carney, Badley, Smith &
Spellman, counsel for Sellers and the Company, substantially in the
form attached hereto as Exhibit A;
(c) all releases necessary to terminate and discharge any
Liens on the Shares;
(d) an executed copy of the Stock Purchase Agreement
dated the date hereof between Ski Holdings, the Representative and Sellers (the
"Holdings Purchase Agreement") and evidence of consummation of the transactions
contemplated thereunder;
(e) a certified copy of the Certificate of Formation from
the Secretary of State of the State of Delaware evidencing the creation of
Purchaser (the "Certificate of Formation");
(f) an executed copy of the Operating Agreement of
Purchaser (the "Operating Agreement");
(g) a transfer deed evidencing transfer of certain
Developmental Real Estate from the Company to Purchaser (the "DRE Deed");
(h) an executed copy of the Agreement and Plan of
Recapitalization between the Company and Sellers (the "Recapitalization Plan");
(i) evidence that Sellers have designated David R.
Moffett as Representative in accordance with Section 9.1 of the Agreement; and
(j) such other instruments and documents as are: (i)
required by any other provisions of this Agreement to be delivered by Sellers
to Purchaser; or (ii) reasonably necessary, in the opinion of Purchaser, to
effect the performance of this Agreement by Sellers.
6.3 Deliveries by Purchaser to Sellers. Prior to and as a
condition precedent to the effectiveness of the transactions contemplated
hereunder, Sellers shall have received and/or Purchaser shall deliver or cause
to be delivered to Sellers:
(a) the legal opinion of Winston & Strawn, special
counsel for Purchaser, substantially in the form attached hereto as
Exhibit B;
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(b) a certificate of the Manager of Purchaser, of the
date hereof, certifying to (i) the operating agreement of Purchaser;
(ii) resolutions of the Members of Purchaser approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby; and (iii) incumbency and signatures
of the officers of Manager executing this Agreement and any other
certificate or document delivered in connection herewith;
(c) a certified copy of the Certificate of Formation of
Purchaser from the Secretary of State of the State of Delaware;
(d) an executed copy of the Holdings Purchase Agreement
and evidence of consummation of the transactions contemplated
thereunder;
(e) an executed copy of the security agreement (the
"Preferred Stock Purchase Security Agreement") and the deed of trust
(the "Preferred Stock Purchase Deed of Trust"), each dated the date
hereof from Purchaser on behalf of the Representative for the benefit
of Sellers, securing the obligations of Purchaser under this
Agreement;
(f) a certified copy of the Amended Articles from the
Secretary of State of the State of Washington;
(g) an executed copy of the Operating Agreement;
(h) an executed copy of the DRE Deed;
(i) an executed copy of the Recapitalization Plan;
(j) an executed copy of that certain Reservation
Agreement dated the date hereof between the Company and Purchaser (the
"Reservation Agreement"); and
(k) such other instruments and documents as are: (i)
required by any other provisions of this Agreement to be delivered by
Purchaser to Sellers; or (ii) reasonably necessary, in the opinion of
Sellers, to effect the performance of this Agreement by Purchaser.
ARTICLE VII
OTHER AGREEMENTS
7.1 Further Assurance. At any time and from time to time from and
after the date hereof, Sellers and Purchaser will, at the request of the other
parties hereto, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments and other documents and perform or
cause to be performed such acts and provide such information, as may reasonably
be required to evidence or effectuate the sale, conveyance, transfer,
assignment and delivery to
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Purchaser of the Shares or for the performance by Sellers or Purchaser of any
of their other respective obligations under this Agreement. Each party hereto
shall be liable for its own expenses incurred pursuant to this Section 7.1.
7.2 Confidentiality.
(a) The parties hereto agree with respect to the terms
and conditions of this Agreement, including, without limitation, the Purchase
Price, and all information that is furnished or disclosed by the other party
(collectively, "Confidential Information"), that (i) such Confidential
Information is confidential and/or proprietary to the furnishing/disclosing
party and entitled to and shall receive treatment as such by the receiving
party; (ii) the receiving party will hold in confidence and not disclose nor
use (except in respect of the transactions contemplated by this Agreement) any
such Confidential Information, treating such Confidential Information with the
same degree of care and confidentiality as it accords its own confidential and
proprietary information; provided, however, that the receiving party shall not
have any restrictive obligation with respect to any Confidential Information
which (A) is contained in a printed publication available to the general
public, (B) is or becomes publicly known through no wrongful act or omission of
the receiving party, or (C) is known by the receiving party without any
proprietary restrictions by the furnishing/disclosing party at the time of
receipt of such Confidential Information; and (iii) all such Confidential
Information furnished to either party by the other, unless otherwise specified
in writing, shall remain the property of the furnishing/disclosing party, and
in the event this Agreement is terminated, shall be returned to it, together
with any and all copies made thereof, upon request for such return by it
(except for documents submitted to an Authority with the consent of the
furnishing/disclosing party or upon subpoena and which cannot be retrieved with
reasonable effort).
(b) Each party hereto acknowledges that the remedy at law
for any breach by either party of its obligations under Section 7.2(a) is
inadequate and that the other party shall be entitled to equitable remedies,
including an injunction, in the event of breach of any other party.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Sellers. Sellers, jointly and severally,
agree to indemnify, defend, hold harmless and waive any claim for contribution
against Purchaser, the Company and all of their officers, directors,
shareholders, Affiliates, employees and agents (the "Purchaser Indemnified
Persons") after the date hereof from and against any Adverse Consequence
arising out of or resulting from:
(a) any misrepresentation or breach as of the date hereof
of any representation or warranty of Sellers contained in this
Agreement (each a "Purchaser Warranty Claim"); provided, however, that
the Purchaser Indemnified Persons' rights to indemnification for
Purchaser Warranty Claims shall be subject to the limitations set
forth in Section 8.4 and the following:
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(i) such Purchaser Warranty Claims shall expire
fifteen (15) months following the date hereof, except with
respect to claims under Sections 3.1, 3.2 and 3.3 as to which
there shall be no expiration date; provided, that if at the
stated expiration of any indemnification obligation there
shall then be pending any indemnification claim by a Person,
such Person shall continue to have the right to such
indemnification with respect to such claim notwithstanding
such expiration;
(ii) No Purchaser Indemnified Person shall be
entitled to indemnification for Purchaser Warranty Claims
unless and until the aggregate Adverse Consequences suffered
by all Purchaser Indemnified Persons collectively exceeds
$50,000, whereupon the Purchaser Indemnified Persons shall be
entitled to indemnification hereunder from Sellers for all
Adverse Consequences suffered by Purchaser Indemnified Persons
in excess of such threshold amount.
(b) the failure by any Seller to perform any of its
covenants or obligations under Sections 5.1, 7.1, 7.2 and 11.1;
provided, the indemnification obligations of Sellers under this
Section 8.1(b) shall expire on the thirty-ninth (39th) month
anniversary of the date hereof, except for any pending indemnification
claims by a Purchaser Indemnified Person which shall continue
notwithstanding such expiration;
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Sellers in
connection with the sale of the Shares or the consummation of the
transactions contemplated by this Agreement;
8.2 Indemnification by Purchaser. Purchaser agrees to indemnify,
defend and hold harmless Sellers after the date hereof from and against any
Adverse Consequences arising out of or resulting from:
(a) any misrepresentation or breach as of the date hereof
of any representation or warranty of Purchaser contained in this
Agreement (each a "Seller Warranty Claim"); provided, however, that the
Sellers' rights to indemnification for Seller Warranty Claims shall be
subject to the following limitations:
(i) such Seller Warranty Claims shall expire fifteen
(15) months following the date hereof; provided, that if at
the stated expiration of any indemnification obligation there
shall then be pending any indemnification claim by a Seller,
said Seller shall then continue to have the right to such
indemnification with respect to such claim notwithstanding
such expiration;
(ii) Purchaser's maximum aggregate liability to
Sellers for indemnification shall not exceed the Outstanding
Preferred Stock Balance; and
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(iii) Sellers shall not be entitled to
indemnification for Seller Warranty Claims unless and until
the aggregate Adverse Consequences suffered by Sellers exceeds
$50,000, whereupon Sellers shall be entitled to
indemnification hereunder from Purchaser for all Adverse
Consequences suffered by Sellers in excess of such threshold
amount.
(b) the failure by Purchaser to perform any of its
covenants or obligations hereunder;
(c) the operation of the Business after October 1, 1996
(except for or with respect to any Adverse Consequences for which any
Purchaser Indemnified Person is entitled to indemnification hereunder
or under the Holdings Purchase Agreement, without regard to any of the
limitations set forth in Sections 8.1 or 8.4); or
(d) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Purchaser in
connection with the sale of the Shares or the consummation of the
transactions contemplated by this Agreement.
8.3 Procedure for Indemnification. If any Person shall claim
indemnification (the "Indemnified Party") hereunder for any claim, the
Indemnified Party shall promptly give written notice to the other party from
whom indemnification is sought (the "Indemnifying Party") of the nature and
amount of the claim. If an Indemnified Party shall claim indemnification
hereunder arising from any claim or demand, the Indemnified Party shall
promptly give written notice (a "Claim Notice") to the Indemnifying Party of
the basis for such claim or demand, setting forth the nature of the claim or
demand in detail. If the claim is by a third-party, the Indemnifying Party
shall have the right to compromise or, if appropriate, defend at its own cost
and through counsel of its own choosing, any claim or demand set forth in a
Claim Notice giving rise to such claim for indemnification. In the event the
Indemnifying Party undertakes to compromise or defend any such claim or demand,
it shall promptly (and in any event, no later than fifteen (15) days after
receipt of the Claim Notice) notify the Indemnified Party in writing of its
intention to do so and shall give the Indemnified Party such security in that
regard as the Indemnified Party reasonably may request. The Indemnified Party
shall fully cooperate with the Indemnifying Party and its counsel in the
defense or compromise of such claim or demand. After the assumption of the
defense by the Indemnifying Party, the Indemnified Party shall not be liable
for any legal or other expenses subsequently incurred by the Indemnifying
Party, in connection with such defense, but the Indemnified Party may
participate in such defense at its own expense. No settlement of a third party
claim or demand defended by the Indemnifying Party shall be made without the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld. The Indemnifying Party shall not, except with written consent of the
Indemnified Party, consent to the entry of a judgment or settlement which does
not include as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Party of an unconditional release from all
liability in respect of such third party claim or demand.
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8.4 Limitations on Liability.
(a) Notwithstanding anything else in this Agreement to
the contrary, the relative liability of each Seller with respect to any claim
for indemnification pursuant to this Agreement and the Holdings Purchase
Agreement shall be limited to such Seller's pro rata share of the sum of (i)
the Purchase Price plus (ii) the "Purchase Price" under the Holdings Purchase
Agreement.
(b) Sellers' maximum aggregate liability to Purchaser
Indemnified Persons for indemnification of (i) Purchaser Warranty Claims
pursuant to Sections 3.1, 3.2 and 3.3 shall not exceed the sum of (A) the
Purchase Price plus (B) the "Purchase Price" under the Holdings Purchase
Agreement; and (ii) claims pursuant to Section 8.1(b) and for Purchaser
Warranty Claims (other than those set forth in clause (i)) shall not exceed the
Outstanding Preferred Stock Balance.
(c) For purposes of calculating the amount of any
threshold or maximum aggregate liability under this Article VIII,
indemnification claims under this Agreement shall be aggregated with
indemnification claims under the Holdings Purchase Agreement and Purchaser and
Ski Holdings shall be deemed one and the same entity.
8.5 Payment. Except for third-party claims being defended in good
faith by the Indemnifying Party in accordance with Section 8.3 or claims being
disputed by either Sellers or Purchaser in accordance with Article X hereof,
the Indemnifying Party shall satisfy its obligations hereunder within fifteen
(15) days after receipt of a claim notice. Any amount not paid to the
Indemnified Party by such date shall bear interest at a rate equal to nine
percent (9%) per annum from the date due until the date paid.
8.6 Set-Off. If any Seller fails to make any payment with respect
to any indemnification claim in accordance with this Article VIII or in
accordance with Article VIII of the Holdings Purchase Agreement, Purchaser may,
in addition to any other rights hereunder, set-off the amount of such claim
against any amounts payable by Purchaser, the Company or their Affiliates to
any Seller under this Agreement. Any amounts Purchaser determines it is
entitled to set off pursuant to this Section 8.6 shall be paid into the Escrow
Account (as defined herein) on the date otherwise due to Sellers.
8.7 Escrow Account. In the event Purchaser is entitled to set-off
the amount of any claim for indemnification pursuant to Section 8.6, Purchaser
shall be obligated to deposit all amounts to be set-off into an escrow account
(the "Escrow Account") with a banking institution of national standing
reasonably acceptable to Representative and Purchaser pursuant to the terms and
conditions of an escrow agreement in substantially the form of Exhibit C
attached hereto (the "Escrow Agreement"). Such Escrow Agreement will provide,
without limitation, for the release of such amount only upon (i) the mutual
consent of the Representative and Purchaser or (ii) the order of an arbitrator
issued in accordance with Article X hereof. Representative and Purchaser agree
to act in good faith to promptly take any actions reasonably required to enter
into the Escrow Agreement and to establish the Escrow Account should the Escrow
Agreement be called for by terms of this Agreement. Upon deposit of any such
amount into the Escrow Account, the Representative shall
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deliver written notice to Purchaser acknowledging that the payment into the
Escrow Account satisfies Purchaser's payment obligation under this Agreement to
the extent of such payment, as the case may be.
ARTICLE IX
SELLERS' REPRESENTATIVE
9.1 Appointment. Sellers hereby irrevocably make, constitute and
appoint David R. Moffett as their agent and representative (the
"Representative") for all purposes under this Agreement. In the event of the
death, resignation or incapacity of the Representative, Sellers shall promptly
designate another individual to act as their representative under this
Agreement so that at all times there will be a Representative with the
authority provided in this Article IX. Such successor Representative shall be
designated by Sellers by an instrument in writing signed by Sellers (or their
successors in interest) holding a majority of the Shares, and such appointment
shall become effective as to the successor Representative when such instrument
shall have been delivered to him or her and a copy thereof delivered to
Purchaser.
9.2 Authorization. Sellers hereby authorize the Representative,
on their behalf and in their name, to:
(a) Receive all notices or documents given or to be given
to Sellers by the Purchaser pursuant hereto or in connection herewith and to
receive and accept service of legal process in connection with any suit or
proceeding arising under this Agreement. The Representative shall promptly
forward a copy of such notice of process to each Seller;
(b) Deliver on the date hereof and hereafter the
certificates for the Shares of the Sellers in exchange for their respective
portion of the consideration payable with respect to such securities;
(c) Upon confirmation of the receipt of the cash portion
of the Purchase Price to be paid on the date hereof, sign and deliver to
Purchaser on the date hereof a receipt for Sellers' portion of the
consideration and forward such amount to Sellers;
(d) Deliver to Purchaser on the date hereof all
certificates and documents to be delivered to Purchaser by Sellers pursuant to
this Agreement, together with any other certificates and documents executed by
Sellers and deposited with the Representative for such purpose;
(e) Engage counsel, and such accountants and other
advisors for Sellers and incur such other expenses on behalf of Sellers in
connection with this Agreement and the transactions contemplated hereby as the
Representative may deem appropriate; and
(f) Take such action on behalf of Sellers as the
Representative may deem appropriate in respect of:
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(i) waiving any inaccuracies in the
representations or warranties of Purchaser
contained in this Agreement or in any
document delivered by Purchaser pursuant
hereto;
(ii) waiving the fulfillment of any of the
conditions precedent to Sellers' obligations
hereunder, except with respect to Purchaser's
payment of the Purchase Price to be paid to
Representative for the benefit of Sellers
pursuant to Section 2.2;
(iii) taking such other action as the
Representative is authorized to take under
this Agreement;
(iv) receiving all documents or certificates and
making all determinations, on behalf of
Sellers, required under this Agreement;
(v) all such other matters as the Representative
may deem necessary or appropriate to
consummate this Agreement and the
transactions contemplated hereby; and
(vi) taking all such action as may be necessary
after the date hereof to carry out any of the
transactions contemplated by this Agreement.
9.3 Irrevocable Appointment. The appointment of the
Representative hereunder is irrevocable and any action taken by the
Representative pursuant to the authority granted in this Article IX shall be
effective and absolutely binding on each Seller notwithstanding any contrary
action of, or direction from, a Seller, except for actions taken by the
Representative which are in bad faith or grossly negligent. The death or
incapacity of a Seller shall not terminate the prior authority and agency of
the Representative.
9.4 Resignation. The Representative may resign at any time by
giving notice to Sellers, and such resignation shall be effective upon the
appointment and qualification of a successor. The Representative may be
discharged, and replaced by another person to act as his or her successor, by
an instrument in writing signed by Sellers (or their successors in interest)
holding a majority of the Shares.
9.5 Purchaser's Reliance. Purchaser shall not be obliged to
inquire into the authority of the Representative, and Purchaser shall be fully
protected in dealing with the Representative in good faith.
9.6 Exculpation and Indemnification.
(a) In performing any of his or her duties as
Representative under this Agreement, the Representative shall not incur any
Liability to any Person, except for Liability caused by the Representative's
willful misconduct or gross negligence. Accordingly, the Representative shall
not
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incur any such Liability for (i) any action that is taken or omitted in good
faith regarding any questions relating to the duties and responsibilities of
the Representative under this Agreement, or (ii) any action taken or omitted to
be taken in reliance upon any instrument that the Representative shall in good
faith believe to be genuine, to have been signed or delivered by a proper
person or persons and to conform with the provisions of this Agreement.
(b) Sellers, jointly and severally, shall indemnify,
defend and hold harmless the Representative against, from and in respect of any
Adverse Consequence arising out of or resulting from the performance of his or
her duties hereunder or in connection with this Agreement (except for
Liabilities arising from the gross negligence or willful misconduct of the
Representative).
ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. Any controversy, claim or dispute arising
out of or relating to this Agreement, or the alleged breach hereof shall be
resolved by binding arbitration by one arbitrator subject to the sole
jurisdiction of the Judicial Arbitration and Mediation Service of King County,
Washington (J.A.M.S.). Either Purchaser or Representative may submit any such
controversy, claim or dispute to such arbitration by notifying the other, in
writing, of such election. Within ten (10) days after receipt of such notice,
Purchaser and Representative shall designate in writing one (1) arbitrator
mutually agreeable to each; provided, that if Purchaser and Representative are
unable to agree on one (1) arbitrator within such ten-day period, an arbitrator
shall be selected by the American Arbitration Association, subject to the last
two (2) sentences of this Section 10.1. The arbitrator shall permit a period
of open and free discovery, including the taking of depositions, and will
promptly conduct an arbitration hearing. It is the intent of the parties
hereto that an arbitration hearing be concluded within ninety (90) days of the
appointment of the arbitrator. The arbitrator shall have broad authority to
fashion any legal or equitable remedy including the authority to award specific
performance. The arbitrator will render a final and binding decision within
ten (10) days of the conclusion of the arbitration hearing. Such arbitrator
shall, at the sole election of Purchaser, be a resident of, or maintain a
principal place of business in, the City of San Francisco, State of California.
In no event shall such arbitrator be a resident of, or maintain a principal
place of business in, the State of Washington unless Purchaser otherwise
agrees.
10.2 Arbitration Award. After the arbitration award being
rendered, it may be entered in any court of competent jurisdiction and shall
constitute a final adjudication of all matters submitted to arbitration.
10.3 Procedures. If any party at any time subsequent to execution
of this Agreement refuses to comply with the arbitration provisions of this
Article X, any party may make specific application to the Superior Court of
King County, Washington to compel the party to submit to arbitration in
accordance with the terms of this Article. Nothing in this Article X, however,
shall deprive a court of competent jurisdiction of the authority to apply a
temporary restraining order or preliminary injunction prohibiting a violation
of this Agreement prior to any arbitration proceeding.
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10.4 Attorneys' Fees. It if shall be necessary for any party to
this Agreement to employ an attorney to enforce their rights pursuant to this
Agreement because of the default of another party(s), the defaulting party(s)
shall reimburse the prevailing party(s) for reasonable attorneys' fees and
expenses arising from such enforcement, including such fees and expenses on
appeal and in bankruptcy or arbitration proceedings.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Post-Closing Deliveries. After the date hereof, any monies,
checks, instruments, invoices, bills, receipts, notices, mail and other
communications received by one party but directed toward or due to another
shall be promptly delivered to the other party. Sellers shall cooperate with
Purchaser after the date hereof, to ensure the orderly transition of the
operation of the Business from Sellers to Purchaser and to minimize any
disruption in the business of Purchaser that might result from the transactions
contemplated hereby.
11.2 Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have
been duly received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a business day
and during normal business hours of the recipient, and otherwise on the next
business day following transmission, (b) if given by certified or registered
mail, return receipt requested, postage prepaid, three (3) business days after
being deposited in the U.S. mails and (c) if given by courier or other means,
when received or personally delivered, and, in any such case, addressed as
follows:
(1) if to Purchaser:
c/o Booth Creek, Inc.
1000 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Facsimile: (970) 479-0291
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Bruce A. Toth
Facsimile: (312) 558-5700
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(2) if to Sellers or Representative:
c/o David R. Moffett
3626 W. Mercer Way
Mercer Island, WA 98040
with a copy to:
Carney, Badley, Smith & Spellman
2200 Columbia Center
701 Fifth Avenue
Seattle, WA 98104-7091
Attention: Stephen C. Sieberson
Facsimile: (206) 467-8215
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the
provisions of this Section 11.2.
11.3 Assignment. No party may assign or transfer any or all of its
rights or obligations under this Agreement without the prior written approval
of all the other parties; provided, however, that Purchaser may assign or
transfer all (but not less than all) of its rights and obligations under this
Agreement (a) to any Person that is an Affiliate of Purchaser or (b) after the
date hereof, to any Person to whom Purchaser sells the Business and
substantially all of the Company's assets; and, provided further, that
Purchaser may collaterally assign its rights hereunder to any Person or Persons
providing financing to Purchaser in connection with the transactions
contemplated hereby.
11.4 Benefit of the Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be construed so as
to confer any right or benefit upon any Person, other than the parties hereto
and their respective successors and permitted assigns.
11.5 Exhibits. The Exhibits hereto shall be construed with and as
an integral part of this Agreement to the same effect as if the contents
thereof had been set forth verbatim herein.
11.6 Headings. The headings used in this Agreement are for
convenience of reference only and shall not be deemed to limit, characterize or
in any way affect the interpretation of any provision of this Agreement.
11.7 Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and no other representations, promises, agreements or understandings
regarding the subject matter hereof shall be of any force or effect unless in
writing, executed by the party to be bound thereby and dated on or after the
date hereof.
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11.8 Modifications and Waivers. No change, modification or waiver
of any provision of this Agreement shall be valid or binding unless it is in
writing, dated subsequent to the date hereof and signed by Purchaser and each
Seller. No waiver of any breach, term or condition of this Agreement by any
party shall constitute a subsequent waiver of the same or any other breach,
term or condition.
11.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.10 Severability. In case any one or more of the provisions
contained herein for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WASHINGTON.
11.12 Expenses. Except as otherwise expressly provided herein, each
party hereto shall pay all of its own costs and expenses incurred or to be
incurred in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
11.13 Liquidated Damages. The parties hereto agree that an Event of
Default which has occurred and is continuing, the liquidated value of the
Sellers' damages with respect thereto shall be deemed to equal the aggregate
amount remaining to be paid to Sellers pursuant to Section 2.3.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Preferred
Stock Purchase Agreement as of the date first written above.
PURCHASER: DRE, L.L.C.
By: Ski Lifts, Inc.
Title: Member
By: /s/ George N. Gillett, Jr.
--------------------------------
Title: Chairman
----------------------------
SELLERS:
/s/ William W. Moffett, Jr.
-----------------------------------
William W. Moffett, Jr.
/s/ David R. Moffett
-----------------------------------
David R. Moffett
/s/ Laurie M. Padden
-----------------------------------
Laurie M. Padden
/s/ Laurie M. Padden
-----------------------------------
Laurie M. Padden, as custodian for
Christina Padden
/s/ Laurie M. Padden
-----------------------------------
Laurie M. Padden, as custodian for
Jennifer Padden
/s/ Laurie M. Padden
-----------------------------------
Laurie M. Padden, as custodian for
Mary M. Padden
/s/ Stephen R. Moffett
-----------------------------------
Stephen R. Moffett
/s/ Katharine E. Moffett
-----------------------------------
Katharine E. Moffett
/s/ Frances J. DeBruler
-----------------------------------
Frances J. DeBruler, individually
and as representative of the Estate
of Jean S. DeBruler, Jr.,
deceased
/s/ Peggy Westerlund
-----------------------------------
Peggy Westerlund
REPRESENTATIVE
/s/ David R. Moffett
----------------------------------
David R. Moffett
<PAGE> 1
EXHIBIT 10.10
MANAGEMENT AGREEMENT
This Management Agreement, dated as of this 27th day of
November, 1996, (this "Agreement") is by and between Booth Creek Ski Holdings,
Inc, a Delaware corporation (the "Company"), and Booth Creek, Inc., a Delaware
corporation (the "Management Company").
RECITALS
A. The Company and its subsidiaries are engaged in the
business of owning and operating ski resorts and related businesses.
B. The management of the Management Company has
extensive experience and expertise in the operation of ski resorts and
businesses related thereto.
C. The Company has requested that the Management Company
provide management services to the Company, Booth Creek Ski Group, Inc., of
which the Company is a wholly owned subsidiary ("Group"), and the Company's
subsidiaries in connection with their ownership and operation of the ski
resorts and related businesses.
D. The Management Company and the Company desire to set
forth their respective agreements regarding the management services to be
provided by the Management Company to the Company and the compensation and
reimbursement to be received by the Management Company therefor.
NOW THEREFORE, intending to be legally bound hereby, in
consideration of the premises and mutual agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Appointment
(a) Subject to Section 6 hereof, the Company hereby
appoints the Management Company to manage and supervise, directly or
indirectly, where applicable, certain aspects of its businesses and operations
including, without limitation, the duties and responsibilities set forth in
Sections 2 and 3 hereof, and agrees that during the term hereof the Management
Company may take such actions as it deems reasonably necessary to render such
management services to the Company, Group and its subsidiaries. The Company
shall, and shall cause Group and its subsidiaries to, cooperate with the
Management Company and reasonably assist the Management Company as required to
enable the Management Company to discharge its duties and responsibilities
hereunder.
(b) The Management Company hereby accepts such
appointment by the Company and agrees to act in accordance with the duties and
responsibilities set forth in this Agreement and to take such actions as may
reasonably be required to discharge such duties and responsibilities.
<PAGE> 2
2. Board of Directors' Meetings
If requested by the officers or directors of the Company,
Group or of any subsidiary of the Company, the Management Company will have its
management personnel attend meetings of the respective boards of directors of
each such companies, and advise such boards with respect to the conduct of the
business and affairs of such companies.
3. Management Services
The Management Company shall provide general management advice
with respect to the following:
(a) financial services including, without limitation,
cash management, accounting and data processing systems and procedures,
budgeting, equipment purchases, business forecasts, treasury functions and
investor relations;
(b) the preparation by Group, the Company or its
subsidiaries of: (1) consolidated unaudited financial statements of Group, the
Company and its subsidiaries as of the end of each month and quarter of each
fiscal year, (2) annual cash flow budgets and projections, and (3) any other
reports or statements required by institutional investors of Group or
reasonably requested by the board of directors of the Company;
(c) tax matters including, without limitation,
preparation of local, state and federal tax returns, participation in tax
audits or reviews and resolution of tax claims;
(d) legal matters including, without limitation,
negotiation of contracts, preparation of documents, supervision of
investigations, litigation and similar matters, environmental matters and
government regulatory matters;
(e) corporate finance matters including, without
limitation, divestitures, acquisitions, debt and equity financing and capital
expenditures;
(f) administration and operation matters including,
without limitation, unified management of the ski resorts, research, marketing
and promotion;
(g) personnel matters including, without limitation,
employee benefit and retirement plan administration, employee relations,
insurance administration, employment policies and procedures and public
relations;
(h) business insurance matters including, without
limitation, procurement of directors and officers, casualty, crime, fiduciary,
automobile, property, general liability, medical, life and disability
insurance; and
(i) employment of consultants, contractors and agents to
perform services on behalf of the Group, the Company or any of its
subsidiaries.
-2-
<PAGE> 3
4. Fees and Reimbursement of Expenses and Payment
In consideration for the services rendered by the
Management Company hereunder to the Company, the Company agrees to compensate
and pay the Management Company as set forth in this Section 4.
(a) Base Compensation: The Company shall pay the
Management Company the sum of $350,000 per annum (the "Base Compensation")
payable on a monthly basis in advance.
(b) Certain Operations Costs. The Company shall pay the
Management Company amounts necessary to cover operations costs (other than
office operations costs but including, without limitation, reasonable travel
and entertainment costs) of the Management Company attributable to, arising out
of, in connection with, or related to management services rendered to the
Company or any of its subsidiaries by the Management Company.
(c) Third Party Reimbursement: The Company shall
reimburse the Management Company for any other costs or expenses incurred by
the Management Company for independent third party professionals or persons
with respect to its management services set forth in Sections 2 and 3 hereof.
(d) Operating Bonus: In addition to the amounts
identified above, the Company shall pay to the Management Company an operating
bonus (the "Operating Bonus") for each fiscal year that begins during the Term
(as defined in Section 5 below) beginning with the fiscal year which commences
on November 1, 1996, on the terms and conditions set forth in this Section
4(d). The Operating Bonus for each fiscal year shall be paid within 15 days
after Group receives its fiscal year-end audited financial statements for that
fiscal year. For the current fiscal year and for each full fiscal year that
ends during the Term, the Operating Bonus shall be an amount equal to the
product of (i) 2.5% multiplied by (ii) the excess of (x) Consolidated EBITDA
(as defined below) for such fiscal year, over (y) $25 million. For any fiscal
year that begins during and ends after the Term, the Operating Bonus shall be
an amount equal to the product of (1) an amount equal to the product of (i)
2.5% multiplied by (ii) the excess of (x) Consolidated EBITDA for such fiscal
year, over (y) $25 million, multiplied by (2) a fraction, the numerator of
which is the number of days from the beginning of the fiscal year through the
end of the Term, and the denominator of which is 365. "Consolidated EBITDA"
shall have the meaning assigned thereto in those certain Securities Purchase
Agreements dated the date hereof by and between Group and each of John Hancock
Mutual Life Insurance Company and CIBC WG Argosy Merchant Fund 2, L.L.C. (The
"Securities Purchase Agreements"). Notwithstanding anything to the contrary,
the Operating Bonus to be paid for any fiscal year shall not exceed $400,000.
(e) Notwithstanding anything to the contrary set forth
herein, the reimbursements to be paid by the Company to the Management Company
hereunder shall not be in lieu of, and the Company shall be directly liable
for, any expenses incurred by the Company, Group or any of its subsidiaries, or
by the Management Company on behalf of Company, Group or any of its
subsidiaries, for services rendered to Company, Group or any of its
subsidiaries by unaffiliated third parties whether or not such third parties
are retained by the Management Company.
-3-
<PAGE> 4
(f) The Management Company shall invoice the Company on a
monthly basis for the respective amounts allocable to such parties and payable
pursuant to Section 4(b) and 4(c), and such parties agree to pay such invoices
on a net 30-day basis.
(g) The Company acknowledges and agrees that (i) the
Management Company's obligation to perform the management services set forth
herein, and (ii) the Management Company's election to pay any third parties any
amounts due and owing by the Company, Group or any subsidiary for any fees,
expenses or costs of any kind is contingent upon and subject to the Management
Company's receipt of its compensation due hereunder and reimbursement from
Company, Group and its subsidiaries in consideration for the management
services rendered to Company, Group and its subsidiaries in amounts which the
Management Company, in its sole and absolute discretion, considers sufficient
to cover any expenditures by the Management Company hereunder.
(h) The Management Company acknowledges that the
obligation of the Company to make the payments hereunder to Management Company
is subject to the provisions of the Securities Purchase Agreements, including
without limitation Section 14.6 thereof.
5. Term.
The term of this Agreement (the "Term") shall commence on the
date hereof and continue until date of termination (the "Termination Date") of
this Agreement as provided in Section 6 hereof.
6. Termination
This Agreement may be terminated as follows:
(a) the Management Company may terminate this Agreement
if the Company fails or refuses (by act or omission) to comply with or perform
in any material respect its obligations under this Agreement and such failure
or refusal continues unremedied for more than sixty (60) days after written
notice thereof has been given to such failing or refusing party by the
Management Company;
(b) the Company may terminate this Agreement upon the
failure or refusal (by act or omission) of the Management Company to comply
with or perform in any material respect its obligations under this Agreement
and such failure or refusal continues unremedied for more than ninety (90) days
after written notice thereof has been given to the Management Company by the
Company; or
(c) the Company may terminate this Agreement as a result
of a reasonable determination by the Company that the Management Company, its
officers or employees have committed a criminal felony or an act of
embezzlement with respect to the funds or property of the Company which could
have been prevented by prudent management by the Management Company;
-4-
<PAGE> 5
provided, however, that, notwithstanding any termination of this Agreement, the
obligations of each party hereunder for services rendered or payments made by
the Management Company prior to such termination shall expressly survive any
termination of this Agreement and remain in full force and effect.
In addition, this Agreement shall terminate automatically upon
consummation of the sale of all or substantially all of the assets or stock of
Booth Creek Ski Group, Inc. and its subsidiaries on a consolidated basis.
Any party hereto terminating this Agreement shall send written
notice of such termination to the other party hereto.
7. Limitation of Liability; Indemnification
(a) To the fullest extent permitted by law, the
Management Company and any officer, director, employee, agent or attorney of
the Management Company (collectively, the "Indemnitees") shall not have any
liability to any of Group, the Company or any of their subsidiaries for any
loss, damage, cost or expense (including, without limitation, any court costs,
attorneys' fees and any special, indirect, consequential or punitive damages of
Group, the Company or any of their subsidiaries) allegedly arising out of the
Management Company's management services rendered to Group, the Company or any
of their subsidiaries hereunder or Indemnities' acts, conduct or omissions in
connection with the Management Company's management services rendered to
Group, the Company or any of their subsidiaries hereunder; provided, however,
that this provision shall not apply if such loss, damage, cost or expense
arises out of (i) an act of embezzlement or commission of a criminal felony by
the Management Company or (ii) willful misconduct or gross negligence by the
Management Company.
(b) To the fullest extent permitted by law, the Company
agrees to indemnify the Indemnitees and hold the Indemnitees harmless against,
any loss, damage, cost or expense (including, without limitation, court costs
and reasonable attorneys' fees) which the Indemnitees may sustain or incur by
reason of any threatened, pending or completed investigation, action, claim,
demand, suit, proceeding or recovery by any person (other than the Indemnitees)
allegedly arising out of the Management Company's management services rendered
to Group, the Company or any of their subsidiaries hereunder or the
Indemnitees' acts, conduct or omissions in connection with the Management
Company's management services rendered to Group, the Company or any of their
subsidiaries hereunder, except in any instance in which the Indemnitees would
not be exempted from liability under Section 7(a) hereof.
(c) Any Indemnitee shall as promptly as practicable
notify the Company of a claim as to which indemnification is sought by such
Indemnitee; provided, however, that the Company shall not be relieved of its
obligations hereof by reason of the failure by such Indemnitee to give such
notice to the Company except to the extent that such failure interferes with or
adversely affects the Company's or defense in connection with such claim. The
Company shall have the right in its sole discretion to defend or compromise any
claim for which indemnification is sought under this Section 7, and such
Indemnitee shall reasonably cooperate with all reasonable requests of the
-5-
<PAGE> 6
Company in connection therewith; provided, however, if (i) the Indemnitee has
been advised by counsel that an actual or potential conflict of interest could
exist were such Indemnitee to be represented by counsel for the Company or (ii)
such Indemnitee has been indicted or otherwise charged in a criminal complaint,
such Indemnitee may have separate counsel, the reasonable fees and expenses of
counsel engaged on behalf of such Indemnitee to be borne by the Company. An
Indemnitee, at any time and at its own expense, may participate in any judicial
proceeding controlled by the Company pursuant to this Section 7(d). To the
extent that an Indemnitee would be entitled to indemnifications under this
Section 7 but a court determines the undertaking to indemnify and hold harmless
set forth in this Section 7 is unenforceable because it is violative of any law
or public policy, the Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities and obligations incurred by the
Indemnitees or any of them.
8. Notices
All notices and other communications to any of the parties
hereto required or permitted under the Agreement (including, without
limitation, any termination notice) shall be in writing and shall be deemed to
have been given (a) when delivered to the addressee in person, (b) when sent by
facsimile after confirmation of receipt, (c) when sent via overnight mail, one
business day after being sent, or (d) three (3) business days after being
deposited in the United States mail, first class postage prepaid, registered or
certified mail, addressed to the respective addressee(s) at the following
addresses:
If to the Management Company: 1000 S. Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
If to the Company: 1000 S. Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
or, to such other address as any party hereto shall previously have designated
by written notice to the other parties hereto in accordance with this Section
8.
Any notice or other communication sent by telecopier or
similar facsimile telecommunication shall be confirmed promptly by the sending
of a copy of such notice or other communication to the addressee thereof by
United States mail, first class postage prepaid, registered or certified mail.
9. Amendment; Assignment; Binding Effect
This Agreement may be amended or modified only by a written
instrument signed by all the parties hereto. No party shall assign or transfer
this Agreement, in whole or in part, or any of such party's rights or
obligations hereunder, to any other person or entity without the prior written
-6-
<PAGE> 7
consent of the other parties hereto. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
10. Waiver; Severability
The failure of a party hereto to insist in any instance upon
the strict and punctual performance of any provision of this Agreement shall
not constitute a continuing waiver of such a provision. No party shall be
deemed to have waived any right, power or privilege under this Agreement or any
provisions hereunder unless such waiver shall have been in writing and duly
executed by the party to be charged with such waiver, and such waiver shall be
a waiver only with respect to the specific instance involved and shall in no
way impair the rights of the waiving party or the obligations of any other
party in any other respect or at any other time. If any provision of this
Agreement shall be waived, or be invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain binding and in full force and effect.
11. No Recourse Against Others
Notwithstanding anything contained in this Agreement to the
contrary, a director, officer or employee, as such, of the Management Company
shall not have any liability for any obligations of the Management Company,
Group, the Company or any of the Company's subsidiaries, as the case may be,
under this Agreement or for any claim based upon, in respect of, or by reason
of such obligations or its creation.
12. GOVERNING LAW
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS
OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
13. Entire Agreement
This Agreement constitutes the entire Agreement among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, either oral or written, with respect
thereto.
14. Counterparts
This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same instrument.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
BOOTH CREEK SKI HOLDINGS, INC.
BY: /s/ Jeffrey J. Joyce
---------------------------
ITS:
--------------------------
BOOTH CREEK, INC.
BY: /s/ Jeffrey J. Joyce
---------------------------
ITS:
--------------------------
-9-
<PAGE> 1
EXHIBIT 10.11
December 3, 1996
Ms. Nanci N. Northway
P.O. Box 655
Carnelian Bay, California
Dear Nanci:
This letter will confirm that Booth Creek Ski Holdings, Inc.
("Company") will provide to you a payment of $100,000 within 90 days following
an initial public offering of the Company or a sale of the Company to any
entity or entities not controlled by George N. Gillett, Jr., provided that you
are an employee of the Company on the date of such event.
As you know, you have had and will have access to confidential
information (including, but not limited to, current and prospective
confidential know-how, inventions, trade secrets, customer lists, marketing
plans, business plans, information regarding acquisitions, mergers and/or joint
ventures) concerning the business, customers, products, plans, finances,
suppliers, and assets of Company and its parents, subsidiaries, affiliates and
other related entities that is not generally known outside Company and/or the
related entities. You understand and agree that you will keep all such
information confidential both during your employment with the Company and at
all times following the termination of your employment.
Please signify your agreement to the foregoing by signing and
dating this letter and returning it to me.
Very truly yours,
/s/ George N. Gillett, Jr.
George N. Gillett, Jr.
Acknowledged and Agreed
as of December 3, 1996.
/s/ Nanci N. Northway
- -------------------------------
Nanci N. Northway
<PAGE> 1
EXHIBIT 10.12
FS-2700-5b (7/93)
OMB No. 0596-0082 Expires 6/30/96
- --------------------------------------------------------------------------------
USDA - Forest Service Holder No. Type Site Authority
4002 / 1 161 545
Auth. Type Issue Date Expir. Date
SKI AREA
18 10/31/1994 10/31/2034
TERM SPECIAL USE PERMIT
Location Sequence No. Stat. Ref.
Act of October 22, 1986 0922043300902
(Ref. FSM 2710) Latitude Longitude LOS Case
- - - -
- --------------------------------------------------------------------------------
Waterville Valley Ski Resort, Inc. of 1000 South Frontage Road, Vail Colorado,
81657 (hereafter called the holder), is hereby authorized to use National
Forest System lands, on the White Mountain National Forest, for the purposes of
constructing, operating, and maintaining a four-season sports resort including
food service, retail sales, and other ancillary facilities, described herein,
known as the Waterville Valley Resort and subject to the provisions of this
term permit. This permit covers 790 acres more or less, described here and as
shown on the attached map dated 10/96, Exhibit (Appendix C-1).
The following improvements, whether on or off the site, are authorized:
As shown on the attachments entitled "As Built Plans" dated October 19, 1994,
Appendix A-1, "Waterville Valley Master Development Plan, Maps/Narrative" dated
February 1976, Appendix A-2, and "As Built Master Development Plan Waterville
Valley Cross Country Ski Area", Appendix A-3.
Attached Clauses. This term permit is accepted subject to the
conditions set forth herein on pages 2 through 20, and to exhibits Appendix A-D
attached or referenced hereto and made a part of this permit.
- --------------------------------------------------------------------------------
THIS PERMIT IS ACCEPTED SUBJECT TO ALL OF ITS TERMS AND CONDITIONS.
ACCEPTED:
/s/ GEORGE N. GILLETT, JR. 11/16/96
- --------------------------------------------------------------------------------
GEORGE N. GILLETT, JR. DATE
APPROVED:
/s/ DONNA L. HEPP 11/26/96
- --------------------------------------------------------------------------------
DONNA L. HEPP FOREST SUPERVISOR DATE
<PAGE> 2
TERMS AND CONDITIONS
<TABLE>
<S> <C> <C>
I. AUTHORITY AND USE AND TERM AUTHORIZED . . . . . . . . . . . . . . . . . 2
A. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . 2
C. Rules, Laws and Ordinances . . . . . . . . . . . . . . . . . . . 2
D. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
E. Nonexclusive Use . . . . . . . . . . . . . . . . . . . . . . . . 2
F. Area Access . . . . . . . . . . . . . . . . . . . . . . . . . . 3
G. Master Development Plan . . . . . . . . . . . . . . . . . . . . 3
H. Periodic Revision . . . . . . . . . . . . . . . . . . . . . . . 3
II. IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Permission . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Site Development Schedule . . . . . . . . . . . . . . . . . . . 3
C. Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
D. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
E. Ski Lift Plans and Specifications . . . . . . . . . . . . . . . 4
III. OPERATIONS AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . 4
A. Conditions of Operations . . . . . . . . . . . . . . . . . . . . 4
B. Ski Lift, Holder Inspection . . . . . . . . . . . . . . . . . . 4
C. Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . 5
D. Cutting of Trees . . . . . . . . . . . . . . . . . . . . . . . . 5
E. Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
F. Temporary Suspension . . . . . . . . . . . . . . . . . . . . . . 5
IV. NONDISCRIMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
V. LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . 6
B. Indemnification of the United States . . . . . . . . . . . . . . 6
C. Damage to United States Property . . . . . . . . . . . . . . . . 6
D. Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
E. Hazards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
F. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
VI. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Holder to pay fair market value for the permitted use . . . . . 7
B. Fees - Construction Period - Flat Fee . . . . . . . . . . . . . 8
C. Fees - Graduated Rate Fee System . . . . . . . . . . . . . . . . 8
1. Weighted-average break-even point and
weighted-average rate base . . . . . . . . . . . . . . . . . . . 8
2. Minimum annual fee . . . . . . . . . . . . . . . . . . . . . . . 8
3. Mixed ownership . . . . . . . . . . . . . . . . . . . . . . . . 9
D. Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
E. Definitions of Sales Categories and Gross Fixed
Assets (GFA). . . . . . . . . . . . . . . . . . . . . . . . . . 9
1. Sales Categories . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Gross Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . 10
F. Change of Gross Fixed Asset Amount Upon Sale or
Change in Controlling Interest . . . . . . . . . . . . . . . . 10
G. Determining Sales and Other Revenue . . . . . . . . . . . . . . 10
1. Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
a. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(1) Gratuities . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(2) Acceptable Discounts . . . . . . . . . . . . . . . . . . . . . 11
(3) Discriminatory Pricing . . . . . . . . . . . . . . . . . . . . 11
(4) Preferential Discounts . . . . . . . . . . . . . . . . . . . 11
(5) Market Price . . . . . . . . . . . . . . . . . . . . . . . . . 11
(6) Bartering or Trade Offs . . . . . . . . . . . . . . . . . . . 11
(7) Commissions . . . . . . . . . . . . . . . . . . . . . . . . . 11
(8) Franchise Receipts . . . . . . . . . . . . . . . . . . . . . . 11
b. Inclusions . . . . . . . . . . . . . . . . . . . . . . . . . . 11
c. Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
H. Concession Payment, Graduated Rate Fee System . . . . . . . . . 13
I. Interest and Penalties . . . . . . . . . . . . . . . . . . . . . 14
1. Interest shall be charged . . . . . . . . . . . . . . . . . . . 14
2. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . 14
3. Penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
J. Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
K. Access to Records . . . . . . . . . . . . . . . . . . . . . . . 14
L. Accounting Records . . . . . . . . . . . . . . . . . . . . . . . 15
1. Systematic internal controls . . . . . . . . . . . . . . . . . . 15
2. A permanent record of investments in facilities . . . . . . . . 15
3. As may be specified . . . . . . . . . . . . . . . . . . . . . . 15
VII. TRANSFER AND SALE
A. Subleasing . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. Notification of Sale . . . . . . . . . . . . . . . . . . . . . . 15
C. Divestiture of Ownership . . . . . . . . . . . . . . . . . . . . 15
VIII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Termination for Higher Public Purpose . . . . . . . . . . . . . 16
B. Termination, Revocation and Suspension . . . . . . . . . . . . . 16
IX. RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION
OR NONRENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Removal of Improvements . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
XI. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Members of Congress . . . . . . . . . . . . . . . . . . . . . . 17
B. Inspection, Forest Service . . . . . . . . . . . . . . . . . . . 17
C. Regulating Services and Rates . . . . . . . . . . . . . . . . . 17
D. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . 17
E. Bonding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
F. Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 18
G. Current Addresses . . . . . . . . . . . . . . . . . . . . . . . 18
H. Identification of Holder . . . . . . . . . . . . . . . . . . . . 18
I. Archaeological-Paleontological Discoveries . . . . . . . . . . . 19
J. Protection of Habitat of Endangered, Threatened and
Sensitive Species . . . . . . . . . . . . . . . . . . . . . . . 19
K. Superior Clauses . . . . . . . . . . . . . . . . . . . . . . . . 19
L. Superseded Permit . . . . . . . . . . . . . . . . . . . . . . . 19
M. Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
N. Paper Work Reduction Act Notice . . . . . . . . . . . . . . . .. 20
</TABLE>
APPENDICES
APPENDIX A - MASTER DEVELOPMENT PLANS
A-1 As Built Plans
A-2 Waterville Valley Master Development Plan,
Maps/Narrative
A-3 As Built Master Development Plan Waterville Valley
Cross Country Ski Area
APPENDIX B - CONSTRUCTION/OPERATION
B-1 Site Development Schedule
B-2 Operating Plan
APPENDIX C - MAPS
C-1 Permit Boundary
C-2 Development Area Boundary
APPENDIX D - BUSINESS MANAGEMENT
D-1 Gross Fixed Assets (GFA)
D-2 Billing Calendar
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TERMS AND CONDITIONS
I. AUTHORITY AND USE AND TERM AUTHORIZED.
A. Authority. This term permit is issued under the authority of
the Act of October 22, 1986 (Title 16, United States Code, Section 497b), and
Title 36, Code of Federal Regulations, Sections 251.50-251.64.
B. Authorized Officer. The authorized officer is the Forest
Supervisor. The authorized officer may designate a representative for
administration of specific portions of this authorization.
C. Rules, Laws and Ordinances. The holder, in exercising the
privileges granted by this term permit, shall comply with all present and
future regulations of the Secretary of Agriculture and federal laws; and all
present and future, state, county, and municipal laws, ordinances, or
regulations which are applicable to the area or operations covered by this
permit to the extent they are not in conflict with federal law, policy or
regulation. The Forest Service assumes no responsibility for enforcing laws,
regulations, ordinances and the like which are under the jurisdiction of other
government bodies.
D. Term.
1. This authorization is for a term of N/A years to provide for
the holder to prepare a Master Development Plan. Subject to acceptance of the
Master Development Plan by the authorized officer, this authorization shall be
extended for an additional N/A years, for a total of N/A years, to provide the
holder sufficient time to construct facilities approved in the Master
Development Plan within the schedule outlined in clause II.B. (Site Development
Schedule), so that the area may be used by the public. Further Provided; This
authorization shall be extended by its terms for an additional N/A years, for a
total of N/A years, if it is in compliance with the site development schedule
in the Master Development Plan and being in operation by the 10-year
anniversary date of the issuance of this authorization. Failure of the holder
to comply with all or any provisions of this clause shall cause the
authorization to terminate under its terms.
2. Unless sooner terminated or revoked by the authorized officer,
in accordance with the provisions of the authorization, this permit shall
terminate on October 31, 2034, but a new special-use authorization to occupy
and use the same National Forest land may be granted provided the holder shall
comply with the then-existing laws and regulations governing the occupancy and
use of National Forest lands. The holder shall notify the authorized officer
in writing not less than six (6) months prior to said date that such new
authorization is desired.
E. Nonexclusive Use. This permit is not exclusive. The Forest
Service reserves the right to use or permit others to use any part of the
permitted area for any purpose, provided such use does not materially interfere
with the rights and privileges hereby authorized.
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<PAGE> 6
F. Area Access. Except for any restrictions as the holder and
the authorized officer may agree to be necessary to protect the installation
and operation of authorized structures and developments, the lands and waters
covered by this permit shall remain open to the public for all lawful purposes.
To facilitate public use of this area, all existing roads or roads as may be
constructed by the holder, shall remain open to the public, except for roads
as may be closed by joint agreement of the holder and the authorized officer.
G. Master Development Plan. In consideration of the privileges
authorized by this permit, the holder agrees to prepare and submit changes in
the Master Development Plan encompassing the entire winter sports resort
presently envisioned for development in connection with the National Forest
lands authorized by this permit, and in a form acceptable to the Forest
Service. Planning should encompass all the area authorized for use by this
permit. The accepted Master Development Plan SHALL BECOME A PART OF THIS
PERMIT. For planning purposes, a capacity for the ski area in people-at-one
time shall be established in the Master Development Plan and appropriate
National Environmental Policy Act (NEPA) document. The overall development
shall not exceed that capacity without further environmental analysis
documentation through the appropriate NEPA process.
H. Periodic Revision.
1. The terms and conditions of this authorization shall be
subject to revision to reflect changing times and conditions so that land use
allocation decisions made as a result of revision to Forest Land and Resource
Management Plan may be incorporated.
2. At the sole discretion of the authorized officer this term
permit may be amended to remove authorization to use any National Forest System
lands not specifically covered in the Master Development Plan and/or needed for
use and occupancy under this authorization.
II. IMPROVEMENTS.
A. Permission. Nothing in this permit shall be construed to
imply permission to build or maintain any improvement not specifically named in
the Master Development Plan and approved in the annual operating plan, or
further authorized in writing by the authorized officer.
B. Site Development Schedule. As part of this permit, a schedule
for the progressive development of the permitted area and installation of
facilities shall be prepared jointly by the holder and the Forest Service.
Such a schedule shall be prepared by February 1, 1998, and shall set forth an
itemized priority list of planned improvements and the due date for completion.
This schedule shall be made a part of this permit (Appendix B-1). The holder
may accelerate the scheduled date for installation of any improvement
authorized, provided the other scheduled priorities are met; and provided
further, that all priority installations authorized are completed to the
satisfaction of the Forest Service and ready for public use prior to the
scheduled due date.
1. All required plans and specifications for site improvements,
and structures included in the development schedule shall be properly certified
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<PAGE> 7
and submitted to the Forest Service at least forty-five (45) days before the
construction date stipulated in the development schedule.
2. In the event there is agreement with the Forest Service to
expand the facilities and services provided on the areas covered by this
permit, the holder shall jointly prepare with the Forest Service a development
schedule for the added facilities prior to any construction and meet
requirements of paragraph II.D of this section. Such schedule SHALL BE MADE A
PART OF THIS PERMIT (Appendix B-1).
C. Plans. All plans for development, layout, construction,
reconstruction or alteration of improvements on the site, as well as revisions
of such plans, must be prepared by a licensed engineer, architect, and/or
landscape architect (in those states in which such licensing is required) or
other qualified individual acceptable to the authorized officer. Such plans
must be accepted by the authorized officer before the commencement of any work.
A holder may be required to furnish as-built plans, maps, or surveys upon the
completion of construction.
D. Amendment. This authorization may be amended to cover new,
changed, or additional use(s) or area not previously considered in the approved
Master Development plan. In approving or denying changes or modifications, the
authorized officer shall consider, among other things, the findings or
recommendations of other involved agencies and whether their terms and
conditions of the existing authorization may be continued or revised, or a new
authorization issued.
E. Ski Lift Plans and Specifications. All plans for uphill
equipment and systems shall be properly certified as being in accordance with
the American National Standard Safety Requirements for Aerial Passenger
Tramways (B77.1). A complete set of drawings, specifications, and records for
each lift shall be maintained by the holder and made available to the Forest
Service upon request. These documents shall be retained by the holder for a
period of three (3) years after the removal of the system from National Forest
land.
III. OPERATIONS AND MAINTENANCE.
A. Conditions of Operations. The holder shall maintain the
improvements and premises to standards of repair, orderliness, neatness,
sanitation, and safety acceptable to the authorized officer. Standards are
subject to periodic change by the authorized officer. This use shall normally
be exercised at least 120 days each year or season. Failure of the holder to
exercise this minimum use may result in termination pursuant to VIII.B.
B. Ski Lift, Holder Inspection. The holder shall have all
passenger tramways inspected by a qualified engineer or tramway specialist.
Inspections shall be made in accordance with the American National Standard
Safety Requirements for Aerial Passenger Tramways (B77.1). A certificate of
inspection, signed by an officer of the holder's company, attesting to the
adequacy and safety of the installations and equipment for public use shall be
received by the Forest Service prior to public operation stating as a minimum:
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<PAGE> 8
"Pursuant to our special use permit, we have had an inspection
to determine our compliance with the American National
Standard B77.1. We have received the results of that
inspection and have made corrections of all deficiencies
noted. The facilities are ready for public use."
C. Operating Plan. The holder or designated representative shall
prepare and annually revise by October 1 (Winter Plan) and March 15
(Summer/Construction Plan) an Operating Plan. The plan shall be prepared in
consultation with the authorized officer or designated representative and cover
winter and summer operations as appropriate. The provisions of the Operating
Plan and the annual revisions SHALL BECOME A PART OF THIS PERMIT (Appendix B-2)
and shall be submitted by the holder and approved by the authorized officer or
their designated representatives. This plan shall consist of at least the
following sections:
1. Ski patrol and first aid.
2. Communications.
3. Signs.
4. General safety and sanitation.
5. Erosion control.
6. Accident reporting.
7. Avalanche control.
8. Search and rescue.
9. Boundary management.
10. Vegetation management.
11. Designation of representatives.
12. Trail routes for nordic skiing and other dispersed uses.
The authorized officer may require a joint annual business meeting agenda to:
a. Update Gross Fixed Assets and lift-line proration when the fee
is calculated by the Graduated Rate Fee System.
b. Determine need for performance bond for construction projects,
and amount of bond.
c. Provide annual use reports.
D. Cutting of Trees. Trees or shrubbery on the permitted area
may be removed or destroyed only after the authorized officer has approved and
marked, or otherwise designated, that which may be removed or destroyed.
Timber cut or destroyed shall be paid for by the holder at appraised value,
provided that the Forest Service reserves the right to dispose of the
merchantable timber to others than the holder at no stumpage cost to the
holder.
E. Signs. Signs or advertising devices erected on National
Forest lands, shall have prior approval by the Forest Service as to location,
design, size, color, and message. Erected signs shall be maintained or renewed
as necessary to neat and presentable standards, as determined by the Forest
Service.
F. Temporary Suspension. Immediate temporary suspension of the
operation, in whole or in part, may be required when the authorized officer, or
designated representative, determines it to be necessary to protect the public
health or safety, or the environment. The order for suspension may be given
verbally or in writing. In any such case, the superior of the authorized
officer, or designated representative, shall,
5
<PAGE> 9
within ten (10) days of the request of the holder, arrange for an
on-the-ground review of the adverse conditions with the holder. Following this
review the superior shall take prompt action to affirm, modify or cancel the
temporary suspension.
IV. NONDISCRIMINATION. During the performance of this permit, the holder
agrees:
A. In connection with the performance of work under this permit,
including construction, maintenance, and operation of the facility, the holder
shall not discriminate against any employee or applicant for employment because
of race, color, religion, sex, national origin, age, or handicap. (Ref. Title
VII of the Civil Rights Act of 1964 as amended).
B. The holder and employees shall not discriminate by segregation
or otherwise against any person on the basis of race, color, religion, sex,
national origin, age or handicap, by curtailing or refusing to furnish
accommodations, facilities, services, or use privileges offered to the public
generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section
504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments,
and the Age Discrimination Act of 1975.)
C. The holder shall include and require compliance with the above
nondiscrimination provisions in any subcontract made with respect to the
operations under this permit.
D. Signs setting forth this policy of nondiscrimination to be
furnished by the Forest Service will be conspicuously displayed at the public
entrance to the premises, and at other exterior or interior locations as
directed by the Forest Service.
E. The Forest Service shall have the right to enforce the
foregoing nondiscrimination provisions by suit for specific performance or by
any other available remedy under the laws of the United States of the State in
which the breach or violation occurs.
V. LIABILITIES.
A. Third Party Rights. This permit is subject to all valid
existing rights and claims outstanding in third parties. The United States is
not liable to the holder for the exercise of any such right or claim.
B. Indemnification of the United States. The holder shall hold
harmless the United States from any liability from damage to life or property
arising from the holder's occupancy or use of National Forest lands under this
permit.
C. Damage to United States Property. The holder shall exercise
diligence in protecting from damage the land and property of the United States
covered by and used in connection with this permit. The holder shall pay the
United States the full cost of any damage resulting from negligence or
activities occurring under the terms of this permit or under any law or
regulation applicable to the national forests, whether caused by the holder, or
by any agents or employees of the holder.
D. Risks. The holder assumes all risk of loss to the
improvements resulting from natural or catastrophic events, including but not
limited to, avalanches, rising waters, high winds, falling limbs or trees, and
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<PAGE> 10
other hazardous events. If the improvements authorized by this permit
are destroyed or substantially damaged by natural or catastrophic events, the
authorized officer shall conduct an analysis to determine whether the
improvements can be safely occupied in the future and whether rebuilding should
be allowed. The analysis shall be provided to the holder within six (6) months
of the event.
E. Hazards. The holder has the responsibility of inspecting the
area authorized for use under this permit for evidence of hazardous conditions
which could affect the improvements or pose a risk of injury to individuals.
F. Insurance. The holder shall have in force public liability
insurance covering: (1) property damage in the amount of one hundred thousand
dollars ($100,000), and (2) damage to persons in the minimum amount of five
hundred thousand dollars ($500,000) in the event of death or injury to one
individual, and the minimum amount of one million dollars ($1,000,000) in the
event of death or injury to more than one individual. These minimum amounts
and terms are subject to change at the sole discretion of the authorized
officer at the five-year anniversary date of this authorization. The coverage
shall extend to property damage, bodily injury, or death arising out of the
holder's activities under the permit including, but not limited to, occupancy
or use of the land and the construction, maintenance, and operation of the
structures, facilities, or equipment authorized by this permit. Such insurance
shall also name the United States as an additionally insured. The holder shall
send an authenticated copy of its insurance policy to the Forest Service
immediately upon issuance of the policy. The policy shall also contain a
specific provision or rider to the effect that the policy shall not be
cancelled or its provisions changed or deleted before thirty (30) days WRITTEN
NOTICE to the Forest Supervisor, White Mountain National Forest, 719 North Main
Street, Laconia, NH 03246 by the insurance company.
Rider Clause (for insurance companies)
"It is understood and agreed that the coverage provided under this
policy shall not be cancelled or its provisions changed or deleted
before thirty (30) days of receipt of WRITTEN NOTICE to the Forest
Supervisor, White Mountain National Forest, 719 North Main Street,
Laconia, NH 03246 by the insurance company."
VI. FEES.
A. Holder to pay fair market value for the permitted use. The
holder must pay fair market value for the use of National Forest System land.
1. The provisions of the Graduated Rate Fee System (GRFS)
identified under this permit may be revised by the Forest Service to reflect
changed times and conditions. Changes shall become effective when:
a. Mutually agreed; or,
b. A permit is amended for other purposes; or,
c. A new permit is issued including reissue after termination.
2. The Graduated Rate Fee System may be replaced in its entirety
by
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<PAGE> 11
the Chief of the Forest Service if a new generally applicable
fee system is imposed affecting all holders of authorizations under Public Law
99-522. Replacement shall become effective on the beginning of the holder's
business year following establishment.
B. Fees - Construction Period - Flat Fee. An annual flat fee
shall be due the United States during the initial construction period (VI.AA)
and until exceeded by fees determined by the Graduated Rate Fee System
described below; Thereafter, the annual fees due the United States for those
activities authorized by this permit shall be calculated on sales according to
the schedule below.
C. Fees - Graduated Rate Fee System. The annual fees due the
United States for those activities authorized by this permit shall be
calculated on sales according to the following schedule:
<TABLE>
<CAPTION>
Break-even point Balance of
(Sales to GFA) Rate Base Sales rate
Kind of Business (Percentage) (Percentage) (Percentage)
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery 70 .75 1.13
Service, food 70 1.25 1.88
Service, car 70 1.30 1.95
Merchandise 70 1.50 2.25
Liquor Service 60 1.80 2.70
Outfitting/Guiding 50 2.00 3.00
Rental and Services 30 4.50 6.75
Lodging 40 4.00 6.00
Lifts, Tows, and Ski
Schools 20 2.00 5.00
</TABLE>
1. A weighted-average break-even point (called the break-even
point) and a weighted-average rate base (called the rate base) shall be
calculated and used when applying the schedule to mixed business. If the
holder's business records do not clearly segregate the sales into the business
categories authorized by this permit, they shall be placed in the most logical
category. If sales with a different rate base are grouped, place them all in
the rate category that shall yield the highest fee. Calculate the fee on sales
below the break-even point using 50 percent of the rate base. Calculate the
fee on sales between the break-even point and twice the break-even point using
150 percent of the rate base. Calculate the fee on sales above twice the
break-even point using the balance of sales rate.
2. The minimum annual fee for this use, which is DUE IN ADVANCE
and is not subject to refund, shall be equal to the fee that would result when
sales are 40 percent of the break-even point. This fee shall be calculated and
billed by the Forest Service during the final quarter of the holder's fiscal
year, using the most recent GFA figure and previously reported sales data for
the current year, plus, if the operating season is still active, estimated
sales for the remainder of the year.
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<PAGE> 12
3. Mixed ownership. This use occupies both private and public
land. For purposes of the fee calculation, the calculated fee shall be
adjusted by the slope-transport-feet percentage representing the portion of the
use attributed to National Forest land. Slope-transport feet is determined by
the slope distance traveled by lifts over each ownership, multiplied by the
lift capacity.
D. Surcharge. A surcharge of N/A percent shall be applied to and
added to the basic fee. The surcharge shall be applied for N/A years beginning
with the year that sales first occur under this operation.
E. Definitions of Sales Categories and Gross Fixed Assets (GFA).
1. Sales categories. For purposes of recording and reporting
sales, and sales-related information including the cost of sales, the
activities of the concessioner are divided into:
Grocery . Includes the sale of items usually associated with grocery
stores such as staple foods, meats, produce, household supplies. Includes the
sale of bottled soft drinks, beer and wine, when included in the grocery
operation.
Service, Food. Includes the serving of meals, sandwiches, and other
items either consumed on the premises or prepared for carry out. Snack bars
are included.
Service, Cars. Includes servicing and the sale of fuels, lubricants,
and all kinds of articles used in servicing and repairing autos, boats,
snowmobiles, and aircraft.
Merchandise.
. Includes the sale of clothing, souvenirs, gifts, ski and
other sporting equipment. Where a "Service, Cars" category of business is not
established by this permit, the sale of auto accessories is included in this
category.
Service, Liquor. Includes the sale of alcoholic drinks for
consumption on the premises and other sales ordinarily a part of a bar or
cocktail lounge business. Where a bar is operated in conjunction with a
restaurant or overnight accommodations, liquor, beer and wine sales shall be
accounted for consistent with the holder's normal business practice. The sale
of alcoholic beverages for consumption off the premises is also included in
this item, except as indicated in "Grocery".
Outfitting, Guiding. Includes all activities or commercial guiding
services involving back-country travel, regardless of mode of travel, when
associated with a resort or dude ranch with a mixture of business. All fees
charged are considered sales.
Lodging. Includes lodging where daily maid service is furnished.
Rentals and Services. Includes lodging where daily maid service is
not furnished by the holder; the rental of camping space, ski equipment and
other equipment rentals; fees for the use of cross-country ski trails. Also
included are services such as barbershops, and amusements including video
games.
Lifts, Tows, and Ski Schools . Includes charges for use of all types
of uphill transportation facilities and for sports lessons and training.
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<PAGE> 13
2. Gross Fixed Assets. The capitalized cost of improvements,
equipment, and fixtures necessary and used to generate sales and other revenue
during the permit year on the permitted area or within the development boundary
shown in this permit.
GFA shall be established by and changed at the sole discretion of the
authorized officer based on the current interpretation of guidelines supporting
the Graduated Rate Fee System.
a. Costs of the following items as presented by the holder and
verified by a representative of the authorized officer to be in existence and
in use are included:
(1) Identifiable structures, major equipment, such as road
maintenance equipment, or land improvements which play a distinct role in the
permitted activity.
(2) Identifiable holder costs, to provide utility services to the
area. Utility services that extend beyond the development boundary may be
included in GFA to the extent they are necessary for the generation of sales
and are paid by the holder. Costs for user surcharge or demand rates are not
included as GFA.
b. The following, and similar items, are not part of GFA:
(1) Assets that ordinarily qualify for inclusion in GFA, but which
are out of service for the full operating year for which fees are being
determined.
(2) Land.
(3) Expendable or consumable supplies.
(4) Intangible assets, such as goodwill, permit value,
organization expense, and liquor licenses.
(5) Improvements not related to the operation.
(6) Luxury assets, to the extent their design and cost exceed
functional need.
(7) The prorata share of GFA assets used in off-site activities
not directly associated with the authorized use.
(8) Expensed assets.
(9) Operating leases.
As of the date of this permit, October 31, 1994 the initial GFA under
this ownership has been determined to be $18,647,505 as shown in detail on the
attached Apendix D-1. This amount will be updated based on the resulting
revaluation of assets at the time of purchase. If an error is found in the GFA
amount, it shall be changed to the correct amount retroactive to the date the
error occurred and fees adjusted accordingly (see p. 19 paragraph 9).
F. Change of Gross Fixed Asset Amount Upon Sale or Change in
Controlling Interest. Upon change of ownership, effective dominion or
controlling interest or upon sale of assets or common stock which results in a
change of ownership, effective dominion, or controlling interest, the value of
Gross Fixed Assets shall be established applying Generally Accepted Accounting
Principles (GAAP).
G. Determining Sales and Other Revenue. Sales and Gross
Fixed Assets shall be derived from all improvements and facilities, including
those of sublessees, which constitute a logical single overall integrated
business operation regardless of the land ownership. A map shall be prepared
designating the development boundary and may be augmented by narrative or
tables and SHALL BECOME A PART OF THIS PERMIT (Appendix C-2).
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<PAGE> 14
1. Sales. Fees shall be assessed against all receipts from sales
unless specifically exempted. Sales for the purpose of fee calculation
include, (1) all revenue derived from goods and services sold which are related
to operations under this permit and all revenue derived within the development
boundary, unless otherwise excluded, (2) the value of goods and services
traded-off for goods and services received (bartering) and (3) the value of
gratuities.
a. Definitions.
(1) Gratuities. Goods, services or privileges that are provided
without charge or at deep discount to such individuals as employees, owners,
and officers or immediate families of employees, owners and officers and not
available to the general public.
(2) Acceptable Discounts. Transactions for goods or services
below stated, listed or otherwise presented prices to the public at large.
Included are such things as group sales and organized programs. These are
included in sales at the actual transaction price.
(3) Discriminatory Pricing. Rates based solely on residence,
race, color, or religion. Discounts based on age or disability are not
discriminatory pricing.
(4) Preferential Discounts. Discounts offered to certain classes
or individuals based on their status, such as members of boards of directors,
contractors, advertisers, doctors, and VIPs, etc.
(5) Market Price. The price generally available to an informed
public excluding special promotions. It may not be the "window price".
(6) Bartering or Tradeoffs. The practice of exchanging goods or
services between individuals or companies.
(7) Commissions. Commissions are payments received by the holder
for collecting revenue on behalf of others as an agent or providing services
not directly associated with the operations, such as selling hunting and
fishing licenses, bus or sightseeing tickets for trips off or predominantly off
the permitted area, accommodating telephone toll calls, and so forth.
(8) Franchise Receipts. These are payments made to specific
permittees by sublessees solely for the opportunity to do business at a
specific location. The permittee provides little, if anything, in the way of
facilities or services. They may be the only fee paid to the permittee or, if
some facilities or services are provided by the permittee, they may be made in
addition to a rental fee. The franchise receipts may be in the form of fixed
amounts of money or in reduced prices for the franchiser's product or service.
b. Inclusions. The following items shall be included as gross
receipts to arrive at sales:
(1) Gratuities. Daily and season passes are valued at market
price unless the permit holder has sufficient records of daily individual use
to substantiate a "value of use". Value of use is the number of days the pass
is used times the market price. Does not include employees. See (4) below.
(2) Preferential Discounts. Include the amount that would have
been received had the transaction been made at the market price.
(3) Value of Discriminatory Pricing. Discriminatory pricing is
disallowed. Include the amount that would have been received had the
transaction been made at the market price.
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<PAGE> 15
(4) Employee discounts in excess of 30 percent of market price.
These discounts are exclusively given or provided to employees, owners,
officers or immediate families of employees, owners or officers are gratuities
and are included in sales at 70 percent of market price. Employee discounts
less than 30 percent are recorded at the transaction price.
(5) Value of bartered goods and services (trade offs).
(6) Gross sales of sublessees. Includes sales of State controlled
liquor stores.
(7) Fifty percent of franchise receipts.
(8) All other revenue items not specifically excluded below shall
be included as sales.
c. Exclusions. The following items shall be excluded from gross
receipts or revenue to arrive at sales:
(1) Value of goods and services provided to employees, agents,
contractors or officials to facilitate the accomplishment of their assigned
duties or work-related obligation or to others for educational or technical
competence related to the type of permitted use such as lift operation, ski
patrol, water safety, avalanche control, etc. Similarly, local, state and
federal government officials including Forest Service employees, who in the
course of their oversight responsibilities or otherwise on official business,
use goods or services. The holder is not required to report the value of such
duty-related or official use as sales for fee calculation purposes.
(2) The value of meals and lodging furnished by an employer to an
employee for the employer's convenience if, in the case of meals, they are
furnished on the employer's business premises. The fact that the employer
imposes a partial charge for, or that the employee may accept or decline meals
does not affect the exclusion if all other conditions are met. If the employer
imposes a charge for meals and lodging it shall be included at the transaction
price. The holder need not keep records of employee meals and lodging more
detailed than those required by the Internal Revenue Service.
(3) Refunds from returned merchandise and receipts from sales of
real and nonrental personal property used in the operation.
(4) Rents paid to the permittee by sublessees, even if based on
sales.
(5) Taxes collected on site from customers, accounted for as such
in the holder's accounting records, and that were paid or are payable to taxing
authorities. Taxes included in the purchase price of gasoline, tobacco and
other products, but paid to the taxing authority by the manufacturer or
wholesaler are included in sales, and subject to the permit fee.
(6) Amounts paid or payable to a Government licensing authority or
recreation administering agency from sales of hunting or fishing licenses and
recreation fee tickets.
(7) Value of sales and commissions where the holder is serving as
an agent for businesses not directly associated with the permitted operation.
This includes such things as bus or sightseeing-ticket sales for trips not
related to activities on the permitted area, telephone-toll charges, and
accident-insurance sales.
(8) Sales of operating equipment. Rental equipment, capitalized
assets or other assets used in operations shall be excluded from gross
12
<PAGE> 16
receipts. Examples are such items as used rental skis and boots, ski lifts, or
grooming equipment, which are sold periodically and replaced.
H. Concession Payment, Graduated Rate Fee System. Reports and
deposits required as outlined above shall be tendered in accordance with the
schedule below. They shall be sent or delivered to the Collection Officer,
Forest Service, USDA, at the address furnished by the Forest Supervisor.
Checks or money orders shall be payable to "Forest Service, USDA."
1. The holder shall report sales, calculate fees due, and make
payment each calendar month during the primary season (November through April)
and quarterly during the "off season" (1st quarter - August-October and 4th
quarter - May-July except for periods in which no sales take place and the
holder has notified the authorized officer that the operation has entered a
seasonal shutdown for a specific period. Reports and payments shall be made by
the 30th of the month following the end of each reportable period (see Appendix
D-2 Billing Calendar).
2. The authorized officer, prior to August 1, shall furnish the
holder with a tentative rate which shall be applied to sales in the fee
calculation (item 1), such rate to be one that shall produce the expected fee
based on past experience. The correct fee shall be determined at the end of
the year and adjustment made as provided under item (5). Any balance that may
exist shall be credited and applied against the next payment due.
3. During the final fiscal month, pay within 30 days of billing
by the Forest Service, the annual minimum fee for the next year (see Appendix
D-2 Billing Calendar).
4. The holder must also provide within three (3) months after
close of its operating year, a balance sheet representing its financial
condition at the close of its business year, an annual operating statement
reporting the results of operations including yearend adjustments for itself
and each sublessee for the same period, and a schedule of Gross Fixed Assets
adjusted to comply with the terms of this permit in a format and manner
prescribed by the authorized officer.
If the holder fails to report all sales in the period they were made
or misreports Gross Fixed Assets and the authorized officer determines that
additional fees are owed, the holder shall pay the additional fee plus
interest. Such interest shall be assessed at the rate specified in clause I
and shall accrue from the date the sales or correct Gross Fixed Assets should
have been reported and fee paid until the date of actual payment of the
underpaid fee.
5. Within 30 days of receipt of a statement from the Forest
Service, pay any additional fee required to correct fees paid for the past
year's operation.
6. Payments shall be credited on the date received by the
designated collection officer or deposit location. If the due date for the fee
or fee calculation financial statement falls on a non-workday, the charges
shall not apply until the close of business on the next workday.
7. All fee calculations and records of sales and Gross Fixed
Assets are subject to periodic audit. Errors in calculation or payment shall
be corrected as needed for conformance with those audits. Additional fees and
interest due as a result of such audits shall be in accordance with item 4,
paragraph 2.
8. Disputed fees must be paid in a timely manner.
13
<PAGE> 17
9. Correction of errors includes any action necessary to
establish the cost of gross fixed assets to the current holder, sales, slope
transport feet calculation, or other data required to accurately assess and
calculate fees. For fee calculation purposes, error may include:
a. Misreporting or misrepresentation of amounts,
b. Arithmetic mistakes,
c. Typographic mistakes,
d. Variation from Generally Accepted Accounting Principles
(GAAP), when such variations are inconsistent with the terms
and conditions of the authorization.
Correction of errors shall be made retroactively to the date the error
was made or to the previous audit period, whichever is more recent, with past
fees adjusted accordingly. Changes effected by agency policy including
definition of assets included in GFA, shall only be made prospectively.
I. Interest and Penalties.
1. Pursuant to 31 USC 3717 and 7 CFR Part 3, Subpart B, or
subsequent changes thereto, interest shall be charged on any fee not paid by
the date the fee or fee calculation financial statements specified in this
permit was due.
2. Interest shall be assessed using the higher of (1) the most
current rate prescribed by the United States Department of the Treasury
Financial Manual (TFM-6-8025.40), or (2) the prompt payment rate prescribed by
the United States Department of the Treasury under section 12 of the Contract
Disputes Act of 1978 (41 USC 611). Interest shall accrue from the date the fee
or fee calculation financial statement is due. In the event the account
becomes delinquent, administrative costs to cover processing and handling of
the delinquent debt may be assessed.
3. A penalty of 6 percent per year shall be assessed on any fee
overdue in excess of 90 days, and shall accrue from the due date of the first
billing or the date the fee calculation financial statement was due. The
penalty is in addition to interest and any other charges specified in item 2.
4. Delinquent fees and other charges shall be subject to all the
rights and remedies afforded the United States pursuant to federal law and
implementing regulations. (31 U.S.C. 3711 et seq.).
J. Nonpayment. Failure of the holder to make timely payments,
pay interest charges or any other charges when due, constitutes breach and
shall be grounds for termination of this authorization. This permit terminates
for nonpayment of any monies owed the United States when more than 90 days in
arrears.
K. Access to Records. For the purpose of administering this
permit (including ascertaining that fees paid were correct and evaluating the
propriety of the fee base), the holder agrees to make all of the accounting
books and supporting records to the business activities, as well as those of
sublessees operating within the authority of this permit, available for
analysis by qualified representatives of the Forest Service or other federal
agencies authorized to review the Forest Service activities. Review of
accounting books and supporting records shall be made at dates convenient to
the holder and reviewers. Financial information so obtained
14
<PAGE> 18
shall be treated as confidential as provided in regulations issued by the
Secretary of Agriculture.
The holder shall retain the above records and keep them available for
review for 5 years after the end of the year involved, unless disposition is
otherwise approved by the authorized officer in writing.
L. Accounting Records. The holder shall follow Generally
Accepted Accounting Principles or Other Comprehensive Bases of Accounting
acceptable to the Forest Service in recording financial transactions and in
reporting results to the authorized officer. When requested by the authorized
officer, the holder at own expense, shall have the annual accounting reports
audited or prepared by a licensed independent accountant acceptable to the
Forest Service. The holder shall require sublessees to comply with these same
requirements. The minimum acceptable accounting system shall include:
1. Systematic internal controls and recording by kind of business
the gross receipts derived from all sources of business conducted under this
permit. Receipts should be recorded daily and, if possible, deposited into a
bank account without reduction by disbursements. Receipt entries shall be
supported by source documents such as cash register tapes, sale invoices,
rental records, and cash accounts from other sources.
2. A permanent record of investments in facilities (depreciation
schedule), and current source documents for acquisition costs of capital items.
3. Preparation and maintenance of such special records and
accounts as may be specified by the authorized officer.
VII. TRANSFER AND SALE.
A. Subleasing. The holder may sublease the use of land and
improvements covered under this permit and the operation of concessions and
facilities authorized upon PRIOR WRITTEN NOTICE to the authorized officer. The
Forest Service reserves the right to disapprove subleasees. In any
circumstance, only those facilities and activities authorized by this permit
may be subleased. The holder shall continue to be responsible for compliance
with all conditions of this permit by persons to whom such premises may be
sublet. The holder may not sublease direct management responsibility without
PRIOR WRITTEN APPROVAL by the authorized officer.
B. Notification of Sale. The holder shall immediately notify the
authorized officer when a sale and transfer of ownership of the permitted
improvements is planned.
C. Divestiture of Ownership. Upon change in ownership of the
facilities authorized by this permit, the rights granted under this
authorization may be transferred to the new owner upon application to and
approval by the authorized officer. The new owner must qualify and agree to
comply with, and be bound by the terms and conditions of the authorization. In
granting approval, the authorized officer may modify the terms, conditions, and
special stipulations to reflect any new requirements imposed by current Federal
and state land use plans, laws, regulations or other management decisions.
15
<PAGE> 19
VIII. TERMINATION.
A. Termination for Higher Public Purpose. If, during the term of
this permit or any extension thereof, the Secretary of Agriculture or any
official of the Forest Service acting by or under his or her authority shall
determine by his or her planning for the uses of the National Forest that the
public interest requires termination of this permit, this permit shall
terminate upon one hundred-eighty (180) days' WRITTEN NOTICE to the holder of
such determination, and the United States shall have the right thereupon,
subject to Congressional authorization and appropriation, to purchase the
holder's improvements, to remove them, or to require the holder to remove them,
at the option of the United States. The United States shall be obligated to
pay an equitable consideration for the improvements or for removal of the
improvements and damages to the improvements resulting from their removal. The
amount of the consideration shall be fixed by mutual agreement between the
United States and the holder and shall be accepted by the holder in full
satisfaction of all claims against the United States under this clause:
Provided, that if mutual agreement is not reached, the Forest Service shall
determine the amount, and if the holder is dissatisfied with the amount thus
determined to be due him may appeal the determination in accordance with the
Appeal Regulations, and the amount as determined on appeal shall be final and
conclusive on the parties hereto; Provided further, that upon the payment to
the holder of 75% of the amount fixed by the Forest Service, the right of the
United States to remove or require the removal of the improvements shall not be
stayed pending the final decision on appeal.
B. Termination, Revocation and Suspension. The authorized
officer may suspend, revoke, or terminate this permit for (1) noncompliance
with applicable statutes, regulations, or terms and conditions of the
authorization; (2) for failure of the holder to exercise the rights and
privileges granted; (3) with the consent of the holder; or (4) when, by its
terms, a fixed agreed upon condition, event, or time occurs. Prior to
suspension, revocation, or termination, the authorized officer shall give the
holder WRITTEN NOTICE of the grounds for such action and reasonable time to
correct cureable noncompliance.
IX. RENEWAL.
A. Renewal. The authorized use may be renewed. Renewal requires
the following conditions: (1) the land use allocation is compatible with the
Forest Land and Resource Management Plan; (2) the site is being used for the
purposes previously authorized and; (3) the enterprise is being continually
operated and maintained in accordance with all the provisions of the permit.
In making a renewal, the authorized officer may modify the terms, conditions,
and special stipulations.
16
<PAGE> 20
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR NONRENEWAL.
A. Removal of Improvements. Except as provided in Clause VIII. A,
upon termination or revocation of this special use permit by the Forest
Service, the holder shall remove within a reasonable time as established by the
authorized officer, the structures and improvements, and shall restore the site
to a condition satisfactory to the authorized officer, unless otherwise waived
in writing or in the authorization. If the holder fails to remove the
structures or improvements within a reasonable period, as determined by the
authorized officer, they shall become the property of the United States without
compensation to the holder, but that shall not relieve the holder's liability
for the removal and site restoration costs.
XI. MISCELLANEOUS PROVISIONS.
A. Members of Congress. No Member of or Delegate to Congress, or
Resident Commissioner shall be admitted to any share or part of this agreement
or to any benefit that may arise herefrom unless it is made with a corporation
for its general benefit.
B. Inspection, Forest Service. The Forest Service shall monitor
the holder's operations and reserves the right to inspect the permitted
facilities and improvements at any time for compliance with the terms of this
permit. Inspections by the Forest Service do not relieve the holder of
responsibilities under other terms of this permit.
C. Regulating Services and Rates. The Forest Service shall have
the authority to check and regulate the adequacy and type of services provided
the public and to require that such services conform to satisfactory standards.
The holder may be required to furnish a schedule of prices for sales and
services authorized by the permit. Such prices and services may be regulated
by the Forest Service: Provided, that the holder shall not be required to
charge prices significantly different than those charged by comparable or
competing enterprises.
D. Advertising. The holder, in advertisements, signs, circulars,
brochures, letterheads, and like materials, as well as orally, shall not
misrepresent in any way either the accommodations provided, the status of the
permit, or the area covered by it or the vicinity. The fact that the permitted
area is located on the National Forest shall be made readily apparent in all of
the holder's brochures and print advertising regarding use and management of
the area and facilities under permit.
E. Bonding. The authorized officer may require the holder to
furnish a bond or other security to secure all or any of the obligations
imposed by the terms of the authorization or any applicable law, regulation, or
order.
Bonds, Performance. Use the following text, when bonding is called
for: As a further guarantee of the faithful performance of the provisions of
terms and conditions to be determined as needed (list applicable clauses) of
this permit, the holder agrees to deliver and maintain a surety bond or other
acceptable security in the amount of $ to be determined as needed.
Should the sureties or the bonds delivered under this permit become
unsatisfactory to the Forest Service, the holder shall, within thirty (30) days
of demand, furnish a new bond with surety, solvent and satisfactory to the
Forest Service. In lieu of a surety bond, the holder
17
<PAGE> 21
may deposit into a Federal depository, as directed by the Forest Service, and
maintain therein, cash in the amounts provided for above, or negotiable
securities of the United States having a market value at the time of deposit
of not less than the dollar amounts provided above.
The holder's surety bond shall be released, or deposits in lieu of a
bond, shall be returned thirty (30) days after certification by the Forest
Service that priority installations under the development plan are complete,
and upon furnishing by the holder of proof satisfactory to the Forest Service
that all claims for labor and material on said installations have been paid or
released and satisfied. The holder agrees that all moneys deposited under this
permit may, upon failure on his or her part to fulfill all and singular the
requirements herein set forth or made a part hereof, be retained by the United
States to be applied to satisfy obligations assumed hereunder, without
prejudice whatever to any rights and remedies of the United States.
Prior to undertaking, additional construction or alteration work not
provided for in the above terms and conditions or when the improvements are to
be removed and the area restored, the holder shall deliver and maintain a
surety bond in an amount set by the Forest Service, which amount shall not be
in excess of the estimated loss which the Government would suffer upon default
in performance of this work.
F. Water Rights. This authorization confers no rights to the use
of water by the holder. Such rights must be acquired under State law.
G. Current Addresses. The holder and the Forest Service shall
keep each informed of current mailing addresses, including those necessary for
billing and payment of fees.
H. Identification of Holder. Identification of the holder shall
remain sufficient so that the Forest Service shall know the true identity of
the entity.
Corporation Status Notification:
1. The holder shall notify the authorized officer within fifteen
(15) days of the following changes:
a. Names of officers appointed or terminated.
b. Names of stockholders who acquire stock shares causing their
ownership to exceed 50 percent of shares issued or otherwise acquired,
resulting in gaining controlling interest in the corporation.
2. The holder shall furnish the authorized officer:
a. A copy of the articles of incorporation and bylaws.
b. An authenticated copy of a resolution of the board of
directors specifically authorizing a certain individual or individuals to
represent the holder in dealing with the Forest Service.
c. A list of officers and directors of the corporation and their
addresses.
d. Upon request, a certified list of stockholders and amount of
stock owned by each.
e. The authorized officer may require the holder to furnish
additional information as set forth in 36 CFR 251.54(e)(1)(iv).
18
<PAGE> 22
Partnership Status Notification:
The holder shall notify the authorized officer within fifteen (15) days of the
following changes. Names of the individuals involved shall be included with
the notification.
1. Partnership makeup changes due to death, withdrawal, or
addition of a partner.
2. Party or parties assigned financed interest in the partnership
by existing partner(s).
3. Termination, reformation, or revision of the partnership
agreement.
4. The acquisition of partnership interest, either through
purchase of an interest from an existing partner or partners, or contribution
of assets, that exceeds 50 percent of the partnership permanent investment.
I. Archaeological-Paleontological Discoveries. The holder shall
immediately notify the authorized officer of any and all antiquities or other
objects of historic or scientific interest. These include, but are not limited
to, historic or prehistoric ruins, fossils, or artifacts discovered as the
result of operations under this permit, and shall leave such discoveries intact
until authorized to proceed by the authorized officer. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
J. Protection of Habitat of Endangered, Threatened. and Sensitive
Species. Location of areas needing special measures for protection of plants or
animals listed as threatened or endangered under the Endangered Species Act
(ESA) of 1973, as amended, or listed as sensitive by the Regional Forester
under authority of FSM 2670, derived from ESA Section 7 consultation, may be
shown on a separate map, hereby made a part of this permit, or identified on
the ground. Protective and mitigative measures specified by the authorized
officer shall be the responsibility of the permit holder.
If protection measures prove inadequate, if other such areas are
discovered, or if new species are listed as Federally threatened or endangered
or as sensitive by the Regional Forester, the authorized officer may specify
additional protection regardless of when such facts become known. Discovery
of such areas by either party shall be promptly reported to the other party.
K. Superior Clauses. In the event of any conflict between any of
the preceding printed clauses or any provision thereof, and any of the
following clauses or any provision thereof, the preceding clauses shall
control.
L. Superseded Permit. This permit replaces a special use permit
issued to: Waterville Co. Inc., February 2, 1976.
19
<PAGE> 23
M. Disputes. Appeal of any provisions of this authorization or
any requirements thereof shall be subject to the appeal regulations at 36 CFR
251, Subpart C, or revisions thereto. The procedures for these appeals are set
forth in 36 CFR 251 published in the Federal Register at 54 FR 3362, January
23, 1989.
Public reporting burden for this collection of information is
estimated to average 12 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and reviewing the collection of information. Send
comments regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden, to Department
of Agriculture, Clearance Officer, OIRM, AG Box 7630, Washington D.C. 20250;
and to the Office of Management and Budget, Paperwork Reduction Project (OMB #
0596-0082), Washington, D.C. 20503.
Note: Additional provisions may be added by the authorized officer to
reflect local conditions.
N. Water Withdrawal. To provide and maintain satisfactory
aquatic habitat, the holder shall:
Insure that during water withdrawal operations, a minimum of
4.0 cubic feet per second (cfs) remains in the West Branch of
the Mad River.
If minimum flow requirements are not met, upon receipt of written
notice from the Forest Service the holder will immediately cease
pumping water. Noncompliance will result in suspension of operations
under the permit.
20
<PAGE> 24
APPENDIX A - MASTER DEVELOPMENT PLANS
A-1 As Built Plans
A-2 Waterville Valley Master Development Plan, Maps/Narrative
A-3 As Built Master Development Plan Waterville Valley Cross
Country Ski Area
<PAGE> 25
A-1 As Built Plans
FILED SEPARATELY
Includes sheets 1 and 2 and titled, "As Built Plans, Mt. Tecumseh/Snows Mtn.
received 10/20/94.
<PAGE> 26
A-2 Waterville Valley Master Development Plan
Includes the following:
MAPS - FILED SEPARATELY
Index Sheet
Location Map
A-1 General Development Plan, Mt Tecumseh Ski Area
A-2 General Development Plan, Mt Tecumseh Ski Area
A-3 General Development Plan, Mt Tecumseh Ski Area
B-1 Base Area Site Plan Mt Tecumseh Ski Area
B-2 Base Area Site Plan Mt Tecumseh Ski Area
B-3 Base Area Site Plan Mt Tecumseh Ski Area
C-1 General Development Plan, Snow's Mtn Ski Area
C-2 General Development Plan, Snow's Mtn Ski Area
C-3 General Development Plan, Snow's Mtn Ski Area
NARRATIVE
<PAGE> 27
A-3 As Built Master Development Plan Waterville Valley Cross Country Ski
Area
<PAGE> 28
APPENDIX B - CONSTRUCTION/OPERATIONS
B-1 Site Development Schedule
B-2 Operating Plan
<PAGE> 29
B-1 Site Development Schedule
To be included when completed or updated
<PAGE> 30
B-2 Operating Plan
To be included when completed and updated
<PAGE> 31
APPENDIX C - MAPS
C-1 Permit Boundary
C-2 Development Area Boundary
<PAGE> 32
C-1 Permit Boundary
<PAGE> 33
Description of Permit Boundary
Mt. Tecumseh Area
Beginning at a point N.76 Degrees 24 Minutes E. and 40.00 Minutes distant from
Sta. 0 plus 00 of the center line of an 80.00 Minutes right-of-way on the
Tripoli Road, Forest Development Road #30A. Said 80.00 Minutes right-of-way
being further described as the proposed relocation of the Tripoli Road. Thence
running along the easterly limits of said right-of-way in a northwesterly
direction 3030.00 Minutes more or less to a point located 40.00 Minutes
easterly from center line Sta. 30 plus 30.00 Minutes as shown on a plan of the
proposed relocation of the Tripoli Road.
Thence running N.17 Degrees 30 Minutes W. 879.00 Minutes more or less.
Thence running N.72 Degrees 03 Minutes W. 810.00 Minutes more or less.
Thence running N.78 Degrees 12 Minutes W. 2261.00 Minutes more or less.
Thence running S.73 Degrees 05 Minutes W. 2510.00 Minutes more or less.
Thence running S.65 Degrees 15 Minutes W. 2103.00 Minutes more or less.
Thence running S.50 Degrees 58 Minutes W. 2175.00 Minutes more or less.
Thence running S.20 Degrees 21 Minutes E. 992.00 Minutes more or less.
Thence running S.80 Degrees 27 Minutes E. 1130.00 Minutes more or less.*
Thence running North approximately 500 feet more or less.*
Thence running S.80 Degrees E. approximately 500 feet more or less.*
Thence running N.13 Degrees approximately 500 feet more or less.*
Thence running N.43 Degrees 50 Minutes E. 3351.00 Minutes more or less.
Thence running East 2142.00 Minutes more or less to the westerly limits of the
said 80.00 Minutes right-of-way, at a point 40.00 Minutes westerly from center
line station 11 plus 20.00 Minutes of the proposed relocation of the Tripoli
Road.
Thence running along the westerly limits of said 80.00 Minutes
right-of-way in a southeasterly direction 1120.00 Minutes more or less to a
point located S.76 Degrees 24 Minutes W. and 40.00 Minutes distant from center
line Sta.
00 plus 00 of the proposed relocation of the Tripoli Road.
Thence running N.76 Degrees 24 Minutes E. 80.00 Minutes more or less to
the point of beginning.
* Estimated from map attached. Boundary delineation will be verified by
11/1/95.
The above described tract to contains 750.00 acres more or less and is shown on
the attached map.
Permit Boundary
Snows Mtn Area
Described on map attached and containing 35.5 acres more or less. Boundary
Delineation will be verified by 11/1/95.
<PAGE> 34
Permit Boundary
Pipelines
1. Primary pumphouse and water pipeline as described in amendment # 2
dated 3/25/80 to original permit shown on the attached map.
2. Buried 14" water main to transport water from Mad River to the
Tecumseh Base Area for snowmaking purposes as described below and
authorized in a permit dated 8/19/86.
Being 20 feet wide and approximately 9385 feet in length
beginning on National Forest System land at meander point 4 on
line corner 9-10 of U.S. Tract #50f, (Exception 1, (Woodstock
Lumber Co.), thence running N 2 Degrees E 225 feet; N 69
Degrees W 960 feet to a point on the westerly side of the
Tripoli Road; thence northerly and parallel with the westerly
side of the Tripoli Road approximately 3500 feet to its
intersection with the Mt. Tecumseh access road; thence on the
westerly side and parallel with the Mt. Tecumseh access road
approximately 4700 feet to the South Complex of the Base area
as shown on the attached map.
Boundary Delineation will be verified by 11/1/95.
<PAGE> 35
C-2 Development Boundary
To be included when completed
<PAGE> 36
APPENDIX D - BUSINESS MANAGEMENT
D-1 Gross Fixed Assets (GFA)
D-2 Billing Calendar
<PAGE> 37
D-1 Gross Fixed Assets (GFA)
-DRAFT-
WATERVILLE VALLEY SKI AREA, LTD
SCHEDULE OF GROSS FIXED ASSETS (GFA)
AS OF 10/31/94
ACCOUNTING GROUP ASSET CATEGORY APPROVED GFA 10/31/94
- --------------------------------------------------------------------------------
3200 LAND IMPROVEMENTS 1,354,303
3300 LIFTS & TOWS 3,553,566
3400 BUILDINGS 4,347,655
3500 TRAILS 1,332,912
3600 FURNISHINGS, EQUIPMENT
& VEHICLES 8,059,068
----------
18,647,505
----------
NOTE: The accounts and amounts appearing in this schedule reflect the
capitalized cost of facilities and improvements used to generate Graduated Rate
Fee System (GRFS) Sales as of October 31, 1994. It is subject to change in
accordance with permit clauses VI E and VI L and current Forest Service Manual
Direction.
D-1
<PAGE> 38
D-2 Billing Calendar
BILLING CONTROL CALENDAR
SKI AREA NAME: Waterville Valley TR = ______%1/
PERIOD: Aug 01, 1996 thru July 31, 1997 NFO = 97.72%2/
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7) (8) (9)
PAYMENT GROSS GROSS
BILLING PAYMENT BILLED RECEIVED PAID BALANCE FIXED SALE
BILL# DESCRIPTION DUE DATE AMOUNT DATE AMOUNT DUE ASSETS REVENUES
- ----- ----------- -------- ------ ---------- ------ ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Min Anl Fee Aug 1 $ $ $ -0- $ $
(Note: FY 9 Year-End CREDIT in the amount of $< > applied.)
n/a 1st Qtr Fee Dec 1 $ -0- n/a $ -0- $ -0- $ $
Nov Fee Jan 1 $ $ $ $
Dec Fee Feb 1 $ $ $ $ $
Jan Fee Mar 1 $ $ $ $ $
Feb Fee Apr 1 $ $ $ $ $
Mar Fee May 1 $ $ $ $ $
Apr Fee Jun 1 $ $ $ $ $
3rd Qtr Sep 1 $ $ $ $ $
Yr-End Rpts Nov 1
Yr-End Fee Dec 15 $ $ $ $ $
TOTAL FEE/GFA/GSR $ $ $
Audit: Last NA (Permit Effective Nov. 1, '94)
Audit: Next Fall 97
Fee per Audit Bill + $ $ $ $ $
30 days
</TABLE>
Please see reverse for a list of reports and information to be provided.
Notes:
1/ Subject to change pending fee review outcome.
2/ Round to 2 decimal places.
<PAGE> 1
EXHIBIT 10.13
FS-2700-5b (7/96)
OMB No. 0596-0082
- -------------------------------------------------------------------------------
USDA - Forest Service Holder No. Type Site Authority
5123 / 01 161 10/22/86
--------------------------------------------
SKI AREA Auth. Type Issue Date Expir. Date
TERM SPECIAL USE PERMIT 545 06/24/20
--------------------------------------------
Act of October 22, 1986 Location Sequence No. Stat. Ref.
(Ref. FSM 2710) 05 12 52
--------------------------------------------
Latitude Longitude LOS Case
- - - -
- -------------------------------------------------------------------------------
BEAR MOUNTAIN, INC. of P.O. BOX 6812
- ------------------------------------- --------------------------------------
(Holder Name) (Billing Address - 1)
BIG BEAR LAKE CALIFORNIA 92315
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(Billing Address - 2) (City) (State) (Zip Code)
(hereinafter called the holder) is hereby authorized to use National Forest
System lands, on the SAN BERNARDINO National Forest, for the purposes of
constructing, operating, and maintaining a winter sports resort including food
service, retail sales, and other ancillary facilities, described herein, known
as the BEAR MOUNTAIN ski area and subject to the provisions of this term
permit. This permit covers 698 acres described here and as shown on the
attached maps dated 11/27/95, prepared by Paul Bennett, and includes land in
portions of Sections 26, 27, 34, and 35, T.2 N., R. 1. E., SBB&M.
The following improvements, whether on or off the site, are
authorized:
Ski lifts and tows, ski runs and trails, maintenance and snowmaking facilities,
roads, utilities, signs, and other facilities and improvements needed in the
operation and maintenance of a four-season resort, including those improvements
listed in Exhibit A, Bear Mountain, Inc. Ski Resort improvements on National
Forest and private lands as of November 1, 1995.
Note: Exhibit A shall be updated as necessary.
Attached Clauses. This term permit is accepted subject to the
conditions set forth herein on pages 2 through 19, and to exhibits A
to __________, and Attachment 1, attached or referenced hereto and made a part
of this permit.
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THIS PERMIT IS ACCEPTED SUBJECT TO ALL OF ITS TERMS AND CONDITIONS.
ACCEPTED: BEAR MOUNTAIN, INC., BY:
/s/ George N. Gillett, Jr. Nov. 27, 1996
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HOLDER'S NAME AND SIGNATURE DATE
APPROVED: /s/ Forest Supervisor 12-3-96
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AUTHORIZED OFFICER'S NAME AND SIGNATURE TITLE DATE
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TERMS AND CONDITIONS
I. AUTHORITY AND USE AND TERM AUTHORIZED.
A. Authority. This term permit is issued under the authority of
the Act of October 22, 1986, (Title 16, United States Code, Section 497b), and
Title 36, Code of Federal Regulations, Sections 251.50-251.64.
B. Authorized Officer. The authorized officer is the Forest
Supervisor. The authorized officer may designate a representative for
administration of specific portions of this authorization.
C. Rules, Laws and Ordinances. The holder, in exercising the
privileges granted by this term permit, shall comply with all present and
future regulations of the Secretary of Agriculture and federal laws; and all
present and future, state, county, and municipal laws, ordinances, or
regulations which are applicable to the area or operations covered by this
permit to the extent they are not in conflict with federal law, policy or
regulation. The Forest Service assumes no responsibility for enforcing laws,
regulations, ordinances and the like which are under the jurisdiction of other
government bodies.
D. Term.
1. This authorization is for a term of N/A years to provide for
the holder to prepare a Master Development Plan. Subject to acceptance of the
Master Development Plan by the authorized officer, this authorization shall be
extended for an additional N/A years, for a total of N/A years, to provide the
holder sufficient time to construct facilities approved in the Master
Development Plan within the schedule outlined in clause II.B. (Site Development
Schedule), so that the area may be used by the public. Further Provided; This
authorization shall be extended by its terms for an additional N/A years, for a
total of N/A years, if it is in compliance with the site development schedule
in the Master Development Plan and being in operation by the 10-year
anniversary date of the issuance of this authorization. Failure of the holder
to comply with all or any provisions of this clause shall cause the
authorization to terminate under its terms.
2. Unless sooner terminated or revoked by the authorized officer,
in accordance with the provisions of the authorization, this permit shall
terminate on June 24, 2020, but a new special-use authorization to occupy and
use the same National Forest land may be granted provided the holder shall
comply with the then-existing laws and regulations governing the occupancy and
use of National Forest lands. The holder shall notify the authorized officer
in writing not less than six (6) months prior to said date that such new
authorization is desired.
E. Nonexclusive Use. This permit is not exclusive. The Forest
Service reserves the right to use or permit others to use any part of the
permitted area for any purpose, provided such use does not materially interfere
with the rights and privileges hereby authorized.
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F. Area Access. Except for any restrictions as the holder and the
authorized officer may agree to be necessary to protect the installation
and operation of authorized structures and developments, the lands and waters
covered by this permit shall remain open to the public for all lawful purposes.
To facilitate public use of this area, all existing roads or roads as may be
constructed by the holder, shall remain open to the public, except for roads as
may be closed by joint agreement of the holder and the authorized officer.
G. Master Development Plan. In consideration of the privileges
authorized by this permit, the holder agrees to prepare and submit changes in
the Master Development Plan encompassing the entire winter sports resort
presently envisioned for development in connection with the National Forest
lands authorized by this permit, and in a form acceptable to the Forest
Service. Additional construction beyond maintenance of existing improvements
shall not be authorized until this plan has been amended. Planning should
encompass all the area authorized for use by this permit. The accepted Master
Development Plan shall become a part of this permit. For planning purposes, a
capacity for the ski area in people-at-one time shall be established in the
Master Development Plan and appropriate National Environmental Policy Act
(NEPA) document. The overall development shall not exceed that capacity
without further environmental analysis documentation through the appropriate
NEPA process.
H. Periodic Revision.
1. The terms and conditions of this authorization shall be
subject to revision to reflect changing times and conditions so that land use
allocation decisions made as a result of revision to Forest Land and Resource
Management Plan may be incorporated.
2. At the sole discretion of the authorized officer this term
permit may be amended to remove authorization to use any National Forest System
lands not specifically covered in the Master Development Plan and/or needed for
use and occupancy under this authorization.
II. IMPROVEMENTS.
A. Permission. Nothing in this permit shall be construed to
imply permission to build or maintain any improvement not specifically named in
the Master Development Plan and approved in the annual operating plan, or
further authorized in writing by the authorized officer.
B. Site Development Schedule. As part of this permit, a schedule
for the progressive development of the permitted area and installation of
facilities shall be prepared jointly by the holder and the Forest Service.
Such a schedule shall be prepared by August 1, 1998, and shall set forth an
itemized priority list of planned improvements and the due date for completion.
This schedule shall be made a part of this permit. The holder may accelerate
the scheduled date for installation of any improvement authorized, provided the
other scheduled priorities are met; and provided further, that all priority
installations authorized are completed to the satisfaction of the Forest
Service and ready for public use prior to the scheduled due date.
1. All required plans and specifications for site improvements,
and structures included in the development schedule shall be properly certified
and submitted to the Forest Service at least forty-five (45) days before the
construction date stipulated in the development schedule.
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2. In the event there is agreement with the Forest Service to
expand the facilities and services provided on the areas covered by this
permit, the holder shall jointly prepare with the Forest Service a
development schedule for the added facilities prior to any construction and
meet requirements of paragraph II.D of this section. Such schedule shall be
made a part of this permit.
C. Plans. All plans for development, layout, construction,
reconstruction or alteration of improvements on the site, as well as revisions
of such plans, must be prepared by a licensed engineer, architect, and/or
landscape architect (in those states in which such licensing is required) or
other qualified individual acceptable to the authorized officer. Such plans
must be accepted by the authorized officer before the commencement of any work.
A holder may be required to furnish as-built plans, maps, or surveys upon the
completion of construction.
D. Amendment. This authorization may be amended to cover new,
changed, or additional use(s) or area not previously considered in the approved
Master Development plan. In approving or denying changes or modifications, the
authorized officer shall consider among other things, the findings or
recommendations of other involved agencies and whether their terms and
conditions of the existing authorization may be continued or revised, or a new
authorization issued.
E. Ski Lift Plans and Specifications. All plans for uphill
equipment and systems shall be properly certified as being in accordance with
the American National Standard Safety Requirements for Aerial Passenger
Tramways (B77.1). A complete set of drawings, specifications, and records for
each lift shall be maintained by the holder and made available to the Forest
Service upon request. These documents shall be retained by the holder for a
period of three (3) years after the removal of the system from National Forest
land.
III. OPERATIONS AND MAINTENANCE.
A. Conditions of Operations. The holder shall maintain the
improvements and premises to standards of repair, orderliness, neatness,
sanitation, and safety acceptable to the authorized officer. Standards are
subject to periodic change by the authorized officer. This use shall normally
be exercised at least 120 days each year or season. Failure of the holder to
exercise this minimum use may result in termination pursuant to VIII.B.
B. Ski Lift, Holder Inspection. The holder shall have all
passenger tramways inspected by a qualified engineer or tramway specialist.
Inspections shall be made in accordance with the American National Standard
Safety Requirements for Aerial Passenger Tramways (B77.1). A certificate of
inspection, signed by an officer of the holder's company, attesting to the
adequacy and safety of the installations and equipment for public use shall be
received by the Forest Service prior to public operation stating as a minimum:
"Pursuant to our special use permit, we have had an inspection to
determine our compliance with the American National Standard B77.1.
We have received the results of that inspection and have made
corrections of all deficiencies noted. The facilities are ready for
public use."
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C. Operating Plan. The holder or designated representative shall
prepare and annually revise by November 15 an Operating Plan. The plan shall
be prepared in consultation with the authorized officer or designated
representative and cover winter and summer operations as appropriate. The
provisions of the Operating Plan and the annual revisions shall become a part
of this permit and shall be submitted by the holder and approved by the
authorized officer or their designated representatives. This plan shall
consist of at least the following sections:
1. Ski patrol and first aid.
2. Communications.
3. Signs.
4. General safety and sanitation.
5. Erosion control.
6. Accident reporting.
7. Avalanche control.
8. Search and rescue.
9. Boundary management.
10. Vegetation management.
11. Designation of representatives.
12. Trail routes for nordic skiing.
The authorized officer may require a joint annual business meeting agenda to:
a. Update Gross Fixed Assets and lift-line proration when the fee
is calculated by the Graduated Rate Fee System.
b. Determine need for performance bond for construction projects,
and amount of bond.
c. Provide annual use reports.
D. Cutting of Trees. Trees or shrubbery on the permitted area
may be removed or destroyed only after the authorized officer has approved and
marked, or otherwise designated, that which may be removed or destroyed.
Timber cut or destroyed shall be paid for by the holder at appraised value,
provided that the Forest Service reserves the right to dispose of the
merchantable timber to others than the holder at no stumpage cost to the
holder.
E. Signs. Signs or advertising devices erected on National
Forest lands, shall have prior approval by the Forest Service as to location,
design, size, color, and message. Erected signs shall be maintained or renewed
as necessary to neat and presentable standards, as determined by the Forest
Service.
F. Temporary Suspension. Immediate temporary suspension of the
operation, in whole or in part, may be required when the authorized officer, or
designated representative, determines it to be necessary to protect the public
health or safety, or the environment. The order for suspension may be given
verbally or in writing. In any such case, the superior of the authorized
officer, or designated representative, shall, within ten (10) days of the
request of the holder, arrange for an on-the-ground review of the adverse
conditions with the holder. Following this review the superior shall take
prompt action to affirm, modify or cancel the temporary suspension.
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IV. NONDISCRIMINATION. During the performance of this permit, the holder
agrees:
A. In connection with the performance of work under this permit,
including construction, maintenance, and operation of the facility, the holder
shall not discriminate against any employee or applicant for employment because
of race, color, religion, sex, national origin, age, or handicap. (Ref. Title
VII of the Civil Rights Act of 1964 as amended).
B. The holder and employees shall not discriminate by segregation
or otherwise against any person on the basis of race, color, religion, sex,
national origin, age or handicap, by curtailing or refusing to furnish
accommodations, facilities, services, or use privileges offered to the public
generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section
504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments,
and the Age Discrimination Act of 1975).
C. The holder shall include and require compliance with the above
nondiscrimination provisions in any subcontract made with respect to the
operations under this permit.
D. Signs setting forth this policy of nondiscrimination to be
furnished by the Forest Service will be conspicuously displayed at the public
entrance to the premises, and at other exterior or interior locations as
directed by the Forest Service.
E. The Forest Service shall have the right to enforce the
foregoing nondiscrimination provisions by suit for specific performance or by
any other available remedy under the laws of the United States of the State in
which the breach or violation occurs.
V. LIABILITIES.
A. Third Party Rights. This permit is subject to all valid
existing rights and claims outstanding in third parties. The United States is
not liable to the holder for the exercise of any such right or claim.
B. Indemnification of the United States. The holder shall hold
harmless the United States from any liability from damage to life or property
arising from the holder's occupancy or use of National Forest lands under this
permit.
C. Damage to United States Property. The holder shall exercise
diligence in protecting from damage the land and property of the United States
covered by and used in connection with this permit. The holder shall pay the
United States the full cost of any damage resulting from negligence or
activities occurring under the terms of this permit or under any law or
regulation applicable to the national forests, whether caused by the holder, or
by any agents or employees of the holder.
D. Risks. The holder assumes all risk of loss to the
improvements resulting from natural or catastrophic events, including but not
limited to, avalanches, rising waters, high winds, falling limbs or trees, and
other hazardous events. If the improvements authorized by this permit are
destroyed or substantially damaged by natural or catastrophic events, the
authorized officer shall conduct an analysis to determine whether the
improvements can be safely occupied in the future and whether rebuilding should
be allowed. The analysis shall be provided to the holder within six (6) months
of the event.
E. Hazards. The holder has the responsibility of inspecting the
area authorized for use under this permit for evidence of hazardous conditions
which could affect the improvements or pose a risk of injury to individuals.
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F. Insurance. The holder shall have in force public liability
insurance covering: (1) property damage in the amount of fifty-thousand
dollars ($50,000.00), and (2) damage to persons in the minimum amount of five
hundred thousand dollars ($500,000.00) in the event of death or injury to one
individual, and the minimum amount of one million dollars ($1,000,000.00) in
the event of death or injury to more than one individual. These minimum
amounts and terms are subject to change at the sole discretion of the
authorized officer at the five-year anniversary date of this authorization.
The coverage shall extend to property damage, bodily injury, or death arising
out of the holder's activities under the permit including, but not limited to,
occupancy or use of the land and the construction, maintenance, and operation
of the structures, facilities, or equipment authorized by this permit. Such
insurance shall also name the United States as an additionally insured. The
holder shall send an authenticated copy of its insurance policy to the Forest
Service immediately upon issuance of the policy. The policy shall also contain
a specific provision or rider to the effect that the policy shall not be
cancelled or its provisions changed or deleted before thirty (30) days written
notice to the Forest Supervisor, San Bernardino National Forest, 1824 S.
Commercenter Circle, San Bernardino, California, 92408-3430, by the insurance
company.
Rider Clause (for insurance companies)
"It is understood and agreed that the coverage provided under this
policy shall not be cancelled or its provisions changed or deleted
before thirty (30) days of receipt of written notice to the Forest
Supervisor, San Bernardino National Forest, 1824 S. Commercenter
Circle, San Bernardino, California, 92408-3430, by the insurance
company."
VI. FEES.
A. Holder to pay fair market value for the permitted use. The
holder must pay fair market value for the use of National Forest System land.
1. The provisions of the Graduated Rate Fee System (GRFS)
identified under this permit may be revised by the Forest Service to reflect
changed times and conditions. Changes shall become effective when:
a. Mutually agreed; or,
b. A permit is amended for other purposes; or,
c. A new permit is issued including reissue after termination.
2. The Graduated Rate Fee System may be replaced in its entirety
by the Chief of the Forest Service if a new generally applicable fee system is
imposed affecting all holders of authorizations under Public Law 99-522.
Replacement shall become effective on the beginning of the holder's business
year following establishment.
B. Fees - Construction Period - Flat Fee. An annual flat fee
shall be due the United States during the initial construction period (VI.AA)
and until exceeded by fees determined by the Graduated Rate Fee System
described below; Thereafter, the annual fees due the United States for those
activities authorized by this permit shall be calculated on sales according to
the schedule below.
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C. Fees - Graduated Rate Fee System. The annual fees due the
United States for those activities authorized by this permit shall be
calculated on sales according to the following schedule:
<TABLE>
<CAPTION>
Break-even point Balance of
(Sales to GFA) Rate Base Sales rate
Kind of Business (Percentage) (Percentage) (Percentage)
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<S> <C> <C> <C>
Grocery 70 .75 1.13
Service, food 70 1.25 1.88
Service, car 70 1.30 1.95
Merchandise 70 1.50 2.25
Liquor Service 60 1.80 2.70
Outfitting/Guiding 50 2.00 3.00
Rental and Services 30 4.50 6.75
Lodging 40 4.00 6.00
Lifts, Tows, and Ski
Schools 20 2.00 5.00
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</TABLE>
1. A weighted-average break-even point (called the break-even
point) and a weighted-average rate base (called the rate base) shall be
calculated and used when applying the schedule to mixed business. If the
holder's business records do not clearly segregate the sales into the business
categories authorized by this permit, they shall be placed in the most logical
category. If sales with a different rate base are grouped, place them all in
the rate category that shall yield the highest fee. Calculate the fee on sales
below the break-even point using 50 percent of the rate base. Calculate the
fee on sales between the break-even point and twice the break-even point using
150 percent of the rate base. Calculate the fee on sales above twice the
break-even point using the balance of sales rate.
2. The minimum annual fee for this use, which is due in advance
and is not subject to refund, shall be equal to the fee that would result when
sales are 40 percent of the break-even point. This fee shall be calculated and
billed by the Forest Service during the final quarter of the holder's fiscal
year, using the most recent GFA figure and previously reported sales data for
the current year, plus, if the operating season is still active, estimated
sales for the remainder of the year.
3. Mixed ownership. This use occupies both private and public
land. For purposes of the fee calculation, the calculated fee shall be
adjusted by the slope-transport-feet percentage representing the portion of the
use attributed to National Forest land. Slope-transport feet is determined by
the slope distance traveled by lifts over each ownership, multiplied by the
lift capacity.
D. Surcharge. A surcharge of N/A percent shall be applied to and
added to the basic fee. The surcharge shall be applied for N/A years beginning
with the year that sales first occur under this operation.
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E. Definitions of Sales Categories and Gross Fixed Assets (GFA).
1. Sales categories. For purposes of recording and reporting
sales, and sales-related information including the cost of sales, the
activities of the concessioner are divided into:
Grocery. Includes the sale of items usually associated with grocery
stores such as staple foods, meats, produce, household supplies.
Includes the sale of bottled soft drinks, beer and wine, when included in the
grocery operation.
Service, Food. Includes the serving of meals, sandwiches, and other
items either consumed on the premises or prepared for carry out. Snack bars
are included.
Service, Cars. Includes servicing and the sale of fuels, lubricants,
and all kinds of articles used in servicing and repairing autos, boats,
snowmobiles, and aircraft.
Merchandise. Includes the sale of clothing, souvenirs, gifts, ski
and other sporting equipment. Where a "Service, Cars" category of
business is not established by this permit, the sale of auto accessories is
included in this category.
Service, Liquor. Includes the sale of alcoholic drinks for
consumption on the premises and other sales ordinarily a part of a bar or
cocktail-lounge business. Where a bar is operated in conjunction with a
restaurant or overnight accommodations, liquor, beer and wine sales shall be
accounted for consistent with the holder's normal business practice. The sale
of alcoholic beverages for consumption off the premises is also included in
this item, except as indicated in "Grocery".
Outfitting, Guiding. Includes all activities or commercial guiding
services involving back-country travel, regardless of mode of travel, when
associated with a resort or dude ranch with a mixture of business. All fees
charged are considered sales.
Lodging. Includes lodging where daily maid service is furnished.
Rentals and Services. Includes lodging where daily maid service is
not furnished by the holder; the rental of camping space, ski equipment and
other equipment rentals; fees for the use of cross-country ski trails. Also
included are services such as barbershops, and amusements including video
games.
Lifts, Tows, and Ski Schools. Includes charges for use of all types
of uphill transportation facilities and for sports lessons and training.
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2. Gross Fixed Assets. The capitalized cost of improvements,
equipment, and fixtures necessary and used to generate sales and other revenue
during the permit year on the permitted area or within the development boundary
shown in this permit.
GFA shall be established by and changed at the sole discretion of the
authorized officer based on the current interpretation of guidelines supporting
the Graduated Rate Fee System.
a. Costs of the following items as presented by the holder and
verified by a representative of the authorized officer to be in existence and
in use are included:
(1) Identifiable structures, major equipment, such as road
maintenance equipment, or land improvements which play a distinct role in the
permitted activity.
(2) Identifiable holder costs, to provide utility services to the
area. Utility services that extend beyond the development boundary may be
included in GFA to the extent they are necessary for the generation of sales
and are paid by the holder. Costs for user surcharge or demand rates are not
included as GFA.
b. The following, and similar items, are not part of GFA:
(1) Assets that ordinarily qualify for inclusion in GFA, but which
are out of service for the full operating year for which fees are being
determined.
(2) Land.
(3) Expendable or consumable supplies.
(4) Intangible assets, such as goodwill, permit value,
organization expense, and liquor licenses.
(5) Improvements not related to the operation.
(6) Luxury assets, to the extent their design and cost exceed
functional need.
(7) The prorata share of GFA assets used in off-site activities
not directly associated with the authorized use.
(8) Expensed assets.
(9) Operating leases.
As of the date of this permit, (__________) the initial GFA under this
ownership has been determined to be $ TBD as shown in detail on the
attached exhibit TBD. If an error is found in the GFA amount, it shall be
changed to the correct amount retroactive to the date the error occurred and
fees adjusted accordingly.
F. Change of Gross Fixed Asset Amount Upon Sale or Change in
Controlling Interest. Upon change of ownership, effective dominion or
controlling interest or upon sale of assets or common stock which results in a
change of ownership, effective dominion, or controlling interest, the value of
Gross Fixed Assets shall be established applying Generally Accepted Accounting
Principles (GAAP).
G. Determining Sales and Other Revenue. Sales and Gross Fixed
Assets shall be derived from all improvements and facilities, including those
of sublessees, which constitute a logical single overall integrated business
operation regardless of the land ownership. A map shall be prepared
designating the development boundary and may be augmented by narrative or
tables and shall become a part of this permit.
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1. Sales. Fees shall be assessed against all receipts from sales
unless specifically exempted. Sales for the purpose of fee calculation
include, (1) all revenue derived from goods and services sold which are related
to operations under this permit and all revenue derived within the development
boundary, unless otherwise excluded, (2) the value of goods and services
traded-off for goods and services received (bartering) and (3) the value of
gratuities.
a. Definitions.
(1) Gratuities. Goods, services or privileges that are provided
without charge or at deep discount to such individuals as employees, owners,
and officers or immediate families of employees, owners and officers and not
available to the general public.
(2) Acceptable Discounts. Transactions for goods or services
below stated, listed or otherwise presented prices to the public at large.
Included are such things as group sales and organized programs. These are
included in sales at the actual transaction price.
(3) Discriminatory Pricing. Rates based solely on residence,
race, color, or religion. Discounts based on age or disability are not
discriminatory pricing.
(4) Preferential Discounts. Discounts offered to certain classes
or individuals based on their status, such as members of boards of directors,
contractors, advertisers, doctors, and VIP's, etc.
(5) Market Price. The price generally available to an informed
public excluding special promotions. It may not be the "window price".
(6) Bartering or TradeOffs. The practice of exchanging goods or
services between individuals or companies.
(7) Commissions. Commissions are payments received by the holder
for collecting revenue on behalf of others as an agent or providing services
not directly associated with the operations, such as selling hunting and
fishing licenses, bus or sightseeing tickets for trips off or predominantly off
the permitted area, accommodating telephone toll calls, and so forth.
(8) Franchise Receipts. These are payments made to specific
permittees by sublessees solely for the opportunity to do business at a
specific location. The permittee provides little, if anything, in the way of
facilities or services. They may be the only fee paid to the permittee or, if
some facilities or services are provided by the permittee, they may be made in
addition to a rental fee. The franchise receipts may be in the form of fixed
amounts of money or in reduced prices for the franchiser's product or service.
b. Inclusions. The following items shall be included as gross
receipts to arrive at sales:
(1) Gratuities. Daily and season passes are valued at market
price unless the permit holder has sufficient records of daily individual use
to substantiate a "value of use". Value of use is the number of days the pass
is used times the market price. Does not include employees. See (4) below.
(2) Preferential Discounts. Include the amount that would have
been received had the transaction been made at the market price.
(3) Value of Discriminatory Pricing. Discriminatory pricing is
disallowed. Include the amount that would have been received had the
transaction been made at the market price.
(4) Employee discounts in excess of 30 percent of market price.
These discounts are exclusively given or provided to employees, owners,
officers or immediate families of employees, owners or officers are gratuities
and are included in sales at 70 percent of market price. Employee discounts
less than 30 percent are recorded at the transaction price.
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(5) Value of bartered goods and services (trade offs).
(6) Gross sales of sublessees. Includes sales of State controlled
liquor stores.
(7) Fifty percent of franchise receipts.
(8) All other revenue items not specifically excluded below shall
be included as sales.
c. Exclusions. The following items shall be excluded from gross
receipts or revenue to arrive at sales:
(1) Value of goods and services provided to employees, agents,
contractors or officials to facilitate the accomplishment of their assigned
duties or work-related obligation or to others for educational or technical
competence related to the type of permitted use such as lift operation, ski
patrol, water safety, avalanche control, etc. Similarly, local, state and
federal government officials including Forest Service employees, who in the
course of their oversight responsibilities or otherwise on official business,
use goods or services. The holder is not required to report the value of such
duty-related or official use as sales for fee calculation purposes.
(2) The value of meals and lodging furnished by an employer to an
employee for the employer's convenience if, in the case of meals, they are
furnished on the employer's business premises. The fact that the employer
imposes a partial charge for, or that the employee may accept or decline meals
does not affect the exclusion if all other conditions are met. If the employer
imposes a charge for meals and lodging it shall be included at the transaction
price. The holder need not keep records of employee meals and lodging more
detailed than those required by the Internal Revenue Service.
(3) Refunds from returned merchandise and receipts from sales of
real and nonrental personal property used in the operation.
(4) Rents paid to the permittee by sublessees, even if based on
sales.
(5) Taxes collected on site from customers, accounted for as such
in the holder's accounting records, and that were paid or are payable to taxing
authorities. Taxes included in the purchase price of gasoline, tobacco and
other products, but paid to the taxing authority by the manufacturer or
wholesaler are included in sales, and subject to the permit fee.
(6) Amounts paid or payable to a Government licensing authority or
recreation administering agency from sales of hunting or fishing licenses and
recreation fee tickets.
(7) Value of sales and commissions where the holder is serving as
an spell for businesses not directly associated with the permitted operation.
This includes such things as bus or sightseeing-ticket sales for trips not
related to activities on the permitted area, telephone-toll charges, and
accident-insurance sales.
(8) Sales of operating equipment. Rental equipment, capitalized
assets or other assets used in operations shall be excluded from gross
receipts. Examples are such items as used rental skis and boots, ski lifts, or
grooming equipment, which are sold periodically and replaced.
H. Concession Payment, Graduated Rate Fee System. Reports and
deposits required as outlined above shall be tendered in accordance with the
schedule below. They shall be sent or delivered to the Collection Officer,
Forest Service, USDA, at the address furnished by the Forest Supervisor.
Checks or money orders shall be payable to "Forest Service, USDA."
12
<PAGE> 13
1. The holder shall report sales, calculate fees due, and make
payment each calendar month except for periods in which no sales take place and
the holder has notified the authorized officer that the operation has entered a
seasonal shutdown for a specific period. Reports and payments shall be made by
the 30th of the month following the end of each reportable period.
2. The authorized officer, prior to June 15 shall furnish the
holder with a tentative rate which shall be applied to sales in the fee
calculation (item 1), such rate to be one that shall produce the expected fee
based on past experience. The correct fee shall be determined at the end of
the year and adjustment made as provided under item (5). Any balance that may
exist shall be credited and applied against the next payment due.
3. During the final fiscal month, pay within 30 days of billing
by the Forest Service, the annual minimum fee for the next year.
4. The holder must also provide within three (3) months after
close of its operating year, a balance sheet representing its financial
condition at the close of its business year, an annual operating statement
reporting the results of operations including year-end adjustments for itself
and each sublessee for the same period, and a schedule of Gross Fixed Assets
adjusted to comply with the terms of this permit in a format and manner
prescribed by the authorized officer.
If the holder fails to report all sales in the period they were made
or misreports Gross Fixed Assets and the authorized officer determines that
additional fees are owed, the holder shall pay the additional fee plus
interest. Such interest shall be assessed at the rate specified in clause I
and shall accrue from the date the sales or correct Gross Fixed Assets should
have been reported and fee paid until the date of actual payment of the
underpaid fee.
5. Within 30 days of receipt of a statement from the Forest
Service, pay any additional fee required to correct fees paid for the past
year's operation.
6. Payments shall be credited on the date received by the
designated collection officer or deposit location. If the due date for the fee
or fee calculation financial statement falls on a non-workday, the charges
shall not apply until the close of business on the next workday.
7. All fee calculations and records of sales and Gross Fixed
Assets are subject to periodic audit. Errors in calculation or payment shall
be corrected as needed for conformance with those audits. Additional fees and
interest due as a result of such audits shall be in accordance with item 4,
paragraph 2.
8. Disputed fees must be paid in a timely manner.
9. Correction of errors includes any action necessary to
establish the cost of gross fixed assets to the current holder, sales, slope
transport feet calculation, or other data required to accurately assess and
calculate fees. For fee calculation purposes, error may include:
a. Misreporting or misrepresentation of amounts,
b. Arithmetic mistakes,
c. Typographic mistakes,
d. Variation from Generally Accepted Accounting Principles
(GAAP), when such variations are inconsistent with the terms
and conditions of the authorization.
Correction of errors shall be made retroactively to the date the error
was made or to the previous audit period, whichever is more recent, with past
fees adjusted accordingly. Changes effected by agency policy including
definition of assets included in GFA, shall only be made prospectively.
13
<PAGE> 14
I. INTEREST AND PENALTIES.
1. Pursuant to 31 USC 3717 and 7 CFR Part 3, Subpart B, or
subsequent changes thereto, interest shall be charged on any fee not paid by
the date the fee or fee calculation financial statements specified in this
permit was due.
2. Interest shall be assessed using the higher of (1) the most
current rate prescribed by the United States Department of the Treasury
Financial Manual (TFM-6-8025.40), or (2) the prompt payment rate prescribed by
the United States Department of the Treasury under section 12 of the Contract
Disputes Act of 1978 (41 USC 611). Interest shall accrue from the date the fee
or fee calculation financial statement is due. In the event the account
becomes delinquent, administrative costs to cover processing and handling of
the delinquent debt may be assessed.
3. A penalty of 6 percent per year shall be assessed on any fee
overdue in excess of 90 days, and shall accrue from the due date of the first
billing or the date the fee calculation financial statement was due. The
penalty is in addition to interest and any other charges specified in item 2.
4. Delinquent fees and other charges shall be subject to all the
rights and remedies afforded the United States pursuant to federal law and
implementing regulations. (31 U.S.C. 3711 et seq.).
J. Nonpayment. Failure of the holder to make timely payments,
pay interest charges or any other charges when due, constitutes breach and
shall be grounds for termination of this authorization. This permit terminates
for nonpayment of any monies owed the United States when more than 90 days in
arrears.
K. Access to Records. For the purpose of administering this
permit (including ascertaining that fees paid were correct and evaluating the
propriety of the fee base), the holder agrees to make all of the accounting
books and supporting records to the business activities, as well as those of
sublessees operating within the authority of this permit, available for
analysis by qualified representatives of the Forest Service or other Federal
agencies authorized to review the Forest Service activities. Review of
accounting books and supporting records shall be made at dates convenient to
the holder and reviewers. Financial information so obtained shall be treated
as confidential as provided in regulations issued by the Secretary of
Agriculture.
The holder shall retain the above records and keep them available for
review for 5 years after the end of the year involved, unless disposition is
otherwise approved by the authorized officer in writing.
L. Accountant Records. The holder shall follow Generally
Accepted Accounting Principles or Other Comprehensive Bases of Accounting
acceptable to the Forest Service in recording financial transactions and in
reporting results to the authorized officer. When requested by the authorized
officer, the holder at own expense, shall have the annual accounting reports
audited or prepared by a licensed independent accountant acceptable to the
Forest Service. The holder shall require sublessees to comply with these same
requirements. The minimum acceptable accounting system shall include:
1. Systematic internal controls and recording by kind of business
the gross receipts derived from all sources of business conducted under this
permit. Receipts should be recorded daily and, if possible, deposited into a
bank account without reduction by disbursements. Receipt entries shall be
supported by source documents such as cash-register tapes, sale invoices,
rental records, and cash accounts from other sources.
14
<PAGE> 15
2. A permanent record of investments in facilities (depreciation
schedule), and current source documents for acquisition costs of capital items.
3. Preparation and maintenance of such special records and
accounts as may be specified by the authorized officer.
VII. TRANSFER AND SALE.
A. Subleasing. The holder may sublease the use of land and
improvements covered under this permit and the operation of concessions and
facilities authorized upon prior written notice to the authorized officer. The
Forest Service reserves the right to disapprove sublessees. In any
circumstance, only those facilities and activities authorized by this permit
may be subleased. The holder shall continue to be responsible for compliance
with all conditions of this permit by persons to whom such premises may be
sublet. The holder may not sublease direct management responsibility without
prior written approval by the authorized officer.
B. Notification of Sale. The holder shall immediately notify the
authorized officer when a sale and transfer of ownership of the permitted
improvements is planned.
C. Divestiture of Ownership. Upon change in ownership of the
facilities authorized by this permit, the rights granted under this
authorization may be transferred to the new owner upon application to and
approval by the authorized officer. The new owner must qualify and agree to
comply with, and be bound by the terms and conditions of the authorization. In
granting approval, the authorized officer may modify the terms, conditions, and
special stipulations to reflect any new requirements imposed by current Federal
and state land use plans, laws, regulations or other management decisions.
VIII. TERMINATION.
A. Termination for Higher Public Purpose. If, during the term of
this permit or any extension thereof, the Secretary of Agriculture or any
official of the Forest Service acting by or under his or her authority shall
determine by his or her planning for the uses of the National Forest that the
public interest requires termination of this permit, this permit shall
terminate upon one hundred-eighty (180) days' written notice to the holder of
such determination, and the United States shall have the right thereupon,
subject to Congressional authorization and appropriation, to purchase the
holder's improvements, to remove them, or to require the holder to remove them,
at the option of the United States. The United States shall be obligated to
pay an equitable consideration for the improvements or for removal of the
improvements and damages to the improvements resulting from their removal. The
amount of the consideration shall be fixed by mutual agreement between the
United States and the holder and shall be accepted by the holder in full
satisfaction of all claims against the United States under this clause:
Provided, that if mutual agreement is not reached, the Forest Service shall
determine the amount, and if the holder is dissatisfied with the amount thus
determined to be due him may appeal the determination in accordance with the
Appeal Regulations, and the amount as determined on appeal shall be final and
conclusive on the parties hereto; Provided further, that upon the payment to
the holder of 75% of the amount fixed by the Forest Service, the right of the
United States to remove or require the removal of the improvements shall not be
stayed pending the final decision on appeal.
15
<PAGE> 16
B. Termination, Revocation and Suspension. The authorized
officer may suspend, revoke, or terminate this permit for (1) noncompliance
with applicable statutes, regulations, or terms and conditions of the
authorization; (2) for failure of the holder to exercise the rights and
privileges granted; (3) with the consent of the holder; or (4) when, by its
terms, a fixed agreed upon condition, event, or time occurs. Prior to
suspension, revocation, or termination, the authorized officer shall give the
holder written notice of the grounds for such action and reasonable time to
correct curable noncompliance.
IX. RENEWAL.
A. Renewal. The authorized use may be renewed. Renewal requires
the following conditions: (1) the land use allocation is compatible with the
Forest Land and Resource Management Plan; (2) the site is being used for the
purposes previously authorized; and (3) the enterprise is being continually
operated and maintained in accordance with all the provisions of the permit.
In making a renewal, the authorized officer may modify the terms, conditions,
and special stipulations.
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR NONRENEWAL.
A. Removal of Improvements. Except as provided in Clause VIII.
A, upon termination or revocation of this special use permit by the Forest
Service, the holder shall remove within a reasonable time as established by the
authorized officer, the structures and improvements, and shall restore the site
to a condition satisfactory to the authorized officer, unless otherwise waived
in writing or in the authorization. If the holder fails to remove the
structures or improvements within a reasonable period, as determined by the
authorized officer, they shall become the property of the United States without
compensation to the holder, but that shall not relieve the holder's liability
for the removal and site restoration costs.
XI. MISCELLANEOUS PROVISIONS.
A. Members of Congress. No Member of or Delegate to Congress, or
Resident Commissioner shall be admitted to any share or part of this agreement
or to any benefit that may arise herefrom unless it is made with a corporation
for its general benefit.
B. Inspection, Forest Service. The Forest Service shall monitor
the holder's operations and reserves the right to inspect the permitted
facilities and improvements at any time for compliance with the terms of this
permit. Inspections by the Forest Service do not relieve the holder of
responsibilities under other terms of this permit.
C. Regulating Services and Rates. The Forest Service shall have
the authority to check and regulate the adequacy and type of services provided
the public and to require that such services conform to satisfactory standards.
The holder may be required to furnish a schedule of prices for sales and
services authorized by the permit. Such prices and services may be regulated
by the Forest Service: Provided, that the holder shall not be required to
charge prices significantly different than those charged by comparable or
competing enterprises.
16
<PAGE> 17
D. Advertisement. The holder, in advertisements, signs,
circulars, brochures, letterheads, and like materials, as well as orally, shall
not misrepresent in any way either the accommodations provided, the status of
the permit, or the area covered by it or the vicinity. The fact that the
permitted area is located on the National Forest shall be made readily apparent
in all of the holder's brochures and print advertising regarding use and
management of the area and facilities under permit.
E. Bonding. The authorized officer may require the holder to
furnish a bond or other security to secure all or any of the obligations
imposed by the terms of the authorization or any applicable law, regulation, or
order.
Bonds, Performance. Use the following text, when bonding is called
for: As a further guarantee of the faithful performance of the provisions of
terms and conditions N/A (list applicable clauses) of this permit, the
holder agrees to deliver and maintain a surety bond or other acceptable
security in the amount of N/A . Should the sureties or the bonds
delivered under this permit become unsatisfactory to the Forest Service, the
holder shall, within thirty (30) days of demand, furnish a new bond with
surety, solvent and satisfactory to the Forest Service. In lieu of a surety
bond, the holder may deposit into a Federal depository, as directed by the
Forest Service, and maintain therein, cash in the amounts provided for above,
or negotiable securities of the United States having a market value at the time
of deposit of not less than the dollar amounts provided above.
The holder's surety bond shall be released, or deposits in lieu of a
bond, shall be returned thirty (30) days after certification by the Forest
Service that priority installations under the development plan are complete,
and upon furnishing by the holder of proof satisfactory to the Forest Service
that all claims for labor and material on said installations have been paid or
released and satisfied. The holder agrees that all moneys deposited under this
permit may, upon failure on his or her part to fulfill all and singular the
requirements herein set forth or made a part hereof, be retained by the United
States to be applied to satisfy obligations assumed hereunder, without
prejudice whatever to any rights and remedies of the United States.
Prior to undertaking additional construction or alteration work not
provided for in the above terms and conditions or when the improvements are to
be removed and the area restored, the holder shall deliver and maintain a
surety bond in an amount set by the Forest Service, which amount shall not be
in excess of the estimated loss which the Government would suffer upon default
in performance of this work.
F. Water Rights. This authorization confers no rights to the use
of water by the holder. Such rights must be acquired under State law. All
water rights acquired or claimed by the holder during the term of this permit
which involve diversion of water directly from National Forest System Lands, to
the extent the same are applied to beneficial uses on National Forest System
lands authorized under this permit, shall be acquired by the holder and
transferred to the United States. Such transactions are subject to the permit
holder's right to use.
G. Current Addresses. The holder and the Forest Service shall
keep each informed of current mailing addresses including those necessary for
billing and payment of fees.
17
<PAGE> 18
H. Identification of Holder. Identification of the holder shall
remain sufficient so that the Forest Service shall know the true identity of
the entity.
Corporation Status Notification:
1. The holder shall notify the authorized officer within fifteen
(15) days of the following changes:
a. Names of officers appointed or terminated.
b. Names of stockholders who acquire stock shares causing their
ownership to exceed 50 percent of shares issued or otherwise acquired,
resulting in gaining controlling interest in the corporation.
2. The holder shall furnish the authorized officer:
a. A copy of the articles of incorporation and bylaws.
b. An authenticated copy of a resolution of the board of
directors specifically authorizing a certain individual or individuals to
represent the holder in dealing with the Forest Service.
c. A list of officers and directors of the corporation and their
addresses.
d. Upon request, a certified list of stockholders and amount of
stock owned by each.
e. The authorized officer may require the holder to furnish
additional information as set forth in 36 CFR 251.54(e)(1)(iv).
Partnership Status Notification:
The holder shall notify the authorized officer within fifteen (15) days of the
following changes. Names of the individuals involved shall be included with
the notification.
1. Partnership makeup changes due to death, withdrawal, or
addition of a partner.
2. Party or parties assigned financed interest in the partnership
by existing partner(s).
3. Termination, reformation, or revision of the partnership
agreement.
4. The acquisition of partnership interest, either through
purchase of an interest from an existing partner or partners, or contribution
of assets, that exceeds 50 percent of the partnership permanent investment.
I. Archaeological-Paleontological Discoveries. The holder shall
immediately notify the authorized officer of any and all antiquities or other
objects of historic or scientific interest. Those include, but are not limited
to, historic or prehistoric ruins, fossils, or artifacts discovered as the
result of operations under this permit, and shall leave such discoveries intact
until authorized to proceed by the authorized officer. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
J. Protection of Habitat of Endangered, Threatened and Sensitive
Species. Location of areas needing special measures for protection of plants
or animals listed as threatened or endangered under the Endangered Species Act
(ESA) of 1973, as amended, or listed as sensitive by the Regional Forester
under authority of FSM 2670, derived from ESA Section 7 consultation, may be
shown on a separate map, hereby made a part of this permit, or identified on
the ground. Protective and mitigative measures specified by the authorized
officer shall be the responsibility of the permit holder.
18
<PAGE> 19
If protection measures prove inadequate, if other such areas are
discovered, or if new species are listed as Federally threatened or endangered
or as sensitive by the Regional Forester, the authorized officer may specify
additional protection regardless of when such facts become known. Discovery of
such areas by either party shall be promptly reported to the other party.
K. Superior Clauses. In the event of any conflict between any of
the preceding printed clauses or any provision thereof, and any of the
following clauses or any provision thereof, the preceding clauses shall
control.
L. Superseded Permit. This permit replaces a special use permit
issued to:
BEAR MOUNTAIN, INC. on October 23, 1995.
- ----------------------------- ------------------------------ --
(Holder Name) (Date)
M. Disputes. Appeal of any provisions of this authorization or
any requirements thereof shall be subject to the appeal regulations at 36 CFR
251, Subpart C, or revisions thereto. The procedures for these appeals are set
forth in 36 CFR 251 published in the Federal Register at 54 FR 3362, January
23, 1989.
Public reporting burden for this collection of information is
estimated to average 12 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and reviewing the collection of information. Send
comments regarding this burden estimate of any other aspect of this collection
of information, including suggestions for reducing this burden, to Department
of Agriculture, Clearance Officer, OIRM, AG Box 7630, Washington, D.C. 20250;
and to the Office of Management and Budget, Paperwork Reduction Project (OMB #
0596-0082). Washington, D.C. 20503.
19
<PAGE> 20
EXHIBIT A
BEAR MOUNTAIN, INC. SKI RESORT IMPROVEMENTS ON
NATIONAL FOREST AND PRIVATE LAND
AS OF NOVEMBER 1, 1995
A. Lifts
1. Chairlifts (9). Numbers 1-8, 13. Eight fixed grip, and one
detachable grip chairlift(s), including lower and upper
terminals.
2. Surface Lifts. Two Pomas (Supercub 1 & 2).
B. BUILDINGS
1. Administration
a. Business Reception Area
b. General Offices
c. Management Offices
d. Restrooms
e. Ski Patrol and First Aid
2. Chalet
a. Food Service - 2 inside area plus outdoor bar-b-que facilities
b. Bar Service - 3 areas (2 inside, 1 outside)
c. Public Deck
d. Restrooms
3. Skier Services Building
a. Ticket Sales
b. Accounting Offices
c. Employee Restroom
d. Ski School (Instructors) room and lockers
e. Lift Employees room and lockers
f. Ski School Services and Sales
g. Operational Managers offices
h. Miscellaneous Staff Offices
i. Ski Shop
j. Ski rentals
4. Utility Building
a. Lift Maintenance Facility
b. Purchasing Offices
c. Stock Room
d. Engineering
5. East Building (Tent Structure)
a. Children Ski School
b. Skier Services
6. Vehicle Maintenance Building
7. Handicap Ski School Building
8. Lift Buildings (upper and lower terminal structures).
10. Main Pump/Compressor Building (Top of Lassen Road).
11. Food Service (Pump House) Building (Base of Chair 8).
12. Dynastar Ski Test Center.
13. Three on-slope ski patrol buildings (warming huts).
14. Miscellaneous Pump Stations and Outbuildings.
<PAGE> 21
Bear Mountain Ski Resort Improvements (contd.) Page 2
November 1, 1995
C. SNOWMAKING SYSTEM: Consisting of:
1. Reservoir located at bottom of Old Miners Trail;
Capacity 820,000 gallons; surface dimensions; 125' x 69' x
121' x 140', fenced with locked gate.
2. Reservoir located midway on Old Miners Trail;
Capacity approx. 2,000,000 gallons; surface dimensions; (oval)
145' x 260'; fenced with locked gate.
3. Reservoir located at bottom of Six Shooter Trail; capacity
3,200,000 gallons; surface dimensions 328' x 141' x 362' x
138'; fenced with locked gate.
4. Snowmaking water and air pipelines
5. Snowmaking water and air hydrants
6. Snowmaking Center 40' x 120', containing air compressors and
water pumps located next to reservoir #3, concrete slab 40' x
80' for diesel compressors (rentals).
7. Steel water pipeline to Big Bear Lake (22").
8. Water intake system at Big Bear Lake (22").
9. Pumps and pumphouse structure at Big Bear Lake.
D. EROSION CONTROL
1. Settling Basins and approximate sizes:
a. Powder Bowl 90 x 90 x 15' deep
b. Sheep Dip 40 x 60 x 15' deep
c. Gold Meadow 30 x 30 x 8' deep
d. Easy Street 40 x 20 x 10' deep
e. Six Shooter 20 x 20 x 10' deep
f. Clementine 1. 20 x 20 x 5' deep
2. 40 x 20 x 10' deep
3. 40 x 20 x 10' deep
g. Old Miners 100 x 50 x 20' deep
h. Silver Connection 20 x 20 x 10' deep
i. Hibernation (Tower 8) 30 x 50 x 10' deep
2. Culvert and drop inlet installations throughout various
drainages.
3. Concrete line drainage channel on West side of perimeter
parallel to Gold Meadow ski trail.
4. Concrete line and 72" culvert on the East side of perimeter area
down Clementine ski trail.
5. Water bars, overside drains and silt retention devices installed
as needed.
E. PARKING
1. Main parking lot at base of ski area
2. Two small lots on Clubview Drive
3. Rathbun Lot
4. Goldies Lot
5. Backwards Look Lot
6. Moonridge Road sections approved for parking by the City of Big
Bear Lake.
<PAGE> 22
Bear Mountain Ski Resort Improvements (contd.) Page 3
November 1, 1995
F. UTILITIES
1. Underground high voltage electrical system with several
transformers located throughout the ski area.
2. Buried phone lines throughout the ski area.
3. Sewer lines serving three base area buildings.
4. Three underground fuel storage tanks (double tanks), and
associated pumps and plumbing.
5. Various water company slant wells located throughout the
lower portion of the mountain.
6. Domestic water supply to three base area buildings.
G. MISCELLANEOUS
1. Four gate installations at various road entrances to the ski
area.
2. Paved parking in the base area.
3. Race course start and finish gates and associated buildings.
4. Various portable and non-portable barrier fencing throughout
ski trail network.
5. Informational/Directional signing throughout ski area.
6. Storage area south of snowmaking building area.
Note: As of November 1st, 1995, several snow grooming-vehicles were on the
area. Per Scott Pierpont, these vehicles have been sold (with the
exception of two specialized pieces), and the area has entered into a
lease agreement with Bombardier to furnish snow grooming vehicles on a
seasonal basis.
<PAGE> 23
ATTACHMENT ONE
BEAR MOUNTAIN, INC.
SLOPE LIFT LINE PRORATION
as of July 31, 1995
<TABLE>
<CAPTION>
Slope Distance Slope Transport Feet
--------------- --------------------
Chair = and Name Ride National Total National
- ---------------- Capacity Forest Forest Total
--------
<S> <C> <C> <C> <C> <C>
1 Goldmine 950 2455 3455 2,332,250 3,282,250
(Double)
2 Hibernation 1000 1970 2896 1,970,000 2,896,000
(Double)
3 Showdown 1200 1559 1559 1,870,800 1,870,800
(Double)
4 Silver Mountain 1140 3118 3118 3,554,520 3,554,520
(Double)
5 Gold Rush 2400 600 1525 1,440,000 3,660,000
(Quad)
6 Clementine 1800 2480 3758 4,464,000 6,764,400
(Triple)
7 Inspiration 1800 0 1152 0 2,073,600
(Triple)
8 Bear Peak 1200 3630 3630 4,356,000 4,356,000
(Triple)
13 Big Bear Express 3000 4540 5610 13,620,000 16,830,000
(Quad)
Super Cub I 0 301 150,500
(Poma) 500 0
Super Cub II 500 0 301 0 150,500
Totals 20,352 27,305 33,607,570 45,588,570
------ ------ ---------- ----------
</TABLE>
Forest Service Percentage
of the Slope Proration
73.72%
<PAGE> 24
[MAP]
Bear Mountain Ski Resort
(Bear Mountain, Inc.)
Permit Boundary Map
November 27, 1995 P. Bennett
<PAGE> 25
BEAR MOUNTAIN, INC.
WINTER SPORTS AREA
DEVELOPMENT BOUNDARY
[MAP]
Also to Include (Not Shown):
1. 22" steel pipeline to Big Bear Lake.
2. 22" intake system at lake.
3. Pumps and pumphouse located at lake.
4. Two parking lots on Clubview.
5. Rathbun road parking lot.
6. Goldies lot.
7. Backwards Look lot.
8. Moonridge road sections approved for parking by the City of Big Bear Lake.
Prepared 11/27/95
Paul W. Bennett
<PAGE> 1
EXHIBIT 10.14
FS-2700-5b (9/96)
OMB No. 0596-0082
- --------------------------------------------------------------------------------
USDA - Forest Service Holder No. Type Site Authority
4186 /01 161 545
SKI AREA
Auth. Type Issue Date Expir. Date
TERM SPECIAL USE PERMIT
18 / / 04/25/08
Location Sequence No. Stat. Ref.
Act of October 22, 1986
0503560601704
(Ref. FSM 2710) Latitude Longitude LOS Case
120-03-30 38-01-30
- --------------------------------------------------------------------------------
Sierra-at-Tahoe, Inc. of 1111 Sierra-at-Tahoe Road
- ------------------------------ ------------------------------------
(Holder Name) (Billing Address - 1)
Twin Bridges California 95735
- --------------------------- -------------- -------------- --------------
(Billing Address - 2) (City) (State) (Zip Code)
(hereafter called the holder) is hereby authorized to use National Forest
System lands, on the Eldorado National Forest, for the purposes of
constructing, operating, and maintaining a winter sports resort including food
service, retail sales, and other ancillary facilities, described herein, known
as the Sierra-at-Tahoe ski area and subject to the provisions of this term
permit. This permit covers 1,680 acres described here and as shown on the
attached map dated 11/96.
Portions of National Forest lands in Sections 13, 14, 15, 16, 22, 23, and 24,
T. 11 N., R. 17 E., M.D.B.&M.
The following improvements, whether on or off the site, are authorized:
Ski lifts, ski trails, mountain restaurants, signs, snowmaking facilities,
and other facilities and structures needed in the operation and maintenance
of a ski resort. See Exhibit A for a detailed listing.
Attached Clauses. This term permit is accepted subject to the conditions set
forth herein on pages 2 through 22, and to Exhibit A attached or referenced
hereto and made a part of this permit.
________________________________________________________________________________
THIS PERMIT IS ACCEPTED SUBJECT TO ALL OF ITS TERMS AND CONDITIONS.
ACCEPTED: Sierra-at-Tahoe, Inc., by
/s/ George N. Gillett, Jr. Nov 25, 1996
- -------------------------------------------------------------------------------
HOLDER'S NAME AND SIGNATURE DATE
APPROVED: 12/3/96
/s/ JOHN PHIPPS
- -------------------------------------------------------------------------------
JOHN PHIPPS Forest Supervisor
AUTHORIZED OFFICER'S NAME AND SIGNATURE TITLE DATE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
TERMS AND CONDITIONS
I. AUTHORITY AND USE AND TERM AUTHORIZED.
A. AUTHORITY. This term permit is issued under the authority of the Act of
October 22, 1986, (Title 16, United States Code, Section 497b), and Title 36,
Code of Federal Regulations, Sections 251.50-251.64.
B. AUTHORIZED OFFICER. The authorized officer is the Forest Supervisor. The
authorized officer may designate a representative for administration of specific
portions of this authorization.
C. RULES, LAWS AND ORDINANCES. The holder, in exercising the privileges
granted by this term permit, shall comply with all present and future
regulations of the Secretary of Agriculture and federal laws; and all present
and future, state, county, and municipal laws, ordinances, or regulations which
are applicable to the area or operations covered by this permit to the extent
they are not in conflict with federal law, policy or regulation. The Forest
Service assumes no responsibility for enforcing laws, regulations, ordinances
and the like which are under the jurisdiction of other government bodies.
D. TERM.
1. This authorization is for a term of N/A years to provide for the
holder to prepare a Master Development Plan. Subject to acceptance of the
Master Development Plan by the authorized officer, this authorization
shall be extended for an additional N/A years, for a total of N/A
years, to provide the holder sufficient time to construct facilities
approved in the Master Development Plan within the schedule outlined in
clause II.B. (Site Development Schedule), so that the area may be used by
the public. Further Provided; This authorization shall be extended by its
terms for an additional N/A years, for a total of N/A years, if it is
in compliance with the site development schedule in the Master Development
Plan and being in operation by the 10-year anniversary date of the
issuance of this authorization. Failure of the holder to comply with all
or any provisions of this clause shall cause the authorization to
terminate under its terms.
2. Unless sooner terminated or revoked by the authorized officer, in
accordance with the provisions of the authorization, this permit shall
terminate on April 25, 2008 , but a new special-use authorization to
occupy and use the same National Forest land may be granted provided the
holder shall comply with the then-existing laws and regulations governing
the occupancy and use of National Forest lands. The holder shall notify
the authorized officer in writing not less than six (6) months prior to
said date that such new authorization is desired.
E. NONEXCLUSIVE USE. This permit is not exclusive. The Forest Service
reserves the right to use or permit others to use any part of the permitted area
for any purpose, provided such use does not materially interfere with the rights
and privileges hereby authorized.
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F. AREA ACCESS. Except for any restrictions as the holder and the authorized
officer may agree to be necessary to protect the installation and operation of
authorized structures and developments, the lands and waters covered by this
permit shall remain open to the public for all lawful purposes. To facilitate
public use of this area, all existing roads or roads as may be constructed by
the holder, shall remain open to the public, except for roads as may be closed
by joint agreement of the holder and the authorized officer.
G. MASTER DEVELOPMENT PLAN. In consideration of the privileges authorized by
this permit, the holder agrees to prepare and submit changes in the Master
Development Plan encompassing the entire winter sports resort presently
envisioned for development in connection with the National Forest lands
authorized by this permit, and in a form acceptable to the Forest Service.
Additional construction beyond maintenance of existing improvements shall not be
authorized until this plan has been amended. Planning should encompass all the
area authorized for use by this permit. The accepted Master Development Plan
shall become a part of this permit. For planning purposes, a capacity for the
ski area in people-at-one time shall be established in the Master Development
Plan and appropriate National Environmental Policy Act (NEPA) document. The
overall development shall not exceed that capacity without further environmental
analysis documentation through the appropriate NEPA process.
H. PERIODIC REVISION. The terms and conditions of this authorization shall
be subject to revision to reflect changing times and conditions so that land use
allocation decisions made as a result of revision to Forest Land and Resource
Management Plan may be incorporated.
At the sole discretion of the authorized officer this term permit may be
amended to remove authorization to use any National Forest System lands not
specifically covered in the Master Development Plan and/or needed for use and
occupancy under this authorization.
II. IMPROVEMENTS.
A. PERMISSION. Nothing in this permit shall be construed to imply permission
to build or maintain any improvement not specifically named in the Master
Development Plan and approved in the annual operating plan, or further
authorized in writing by the authorized officer.
B. SITE DEVELOPMENT SCHEDULE. As part of this permit, a schedule for the
progressive development of the permitted area and installation of facilities
shall be prepared jointly by the holder and the Forest Service. Such a
schedule shall be prepared by update of the existing "Needs Improvement Plan"
annually by May 1st, and shall set forth an itemized priority list of planned
improvements and the due date for completion. This schedule shall be made a
part of this permit. The holder may accelerate the scheduled date for
installation of any improvement authorized, provided the other scheduled
priorities are met; and provided further, that all priority installations
authorized are completed to the satisfaction of the Forest Service and ready
for public use prior to the scheduled due date.
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1. All required plans and specifications for site improvements, and
structures included in the development schedule shall be properly
certified and submitted to the Forest Service at least forty-five (45)
days before the construction date stipulated in the development schedule.
2. In the event there is agreement with the Forest Service to expand the
facilities and services provided on the areas covered by this permit, the
holder shall jointly prepare with the Forest Service a development
schedule for the added facilities prior to any construction and meet
requirements of paragraph II.D of this section. Such schedule shall be
made a part of this permit.
C. PLANS. All plans for development, layout, construction, reconstruction or
alteration of improvements on the site, as well as revisions of such plans, must
be prepared by a licensed engineer, architect, and/or landscape architect (in
those states in which such licensing is required) or other qualified individual
acceptable to the authorized officer. Such plans must be accepted by the
authorized officer before the commencement of any work. A holder may be
required to furnish as-built plans, maps, or surveys upon the completion of
construction.
D. AMENDMENT. This authorization may be amended to cover new, changed, or
additional use(s) or area not previously considered in the approved Master
Development plan. In approving or denying changes or modifications, the
authorized officer shall consider among other things, the findings or
recommendations of other involved agencies and whether their terms and
conditions of the existing authorization may be continued or revised, or a new
authorization issued.
E. SKI LIFT PLANS AND SPECIFICATIONS. All plans for uphill equipment and
systems shall be properly certified as being in accordance with the American
National Standard Safety Requirements for Aerial Passenger Tramways (B77.1). A
complete set of drawings, specifications, and records for each lift shall be
maintained by the holder and made available to the Forest Service upon request.
These documents shall be retained by the holder for a period of three (3) years
after the removal of the system from National Forest land.
III. OPERATIONS AND MAINTENANCE.
A. CONDITIONS OF OPERATIONS. The holder shall maintain the improvements and
premises to standards of repair, orderliness, neatness, sanitation, and safety
acceptable to the authorized officer. Standards are subject to periodic change
by the authorized officer. This use shall normally be exercised at least 365
days each year or season. Failure of the holder to exercise this minimum use
may result in termination pursuant to VIII.B.
B. SKI LIFT, HOLDER INSPECTION. The holder shall have all passenger tramways
inspected by a qualified engineer or tramway specialist. Inspections shall be
made in accordance with the American National Standard Safety Requirements for
Aerial Passenger Tramways (B77.1). A certificate of inspection, signed by an
officer of the holder's company, attesting to the adequacy and safety of the
installations and equipment for public use shall be received by the Forest
Service prior to public operation stating as a minimum:
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"Pursuant to our special use permit, we have had an inspection to
determine our compliance with the American National Standard B77.1. We
have received the results of that inspection and have made corrections of
all deficiencies noted. The facilities are ready for public use."
C. OPERATING PLAN. The holder or designated representative shall prepare
and annually revise by October 1 an Operating Plan. The plan shall be prepared
in consultation with the authorized officer or designated representative and
cover winter and summer operations as appropriate. The provisions of the
Operating Plan and the annual revisions shall become a part of this permit and
shall be submitted by the holder and approved by the authorized officer or
their designated representatives. This plan shall consist of at least the
following sections:
1. Ski patrol and first aid.
2. Communications.
3. Signs.
4. General safety and sanitation.
5. Erosion control.
6. Accident reporting.
7. Avalanche control.
8. Search and rescue.
9. Boundary management.
10. Vegetation management.
11. Designation of representatives.
12. Trail routes for nordic skiing.
The authorized officer may require a joint annual business meeting agenda to:
a. Update Gross Fixed Assets and lift-line proration when the fee
is calculated by the Graduated Rate Fee System.
b. Determine need for performance bond for construction projects,
and amount of bond.
c. Provide annual use reports.
D. CUTTING OF TREES. Trees or shrubbery on the permitted area may be
removed or destroyed only after the authorized officer has approved and marked,
or otherwise designated, that which may be removed or destroyed. Timber cut or
destroyed shall be paid for by the holder at appraised value, provided that the
Forest Service reserves the right to dispose of the merchantable timber to
others than the holder at no stumpage cost to the holder.
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E. SIGNS. Signs or advertising devices erected on National Forest lands,
shall have prior approval by the Forest Service as to location, design, size,
color, and message. Erected signs shall be maintained or renewed as necessary
to neat and presentable standards, as determined by the Forest Service.
F. TEMPORARY SUSPENSION. Immediate temporary suspension of the operation,
in whole or in part, may be required when the authorized officer, or designated
representative, determines it to be necessary to protect the public health or
safety, or the environment. The order for suspension may be given verbally or
in writing. In any such case, the superior of the authorized officer, or
designated representative, shall, within ten (10) days of the request of the
holder, arrange for an on-the-ground review of the adverse conditions with the
holder. Following this review the superior shall take prompt action to affirm,
modify or cancel the temporary suspension.
IV. NONDISCRIMINATION. During the performance of this permit, the holder
agrees:
A. In connection with the performance of work under this permit, including
construction, maintenance, and operation of the facility, the holder shall not
discriminate against any employee or applicant for employment because of race,
color, religion, sex, national origin, age, or handicap. (Ref. Title VII of
the Civil Rights Act of 1964 as amended).
B. The holder and employees shall not discriminate by segregation or
otherwise against any person on the basis of race, color, religion, sex,
national origin, age or handicap, by curtailing or refusing to furnish
accommodations, facilities, services, or use privileges offered to the public
generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section
504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments,
and the Age Discrimination Act of 1975).
C. The holder shall include and require compliance with the above
nondiscrimination provisions in any subcontract made with respect to the
operations under this permit.
D. Signs setting forth this policy of nondiscrimination to be furnished by
the Forest Service will be conspicuously displayed at the public entrance to
the premises, and at other exterior or interior locations as directed by the
Forest Service.
E. The Forest Service shall have the right to enforce the foregoing
nondiscrimination provisions by suit for specific performance or by any other
available remedy under the laws of the United States of the State in which the
breach or violation occurs.
V. LIABILITIES.
A. THIRD PARTY RIGHTS. This permit is subject to all valid existing rights
and claims outstanding in third parties. The United States is not liable to
the holder for the exercise of any such right or claim.
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B. INDEMNIFICATION OF THE UNITED STATES. The holder shall hold harmless
the United States from any liability from damage to life or property arising
from the holder's occupancy or use of National Forest lands under this permit.
C. DAMAGE TO UNITED STATES PROPERTY. The holder shall exercise diligence
in protecting from damage the land and property of the United States covered by
and used in connection with this permit. The holder shall pay the United
States the full cost of any damage resulting from negligence or activities
occurring under the terms of this permit or under any law or regulation
applicable to the national forests, whether caused by the holder, or by any
agents or employees of the holder.
D. RISKS. The holder assumes all risk of loss to the improvements
resulting from natural or catastrophic events, including but not limited to,
avalanches, rising waters, high winds, falling limbs or trees, and other
hazardous events. If the improvements authorized by this permit are destroyed
or substantially damaged by natural or catastrophic events, the authorized
officer shall conduct an analysis to determine whether the improvements can be
safely occupied in the future and whether rebuilding should be allowed. The
analysis shall be provided to the holder within six (6) months of the event.
E. HAZARDS. The holder has the responsibility of inspecting the area
authorized for use under this permit for evidence of hazardous conditions which
could affect the improvements or pose a risk of injury to individuals.
F. INSURANCE. The holder shall have in force public liability insurance
covering: (1) property damage in the amount of FIFTY THOUSAND AND NO/100
dollars ($50,000.00), and (2) damage to persons in the minimum amount of FIVE
HUNDRED THOUSAND AND NO/100 dollars ($500,000.00) in the event of death or
injury to one individual, and the minimum amount of ONE MILLION AND NO/100
dollars ($1,000,000.00) in the event of death or injury to more than one
individual. These minimum amounts and terms are subject to change at the sole
discretion of the authorized officer at the five-year anniversary date of this
authorization. The coverage shall extend to property damage, bodily injury, or
death arising out of the holder's activities under the permit including, but
not limited to, occupancy or use of the land and the construction, maintenance,
and operation of the structures, facilities, or equipment authorized by this
permit. Such insurance shall also name the United States as an additionally
insured. The holder shall send an authenticated copy of its insurance policy
to the Forest Service immediately upon issuance of the policy. The policy
shall also contain a specific provision or rider to the effect that the policy
shall not be canceled or its provisions changed or deleted before thirty (30)
days written notice to the Forest Supervisor, 100 Forni Road, Placerville, CA
95667 by the insurance company.
Rider Clause (for insurance companies)
"It is understood and agreed that the coverage provided under this policy
shall not be canceled or its provisions changed or deleted before thirty
(30) days of receipt of written notice to the Forest Supervisor, 100 Forni
Road, Placerville, CA 95667, by the insurance company."
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VI. FEES.
A. HOLDER TO PAY FAIR MARKET VALUE FOR THE PERMITTED USE. The holder must
pay fair market value for the use of National Forest System land.
1. The provisions of the Graduated Rate Fee System (GRFS) identified
under this permit may be revised by the Forest Service to reflect
changed times and conditions. Changes shall become effective when:
a. Mutually agreed; or,
b. A permit is amended for other purposes; or,
c. A new permit is issued including reissue after termination.
2. The Graduated Rate Fee System may be replaced in its entirety by the
Chief of the Forest Service if a new generally applicable fee system is
imposed affecting all holders of authorizations under Public Law 99-522.
Replacement shall become effective on the beginning of the holder's
business year following establishment.
B. FEES - CONSTRUCTION PERIOD - FLAT FEE. An annual flat fee shall be due
the United States during the initial construction period (VI AA) and until
exceeded by fees determined by the Graduated Rate Fee System described below;
Thereafter, the annual fees due the United States for these activities
authorized by this permit shall be calculated on sales according to the
schedule below.
C. FEES - GRADUATED RATE FEE SYSTEM. The annual fees due the United States
for those activities authorized by this permit shall be calculated on sales
according to the following schedule:
Break-even point Balance of
(Sales to GFA) Rate Base Sales rate
Kind of Business (Percentage) (Percentage) (Percentage)
---------------------------------------------------------------------
Grocery 70 .75 1.13
Service, food 70 1.25 1.88
Service, car 70 1.30 1.95
Merchandise 70 1.50 2.25
Liquor Service 60 1.80 2.70
Outfitting/Guiding 50 2.00 3.00
Rental and Services 30 4.50 6.75
Lodging 40 4.00 6.00
Lifts, Tows, and Ski Schools 20 2.00 5.00
---------------------------------------------------------------------
1. A weighted-average break-even point (called the break-even point) and a
weighted-average rate base (called the rate base) shall be calculated and
used when applying the schedule to mixed business. If the holder's business
records do not clearly segregate the sales into the business categories
authorized by this permit, they shall be placed in the most logical category.
If sales with a different rate base are grouped, place them all in the rate
category that shall yield the highest fee. Calculate the fee on sales below
the break-even point using 50 percent of the rate base. Calculate the fee on
sales between the break-even
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point and twice the break-even point using 150 percent of the rate base.
Calculate the fee on sales above twice the break-even point using the
balance of sales rate.
2. The minimum annual fee for this use, which is due in advance and is not
subject to refund, shall be equal to the fee that would result when sales
are 40 percent of the break-even point. This fee shall be calculated and
billed by the Forest Service during the final quarter of the holder's
fiscal year, using the most recent GFA figure and previously reported sales
data for the current year, plus, if the operating season is still active,
estimated sales for the remainder of the year.
3. Mixed ownership. [Use when operation is in mixed ownership.] This use
occupies both private and public land. For purposes of the fee
calculation, the calculated fee shall be adjusted by the
slope-transport-feet percentage representing the portion of the use
attributed to National Forest land. Slope-transport-feet is determined by
the slope distance traveled by lifts over each ownership, multiplied by the
lift capacity.
D. SURCHARGE. A surcharge of N/A percent shall be applied to and added
to the basic fee. The surcharge shall be applied for N/A years beginning
with the year that sales first occur under this operation.
E. DEFINITIONS OF SALES CATEGORIES AND GROSS FIXED ASSETS (GFA).
1. Sales categories. For purposes of recording and reporting sales, and
sales-related information including the cost of sales, the activities of
the concessioner are divided into:
Grocery. Includes the sale of items usually associated with grocery
stores such as staple foods, meats, produce, household supplies. Includes
the sale of bottled soft drinks, beer and wine, when included in the
grocery operation.
Service, Food. Includes the serving of meals, sandwiches, and other items
either consumed on the premises or prepared for carry out. Snack bars are
included.
Service, Cars. Includes servicing and the sale of fuels, lubricants, and
all kinds of articles used in servicing and repairing autos, boats,
snowmobiles, and aircraft.
Merchandise. Includes the sale of clothing, souvenirs, gifts, ski and
other sporting equipment. Where a "Service, Cars" category of business is
not established by this permit, the sale of auto accessories is included
in this category.
Service, Liquor. Includes the sale of alcoholic drinks for consumption on
the premises and other sales ordinarily a part of a bar or cocktail-lounge
business. Where a bar is operated in conjunction with a restaurant or
overnight accommodations, liquor, beer and wine sales shall be accounted
for consistent with the holder's normal business practice. The sale of
alcoholic beverages for consumption off the
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premises is also included in this item, except as indicated in "Grocery".
Outfitting, Guiding. Includes all activities or commercial guiding
services involving back-country travel, regardless of mode of travel, when
associated with a resort or dude ranch with a mixture of business. All
fees charged are considered sales.
Lodging. Includes lodging where daily maid service is furnished.
Rentals and Services. Includes lodging where daily maid service is not
furnished by the holder; the rental of camping space, ski equipment and
other equipment rentals; fees for the use of cross-country ski trails.
Also included are services such as barbershops, and amusements including
video games.
Lifts, Tows, and Ski Schools. Includes charges for use of all types of
uphill transportation facilities and for sports lessons and training.
2. Gross Fixed Assets. The capitalized cost of improvements, equipment,
and fixtures necessary and used to generate sales and other revenue during
the permit year on the permitted area or within the development boundary
shown in this permit. GFA shall be established by and changed at the sole
discretion of the authorized officer based on the current interpretation
of guidelines supporting the Graduated Rate Fee System.
a. Costs of the following items as presented by the holder and
verified by a representative of the authorized officer to be in
existence and in use are included:
(1) Identifiable structures, major equipment, such as road
maintenance equipment, or land improvements which play a distinct
role in the permitted activity.
(2) Identifiable holder costs, to provide utility services to the
area. Utility services that extend beyond the development boundary
may be included in GFA to the extent they are necessary for the
generation of sales and are paid by the holder. Costs for user
surcharge or demand rates are not included as GFA.
b. The following, and similar items, are not part of GFA:
(1) Assets that ordinarily qualify for inclusion in GFA, but which
are out of service for the full operating year for which fees are
being determined.
(2) Land.
(3) Expendable or consumable supplies.
(4) Intangible assets, such as goodwill, permit value, organization
expense, and liquor licenses.
(5) Improvements not related to the operation.
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(6) Luxury assets, to the extent their design and cost exceed
functional need.
(7) The prorata share of GFA assets used in off-site activities
not directly associated with the authorized use.
(8) Expensed assets.
(9) Operating leases.
As of the date of this permit December 31, 1995 the initial GFA under
this ownership has been determined to be $ 15,449,744.00* as shown in detail
on the attached Exhibit current capitalized fixed assets schedule. If an
error is found in the GFA amount, it shall be changed to the correct amount
retroactive to the date the error occurred and fees adjusted accordingly.
*This amount will be updated based on the resulting re-evaluation of assets
at the time of purchase.
F. CHANGE OF GROSS FIXED ASSET AMOUNT UPON SALE OR CHANGE IN CONTROLLING
INTEREST. Upon change of ownership, effective dominion or controlling interest
or upon sale of assets or common stock which results in a change of ownership,
effective dominion, or controlling interest, the value of Gross Fixed Assets
shall be established applying Generally Accepted Accounting Principles (GAAP).
G. DETERMINING SALES AND OTHER REVENUE. Sales and Gross Fixed Assets shall
be derived from all improvements and facilities, including those of sublessees,
which constitute a logical single overall integrated business operation
regardless of the land ownership. A map shall be prepared designating the
development boundary and may be augmented by narrative or tables and shall
become a part of this permit.
1. Sales. Fees shall be assessed against all receipts from sales unless
specifically exempted. Sales for the purpose of fee calculation include,
(1) all revenue derived from goods and services sold which are related to
operations under this permit and all revenue derived within the
development boundary, unless otherwise excluded, (2) the value of goods
and services traded-off for goods and services received (bartering) and
(3) the value of gratuities.
a. Definitions.
(1) Gratuities. Goods, services or privileges that are provided
without charge or at deep discount to such individuals as employees,
owners, and officers or immediate families of employees, owners and
officers and not available to the general public.
(2) Acceptable Discounts. Transactions for goods or services below
stated, listed or otherwise presented prices to the public at large.
Included are such things as group sales and organized programs.
These are included in sales at the actual transaction price.
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(3) Discriminatory Pricing. Rates based solely on residence, race,
color, or religion. Discounts based on age or disability are not
discriminatory pricing.
(4) Preferential Discounts. Discounts offered to certain classes or
individuals based on their status, such as members of boards of
directors, contractors, advertisers, doctors, and VIP'S, etc.
(5) Market Price. The price generally available to an informed
public excluding special promotions. It may not be the "window
price".
(6) Bartering or Trade Offs. The practice of exchanging goods or
services between individuals or companies.
(7) Commissions. Commissions are payments received by the holder
for collecting revenue on behalf of others as an agent or providing
services not directly associated with the operations, such as selling
hunting and fishing licenses, bus or sightseeing tickets for trips
off or predominantly off the permitted area, accommodating telephone
toll calls, and so forth.
(8) Franchise Receipts. These are payments made to specific
permittees by sublessees solely for the opportunity to do business at
a specific location. The permittee provides little, if anything, in
the way of facilities or services. They may be the only fee paid to
the permittee or, if some facilities or services are provided by the
permittee, they may be made in addition to a rental fee. The
franchise receipts may be in the form of fixed amounts of money or in
reduced prices for the franchiser's product or service.
b. Inclusions. The following items shall be included as gross receipts
to arrive at sales:
(1) Gratuities. Daily and season passes are valued at market price
unless the permit holder has sufficient records of daily individual
use to substantiate a "value of use". Value of use is the number of
days the pass is used times the market price. Does not include
employees. See (4) below.
(2) Preferential Discounts. Include the amount that would have been
received had the transaction been made at the market price.
(3) Value of Discriminatory Pricing. Discriminatory pricing is
disallowed. Include the amount that would have been received had the
transaction been made at the market price.
(4) Employee discounts in excess of 30 percent of market price.
These discounts are exclusively given or provided to employees,
owners, officers or immediate families of employees, owners or
officers are gratuities and are included in sales at 70 percent of
market price. Employee discounts less than 30 percent are recorded
at the transaction price.
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(5) Value of bartered goods and services (trade offs).
(6) Gross sales of sublessees. Includes sales of State controlled
liquor stores.
(7) Fifty percent of franchise receipts.
(8) All other revenue items not specifically excluded below shall be
included as sales.
c. Exclusions. The following items shall be excluded from gross
receipts or revenue to arrive at sales:
(1) Value of goods and services provided to employees, agents,
contractors or officials to facilitate the accomplishment of their
assigned duties or work-related obligation or to others for
educational or technical competence related to the type of permitted
use such as lift operation, ski patrol, water safety, avalanche
control, etc. Similarly, local, state and federal government
officials including Forest Service employees, who in the course of
their oversight responsibilities or otherwise on official business,
use goods or services. The holder is not required to report the
value of such duty-related or official use as sales for fee
calculation purposes.
(2) The value of meals and lodging furnished by an employer to an
employee for the employer's convenience if, in the case of meals,
they are furnished on the employer's business premises. The fact
that the employer imposes a partial charge for, or that the employee
may accept or decline meals does not affect the exclusion if all
other conditions are met. If the employer imposes a charge for meals
and lodging it shall be included at the transaction price. The
holder need not keep records of employee meals and lodging more
detailed than those required by the Internal Revenue Service.
(3) Refunds from returned merchandise and receipts from sales of
real and nonrental personal property used in the operation.
(4) Rents paid to the permittee by sublessees, even if based on
sales.
(5) Taxes collected on site from customers, accounted for as such in
the holder's accounting records, and that were paid or are payable to
taxing authorities. Taxes included in the purchase price of
gasoline, tobacco and other products, but paid to the taxing
authority by the manufacturer or wholesaler are included in sales,
and subject to the permit fee.
(6) Amounts paid or payable to a Government licensing authority or
recreation administering agency from sales of hunting or fishing
licenses and recreation fee tickets.
(7) Value of sales and commissions where the holder is serving as an
agent for businesses not directly associated with the
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permitted operation. This includes such things as bus or
sightseeing-ticket sales for trips not related to activities on the
permitted area, telephone-toll charges, and accident-insurance sales.
(8) Sales of operating equipment. Rental equipment, capitalized
assets or other assets used in operations shall be excluded from
gross receipts. Examples are such items as used rental skis and
boots, ski lifts, or grooming equipment, which are sold periodically
and replaced.
H. CONCESSION PAYMENT, GRADUATED RATE FEE SYSTEM. Reports and deposits
required as outlined above shall be tendered in accordance with the schedule
below. They shall be sent or delivered to the Collection Officer, Forest
Service, USDA, at the address furnished by the Forest Supervisor. Checks or
money orders shall be payable to "Forest Service, USDA."
1. The holder shall report sales, calculate fees due, and make payment
each calendar month except for periods in which no sales take place
and the holder has notified the authorized officer that the operation has
entered a seasonal shutdown for a specific period. Reports and payments
shall be made by the 30th of the month following the end of each
reportable period.
2. The authorized officer, prior to December 15, shall furnish the
holder with a tentative rate which shall be applied to sales in the fee
calculation (item 1), such rate to be one that shall produce the expected
fee based on past experience. The correct fee shall be determined at the
end of the year and adjustment made as provided under item (5). Any
balance that may exist shall be credited and applied against the next
payment due.
3. During the final fiscal month, pay within 30 days of billing by the
Forest Service, the annual minimum fee for the next year.
4. The holder must also provide within three (3) months after close of
its operating year, a balance sheet representing its financial condition
at the close of its business year, an annual operating statement reporting
the results of operations including year end adjustments for itself and
each sublessee for the same period, and a schedule of Gross Fixed Assets
adjusted to comply with the terms of this permit in a format and manner
prescribed by the authorized officer.
If the holder fails to report all sales in the period they were made or
misreports Gross Fixed Assets and the authorized officer determines that
additional fees are owed, the holder shall pay the additional fee plus
interest. Such interest shall be assessed at the rate specified in clause
I and shall accrue from the date the sales or correct Gross Fixed Assets
should have been reported and fee paid until the date of actual payment of
the underpaid fee.
5. Within 30 days of receipt of a statement from the Forest Service, pay
any additional fee required to correct fees paid for the past year's
operation.
Sierra-at-Tahoe, Inc.
Special Use Permit 14
<PAGE> 15
6. Payments shall be credited on the date received by the designated
collection officer or deposit location. If the due date for the fee or
fee calculation financial statement falls on a non-workday, the charges
shall not apply until the close of business on the next workday.
7. All fee calculations and records of sales and Gross Fixed Assets are
subject to periodic audit. Errors in calculation or payment shall be
corrected as needed for conformance with those audits. Additional fees
and interest due as a result of such audits shall be in accordance with
item 4, paragraph 2.
8. Disputed fees must be paid in a timely manner.
9. Correction of errors includes any action necessary to establish the
cost of gross fixed assets to the current holder, sales, slope transport
feet calculation, or other data required to accurately assess and
calculate fees. For fee calculation purposes, error may include:
a. Misreporting or misrepresentation of amounts,
b. Arithmetic mistakes,
c. Typographic mistakes,
d. Variation from Generally Accepted Accounting Principles (GAAP),
when such variations are inconsistent with the terms and conditions of
the authorization.
Correction of errors shall be made retroactively to the date the error
was made or to the previous audit period, whichever is more recent, with
past fees adjusted accordingly. Changes effected by agency policy
including definition of assets included in GFA, shall only be made
prospectively.
I. INTEREST AND PENALTIES.
1. Pursuant to 31 USC 3717 and 7 CFR Part 3, Subpart B, or subsequent
changes thereto, interest shall be charged on any fee not paid by the date
the fee or fee calculation financial statements specified in this permit
was due.
2. Interest shall be assessed using the higher of (1) the most current
rate prescribed by the United States Department of the Treasury Financial
Manual (TFM-6-8025.40), or (2) the prompt payment rate prescribed by the
United States Department of the Treasury under section 12 of the Contract
Disputes Act of 1978 (41 USC 611). Interest shall accrue from the date
the fee or fee calculation financial statement is due. In the event the
account becomes delinquent, administrative costs to cover processing and
handling of the delinquent debt may be assessed.
3. A penalty of 6 percent per year shall be assessed on any fee overdue
in excess of 90 days, and shall accrue from the due date of the first
billing or the date the fee calculation financial statement was due.
Sierra-at-Tahoe, Inc.
Special Use Permit 15
<PAGE> 16
The penalty is in addition to interest and any other charges specified in
item 2.
4. Delinquent fees and other charges shall be subject to all the rights
and remedies afforded the United States pursuant to federal law and
implementing regulations. (31 U.S.C. 3711 et seq.).
J. NONPAYMENT. Failure of the holder to make timely payments, pay interest
charges or any other charges when due, constitutes breach and shall be grounds
for termination of this authorization. This permit terminates for nonpayment
of any monies owed the United States when more than 90 days in arrears.
K. ACCESS TO RECORDS. For the purpose of administering this permit
(including ascertaining that fees paid were correct and evaluating the
propriety of the fee base), the holder agrees to make all of the accounting
books and supporting records to the business activities, as well as those of
sublessees operating within the authority of this permit, available for
analysis by qualified representatives of the Forest Service or other Federal
agencies authorized to review the Forest Service activities. Review of
accounting books and supporting records shall be made at dates convenient to
the holder and reviewers. Financial information so obtained shall be treated
as confidential as provided in regulations issued by the Secretary of
Agriculture.
The holder shall retain the above records and keep them available for
review for 5 years after the end of the year involved, unless disposition is
otherwise approved by the authorized officer in writing.
L. ACCOUNTING RECORDS. The holder shall follow Generally Accepted Accounting
Principles or Other Comprehensive Bases of Accounting acceptable to the Forest
Service in recording financial transactions and in reporting results to the
authorized officer. When requested by the authorized officer, the holder at
own expense, shall have the annual accounting reports audited or prepared by a
licensed independent accountant acceptable to the Forest Service. The holder
shall require sublessees to comply with these same requirements. The minimum
acceptable accounting system shall include:
1. Systematic internal controls and recording by kind of business the
gross receipts derived from all sources of business conducted under this
permit. Receipts should be recorded daily and, if possible, deposited
into a bank account without reduction by disbursements. Receipt entries
shall be supported by source documents such as cash-register tapes, sale
invoices, rental records, and cash accounts from other sources.
2. A permanent record of investments in facilities (depreciation
schedule), and current source documents for acquisition costs of capital
items.
3. Preparation and maintenance of such special records and accounts as
may be specified by the authorized officer.
VII. TRANSFER AND SALE.
A. SUBLEASING. The holder may sublease the use of land and improvements
covered under this permit and the operation of concessions and facilities
Sierra-at-Tahoe, Inc.
Special Use Permit 16
<PAGE> 17
authorized upon prior written notice to the authorized officer. The Forest
Service reserves the right to disapprove subleasees. In any circumstance, only
those facilities and activities authorized by this permit may be subleased.
The holder shall continue to be responsible for compliance with all conditions
of this permit by persons to whom such premises may be sublet. The holder may
not sublease direct management responsibility without prior written approval by
the authorized officer.
B. NOTIFICATION OF SALE. The holder shall immediately notify the authorized
officer when a sale and transfer of ownership of the permitted improvements is
planned.
C. DIVESTITURE OF OWNERSHIP. Upon change in ownership of the facilities
authorized by this permit, the rights granted under this authorization may be
transferred to the new owner upon application to and approval by the authorized
officer. The new owner must qualify and agree to comply with, and be bound by
the terms and conditions of the authorization. In granting approval, the
authorized officer may modify the terms, conditions, and special stipulations
to reflect any new requirements imposed by current Federal and state land use
plans, laws, regulations or other management decisions.
VIII. TERMINATION.
A. TERMINATION FOR HIGHER PUBLIC PURPOSE. If, during the term of this
permit or any extension thereof, the Secretary of Agriculture or any official
of the Forest Service acting by or under his or her authority shall determine
by his or her planning for the uses of the National Forest that the public
interest requires termination of this permit, this permit shall terminate upon
one hundred eighty (180) day's written notice to the holder of such
determination, and the United States shall have the right thereupon, subject to
Congressional authorization and appropriation, to purchase the holder's
improvements, to remove them, or to require the holder to remove them, at the
option of the United States. The United States shall be obligated to pay an
equitable consideration for the improvements or for removal of the improvements
and damages to the improvements resulting from their removal. The amount of
the consideration shall be fixed by mutual agreement between the United States
and the holder and shall be accepted by the holder in full satisfaction of all
claims against the United States under this clause: Provided, that if mutual
agreement is not reached, the Forest Service shall determine the amount, and if
the holder is dissatisfied with the amount thus determined to be due him may
appeal the determination in accordance with the Appeal Regulations, and the
amount as determined on appeal shall be final and conclusive on the parties
hereto; Provided further, that upon the payment to the holder of 75% of the
amount fixed by the Forest Service, the right of the United States to remove or
require the removal of the improvements shall not be stayed pending the final
decision on appeal.
B. TERMINATION, REVOCATION AND SUSPENSION. The authorized officer may
suspend, revoke, or terminate this permit for (1) noncompliance with applicable
statutes, regulations, or terms and conditions of the authorization; (2) for
failure of the holder to exercise the rights and privileges granted; (3) with
the consent of the holder; or (4) when, by its terms, a fixed agreed upon
condition, event, or time occurs. Prior to suspension, revocation, or
Sierra-at-Tahoe, Inc.
Special Use Permit 17
<PAGE> 18
termination, the authorized officer shall give the holder written notice of the
grounds for such action and reasonable time to correct cureable noncompliance.
IX. RENEWAL.
A. RENEWAL. The authorized use may be renewed. Renewal requires the
following conditions: (1) the land use allocation is compatible with the Forest
Land and Resource Management Plan; (2) the site is being used for the purposes
previously authorized; and (3) the enterprise is being continually operated and
maintained in accordance with all the provisions of the permit. In making a
renewal, the authorized officer may modify the terms, conditions, and special
stipulations.
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR NONRENEWAL.
A. REMOVAL OF IMPROVEMENTS. Except as provided in Clause VIII. A, upon
termination or revocation of this special use permit by the Forest Service, the
holder shall remove within a reasonable time as established by the authorized
officer, the structures and improvements, and shall restore the site to a
condition satisfactory to the authorized officer, unless otherwise waived in
writing or in the authorization. If the holder fails to remove the structures
or improvements within a reasonable period, as determined by the authorized
officer, they shall become the property of the United States without
compensation to the holder, but that shall not relieve the holder's liability
for the removal and site restoration costs.
XI. MISCELLANEOUS PROVISIONS.
A. MEMBERS OF CONGRESS. No Member of or Delegate to Congress, or Resident
Commissioner shall be admitted to any share or part of this agreement or to any
benefit that may arise herefrom unless it is made with a corporation for its
general benefit.
B. INSPECTION, FOREST SERVICE. The Forest Service shall monitor the
holder's operations and reserves the right to inspect the permitted facilities
and improvements at any time for compliance with the terms of this permit.
Inspections by the Forest Service do not relieve the holder of responsibilities
under other terms of this permit.
C. REGULATING SERVICES AND RATES. The Forest Service shall have the
authority to check and regulate the adequacy and type of services provided the
public and to require that such services conform to satisfactory standards.
The holder may be required to furnish a schedule of prices for sales and
services authorized by the permit. Such prices and services may be regulated
by the Forest Service: Provided, that the holder shall not be required to
charge prices significantly different than those charged by comparable or
competing enterprises.
D. ADVERTISING. The holder, in advertisements, signs, circulars,
brochures, letterheads, and like materials, as well as orally, shall not
misrepresent in any way either the accommodations provided, the status of the
permit, or the area covered by it or the vicinity. The fact that the permitted
Sierra-at-Tahoe, Inc.
Special Use Permit 18
<PAGE> 19
area is located on the National Forest shall be made readily apparent in all of
the holder's brochures and print advertising regarding use and management of
the area and facilities under permit.
E. BONDING. The authorized officer may require the holder to furnish a
bond or other security to secure all or any of the obligations imposed by the
terms of the authorization or any applicable law, regulation, or order.
Bonds, Performance. Use the following text, when bonding is called for: As
a further guarantee of the faithful performance of the provisions of terms and
conditions N/A of this permit, the holder agrees to deliver and maintain a
surety bond or other acceptable security in the amount of N/A. Should the
sureties or the bonds delivered under this permit become unsatisfactory to the
Forest Service, the holder shall, within thirty (30) days of demand, furnish a
new bond with surety, solvent and satisfactory to the Forest Service. In lieu
of a surety bond, the holder may deposit into a Federal depository, as directed
by the Forest Service, and maintain therein, cash in the amounts provided for
above, or negotiable securities of the United States having a market value at
the time of deposit of not less than the dollar amounts provided above.
The holder's surety bond shall be released, or deposits in lieu of a bond,
shall be returned thirty (30) days after certification by the Forest Service
that priority installations under the development plan are complete, and upon
furnishing by the holder of proof satisfactory to the Forest Service that all
claims for labor and material on said installations have been paid or released
and satisfied. The holder agrees that all moneys deposited under this permit
may, upon failure on his or her part to fulfill all and singular the
requirements herein set forth or made a part hereof, be retained by the United
States to be applied to satisfy obligations assumed hereunder, without
prejudice whatever to any rights and remedies of the United States.
Prior to undertaking additional construction or alteration work not provided
for in the above terms and conditions or when the improvements are to be
removed and the area restored, the holder shall deliver and maintain a surety
bond in an amount set by the Forest Service, which amount shall not be in
excess of the estimated loss which the Government would suffer upon default in
performance of this work.
F. WATER RIGHTS. This authorization confers no rights to the use of water
by the holder. Such rights must be acquired under State law.
G. CURRENT ADDRESSES. The holder and the Forest Service shall keep each
informed of current mailing addresses including those necessary for billing and
payment of fees.
H. IDENTIFICATION OF HOLDER. Identification of the holder shall remain
sufficient so that the Forest Service shall know the true identity of the
entity.
Corporation Status Notification:
1. The holder shall notify the authorized officer within fifteen (15)
days of the following changes:
a. Names of officers appointed or terminated.
Sierra-at-Tahoe, Inc.
Special Use Permit 19
<PAGE> 20
b. Names of stockholders who acquire stock shares causing their
ownership to exceed 50 percent of shares issued or otherwise
acquired, resulting in gaining controlling interest in the
corporation.
2. The holder shall furnish the authorized officer:
a. A copy of the articles of incorporation and bylaws.
b. An authenticated copy of a resolution of the board of directors
specifically authorizing a certain individual or individuals to
represent the holder in dealing with the Forest Service.
c. A list of officers and directors of the corporation and their
addresses.
d. Upon request, a certified list of stockholders and amount of
stock owned by each.
e. The authorized officer may require the holder to furnish
additional information as set forth in 36 CFR 251.54(e)(1)(iv).
Partnership Status Notification: The holder shall notify the authorized
officer within fifteen (15) days of the following changes. Names of the
individuals involved shall be included with the notification.
1. Partnership makeup changes due to death, withdrawal, or addition of a
partner.
2. Party or parties assigned financed interest in the partnership by
existing partner(s).
3. Termination, reformation, or revision of the partnership agreement.
4. The acquisition of partnership interest, either through purchase of
an interest from an existing partner or partners, or contribution of
assets, that exceeds 50 percent of the partnership permanent investment.
I. ARCHAEOLOGICAL-PALEONTOLOGICAL DISCOVERIES. The holder shall
immediately notify the authorized officer of any and all antiquities or other
objects of historic or scientific interest. These include, but are not limited
to, historic or prehistoric ruins, fossils, or artifacts discovered as the
result of operations under this permit, and shall leave such discoveries intact
until authorized to proceed by the authorized officer. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
J. PROTECTION OF HABITAT OF ENDANGERED, THREATENED, AND SENSITIVE SPECIES.
Location of areas needing special measures for protection of plants or animals
listed as threatened or endangered under the Endangered Species Act (ESA) of
1973, as amended, or listed as sensitive by the Regional Forester under
authority of FSM 2670, derived from ESA Section 7 consultation, may be shown on
a separate map, hereby made a part of this permit, or identified on the ground.
Sierra-at-Tahoe, Inc.
Special Use Permit 20
<PAGE> 21
Protective and mitigative measures specified by the authorized officer shall be
the responsibility of the permit holder.
If protection measures prove inadequate, if other such areas are discovered,
or if new species are listed as Federally threatened or endangered or as
sensitive by the Regional Forester, the authorized officer may specify
additional protection regardless of when such facts become known. Discovery of
such areas by either party shall be promptly reported to the other party.
K. SUPERIOR CLAUSES. In the event of any conflict between any of the
preceding printed clauses or any provision thereof, and any of the following
clauses or any provision thereof, the preceding clauses shall control.
L. LIQUOR SALES PERMITTED. The sale of liquors or other intoxicating
beverages, is allowed in this permit. However, if conditions develop as a
result of this privilege which, in the judgment of the Forest officer in charge
are undesirable, the sale of such intoxicating beverages, shall be
discontinued. In the event that this action becomes necessary, the holder will
be informed in writing by the Forest Service.
M. DISPUTES. Appeal of any provisions of this authorization or any
requirements thereof shall be subject to the appeal regulations at 36 CFR 251,
Subpart C, or revisions thereto. The procedures for these appeals are set
forth in 36 CFR 251 published in the Federal Register at 54 FR 3362, January
23, 1989.
N. SUPERSEDED PERMIT. This permit replaces a special use permit issued to:
Sierra-at-Tahoe, Inc. on June 30, 1993
----------------------------- ---------------
(Holder Name) (Date)
O. FOREST SERVICE REPRESENTATIVE. The Forest Service representative for
this special-use permit is: Placerville District Ranger.
Sierra-at-Tahoe, Inc.
Special Use Permit 21
<PAGE> 22
According to the Paperwork Reduction Act of 1995, no persons are required to
respond to a collection of information unless it displays a valid OMB control
number. The valid OMB control number for this information collection is
0596-0082.
This information is needed by the Forest Service to evaluate requests to use
National Forest System lands and manage those lands to protect natural
resources, administer the use, and ensure public health and safety. This
information is required to obtain or retain a benefit. The authority for that
requirement is provided by the Organic Act of 1897 and the Federal Land Policy
and Management Act of 1976, which authorize the Secretary of Agriculture to
promulgate rules and regulations for authorizing and managing National Forest
System lands. These statutes, along with the Term Permit Act, National Forest
Ski Area Permit Act, Granger-Thye Act, Mineral Leasing Act, Alaska Term Permit
Act, Act of September 3, 1954, Wilderness Act, National Forest Roads and Trails
Act, Act of November 16, 1973, Archeological Resources Protection Act, and
Alaska National Interest Lands Conservation Act, authorize the Secretary of
Agriculture to issue authorizations for the use and occupancy of National
Forest System lands. The Secretary of Agriculture's regulations at 36 CFR Part
251, Subpart B, establish procedures for issuing those authorizations.
The Privacy Act of 1974 (5 U.S.C. 552a) and the Freedom of Information Act (5
U.S.C. 552) govern the confidentiality to be provided for information received
by the Forest Service.
Public reporting burden for this collection of information is estimated to
average 12 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, AG Box 7630, Washington D.C. 20250; and
to the Office of Management and Budget, Paperwork Reduction Project (OMB #
0596-0082), Washington, D.C. 20503.
Sierra-at-Tahoe, Inc.
Special Use Permit 22
<PAGE> 23
SIERRA-AT-TAHOE, INC.
IMPROVEMENTS AND SERVICES INCLUDED IN SPECIAL USE PERMIT
A. Authorized services on National Forest land:
1. Uphill conveyance systems 12. Summer and winter slope grooming
2. Ski instruction 13. Landscaping
3. Safety patrol 14. Erosion control
4. Avalanche protection 15. Ski races
5. Food service 16. Public skiing (alpine)
6. Liquor service 17. Public skiing (nordic)
7. Restrooms 18. Medical clinic
8. Emergency first aid treatment 19. Snowboarding
9. Coffee concession 20. Rental locker concession
10. Photography Concession 21. Special events
11. Video Concession 22. Terrain garden
B. Authorized uphill conveyance systems on National Forest land:
1. Rock Garden double chair lift
2. Nob Hill double chair lift
3. King double chair lift
4. Eldorado double chair lift
5. Short Stuff double chair lift
6. Puma triple chair lift
7. Grandview detachable quad chair lift and chair storage
8. West Bowl Express detachable quad chair lift and chair storage
9. Easy Rider detachable quad chair lift and chair storage
10. Magic Carpet
C. Authorized buildings and improvements (existing) on National Forest land:
1. Lodge #1 (Base Lodge)
2. Lodge #2 (Grandview House)
3. Equipment and maintenance shop (Upper) w/ diesel pump
4. Access road (2.5 miles)
5. Parking lot (6 bays)
6. Equipment shop (Lower) w/gasoline and diesel pump
7. Edelweiss Administrative Facility
8. Pump House and associated snow making facilities
9. Utilities - gas, electric, water, sewage
10. Generator House (Lower)
11. Generator House (Upper)
12. Club Vertical facilities
13. Aspen well and associated road
14. Ski School road
15. Ski School Buildings - To be removed or replaced by August 31, 1999.
16. West Bowl food service trailer
17. Water tank and related building
18. Snowboard equipment storage
19. Ski school kiosk
20. Ski school warming hut
21. Borrow area
EXHIBIT A
<PAGE> 24
22. Various mountain and base area signs.
23. Retaining wall
24. Station teaching Practice chairs (2)
25. Expresso shack
26. West Bowl Ski Patrol Building
27. Information Host Kiosk
28. Various roads serving lifts and runs.
D. Development, maintenance, and mechanical grooming of following ski runs:
Main Side
1. East About 18. Escape
2. Castle 19. Lower Sleigh Ride
3. Preachers Passion 20. Beaver
4. Sugar N' Spice 21. Hemlock
5. Dynamite 22. Shortswing
6. Upper Snowshoe 23. Ego
7. Marten 24. Spur
8. Lower Snowshoe 25. Upper Main
9. Jack Rabbit 26. Lower Main
10. Chute 27. Pyramid
11. Corkscrew 28. Marmot
12. Aspen 29. Dogwood
13. Echo 30. Clipper
14. Aspen West 31. Horsetail
15. Broadway 32. Bashful
16. Upper Sleigh Ride 33. Powder Horn
17. Bear
Back Side
1. Sunshine Alley (Snow Board Run)
2. Wagon Trail
3. Smokey
4. Coyote
5. Lobo
6. Wagon Trail
EXHIBIT A
<PAGE> 25
[MAP]
SIERRA-AT-TAHOE
WINTER SPORTS RESORT
SPECIAL USE PERMIT
MAP
NOVEMBER 1996
<PAGE> 1
EXHIBIT 10.15
FS-2700-5b (7/93)
OMB No. 0596-0082 Expires 6/30/96
<TABLE>
<CAPTION>
<S> <C> <C> <C>
USDA - Forest Service Holder No. Type Site Authority
4033/01
SKI AREA Auth. Type Issue Date Expir. Date
TERM SPECIAL USE PERMIT / / / /
Location Sequence No. Stat. Ref.
Act of October 22, 1986
Latitude Longitude LOS Case
(Ref. FSM 2710) - - - -
</TABLE>
<TABLE>
<S><C>
GRAND TARGHEE INCORPORATED of P.O. BOX SKI, Alta, Wyoming, 83422
-------------------------- ----------------------------------
(Holder Name) (Billing Address - 1)
P.O. Box SKI, Alta Wyoming 83422
- --------------------------- ------- --------- -----------
(Billing Address - 2) (City) (State) (Zip Code)
</TABLE>
(hereafter called the holder) is hereby authorized to use National Forest
System lands, on the TARGHEE National Forest, for the
purposes of constructing, operating, and maintaining
a winter sports resort including food service, retail sales, and other
ancillary facilities, described herein, known as the GRAND TARGHEE RESORT
ski area and subject to the provisions of this term permit. This permit covers
approximately 2,400 acres described here and as shown on the attached map
(Exhibit A) dated March 22, 1995 .
This SKI AREA TERM SPECIAL USE PERMIT would allow skiing capacity to 5,130 SAOT
and Winter resort capacity to 5,438 PAOT as well as Summer use capacity to
52,200 visits per year. The following primary on-site developments and
improvements are authorized as indicated on the attached Exhibits B, C, and D,
all of which are part of the Master Development Plan. The following primary
developments and improvements on-site are authorized subject to approval of the
Site Development Schedule in Clause II. B. of this authorization, 1) 8
lifts/tows, 2) 686 total lodging units, 3) 98,342 sq.ft. of skier service
buildings, 4) 37,906 sq. ft. of commercial space buildings, 5) 678 acres of
developed ski terrain, 6) 9.2 acres of on-site above ground parking with the
last 1.2 acres conditional on a functioning shuttle bus service being in place
before the 1.2 acres can be built, 7) 1.4 acres on-site underground parking, 8)
9.8 miles of new maintenance road/skier traverses, 9) 2 ski patrol buildings,
10) 3 mountain restaurants/warming huts, 11) 29 miles of estimated summer
activity trails, and 12) 3,750 sq. ft. of maintenance building. All other
facilities/activities identified in the Master Development Plan (approved April
1995), and as approved in the Record of Decision dated April 14, 1994 for the
FEIS, are hereby made a part of this permit. The mitigation measures
identified in that Record of Decision and the FEIS, and in Appendix C of the
FEIS for this resort's Master Development Plan are hereby incorporated and made
a part of this permit.
Attached Clauses. This term permit is accepted subject to the conditions set
forth herein on pages 2 through 20 , and to Exhibits A to E
attached or referenced hereto and made a part of this permit.
- -------------------------------------------------------------------------------
THIS PERMIT IS ACCEPTED SUBJECT TO ALL OF ITS TERMS AND CONDITIONS.
ACCEPTED:
/s/ Moritz O. Bergmeyer and Carol Mann Bergmeyer 5-22-95
- -------------------------------------------------------------------------------
HOLDER'S NAME AND SIGNATURE DATE
APPROVED:
/s/ Gary B. Riese Forest Supervisor 5-22-95
- -------------------------------------------------------------------------------
AUTHORIZED OFFICER'S NAME AND SIGNATURE TITLE DATE
1
<PAGE> 2
TERMS AND CONDITIONS
I. AUTHORITY AND USE AND TERM AUTHORIZED.
A. Authority. This term permit is issued under the authority of the Act of
October 26, 1986, (16 U.S.C. 497b), and Title 36, Code of Federal Regulations,
Sections 251.50-251.64.
B. Authorized Officer. The authorized officer is the Forest Supervisor.
The authorized officer may designate a representative for administration of
specific portions of this authorization.
C. Rules, Laws and Ordinances. The holder, in exercising the privileges
granted by this term permit, shall comply with all present and future
regulations of the Secretary of Agriculture and federal laws; and all present
and future, state, county, and municipal laws, ordinances, or regulations which
are applicable to the area or operations covered by this permit to the extent
they are not in conflict with federal law, policy or regulation. The Forest
Service assumes no responsibility for enforcing laws, regulations, ordinances
and the like which are under the jurisdiction of other government bodies.
D. Term.
1. This authorization is for a term of NA years to
provide for the holder to prepare a Master Development Plan. Subject to
acceptance of the Master Development Plan by the authorized officer, this
authorization shall be extended for an additional NA years,
for a total of NA years, to provide the holder sufficient
time to construct facilities approved in the Master Development Plan within the
schedule outlined in clause II.B. (Site Development Schedule), so that the
area may be used by the public. Further Provided; This authorization shall be
extended by its terms for an additional NA years, for a total of
NA years, if it is in compliance with the site development schedule
in the Master Development P1an and being in operation by the 10-year
anniversary date of the issuance of this authorization. Failure of the holder
to comply with all or any provisions of this clause shall cause the
authorization to terminate under its terms.
2. Unless sooner terminated or revoked by the authorized officer, in
accordance with the provisions of the authorization, this permit shall
terminate on December 31, 2034 , but a new special-use authorization to
occupy and use the same National Forest land may be granted provided the holder
shall comply with the then-existing laws and regulations governing the
occupancy and use of National Forest lands. The holder shall notify the
authorized officer in writing not less than six (6) months prior to said date
that such new authorization is desired.
E. Nonexclusive Use. This permit is not exclusive. The Forest Service
reserves the right to use or permit others to use any part of the permitted
area for any purpose, provided such use does not materially interfere with the
rights and privileges hereby authorized.
2
<PAGE> 3
F. Area Access. Except for any restrictions as the holder and the
authorized officer may agree to be necessary to protect the installation and
operation of authorized structures and developments, the lands and waters
covered by this permit shall remain open to the public for all lawful purposes.
To facilitate public use of this area, all existing roads or roads as may be
constructed by the holder, shall remain open to the public, except for roads as
may be closed by joint agreement of the holder and the authorized officer.
G. Master Development Plan. In consideration of the privileges authorized
by this permit, the holder agrees to prepare and submit changes in the Master
Development Plan encompassing the entire winter sports resort presently
envisioned for development in connection with the National Forest lands
authorized by this permit, and in a form acceptable to the Forest Service.
Additional construction beyond maintenance of existing improvements shall not
be authorized until this plan has been amended. Planning should encompass all
the area authorized for use by this permit. The accepted Master Development
Plan shall become a part of this permit. For planning purposes, a capacity for
the ski area in people-at-one time shall be established in the Master
Development Plan and appropriate National Environmental Policy Act (NEPA)
document. The overall development shall not exceed that capacity without
further environmental analysis documentation through the appropriate NEPA
process.
H. Periodic Revision.
1. The terms and conditions of this authorization shall be subject to
revision to reflect changing times and conditions so that land use allocation
decisions made as a result of revision to Forest Land and Resource Management
Plan may be incorporated.
2. At the sole discretion of the authorized officer this term permit may be
amended to remove authorization to use any National Forest System lands not
specifically covered in the Master Development Plan and/or needed for use and
occupancy under this authorization.
II. IMPROVEMENTS.
A. Permission. Nothing in this permit shall be construed to imply
permission to build or maintain any improvement not specifically named in the
Master Development Plan and approved in the annual operating plan, or further
authorized in writing by the authorized officer.
B. Site Development Schedule. As part of this permit, a schedule for the
progressive development of the permitted area and installation of facilities
shall be prepared jointly by the holder and the Forest Service. Such a
schedule shall be prepared by May 1 annually , and shall set forth an
itemized priority list of planned improvements and the due date for completion.
This schedule shall be made a part of this permit. The holder may accelerate
the scheduled date for installation of any improvement authorized, provided the
other scheduled priorities are met; and provided further, that all priority
installations authorized are completed to the satisfaction of the Forest
Service and ready for public use prior to the scheduled due date.
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1. All required plans and specifications for site improvements, and
structures included in the development schedule shall be properly certified and
submitted to the Forest Service at least forty-five (45) days before the
construction date stipulated in the development schedule.
2. In the event there is agreement with the Forest Service to expand the
facilities and services provided on the areas covered by this permit, the
holder shall jointly prepare with the Forest Service a development schedule for
the added facilities prior to any construction and meet requirements of
paragraph II.D of this section. Such schedule shall be made a part of this
permit.
C. Plans. All plans for development, layout, construction, reconstruction
or alteration of improvements on the site, as well as revisions of such plans,
must be prepared by a licensed engineer, architect, and/or landscape architect
(in those states in which such licensing is required) or other qualified
individual acceptable to the authorized officer. Such plans must be accepted
by the authorized officer before the commencement of any work. A holder may be
required to furnish as-built plans, maps, or surveys upon the completion of
construction.
D. Amendment. This authorization may be amended to cover new, changed, or
additional uses(s) or area not previously considered in the approved Master
Development plan. In approving or denying changes or modifications, the
authorized officer shall consider among other things, the findings or
recommendations of other involved agencies and whether their terms and
conditions of the existing authorization may be continued or revised, or a new
authorization issued.
E. Ski Lift Plans and Specifications. All plans for uphill equipment and
systems shall be properly certified as being in accordance with the American
National Standard Safety Requirements for Aerial Passenger Tramways (B77.1). A
complete set of drawings, specifications, and records for each lift shall be
maintained by the holder and made available to the Forest Service upon request.
These documents shall be retained by the holder for a period of three (3) years
after the removal of the system from National Forest land.
III. OPERATIONS AND MAINTENANCE.
A. Conditions of Operations. The holder shall maintain the improvements
and premises to standards of repair, orderliness, neatness, sanitation, and
safety acceptable to the authorized officer. Standards are subject to periodic
change by the authorized officer. This use shall normally be exercised at
least 100 days each year or season. Failure of the holder to exercise this
minimum use may result in termination pursuant to VIII.B.
B. Ski Lift, Holder Inspection. The holder shall have all passenger
tramways inspected by a qualified engineer or tramway specialist. Inspections
shall be made in accordance with the American National Standard Safety
Requirements for Aerial Passenger Tramways (B77.1). A certificate of
inspection, signed by an officer of the holder's company, attesting to the
adequacy and safety of the installations and equipment for public use shall be
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<PAGE> 5
received by the Forest Service prior to public operation stating as a minimum:
"Pursuant to our special use permit, we have had an inspection to
determine our compliance with the American National Standard B77.1. We
have received the results of that inspection and have made corrections
of all deficiencies noted. The facilities are ready for public use."
C. Operating Plan. The holder or designated representative shall prepare
and annually revise by October l (winter) and May 1 (summer-if a separate
plan) an Operating Plan. The plan(s) shall be prepared in consultation with
the authorized officer or designated representative and cover winter and summer
operations as appropriate. The provisions of the Operating Plan and the annual
revisions shall become a part of this permit and shall be submitted by the
holder and approved by the authorized officer or their designated
representatives. This plan shall consist of at least the following sections:
1. Ski patrol and first aid.
2. Communications.
3. Signs.
4. General safety and sanitation.
5. Erosion control.
6. Accident reporting.
7. Avalanche control.
8. Search and rescue.
9. Boundary management.
10. Vegetation management.
11. Designation of representatives.
12. Trail routes for nordic skiing.
The authorized officer may require a joint annual business meeting agenda to:
a. Update Gross Fixed Assets and lift-line proration when fee is
calculated by the Graduated Rate Fee System.
b. Determine need for performance bond for construction projects and
amount of bond.
c. Provide annual use reports.
D. Cutting of Trees. Trees or shrubbery on the permitted area may be
removed or destroyed only after the authorized officer has approved and marked,
or otherwise designated, that which may be removed or destroyed. Timber cut or
destroyed shall be paid for by the holder at appraised value: Provided that the
Forest Service reserves the right to dispose of the merchantable timber to
others than the holder at no stumpage cost to the holder.
E. Signs. Signs or advertising devices erected on National Forest lands,
shall have prior approval by the Forest Service as to location, design, size,
color, and message. Erected signs shall be maintained or renewed as necessary
to neat and presentable standards, as determined by the Forest Service.
F. Temporary Suspension. Immediate temporary suspension of the operation,
in whole or in part, may be required when the authorized officer, or designated
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<PAGE> 6
representative, determines it to be necessary to protect the public health or
safety or the environment. The order for suspension may be given verbally or
in writing. In any such case, the superior of the authorized officer, or
designated representative, shall, within ten (10) days of request of the
holder, arrange for an on-the-ground review of the adverse conditions with the
holder. Following this review the superior shall take prompt action to affirm,
modify or cancel the temporary suspension.
IV. NONDISCRIMINATION. During the performance of this permit, the holder
agrees:
A. In connection with the performance of work under this permit, including
construction, maintenance, and operation of the facility, the holder shall not
discriminate against any employee or applicant for employment because of race,
color, religion, sex, national origin, age, or handicap. (Ref. Title VII of
the Civil Rights Act of 1964 as amended).
B. The holder and employees shall not discriminate by segregation or
otherwise against any person on the basis of race, color, religion, sex,
national origin, age or handicap, by curtailing or refusing to furnish
accommodations, facilities, services, or use privileges offered to the public
generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section
504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments,
and the Age Discrimination Act of 1975).
C. The holder shall include and require compliance with the above
nondiscrimination provisions in any subcontract made with respect to the
operations under this permit.
D. Signs setting forth this policy of nondiscrimination to be furnished by
the Forest Service will be conspicuously displayed at the public entrance to
the premises, and at other exterior or interior locations as directed by the
Forest Service.
E. That the Forest Service shall have the right to enforce the foregoing
nondiscrimination provisions by suit for specific performance or by any other
available remedy under the laws of the United States of the State in which the
breach or violation occurs.
V. LIABILITIES.
A. Third Party Rights. This permit is subject to all valid existing rights
and claims outstanding in third parties. The United States is not liable to
the holder for the exercise of any such right or claim.
B. Indemnification of the United States. The holder shall hold harmless
the United States from any liability from damage to life or property arising
from the holder's occupancy or use of National Forest lands under this permit.
C. Damage to United States Property. The holder shall exercise diligence
in protecting from damage the land and property of the United States covered by
and
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<PAGE> 7
used in connection with this permit. The holder shall pay the United
States the full cost of any damage resulting from negligence or activities
occurring under the terms of this permit or under any law or regulation
applicable to the national forests, whether caused by the holder, or by any
agents or employees of the holder.
D. Risks. The holder assumes all risk of loss to the improvements
resulting from natural or catastrophic events, including but not limited to,
avalanches, rising waters, high winds, falling limbs or trees and other
hazardous events. If the improvements authorized by this permit are destroyed
or substantially damaged by natural or catastrophic events, the authorized
officer shall conduct an analysis to determine whether the improvements can be
safely occupied in the future and whether rebuilding should be allowed. The
analysis shall be provided to the holder within 6 months of the event.
E. Hazards. The holder has the responsibility of inspecting the area
authorized for use under this permit for evidence of hazardous conditions which
could affect the improvements or pose a risk of injury to individuals.
F. Insurance. The holder shall have in force public liability insurance
covering: (1) property damage in the amount of fifty-thousand dollars
($50,000.00) , and (2) damage to persons in the minimum amount of one
million dollars ($1,000,000.00) in the event of death or injury
to one individual, and the minimum amount of three million dollars
($3,000,000.00) in the event of death or injury to more than one
individual. These minimum amounts and terms are subject to change at the sole
discretion of the authorized officer at five-year anniversary date of this
authorization. The coverage shall extend to property damage, bodily injury, or
death rising out of the holder's activities under the permit including, but not
limited to, occupancy or use of the land and the construction, maintenance, and
operation of the structures, facilities, or equipment authorized by this
permit. Such insurance shall also name the United States as an additionally
insured. The holder shall send an authenticated copy of its insurance policy
to the Forest Service immediately upon issuance of the policy. The policy
shall also contain a specific provision or rider to the effect that the policy
shall not be cancelled or its provisions changed or deleted before thirty (30)
days written notice to the Forest Supervisor, Targhee National Forest, P.O.
Box 208, St. Anthony, Idaho 83445 , by the insurance company.
Rider Clause (for insurance companies)
"It is understood and agreed that the coverage provided under this policy
shall not be cancelled or its provisions changed or deleted before thirty
(30) days of receipt of written notice to the Forest Supervisor, Targhee
National Forest, P.O. Box 208, St. Anthony, Idaho, 83445 , by the
insurance company."
VI. FEES.
A. Holder to pay fair market value for the permitted use. The holder must
pay fair market value for the use of National Forest System land.
1. The provisions of the Graduated Rate Fee System (GRFS) identified under
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<PAGE> 8
this permit may be revised by the Forest Service to reflect changed times and
conditions. Changes shall become effective when:
a. Mutually agreed; or,
b. Permit is amended for other purposes; or,
c. A new permit is issued including reissue after termination.
2. The Graduated Rate Fee System may be replaced in its entirety by the
Chief of the Forest Service if a new generally applicable fee system is imposed
affecting all holders of authorizations under PL99-522. Replacement shall
become effective on the beginning of the holder's business year following
establishment.
B. Fees - Construction Period - Flat Fee. An annual flat fee of NA
shall be due the United States during the initial construction period and until
exceeded by fees determined by the Graduated Rate Fee System described below;
Thereafter, the annual fees due the United States for those activities
authorized by this permit shall be calculated on sales according to the
schedule below.
C. Fees - Graduated Rate Fee System. The annual fees due the United States
for those activities authorized by this permit shall be calculated on sales
according to the following schedule:
<TABLE>
<CAPTION>
Break-even point Balance of
(Sales to GFA) Rate Base Sales rate
Kind of Business (Percentage) (Percentage) (Percentage)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery 70 .75 1.13
Service, food 70 1.25 1.88
Service, car 70 1.30 1.95
Merchandise 70 1.50 2.25
Liquor Service 60 1.80 2.70
Outfitting/Guiding 50 2.00 3.00
Rental and Services 30 4.50 6.75
Lodging 40 4.00 6.00
Lifts, Tows and Ski
Schools 20 2.00 5.00
- ----------------------------------------------------------------------------------
</TABLE>
1. A weight-average break-even point (called the break-even point) and
a weighted-average rate base (called the rate base) shall be calculated and used
when applying the schedule to mixed business. If the holder's business
do not clearly segregate the sales into the business categories authorized by
this permit, they shall be placed in the most logical category. If sales with
a different rate base are grouped, place them all in the rate category that
shall yield the highest fee. Calculate the fee on sales below the break-even
point using 50 percent of the rate base. Calculate the fee on sales between
the break-even point and twice the break-even point using 150 percent of the
rate base. Calculate the fee on sales above twice the break-even point using
the balance of sales rate.
2. The minimum annual fee for this use, which is due in advance and is not
subject to refund, shall be equal to the fee that would result when sales are
40
8
<PAGE> 9
percent of the break-even point. This fee shall be calculated and billed by
the Forest Service during the final quarter of the holder's fiscal year, using
the most recent GFA figure and previously reported sales data for the current
year, plus, if the operating season is still active, estimated sales for the
remainder of the year.
D. Surcharge. [Use when there is a surcharge.] A surcharge of NA
percent shall be applied to and added to the basic fee. The surcharge shall be
applied for NA years beginning with the year that sales first occur under
this operation.
E. Definitions of Sales Categories and Gross Fixed Assets (GFA).
1. Sales categories. For purposes of recording and reporting sales, and
sales-related information including the cost of sales, the activities of the
concessioner are divided into:
Grocery. Includes the sale of items usually associated with grocery stores
such as staple foods, meats, produce, household supplies. Includes the sale of
bottled soft drinks, beer and wine, when included in the grocery operation.
Service, Food. Includes the serving of meals, sandwiches, and other items
either consumed on the premises or prepared for carry out. Snack bars are
included.
Service, Cars. Includes servicing and the sale of fuels, lubricants, and
all kinds of articles used in servicing and repairing autos, boats,
snowmobiles, aircraft.
Merchandise. Includes the sale of clothing, souvenirs, gifts, ski and other
sporting equipment. Where a "Service, Cars" category of business is not
established by this permit, the sale of auto accessories is included in this
category.
Service, Liquor. Includes the sale of alcoholic drinks for consumption on
the premises and other sales ordinarily a part of a bar or cocktail-lounge
business. Where a bar is operated in conjunction with a restaurant or
overnight accommodations, liquor, beer and wine sales shall be accounted for
consistent with holder's normal business practice. The sale of alcoholic
beverages for consumption off the premises is also included in this item,
except as indicated in "Grocery".
Outfitting, Guiding. Includes all activities or commercial guiding services
involving back-country travel, regardless of mode of travel, when associated
with a resort or dude ranch with a mixture of business. All fees charged are
considered sales.
Lodging. Includes lodging where daily maid service is furnished.
Rentals and Services. Includes lodging where daily maid service is not
furnished by the holder; the rental of camping space, ski equipment and other
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<PAGE> 10
equipment rentals; fees for the use of cross-country ski trails. Also included
are services such as barbershops, and amusements including video games.
Lifts, Tows, and Ski Schools. Includes charges for use of all types of
uphill transportation facilities and for sports lessons and training.
2. Gross Fixed Assets. The capitalized cost of improvements, equipment,
and fixtures necessary and used to generate sales and other revenue during the
permit year on the permitted area or within the development boundary shown in
this permit.
GFA shall be established by and changed at the sole discretion of the
authorized officer based on the current interpretation of guidelines supporting
the Graduated Rate Fee System.
a. Costs of the following items as presented by the holder and verified by
a representative of the authorized officer to be in existence and in use are
included:
(1) Identifiable structures, major equipment, such as road maintenance
equipment, or land improvements which play a distinct role in the permitted
activity.
(2) Identifiable holder costs, to provide utility services to the area.
Utility services that extend beyond the development boundary may be included in
GFA to the extent they are necessary for the generation of sales and are paid
by the holder. Costs for user surcharge or demand rates are not included as
GFA.
b. The following, and similar items, are not part of GFA:
(1) Assets that ordinarily qualify for inclusion in GFA, but which are out
of service for the full operating year for which fees are being determined.
(2) Land.
(3) Expendable or consumable supplies.
(4) Intangible assets, such as goodwill, permit value, organization expense,
and liquor licenses.
(5) Improvements not related to the operation.
(6) Luxury assets, to the extent their design and cost exceed functional
need.
(7) The pro rata share of GFA assets used in off-site activities not
directly associated with the authorized use.
(8) Expensed assets.
(9) Operating leases.
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<PAGE> 11
As of the date of this permit, May 22, 1995 , the initial GFA under this
ownership has been determined to be $9,426,614 as shown in detail on
attached Exhibit E . If an error is found in the GFA amount, it shall be
changed to the correct amount retroactive to the date the error occurred and
fees adjusted accordingly.
F. Change of Gross Fixed Asset Amount Upon Sale or Change in Controlling
Interest. Upon change of ownership, effective dominion or controlling interest
or upon sale of assets or common stock which results in a change of ownership,
effective dominion, or controlling interest, the value of Gross Fixed Assets
shall be established applying Generally Accepted Accounting Principles (GAAP).
G. Determining Sales and Other Revenue. Sales and Gross Fixed Assets shall
be derived from all improvements and facilities, including those of sublessees,
which constitute a logical single overall integrated business operation
regardless of the land ownership. A map shall be prepared designating the
development boundary and may be augmented by narrative or table and shall
become a part of this permit.
1. Sales. Fees shall be assessed against all receipts from sales unless
specifically exempted. Sales for the purpose of fee calculation include, (1)
all revenue derived from goods and services sold which are related to
operations under this permit and all revenue derived within the development
boundary, unless otherwise excluded, (2) the value of goods and services
traded-off for goods and services received (bartering) and (3) the value of
gratuities.
a. Definitions.
(1) Gratuities. Goods, services or privileges that are provided without
charge or at deep discount to such individuals as employees, owners, and
officers or immediate families of employees, owners and officers and not
available to the general public.
(2) Acceptable Discounts. Transactions for goods or services below stated,
listed or otherwise presented prices to the public at large. Included are such
things as group sales and organized programs. These are included in sales at
the actual transaction price.
(3) Discriminatory Pricing. Rates based solely on residence, race, color,
or religion. Discounts based on age or disability are not discriminatory
pricing.
(4) Preferential Discounts. Discounts offered to certain classes or
individuals based on their status, such as members of boards of directors,
contractors, advertisers, doctors, and VIP's. etc.
(5) Market Price. The price generally available to an informed public
excluding special promotions. It may not be the "window price".
(6) Bartering or Trade Offs. The practice of exchanging goods or services
between individuals or companies.
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<PAGE> 12
(7) Commissions. Commissions are payments received by the holder for
collecting revenue on behalf of others as an agent or providing services not
directly associated with the operations, such as selling hunting and fishing
licenses, bus or sightseeing tickets for trips off or predominantly off the
permitted area, accommodating telephone toll calls, and so forth.
(8) Franchise Receipts. These are payments made to specific permittees by
sublessees solely for the opportunity to do business at a specific location.
The permittee provides little, if anything, in the way of facilities or
services. They may be the only fee paid to the permittee or, if some
facilities or services are provided by the permittee, they may be made in
addition to a rental fee. The franchise receipts may be in the form of fixed
amounts of money or in reduced prices for the franchiser's product or service.
b. Inclusions. The following items shall be included as gross receipts to
arrive at sales:
(1) Gratuities. Daily and season passes are valued at market price unless
the permit holder has sufficient records of daily individual use to
substantiate a "value of use". Value of use is the number of days the pass is
used times the market price. Does not include employees. See (4) below.
(2) Preferential Discounts. Include the amount that would have been
received had the transaction been made at the market price.
(3) Value of Discriminatory Pricing. Discriminatory pricing is disallowed.
Include the amount that would have been received had the transaction been made
at the market price.
(4) Employee discounts in excess of 30 percent of market price. These
discounts are exclusively given or provided to employees, owners, officers or
immediate families of employees, owners or officers are gratuities and are
included in sales at 70 percent of market price. Employee discounts less than
30 percent are recorded at transaction price.
(5) Value of bartered goods and services (trade offs).
(6) Gross sales of sublessees. Includes sales of State controlled liquor
stores.
(7) Fifty percent of franchise receipts.
(8) All other revenue items not specifically excluded below shall be
included as sales.
c. Exclusions. The following items shall be excluded from gross receipts
or revenue to arrive at sales:
(1) Value of goods and services provided to employees, agents, contractors
or officials to facilitate the accomplishment of their assigned duties or
work-related obligation or to others for educational or technical competence
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<PAGE> 13
related to the type of permitted use such as lift operation, ski patrol, water
safety, avalanche control, etc. Similarly, local, state and federal government
officials including Forest Service employees who in the course of their
oversight responsibilities or otherwise on official business use goods or
services. The holder is not required to report the value of such duty-related
or official use as sales for fee calculation purposes.
(2) The value of meals and lodging furnished by an employer to an employee
for the employer's convenience is if, in the case of meals, they are furnished
on the employer's business premises. The fact that the employer imposes a
partial charge for or that the employee may accept or decline meals does not
affect the exclusion if all other conditions are met. If employer imposes a
charge for meals and lodging it shall be included at transaction price. The
holder need not keep records of employee meals and lodging more detailed than
those required by the Internal Revenue Service.
(3) Refunds from returned merchandise and receipts from sales of real and
nonrental personal property used in the operation.
(4) Rents paid to the permittee by sublessees, even if based on sales.
(5) Taxes collected on site from customers, accounted for as such in the
holder's accounting records, and that were paid or are payable to taxing
authorities. Taxes included in the purchase price of gasoline, tobacco and
other products, but paid to the taxing authority by the manufacture or
wholesaler are included in sales, and subject to the permit fee.
(6) Amounts paid or payable to a Government licensing authority or
recreation administering agency from sales of hunting or fishing licenses and
recreation fee tickets.
(7) Value of sales and commissions where the holder is serving as an agent
for businesses not directly associated with the permitted operation. This
includes such things as bus or sightseeing-ticket sales for trips not related
to activities on the permitted area, telephone-toll charges, and
accident-insurance sales.
(8) Sales of operating equipment. Rental equipment, capitalized assets or
other assets used in operations shall be excluded from gross receipts.
Examples are such items as, used rental skis and boots, ski lifts, grooming
equipment which are sold periodically and replaced.
H. Concession Payment, Graduated Rate Fee System. Reports and deposits
required as outlined above shall be tendered in accordance with the schedule
below. They shall be sent or delivered to the Collection Officer, Forest
Service, USDA, at the address furnished by the Forest Supervisor. Checks or
money orders shall be payable to "Forest Service, USDA."
1. The holder shall report sales, calculate fees due and make payment each
calendar month except for periods in which no sales take place and the holder
has notified the authorized officer that the operation has entered a
<PAGE> 14
seasonal shutdown for a specific period. Reports and payments shall be made by
the 30th of the month following the end of each reportable period.
2. The authorized officer, prior to June 1 , shall furnish the holder
with a tentative rate which shall be applied to sales in the fee calculation
(item 1), such rate to be one that shall produce the expected fee based on past
experience. The correct fee shall be determined at the end of the year and
adjustment made as provided under item (5). Any balance that may exist shall
be credited and applied against the next payment due.
3. During the final fiscal month, pay within 30 days of billing by the
Forest Service, the annual minimum fee for the next year.
4. The holder must also provide within three (3) months after close of its
operating year a balance sheet representing its financial condition at the
close of its business year, an annual operating statement reporting the results
of operations including year-end adjustments for itself and each sublessee for
the same period, and a schedule of Gross Fixed Assets adjusted to comply with
the terms of this permit in a format and manner prescribed by the authorized
officer.
If the holder fails to report all sales in the period they were made or
misreports Gross Fixed Assets and the authorized officer determines that
additional fees are owed, the holder shall pay the additional fee plus
interest. Such interest shall be assessed at the rate specified in clause I
and shall accrue from the date the sales or correct Gross Fixed Assets should
have been reported and fee paid until the date of actual payment of the
underpaid fee.
5. Within 30 days of receipt of a statement from the Forest Service, pay
any additional fee required to correct fees paid for the past year's operation.
6. Payments shall be credited on the date received by the designated
collection officer or deposit location. If the due date for the fee or fee
calculation financial statement falls on a non-workday, the charges shall not
apply until the close of business on the next workday.
7. All fee calculations and records of sales and Gross Fixed Assets are
subject to periodic audit. Errors in calculation or payment shall be corrected
as needed for conformance with those audits. Additional fees and interest due
as a result of such audits shall be in accordance with item 4, paragraph 2.
8. Disputed fees must be paid in a timely manner.
I. Interest and Penalties.
1. Pursuant to 31 USC 3717 and 7 CFR Part 3, Subpart B, or subsequent
changes thereto, interest shall be charged on any fee not paid within 30 days
from the date the fee or fee calculation financial statements specified in this
permit was due.
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<PAGE> 15
2. Interest shall be assessed using the higher of (1) the most current rate
prescribed by the United States Department of the Treasury Financial Manual
(TFM-6-8025.40) or (2) the prompt payment rate prescribed by the United States
Department of the Treasury under section 12 of the Contract Disputes Act of
1979 (41 USC 611). Interest shall accrue from the date the fee or fee
calculation financial statement is due. In the event the account becomes
delinquent, administrative costs to cover processing and handling of the
delinquent debt may be assessed.
3. A penalty of 6 percent per year shall be assessed on any fee overdue in
excess of 90 days, and shall accrue from the due date of the first billing or
the date the fee calculation financial statement was due. The penalty is in
addition to interest and any other charges specified in item 2.
4. Delinquent fees and other charges shall be subject to all the rights and
remedies afforded the United States pursuant to federal law and implementing
regulations. (31 U.S.C. 3711 et seq.).
J. Nonpayment. Failure of the holder to make timely payments, pay interest
charges or any other charges when due, constitutes breach and shall be grounds
for termination of this authorization. This permit terminates for nonpayment
of any monies owed the United States when more than 90 days in arrears.
K. Access to Records. For the purpose of administering this permit
(including ascertaining that fees paid were correct and evaluating the
propriety of the fee base), the holder agrees to make all of the accounting
books and supporting records to the business activities, as well as those of
sublessees operating within the authority of this permit, available for
analysis by qualified representatives of the Forest Service or other Federal
agencies authorized to review the Forest Service activities. Review of
accounting books and supporting records shall be made at dates convenient to
the holder and reviewers. Financial information so obtained shall be treated
as confidential as provided in regulations issued by the Secretary of
Agriculture.
The holder shall retain the above records and keep them available for review
for 5 years after the end of the year involved, unless disposition is otherwise
approved by the authorized officer in writing.
L. Accounting Records. The holder shall follow Generally Accepted
Accounting Principles or Other Comprehensive Bases of Accounting acceptable to
the Forest Service in recording financial transactions and in reporting results
to the authorized officer. When requested by the authorized officer, the
holder at own expense, shall have the annual accounting reports audited] or
prepared by a licensed independent accountant acceptable to the Forest Service.
The holder shall require sublessees to comply with these same requirements.
The minimum acceptable accounting system shall include:
1. Systematic internal controls and recording by kind of business the gross
receipts derived from all sources of business conducted under this permit.
Receipts should be recorded daily and, if possible, deposited into a bank
account without reduction by disbursements. Receipt entries shall be
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<PAGE> 16
agreement between the United States and the holder and shall be accepted by the
holder in full satisfaction of all claims against the United States under this
clause: Provided, That if mutual supported by source documents such as
cash-register tapes, sale invoices, rental records, and cash accounts from
other sources.
2. A permanent record of investments in facilities (depreciation schedule),
current source documents for acquisition costs of capital items.
3. Preparation and maintenance of such special records and accounts as may
be specified by the authorized officer.
VII. TRANSFER AND SALE.
A. Subleasing. The holder may sublease the use of land and improvements
covered under this permit and the operation of concessions and facilities
authorized upon prior written notice to the authorized officer. The Forest
Service reserves the right to disapprove subleasees. In any circumstances,
only those facilities and activities authorized by this permit may be supplied.
The holder shall continue to be responsible for compliance with all conditions
of this permit by persons to whom such premises may be sublet. The holder may
not sublease direct management responsibility without prior written approval by
the authorized officer.
B. Notification of Sale. The holder shall immediately notify the
authorized officer when a sale and transfer in ownership of the permitted
improvements is planned.
C. Divestiture of Ownership. Upon change in ownership of the facilities
authorized by this permit, the rights granted under this authorization may be
transferred to the new owner upon application to and approval by the authorized
officer. The new owner must qualify and agree to comply with and be bound by
the terms and conditions of the authorization. In granting approval, the
authorized officer may modify the terms, conditions, and special stipulations
to reflect any new requirements imposed by current Federal and state land use
plans, laws, regulations or other management decisions.
VIII. TERMINATION.
A. Termination for Higher Public Purpose. If, during the term of this
permit or any extension thereof, the Secretary of Agriculture or any official
of the Forest Service acting by or under his or her authority shall determine
by his or her planning for the uses of the national forest that the public
interest requires termination of this permit, this permit shall terminate upon
one hundred eighty (180) days' written notice to the holder of such
determination, and the United States shall have the right thereupon, subject to
Congressional authorization and appropriation, to purchase the holder's
improvements, to remove them, or to require the holder to remove them, at the
option of the United States, and the United States shall be obligated to pay an
equitable consideration for the improvements or for removal of the improvements
and damages to the improvements resulting from their removal. The amount of
the consideration shall be fixed by mutual
16
<PAGE> 17
agreement is not reached, the Forest Service shall determine the amount and if
the holder is dissatisfied with the amount thus determined to be due him he may
appeal the determination in accordance with the Appeal Regulations and the
amount as determined on appeal shall be final and conclusive on the parties
hereto; Provide further, that upon the payment to the holder of 75% of the
amount fixed by the Forest Service, the right of the United States to remove or
require the removal of the improvements shall not be stayed pending final
decision on appeal.
B. Termination, Revocation and Suspension. The authorized officer may
suspend, revoke, or terminate this permit for (1) noncompliance with applicable
statutes, regulations, or terms and conditions of the authorization; (2) for
failure of the holder to exercise the rights and privileges granted; (3) with
the consent of the holder; or (4) when, by its terms, a fixed agreed upon
condition, event, or time occurs. Prior to suspension, revocation, or
termination, the authorized officer shall give the holder written notice of the
grounds for such action and reasonable time to correct curable noncompliance.
IX. RENEWAL.
A. Renewal. The authorized use may be renewed. Renewal requires the
following conditions: (1) the land use allocation is compatible with the Forest
Land and Resource Management Plan; (2) the site is being used for the purposes
previously authorized; and (3) the enterprise is being continually operated and
maintained in accordance with all the provisions of the permit. In making a
renewal, the authorized officer may modify the terms, conditions, and special
stipulations.
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR NONRENEWAL.
A. Removal of Improvements. Except as provided in Clause VIII.A, upon
termination or revocation of this special use permit by the Forest Service, the
holder shall remove within a reasonable time as established by the authorized
officer, the structures and improvements and shall restore the site to a
condition satisfactory to the authorized officer, unless otherwise waived in
writing or in the authorization. If the holder fails to remove the structures
or improvements within a reasonable period, as determined by the authorized
officer, they shall become the property of the United States without
compensation to the holder, but that shall not relieve the holder's liability
for the removal and site restoration costs.
XI. MISCELLANEOUS PROVISIONS.
A. Members of Congress. No Member of or Delegate to Congress or Resident
Commissioner shall be admitted to any share or part of this agreement or to any
benefit that may arise herefrom unless it is made with a corporation for its
general benefit.
B. Inspection, Forest Service. The Forest Service shall monitor the
holder's operations and reserves the right to inspect the permitted facilities
and
17
<PAGE> 18
improvements at any time for compliance with the terms of this permit.
Inspections by the Forest Service do not relieve the holder of responsibilities
under other terms of this permit.
C. Regulating Services and Rates. The Forest Service shall have the
authority to check and regulate the adequacy and type of services provided the
public and to require that such services conform to satisfactory standards.
The holder may be required to furnish a schedule of prices for sales and
services authorized by the permit. Such prices and services may be regulated
by the Forest Service: Provided, that the holder shall not be required to
charge prices significantly different than those charged by comparable or
competing enterprises.
D. Advertising. The holder, in advertisements, signs, circulars,
brochures, letterheads, and like materials as well as orally, shall not
misrepresent in any way, either the accommodations provided, the status of the
permit, or the area covered by it or the vicinity. The fact that the permitted
area is located on the National Forest shall be made readily apparent in all of
the holder's brochures and print advertising regarding use and management of
the area and facilities under permit.
E. Bonding. The authorized officer may require the holder to furnish a
bond or other security to secure all or any of the obligations imposed by the
terms of the authorization or any applicable law, regulation, or order.
F. Water Rights. This authorization confers no rights to the use of water
by the holder. Such rights must be acquired under State Law.
G. Current Addresses. The holder and the Forest Service shall keep each
informed of current mailing addresses including those necessary for billing and
payment of fees.
H. Identification of Holder. Identification of the holder shall remain
sufficient that the Forest Service shall know the true identity of the entity.
Corporation Status Notification:
1. The holder shall notify the authorized officer within fifteen (15) days
of the following changes:
a. Names of officers appointed or terminated.
b. Names of stockholders who acquire stock shares causing their
ownership to exceed 50 percent of shares issued or otherwise acquired
controlling interest in the corporation.
2. The holder shall furnish the authorized officer:
a. A copy of the articles of incorporation and bylaws.
b. An authenticated copy of a resolution of the board of directors
specifically authorizing a certain individual or individuals to represent
the holder in dealing with the Forest Service.
c. A list of officers and directors of the corporation and their
addresses.
18
<PAGE> 19
d. Upon request, a certified list of stockholders and amount of stock
owned by each.
e. The authorized officer may require the holder to furnish additional
information as set forth in 36 CFR 251.54(e)(1)(iv).
Partnership Status Notification:
The holder shall notify the authorized officer within fifteen (15) days of the
following changes. Names of the individuals involved shall be included with
the notification.
1. Partnership makeup changes due to death, withdrawal, or addition of a
partner.
2. Party or parties assigned financed interest in the partnership by
existing partner(s).
3. Termination, reformation, or revision of the partnership agreement.
4. The acquisition of partnership interest, either through purchase of an
interest from an existing partner or partners or contribution of assets, that
exceeds 50 percent of the partnership permanent investment.
I. Archaeological-Paleontological Discoveries. The holder shall
immediately notify the authorized officer of any and all antiquities or other
objects of historic or scientific interest. These include, but are not limited
to, historic or prehistoric ruins, fossils, or artifacts discovered as the
result of operations under this permit, and shall leave such discoveries intact
until authorized to proceed by the authorized officer. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
J. Protection of Habitat of Endangered, Threatened, and Sensitive Species.
Location of areas needing special measures for protection of plants or animals
listed as threatened or endangered under the Endangered Species Act of 1973, as
amended, or as sensitive by the Regional Forester under authority of FSM 2670,
derived from ESA Section 7 consultation, may be shown on a separate map, hereby
made a part of this permit, or identified on the ground. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
If protection measures prove inadequate, if other such areas are discovered,
or if new species are listed as Federally threatened or endangered or as
sensitive by the Regional Forester, the authorized officer may specify
additional protection regardless of when such facts become known. Discovery of
such areas by either party shall be promptly reported to the other party.
K. Superior Clauses. In the event of any conflict between any of the
preceding printed clauses or any provision thereof and any of the following
clauses or any provision thereof, the preceding clauses shall control.
19
<PAGE> 20
L. Superseded Permit. This permit replaces a special use permit issued to:
<TABLE>
<S> <C> <C> <C>
Grand Targhee Incorporated on May 28, , 19 93 .
-------------------------- ------- ---
(Holder Name) (Date)
</TABLE>
M. Disputes. Appeal of any provisions of this authorization or any
requirements thereof shall be subject to the appeal regulations at 36 CFR 251,
Subpart C, or revisions thereto. The procedures for these appeals are set
forth in 36 CFR 251 (54 Fed. Reg. 3362, January 23, 1989).
Public reporting burden for this collection of information is estimated to
average 16 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, Room 404-W, Washington D.C. 20250; and to
the Office of Management and Budget, Paperwork Reduction Project (OMB #
0596-0082), Washington, D.C. 20503.
20
<PAGE> 21
GRAND TARGHEE RESORT
SPECIAL USE PERMIT
EXHIBITS
EXHIBIT A Special Use Permit Boundary
EXHIBIT B Resort Area Master Plan
EXHIBIT C Base Area Concept Plan 11
EXHIBIT D Table V.5 Building Program Summary
EXHIBIT E Gross Fixed Asset List
<PAGE> 22
GRAND TARGHEE
[MAP]
EXHIBIT A
IV-22
<PAGE> 23
This map will be updated according to the errata document dated March 1995 and
as agreed upon at the 3/22/95 meeting held with Grand Targhee to finalize edits
to the Master Development Plan. As soon as the map edits have been made, a new
map will replace this one.
[MAP]
GRAND
TARGHEE
EXHIBIT B
IV-20
<PAGE> 24
This map will be updated according
to the errata document dated March
1995 and as agreed upon at the 3/12/95
meeting held with Grand Targhee to finalize
edits to the Master Development Plan. As
soon as the map edits have seen made, a
new map will replace this one.
[MAP]
GRAND
TARGHEE
FIG.
EXHIBIT C BASE AREA CONCEPT PLAN 11
V-29
<PAGE> 25
TABLE V.5
GRAND TARGHEE
BUILDING PROGRAM SUMMARY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROSS TOTAL TOTAL TOTAL SKIER TOTAL
UNIT ACCOMM. ACCOMM. ACCOMM. COMMERCIAL COMMERCIAL SERVICE SKIER SERVICE
PARCEL FOOTPRINT SIZE FLOORS FLOORSPACE UNITS FLOORS FLOORSPACE FLOORS FLOORSPACE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EXISTING
AA 16,000 0 0.0 0 16 0.4 6,400 2.0 32,000
K 5,600 650 4.0 22,400 32 0.0 0 0.0 0
M 10,950 526 2.0 21,900 48 0.0 0 0.0 0
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 32,550 44,300 96 6,400 32,000
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE 588
- ------------------------------------------------------------------------------------------------------------------------------------
PHASE THREE
FF 1,500 0 0.0 0 0 0.0 0 2.0 3,000
BB 7,500 0 0.0 0 0 0.0 0 2.3 17,250
E 11,000 500 2.5 27,500 55 0.1 1,100 0.4 4,400
F 17,000 750 3.0 51,000 68 0.0 0 0.5 8,500
I 18,000 750 3.0 54,000 72 0.0 0 0.0 0
J 20,000 500 3.0 60,000 120 0.8 16,000 0.0 0
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 75,000 192,500 315 17,100 33,150
- ------------------------------------------------------------------------------------------------------------------------------------
PHASE FOUR
CC 7,200 0 0.0 0 0 0.0 0 1.8 12,636
G 15,400 750 2.5 38,500 51 0.4 6,160 0.0 0
H 20,500 750 3.0 61,500 82 0.4 8,200 0.2 4,100
DD 5,400 0 0.0 0 0 0.0 0 1.4 7,560
MTN. BUILDING 2,000 0 0.0 0 0 0.0 0 1.0 2,000
MTN. BUILDING 250 0 0.0 0 0 0.0 0 1.0 250
REMOVE AA ACCOMM. 0 0.0 0 -16 0.0 0 0.0 0
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 50,750 100,000 117 14,360 26,546
- ------------------------------------------------------------------------------------------------------------------------------------
PHASE FIVE
C 11,000 750 2.5 27,500 37 0.2 2,200 0.3 3,300
D 13,000 500 3.0 39,000 78 0.1 1,300 0.2 2,600
N 13,000 900 3.0 39,000 43 0.0 0 0.0 0
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 37,000 105,500 158 3,500 5,900
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 195,300 442,300 686 37,906* 98,342*
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE 378
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL TOTAL TOTAL
BUILT BUILT ACCOMM. UNDERGROUND SURFACE
PARCEL FLOORSPACE FLOORS PARKING PARKING PARKING STYLE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EXISTING
AA 38,400 2.4 8 0 8 Existing Daylodge
K 22,400 4.0 16 0 16 Existing Sioux Hotel
M 21,900 2.0 24 0 24 Existing Teewinot Hotel
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 82,700 48 0 48
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE
- ---------------------------------------------------------------------------------------------------------------------------------
PHASE THREE
FF 3,000 2.0 0 0 0 Fred's Warming Hut
BB 17,250 2.3 0 0 0 Skier Service Building
E 33,000 3.0 28 22 6 Hotel
F 59,500 3.5 34 27 7 Condotel
I 54,000 3.0 36 29 7 Condotel
J 76,000 3.8 60 48 12 Conference Hotel
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 242,750 158 126 32
- ---------------------------------------------------------------------------------------------------------------------------------
PHASE FOUR
CC 12,636 1.8 0 0 0 Kid's Kamp/Skier Service Building
G 44,660 2.9 26 21 5 Condotel
H 73,800 3.6 41 33 8 Condotel
DD 7,560 1.4 0 0 0 Peaked Mountain Restaurant
MTN. BUILDING 2,000 1.0 0 0 0 Rick's Basin Warming Hut
MTN. BUILDING 250 1.0 0 0 0 Peaked Mtn. Patrol Hut
REMOVE AA ACCOMM. 0 0.0 (8) (8) Targhee Lodge
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 140,906 59 54 5
- ---------------------------------------------------------------------------------------------------------------------------------
PHASE FIVE
C 33,000 3.0 18 15 3 Condotel
D 42,900 3.3 39 31 8 Hotel
N 39,000 3.0 22 0 22 Condotel
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 114,900 79 46 33
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL 578,548* 343 226 118
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE
- ---------------------------------------------------------------------------------------------------------------------------------
NOTE: UNDERGROUND PARKING NUMBERS AS PER F.E.I.S. BUILDING DESCRIPTIONS PAGE L1-L7.
</TABLE>
*Correct authorized sizes based on FEIS
<PAGE> 1
EXHIBIT 10.16
FS-2700-24 (7/92)
OMB No. 0596-0103
Expires 7/31/95
- ------------------------------------------------------------------------------
USDA - Forest Service Holder No. Type Site Authority
4127 / 09 161 545
----------------------------------------------
SKI AREA Auth. Type Issue Date Expir. Date
TERM SPECIAL USE PERMIT 18 12/23/92 12/31/32
----------------------------------------------
Location Sequence No. Stat. Ref.
Act of October 22, 1986 ----------------------------------------------
Latitude Longitude LOS Case
(Ref. FSM 2710) - - - -
- ------------------------------------------------------------------------------
SKI LIFTS, INC. of
- ------------------------------ ------------------------------------------
(Holder Name) (Billing Address - 1)
7900 S.E. 28TH ST. SUITE 200 MERCER ISLAND WA 98040
- -------------------------------- --------------- ------- ----------
(Billing Address - 2) (City) (State) (Zip Code)
(hereinafter called the holder) is hereby authorized to use National Forest
System lands, on the MT. BAKER-SNOQUALMIE National Forest, for the purposes of
constructing, operating, and maintaining a winter sports resort including food
service, retail sales, and other ancillary facilities, described herein, known
as the ALPENTAL, SKI ACRES, SNOQUALMIE AND HYAK ski area and subject to the
provisions of this term permit. This permit covers 1,864 acres described
here and as shown on the attached map labeled Exhibit A, dated 10/92 .
National Forest Lands including all or portions of:
Alpental - SW1/4 SW1/4 Section 28, T23N, R11E; SE1/4, SW1/4, SE1/4 NW1/4
Section 29, T23N, R11E; SE1/4 Section 30, T23N, R11E; NE1/4 NE1/4 Section 31,
T23N, R11E; NW1/4, N1/2 SW1/4, N1/2 SE1/4, NE1/4 Section 32, W. M.
Snoqualmie Summit - NE1/4 NE1/4 Section 8, T22N, R11E; W1/2 SW1/4, W1/2 NE1/4
SW1/4, SE1/4 SW1/4, SW1/4 NW1/4, W1/2 SE1/4 NW1/4, S1/2 NW1/4 NW1/4, SW1/4
NE1/4 NW1/4, Section 4, T22N, R11E; SE1/4 NE1/4, NE1/4 SE1/4 Section 5, T22N,
R11E, W. M.
Ski Acres/Hyak - E1/2 SE1/4 SE1/4, Section 8, T22N, R11E; NW1/4, NE1/4, SE1/4,
E1/2 SW1/4, NW1/4 SW1/4, Section 16, T22N, R11E; SW1/4 Section 21, T22N, R11E;
NW1/4 Section 22, T22N, R11E, W. M.
The following improvements, whether on or off the site, are
authorized:
REFER TO EXHIBIT B, attached to and hereby made a part of this permit.
Attached Clauses. This term permit is accepted subject to the
conditions set forth herein on pages 2 through 19, and to exhibits A to F
attached or referenced hereto and made a part of this permit.
- --------------------------------------------------------------------------------
THIS PERMIT IS ACCEPTED SUBJECT TO ALL OF ITS TERMS AND CONDITIONS.
ACCEPTED:
/s/ SKI LIFTS, INC. David R. Moffett, as its President 12/21/92
- --------------------------------------------------------------------------------
HOLDER'S NAME AND SIGNATURE DATE
APPROVED:
/s/ Walter S. Weaver, Acting Forest Sup. 12/23/92
- --------------------------------------------------------------------------------
AUTHORIZED OFFICER'S NAME AND SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TERMS AND CONDITIONS
<TABLE>
<S> <C> <C>
I. AUTHORITY AND USE AND TERM AUTHORIZED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
C. Rules, Laws and Ordinances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
D. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
E. Nonexclusive Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
F. Area Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
G. Master Development Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
H. Periodic Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Permission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Site Development Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
C. Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
D. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
E. Ski Lift Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
III. OPERATIONS AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Conditions of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Ski Lift, Holder Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
C. Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
D. Cutting of Trees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
E. Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
F. Temporary Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
IV. NONDISCRIMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
V. LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
B. Indemnification of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Damage to United States Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
D. Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
E. Hazards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
F. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
VI. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Holder to pay fair market value for the permitted use . . . . . . . . . . . . . . . . . 7
B. Fees - Construction Period - Flat Fee . . . . . . . . . . . . . . . . . . . . . . . . . 8
C. Fees - Graduated Rate Fee System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1. Weighted-average break-even point and weighted-average rate base . . . . . . . . . . . 8
2. Minimum annual fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Mixed ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
E. Definitions of Sales Categories and Gross Fixed Assets (GFA) . . . . . . . . . . . . . . . 9
1. Sales categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Gross Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
F. Change of Gross Fixed Asset Amount Sale or Change in Controlling Interest . . . . . . . . . 10
G. Determining Sales and Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
a. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(1) Gratuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(2) Acceptable Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(3) Discriminatory Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(4) Preferential Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(5) Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(6) Bartering or Trade Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(7) Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(8) Franchise Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
b. Inclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
c. Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
H. Concession Payment, Graduated Rate Fee System . . . . . . . . . . . . . . . . . . . . . . . 12
I. Interest and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Interest shall be charged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2. Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
J. Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
K. Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
L. Accounting Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1. Systematic internal controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. A permanent record of investments in facilities . . . . . . . . . . . . . . . . . . . . . . 14
3. As may be specified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
VII. TRANSFER AND SALE
A. Subleasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
B. Notification of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
C. Divestiture of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
VIII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. Termination for Higher Public Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. Termination, Revocation and Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IX. RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR
NONRENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Removal of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
XI. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Members of Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
B. Inspection, Forest Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
C. Regulating Services and Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
D. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
E. Bonding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
F. Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
G. Current Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
H. Identification of Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
I. Archaeological-Paleontological Discoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
J. Protection of Habitat of Endangered, Threatened, and Sensitive Species . . . . . . . . . . . . . 18
K. Superior Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
L. Superseded Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
M. Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
N. Master Development Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
O. Instructional Programs (special Clause) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
P. Avalanche Control Outside Boundary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
LIST OF EXHIBITS
A. Permit & Development Boundary Map
B. List of Holder's Improvements
C. Ownership Proration Based on Slope Transport Feet
D. Gross Fixed Assets (GFA) Value Sheets
E. Habitat Map (including an explanation) for Threatened, Endangered &
Sensitive Species
F. Existing Site Development & Facilities Map
(On file at District Office and Forest Supervisor's Office)
iii
<PAGE> 5
TERMS AND CONDITIONS
I. AUTHORITY AND USE AND TERM AUTHORIZED.
A. Authority. This term permit is issued under the authority of
the Act of October 22, 1986, (Title 16, United States Code, Section 497b), and
Title 36, Code of Federal Regulations, Sections 251.50-251.64.
B. Authorized Officer. The authorized officer is the Forest
Supervisor. The authorized officer may designate a representative for
administration of specific portions of this authorization.
C. Rules, Laws and Ordinances. The holder, in exercising the
privileges granted by this term permit, shall comply with all present and
future regulations of the Secretary of Agriculture and federal laws; and all
present and future, state, county, and municipal laws, ordinances, or
regulations which are applicable to the area or operations covered by this
permit to the extent they are not in conflict with federal law, policy or
regulation. The Forest Service assumes no responsibility for enforcing laws,
regulations, ordinances and the like which are under the jurisdiction of other
government bodies.
D. Term. 1. This authorization is for a term of N/A years
to provide for the holder to prepare a Master Development Plan. Subject to
acceptance of the Master Development Plan by the authorized officer, this
authorization shall be extended for an additional N/A years, for a total of N/A
years, to provide the holder sufficient time to construct facilities approved
in the Master Development Plan within the schedule outlined in clause II.B.
(Site Development Schedule), so that the area may be used by the public.
Further Provided; This authorization shall be extended by its terms for an
additional N/A years, for a total of N/A years, if it is in compliance with the
site development schedule in the Master Development Plan and being in operation
by the 10-year anniversary date of the issuance of this authorization. Failure
of the holder to comply with all or any provisions of this clause shall cause
the authorization to terminate under its terms.
2. Unless sooner terminated or revoked by the authorized officer,
in accordance with the provisions of the authorization, this permit shall
terminate on SEPTEMBER 30, 2032 , but a new special-use authorization to occupy
and use the same National Forest land may be granted provided the holder shall
comply with the then-existing laws and regulations governing the occupancy and
use of National Forest lands. The holder shall notify the authorized officer
in writing not less than six (6) months prior to said date that such new
authorization is desired.
E. Nonexclusive Use. This permit is not exclusive. The Forest
Service reserves the right to use or permit others to use any part of the
permitted area for any purpose, provided such use does not materially interfere
with the rights and privileges hereby authorized.
F. Area Access. Except for any restrictions as the holder and
the authorized officer may agree to be necessary to protect the installation
and operation of authorized structures and developments, the lands and waters
covered by this permit shall remain open to the public for all lawful purposes.
To facilitate public use of this area, all existing roads or roads as may be
constructed by the holder, shall remain open to the public, except for roads as
may be closed by joint agreement of the holder and the authorized officer.
PAGE 2
<PAGE> 6
G. Master Development Plan. In consideration of the privileges
authorized by this permit, the holder agrees to prepare and submit changes in
the Master Development Plan encompassing the entire winter sports resort
presently envisioned for development in connection with the National Forest
lands authorized by this permit, and in a form acceptable to the Forest
Service. Additional construction beyond maintenance of existing improvements
shall not be authorized until this plan has been amended. Planning should
encompass all the area authorized for use by this permit. The accepted Master
Development Plan shall become a part of this permit. For planning purposes, a
capacity for the ski area in people-at-one time shall be established in the
Master Development Plan and appropriate National Environmental Policy Act
(NEPA) document. The overall development shall not exceed that capacity
without further environmental analysis documentation through the appropriate
NEPA process.
H. Periodic Revision.
1. The terms and conditions of this authorization shall be
subject to revision to reflect changing times and conditions so that land use
allocation decisions made as a result of revision to Forest Land and Resource
Management Plan may be incorporated.
2. At the sole discretion of the authorized officer this term
permit may be amended to remove authorization to use any National Forest System
lands not specifically covered in the Master Development Plan and/or needed for
use and occupancy under this authorization.
II. IMPROVEMENTS.
A. Permission. Nothing in this permit shall be construed to
imply permission to build or maintain any improvement not specifically named in
the Master Development Plan and approved in the annual operating plan, or
further authorized in writing by the authorized officer.
B. Site Development Schedule. As part of this permit, a schedule
for the progressive development of the permitted area and installation of
facilities shall be prepared jointly by the holder and the Forest Service.
Such a schedule shall be prepared by APRIL 30, 1993, and shall set forth an
itemized priority list of planned improvements and the due date for completion.
This schedule shall be made a part of this permit. The holder may accelerate
the scheduled date for installation of any improvement authorized, provided the
other scheduled priorities are met; and provided further, that all priority
installations authorized are completed to the satisfaction of the Forest
Service and ready for public use prior to the scheduled due date.
1. All required plans and specifications for site improvements,
and structures included in the development schedule shall be properly certified
and submitted to the Forest Service at least forty-five (45) days before the
construction date stipulated in the development schedule.
2. In the event there is agreement with the Forest Service to
expand the facilities and services provided on the areas covered by this
permit, the holder shall jointly prepare with the Forest Service a development
schedule for the added facilities prior to any construction and meet
requirements of paragraph II.D. of this section. Such schedule shall be made a
part of this permit.
PAGE 3
<PAGE> 7
C. Plans. All plans for development, layout, construction,
reconstruction or alteration of improvements on the site, as well as revisions
of such plans, must be prepared by a licensed engineer, architect, and/or
landscape architect (in those states in which such licensing is required) or
other qualified individual acceptable to the authorized officer. Such plans
must be accepted by the authorized officer before the commencement of any work.
A holder may be required to furnish as-built plans, maps, or surveys upon the
completion of construction.
D. Amendment. This authorization may be amended to cover new,
changed, or additional use(s) or area not previously considered in the approved
Master Development plan. In approving or denying changes or modifications, the
authorized officer shall consider among other things, the findings or
recommendations of other involved agencies and whether their terms and
conditions of the existing authorization may be continued or revised, or a new
authorization issued.
E. Ski Lift Plans and Specifications. All plans for uphill
equipment and systems shall be properly certified as being in accordance with
the American National Standard Safety Requirements for Aerial Passenger
Tramways (B77.1). A complete set of drawings, specifications, and records for
each lift shall be maintained by the holder and made available to the Forest
Service upon request. These documents shall be retained by the holder for a
period of three (3) years after the removal of the system from National Forest
land.
III. OPERATIONS AND MAINTENANCE.
A. Conditions of Operations. The holder shall maintain the
improvements and premises to standards of repair, orderliness, neatness,
sanitation, and safety acceptable to the authorized officer. Standards are
subject to periodic change by the authorized officer. This use shall normally
be exercised at least 365 days each year or season. Failure of the holder to
exercise this minimum use may result in termination pursuant to VIII.B.
B. Ski Lift, Holder Inspection. The holder shall have all
passenger tramways inspected by a qualified engineer or tramway specialist.
Inspections shall be made in accordance with the American National Standard
Safety Requirements for Aerial Passenger Tramways (B77.1). A certificate of
inspection, signed by an officer of the holder's company, attesting to the
adequacy and safety of the installations and equipment for public use shall be
received by the Forest Service prior to public operation stating as a minimum:
"Pursuant to our special use permit, we have had an inspection
to determine our compliance with the American National
Standard B77.1. We have received the results of that
inspection and have made corrections of all deficiencies
noted. The facilities are ready for public use."
PAGE 4
<PAGE> 8
C. Operating Plan. The holder or designated representative shall
prepare and annually revise by OCTOBER 1 (WINTER), MAY 1 (SUMMER) an Operating
Plan. The plan shall be prepared in consultation with the authorized officer
or designated representative and cover winter and summer operations as
appropriate. The provisions of the Operating Plan and the annual revisions
shall become a part of this permit and shall be submitted by the holder and
approved by the authorized officer or their designated representatives. This
plan shall consist of at least the following sections:
1. Ski patrol and first aid.
2. Communications.
3. Signs.
4. General safety and sanitation.
5. Erosion control.
6. Accident reporting.
7. Avalanche control.
8. Search and rescue.
9. Boundary management.
10. Vegetation management.
11. Designation of representatives.
12. Trail routes for nordic skiing.
13. A schedule of proposed projects. (Summer Operating Plan)
The authorized officer may require a joint annual business meeting agenda to:
a. Update Gross Fixed Assets and lift-line proration when the fee
is calculated by the Graduated Rate Fee System.
b. Determine need for performance bond for construction projects,
and amount of bond.
c. Provide annual use reports.
D. Cutting of Trees. Trees or shrubbery on the permitted area
may be removed or destroyed only after the authorized officer has approved and
marked, or otherwise designated, that which may be removed or destroyed.
Timber cut or destroyed shall be paid for by the holder at appraised value,
provided that the Forest Service reserves the right to dispose of the
merchantable timber to others than the holder at no stumpage cost to the
holder.
E. Signs. Signs or advertising devices erected on National
Forest lands, shall have prior approval by the Forest Service as to location,
design, size, color, and message. Erected signs shall be maintained or renewed
as necessary to neat and presentable standards, as determined by the Forest
Service.
F. Temporary Suspension. Immediate temporary suspension of the
operation, in whole or in part, may be required when the authorized officer, or
designated representative, determines it to be necessary to protect the public
health or safety, or the environment. The order for suspension may be given
verbally or in writing. In any such case, the superior of the authorized
officer, or designated representative, shall, within ten (10) days of the
request of the holder, arrange for an on-the-ground review of the adverse
conditions with the holder. Following this review the superior shall take
prompt action to affirm, modify or cancel the temporary suspension.
PAGE 5
<PAGE> 9
IV. NONDISCRIMINATION. During the performance of this permit, the holder
agrees:
A. In connection with the performance of work under this permit,
including construction, maintenance, and operation of the facility, the holder
shall not discriminate against any employee or applicant for employment because
of race, color, religion, sex, national origin, age, or handicap. (Ref. Title
VII of the Civil Rights Act of 1964 as amended).
B. The holder and employees shall not discriminate by segregation
or otherwise against any person on the basis of race, color, religion, sex,
national origin, age or handicap, by curtailing or refusing to furnish
accommodations, facilities, services, or use privileges offered to the public
generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section
504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments,
and the Age Discrimination Act of 1975).
C. The holder shall include and require compliance with the above
nondiscrimination provisions in any subcontract made with respect to the
operations under this permit.
D. Signs setting forth this policy of nondiscrimination to be
furnished by the Forest Service will be conspicuously displayed at the public
entrance to the premises, and at other exterior or interior locations as
directed by the Forest Service.
E. The Forest Service shall have the right to enforce the
foregoing nondiscrimination provisions by suit for specific performance or by
any other available remedy under the laws of the United States of the State in
which the breach or violation occurs.
V. LIABILITIES.
A. Third Party Rights. This permit is subject to all valid
existing rights and claims outstanding in third parties. The United States is
not liable to the holder for the exercise of any such right or claim.
B. Indemnification of the United States. The holder shall hold
harmless the United States from any liability from damage to life or property
arising from the holder's occupancy or use of National Forest lands under this
permit.
C. Damage to United States Property. The holder shall exercise
diligence in protecting from damage the land and property of the United States
covered by and used in connection with this permit. The holder shall pay the
United States the full cost of any damage resulting from negligence or
activities occurring under the terms of this permit or under any law or
regulation applicable to the national forests, whether caused by the holder, or
by any agents or employees of the holder.
D. Risks. The holder assumes all risk of loss to the
improvements resulting from natural or catastrophic events, including but not
limited to, avalanches, rising waters, high winds, falling limbs or trees, and
other hazardous events. If the improvements authorized by this permit are
destroyed or substantially damaged by natural or catastrophic events, the
authorized officer shall conduct an analysis to determine whether the
improvements can be safely occupied in the future and whether rebuilding should
be allowed. The analysis shall be provided to the holder within six (6) months
of the event.
E. Hazards. The holder has the responsibility of inspecting the
area authorized for use under this permit for evidence of hazardous conditions
which could affect the improvements or pose a risk of injury to individuals.
PAGE 6
<PAGE> 10
F. Insurance. The holder shall have in force public liability
insurance covering: (1) property damage in the amount of Twenty-five Thousand
dollars ($25,000.00), and (2) damage to persons in the minimum amount of Five
hundred Thousand dollars ($500,000.00) in the event of death or injury to one
individual, and the minimum amount of Five hundred Thousand dollars
($500,000.00) in the event of death or injury to more than one individual
These minimum amounts and terms are subject to change at the sole discretion of
the authorized officer at the five-year anniversary date of this authorization.
The coverage shall extend to property damage, bodily injury, or death arising
out of the holder's activities under the permit including, but not limited to,
occupancy or use of the land and the construction, maintenance, and operation
of the structures, facilities, or equipment authorized by this permit. Such
insurance shall also name the United States as an additionally insured. The
holder shall send an authenticated copy of its insurance policy to the Forest
Service immediately upon issuance of the policy. The policy shall also contain
a specific provision or rider to the effect that the policy shall not be
canceled or its provisions changed or deleted before thirty (30) days' written
notice to the Forest Supervisor,
Mt. Baker-Snoqualmie National Forest, 21905 64th Ave. W., Mountlake Terrace,
WA 98043-2278.
(Address)
by the insurance company.
Rider Clause (for insurance companies)
"It is understood and agreed that the coverage provided under this
policy shall not be canceled or its provisions changed or deleted
before thirty (30) days of receipt of written notice to the Forest
Supervisor, Mt. Baker-Snoqualmie National Forest, 21905 64th Ave. W.,
Mountlake Terrace, WA 98043-2278,
(Address)
by the insurance company."
VI. FEES.
A. Holder to pay fair market value for the permitted use. The
holder must pay fair market value for the use of National Forest System land.
1. The provisions of the Graduated Rate Fee System (GRFS)
identified under this permit may be revised by the Forest Service to reflect
changed times and conditions. Changes shall become effective when:
a. Mutually agreed; or,
b. A permit is amended for other purposes; or,
c. A new permit is issued including reissue after termination.
2. The Graduated Rate Fee System may be replaced in its entirety
by the Chief of the Forest Service if a new generally applicable fee system is
imposed affecting all holders of authorizations under Public Law 99-522.
Replacement shall become effective on the beginning of the holder's business
year following establishment.
PAGE 7
<PAGE> 11
B. Fees - Construction Period - Flat Fee. An annual flat fee
shall be due the United States during the initial construction period (VI.AA)
and until exceeded by fees determined by the Graduated Rate Fee System
described below; Thereafter, the annual fees due the United States for those
activities authorized by this permit shall be calculated on sales according to
the schedule below.
C. Fees - Graduated Rate Fee System. The annual fees due the
United States for those activities authorized by this permit shall be
calculated on sales according to the following schedule:
<TABLE>
<CAPTION>
Break-even point Balance of
(Sales to GFA) Rate Base Sales rate
Kind of Business (Percentage) (Percentage) (Percentage)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery 70 .75 1.13
Service, food 70 1.25 1.88
Service, car 70 1.30 1.95
Merchandise 70 1.50 2.25
Liquor Service 60 1.80 2.70
Outfitting/Guiding 50 2.00 3.00
Rental and Services 30 4.50 6.75
Lodging 40 4.00 6.00
Lifts, Tows, and Ski Schools 20 2.00 5.00
- -------------------------------------------------------------------------------------------------------
</TABLE>
1. A weighted-average break-even point (called the break-even
point) and a weighted-average rate base (called the rate base) shall be
calculated and used when applying the schedule to mixed business. If the
holder's business records do not clearly segregate the sales into the business
categories authorized by this permit, they shall be placed in the most logical
category. If sales with a different rate base are grouped, place them all in
the rate category that shall yield the highest fee. Calculate the fee on sales
below the break-even point using 50 percent of the rate base. Calculate the
fee on sales between the break-even point and twice the break-even point using
150 percent of the rate base. Calculate the fee on sales above twice the
break-even point using the balance of sales rate.
2. The minimum annual fee for this use, which is due in advance
and is not subject to refund, shall be equal to the fee that would result when
sales are 40 percent of the break-even point. This fee shall be calculated and
billed by the Forest Service during the final quarter of the holder's fiscal
year, using the most recent GFA figure and previously reported sales data for
the current year, plus, if the operating season is still active, estimated
sales for the remainder of the year.
3. Mixed ownership. This use occupies both private and public
land. For purposes of the fee calculation, the calculated fee shall be
adjusted by the slope-transport feet percentage representing the portion of the
use attributed to National Forest land. Slope-transport feet is determined by
the slope distance traveled by lifts over each ownership, multiplied by the
lift capacity.
SEE EXHIBIT C.
D. Surcharge. A surcharge of N/A percent shall be applied to
and added to the basic fee. The surcharge shall be applied for N/A years
beginning with the year that sales first occur under this operation.
PAGE 8
<PAGE> 12
E. Definitions of Sales Categories and Gross Fixed Assets (GFA).
1. Sales categories. For purposes of recording and reporting
sales, and sales-related information including the cost of sales, the activities
of the concessioner are divided into:
Grocery . Includes the sale of items usually associated with grocery
stores such as staple foods, meats, produce, household supplies. Includes the
sale of bottled soft drinks, beer and wine, when included in the grocery
operation.
Service, Food. Includes the serving of meals, sandwiches, and other
items either consumed on the premises or prepared for carryout. Snack bars are
included.
Service, Cars. Includes servicing and the sale of fuels, lubricants,
and all kinds of articles used in servicing and repairing autos, boats,
snowmobiles, and aircraft.
Merchandise . Includes the sale of clothing, souvenirs, gifts, ski and
other sporting equipment. Where a "Service, Cars" category of business is not
established by this permit, the sale of auto accessories is included in this
category.
Service, Liquor. Includes the sale of alcoholic drinks for consumption
on the premises and other sales ordinarily a part of a bar or cocktail-lounge
business. Where a bar is operated in conjunction with a restaurant or overnight
accommodations, liquor, beer and wine sales shall be accounted for consistent
with the holder's normal business practice. The sale of alcoholic beverages for
consumption off the premises is also included in this item, except as indicated
in "Grocery".
Outfitting, Guiding. Includes all activities or commercial guiding
services involving back-country travel, regardless of mode of travel, when
associated with a resort or dude ranch with a mixture of business. All fees
charged are considered sales.
Lodging. Includes lodging where daily maid service is furnished.
Rentals and Services. Includes lodging where daily maid service is not
furnished by the holder; the rental of camping space, ski equipment and other
equipment rentals; fees for the use of cross-country ski trails. Also included
are services such as barbershops, and amusements including video games.
Lifts, Tows, and Ski Schools . Includes charges for use of all types of
uphill transportation facilities and for sports lessons and training.
2. Gross Fixed Assets. The capitalized cost of improvements,
equipment, and fixtures necessary and used to generate sales and other revenue
during the permit year on the permitted area or within the development boundary
shown in this permit.
GFA shall be established by and changed at the sole discretion of the
authorized officer based on the current interpretation of guidelines supporting
the Graduated Rate Fee System.
a. Costs of the following items as presented by the holder and
verified by a representative of the authorized officer to be in existence and in
use are included:
(1) Identifiable structures, major equipment, such as road
maintenance equipment, or land improvements which play a distinct role in the
permitted activity.
PAGE 9
<PAGE> 13
(2) Identifiable holder costs, to provide utility services to the
area. Utility services that extend beyond the development boundary may be
included in GFA to the extent they are necessary for the generation of sales
and are paid by the holder. Costs for user surcharge or demand rates are not
included as GFA.
b. The following, and similar items, are not part of GFA:
(1) Assets that ordinarily qualify for inclusion in GFA, but which
are out of service for the full operating year for which fees
are being determined.
(2) Land.
(3) Expendable or consumable supplies.
(4) Intangible assets, such as goodwill, permit value,
organization expense, and liquor licenses.
(5) Improvements not related to the operation.
(6) Luxury assets, to the extent their design and cost exceed
functional need.
(7) The pro rata share of GFA assets used in off-site activities
not directly associated with the authorized use.
(8) Expensed assets.
(9) Operating leases.
As of the date of this permit, (September 30, 1991) the initial GFA
under this ownership has been determined to be $15,578,199.00 as shown in
detail on the attached EXHIBIT D. If an error is found in the GFA amount, it
shall be changed to the correct amount retroactive to the date the error
occurred and fees adjusted accordingly.
F. Change of Gross Fixed Asset Amount Sale or Change in
Controlling Interest. Upon change in ownership, effective dominion or
controlling interest or upon sale of assets or common stock which results in a
change of ownership, effective dominion, or controlling interest, the value of
Gross Fixed Assets shall be established applying Generally Accepted Accounting
Principles (GAAP).
G. Determining Sales and Other Revenue. Sales and Gross Fixed
Assets shall be derived from all improvements and facilities, including those
of sublessees, which constitute a logical single overall integrated business
operation regardless of the land ownership. A map shall be prepared
designating the development boundary and may be augmented by narrative or
tables and shall become a part of this permit.
1. Sales. Fees shall be assessed against all receipts from sales
unless specifically exempted. Sales for the purpose of fee calculation
include, (1) all revenue derived from goods and services sold which are related
to operations under this permit and all revenue derived within the development
boundary, unless otherwise excluded, (2) the value of goods and services
traded-off for goods and services received (bartering) and (3) the value of
gratuities.
a. Definitions.
(1) Gratuities. Goods, services or privileges that are provided
without charge or at deep discount to such individuals as employees, owners,
and officers or immediate families of employees, owners and officers and not
available to the general public.
(2) Acceptable Discounts. Transactions for goods or services
below stated, listed or otherwise presented prices to the public at large.
Included are such things as group sales and organized programs. These are
included in sales at the actual transaction price.
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<PAGE> 14
(3) Discriminatory Pricing. Rates based solely on residence,
race, color, or religion. Discounts based on age or disability are not
discriminatory pricing.
(4) Preferential Discounts. Discounts offered to certain classes
or individuals based on their status, such as members of boards of directors,
contractors, advertisers, doctors, and VIP'S, etc.
(5) Market Price. The price generally available to an informed
public excluding special promotions. It may not be the "window price".
(6) Bartering or Trade Offs. The practice of exchanging goods or
services between individuals or companies.
(7) Commissions. Commissions are payments received by the holder
for collecting revenue on behalf of others as an agent or providing services
not directly associated with the operations, such as selling hunting and
fishing licenses, bus or sightseeing tickets for trips off or predominantly off
the permitted area, accommodating telephone toll calls, and so forth.
(8) Franchise Receipts. These are payments made to specific
permittees by sublessees solely for the opportunity to do business at a
specific location. The permittee provides little, if anything, in the way of
facilities or services. They may be the only fee paid to the permittee or, if
some facilities or services are provided by the permittee, they may be made in
addition to a rental fee. The franchise receipts may be in the form of fixed
amounts of money or in reduced prices for the franchiser's product or service.
b. Inclusions. The following items shall be included as gross
receipts to arrive at sales:
(1) Gratuities. Daily and season passes are valued at market
price unless the permit holder has sufficient records of daily individual use
to substantiate a "value of use". Value of use is the number of days the pass
is used times the market price. Does not include employees. See (4) below.
(2) Preferential Discounts. Include the amount that would have
been received had the transaction been made at the market price.
(3) Value of Discriminatory Pricing. Discriminatory pricing is
disallowed. Include the amount that would have been received had the
transaction been made at the market price.
(4) Employee discounts in excess of 30 percent of market price.
These discounts are exclusively given or provided to employees, owners,
officers or immediate families of employees, owners or officers are gratuities
and are included in sales at 70 percent of market price. Employee discounts
less than 30 percent are recorded at the transaction price.
(5) Value of bartered goods and services (trade offs).
(6) Gross sales of sublessees. Includes sales of State
controlled liquor stores.
(7) Fifty percent of franchise receipts.
(8) All other revenue items not specifically excluded below shall
be included as sales.
c. Exclusions. The following items shall be excluded from gross
receipts or revenue to arrive at sales:
(1) Value of goods and services provided to employees, agents,
contractors or officials to facilitate the accomplishment of their assigned
duties or work-related obligation or to others for educational or technical
competence related to the type of permitted use such as lift operation, ski
patrol, water safety, avalanche control, etc. Similarly, local, state and
federal government officials including Forest Service employees, who in the
PAGE 11
<PAGE> 15
course of their oversight responsibilities or otherwise on official business,
use goods or services. The holder is not required to report the value of such
duty-related or official use as sales for fee calculation purposes.
(2) The value of meals and lodging furnished by an employer to an
employee for the employer's convenience if, in the case of meals, they are
furnished on the employer's business premises. The fact that the employer
imposes a partial charge for, or that the employee may accept or decline meals
does not affect the exclusion if all other conditions are met. If the employer
imposes a charge for meals and lodging it shall be included at the transaction
price. The holder need not keep records of employee meals and lodging more
detailed than those required by the Internal Revenue Service.
(3) Refunds from returned merchandise and receipts from sales of
real and nonrental personal property used in the operation.
(4) Rents paid to the permittee by sublessees, even if based on
sales.
(5) Taxes collected on site from customers, accounted for as such
in the holder's accounting records, and that were paid or are payable to taxing
authorities. Taxes included in the purchase price of gasoline, tobacco and
other products, but paid to the taxing authority by the manufacturer or
wholesaler are included in sales, and subject to the permit fee.
(6) Amounts paid or payable to a Government licensing authority or
recreation administering agency from sales of hunting or fishing licenses and
recreation fee tickets.
(7) Value of sales and commissions where the holder is serving as
an agent for businesses not directly associated with the permitted operation.
This includes such things as bus or sightseeing-ticket sales for trips not
related to activities on the permitted area, telephone-toll charges, and
accident-insurance sales.
(8) Sales of operating equipment. Rental equipment, capitalized
assets or other assets used in operations shall be excluded from gross
receipts. Examples are such items as used rental skis and boots, ski lifts, or
grooming equipment, which are sold periodically and replaced.
H. Concession Payment, Graduated Rate Fee System. Reports and
deposits required as outlined above shall be tendered in accordance with the
schedule below. They shall be sent or delivered to the Collection Officer,
Forest Service, USDA, at the address furnished by the Forest Supervisor.
Checks or money orders shall be payable to "Forest Service, USDA."
1. The holder shall report sales, calculate fees due, and make
payment each calendar month except for periods in which no sales take place
and the holder has notified the authorized officer that the operation has
entered a seasonal shutdown for a specific period. Reports and payments shall
be made by the 30th of the month following the end of each reportable period.
2. The authorized officer, prior to October 1, shall furnish the
holder with a tentative rate which shall be applied to sales in the fee
calculation (item 1), such rate to be one that shall produce the expected fee
based on past experience. The correct fee shall be determined at the end of
the year and adjustment made as provided under item (5). Any balance that may
exist shall be credited and applied against the next payment due.
3. During the final fiscal month, pay within 30 days of billing
by the Forest Service, the annual minimum fee for the next year.
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<PAGE> 16
4. The holder must also provide within three (3) months after
close of its operating year, a balance sheet representing its financial
condition at the close of its business year, an annual operating statement
reporting the results of operations including year-end adjustments for itself
and each sublessee for the same period, and a schedule of Gross Fixed Assets
adjusted to comply with the terms of this permit in a format and manner
prescribed by the authorized officer.
If the holder fails to report all sales in the period they were made
or misreports Gross Fixed Assets and the authorized officer determines that
additional fees are owed, the holder shall pay the additional fee plus
interest. Such interest shall be assessed at the rate specified in clause I
and shall accrue from the date the sales or correct Gross Fixed Assets should
have been reported and fee paid until the date of actual payment of the
underpaid fee.
5. Within 30 days of receipt of a statement from the Forest
Service, pay any additional fee required to correct fees paid for the past
year's operation.
6. Payments shall be credited on the date received by the
designated collection officer or deposit location. If the due date for the fee
or fee calculation financial statement falls on a non-workday, the charges
shall not apply until the close of business on the next workday.
7. All fee calculations and records of sales and Gross Fixed
Assets are subject to periodic audit. Errors in calculation or payment shall
be corrected as needed for conformance with those audits. Additional fees and
interest due as a result of such audits shall be in accordance with item 4,
paragraph 2.
8. Disputed fees must be paid in a timely manner.
9. Correction of errors includes any action necessary to
establish the cost of gross fixed assets to the current holder, sales, slope
transport feet calculation, or other data required to accurately assess and
calculate fees. For fee calculation purposes, error may include:
a. Misreporting or misrepresentation of amounts,
b. Arithmetic mistakes,
c. Typographic mistakes,
d. Variation from Generally Accepted Accounting Principles
(GAAP), when such variations are inconsistent with the terms and conditions of
the authorization.
Correction of errors shall be made retroactively to the date the error
was made or to the previous audit period, whichever is more recent, with past
fees adjusted accordingly. Changes effected by agency policy including
definition of assets included in GFA, shall only be made prospectively.
I. Interest and Penalties.
1. Pursuant to 31 USC 3717 and 7 CFR Part 3, Subpart B, or
subsequent changes thereto, interest shall be charged on any fee not paid by
the date the fee or fee calculation financial statements specified in this
permit was due.
2. Interest shall be assessed using the higher of (1) the most
current rate prescribed by the United States Department of the Treasury
Financial Manual (TFM-6-8025.40), or (2) the prompt payment rate prescribed by
the United States Department of the Treasury under section 12 of the Contract
Disputes Act of 1978 (41 USC 611). Interest shall accrue from the date the fee
or fee calculation financial statement is due. In the event the account
becomes delinquent, administrative costs to cover processing and handling of
the delinquent debt may be assessed.
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<PAGE> 17
3. A penalty of 6 percent per year shall be assessed on any fee
overdue in excess of 90 days, and shall accrue from the due date of the first
billing or the date the fee calculation financial statement was due. The
penalty is in addition to interest and any other charges specified in item 2.
4. Delinquent fees and other charges shall be subject to all the
rights and remedies afforded the United States pursuant to federal law and
implementing regulations. (31 U.S.C. 3711 et seq.).
J. Nonpayment. Failure of the holder to make timely payments,
pay interest charges or any other charges when due, constitutes breach and
shall be grounds for termination of this authorization. This permit terminates
for nonpayment of any monies owed the United States when more than 90 days in
arrears.
K. Access to Records. For the purpose of administering this
permit (including ascertaining that fees paid were correct and evaluating the
propriety of the fee base), the holder agrees to make all of the accounting
books and supporting records to the business activities, as well as those of
sublessees operating within the authority of this permit, available for
analysis by qualified representatives of the Forest Service or other Federal
agencies authorized to review the Forest Service activities. Review of
accounting books and supporting records shall be made at dates convenient to
the holder and reviewers. Financial information so obtained shall be treated
as confidential as provided in regulations issued by the Secretary of
Agriculture.
The holder shall retain the above records and keep them available for
review for 5 years after the end of the year involved, unless disposition is
otherwise approved by the authorized officer in writing.
L. Accounting Records. The holder shall follow Generally
Accepted Accounting Principles or Other Comprehensive Bases of Accounting
acceptable to the Forest Service in recording financial transactions and in
reporting results to the authorized officer. When requested by the authorized
officer, the holder at own expense, shall have the annual accounting reports
audited or prepared by a licensed independent accountant acceptable to the
Forest Service. The holder shall require sublessees to comply with these same
requirements. The minimum acceptable accounting system shall include:
1. Systematic internal controls and recording by kind of business
the gross receipts derived from all sources of business conducted under this
permit. Receipts should be recorded daily and, if possible, deposited into a
bank account without reduction by disbursements. Receipt entries shall be
supported by source documents such as cash-register tapes, sale invoices,
rental records, and cash accounts from other sources.
2. A permanent record of investments in facilities (depreciation
schedule), and current source documents for acquisition costs of capital items.
3. Preparation and maintenance of such special records and
accounts as may be specified by the authorized officer.
VII. TRANSFER AND SALE.
A. Subleasing. The holder may sublease the use of land and
improvements covered under this permit and the operation of concessions and
facilities authorized upon prior written notice to the authorized officer. The
Forest Service reserves the right to disapprove subleases. In any
PAGE 14
<PAGE> 18
circumstance, only those facilities and activities authorized by this permit
may be subleased. The holder shall continue to be responsible for compliance
with all conditions of this permit by persons to whom such premises may be
sublet. The holder may not sublease direct management responsibility without
prior written approval by the authorized officer.
B. Notification of Sale. The holder shall immediately notify the
authorized officer when a sale and transfer of ownership of the permitted
improvements is planned.
C. Divestiture of Ownership. Upon change in ownership of the
facilities authorized by this permit, the rights granted under this
authorization may be transferred to the new owner upon application to and
approval by the authorized officer. The new owner must qualify and agree to
comply with, and be bound by the terms and conditions of the authorization. In
granting approval, the authorized officer may modify the terms, conditions, and
special stipulations to reflect any new requirements imposed by current Federal
and state land use plans, laws, regulations or other management decisions.
VIII. TERMINATION.
A. Termination for Higher Public Purpose. If, during the term of
this permit or any extension thereof, the Secretary of Agriculture or any
official of the Forest Service acting by or under his or her authority shall
determine by his or her planning for the uses of the National Forest that the
public interest requires termination of this permit, this permit shall
terminate upon one hundred eighty (180) days' written notice to the holder of
such determination, and the United States shall have the right thereupon,
subject to Congressional authorization and appropriation, to purchase the
holder's improvements, to remove them, or to require the holder to remove them,
at the option of the United States. The United States shall be obligated to
pay an equitable consideration for the improvements or for removal of the
improvements and damages to the improvements resulting from their removal. The
amount of the consideration shall be fixed by mutual agreement between the
United States and the holder and shall be accepted by the holder in full
satisfaction of all claims against the United States under this clause:
Provided, that if mutual agreement is not reached, the Forest Service shall
determine the amount, and if the holder is dissatisfied with the amount thus
determined to be due him may appeal the determination in accordance with the
Appeal Regulations, and the amount as determined on appeal shall be final and
conclusive on the parties hereto; Provided further, that upon the payment to
the holder of 75% of the amount fixed by the Forest Service, the right of the
United States to remove or require the removal of the improvements shall not be
stayed pending the final decision on appeal.
B. Termination, Revocation and Suspension. The authorized
officer may suspend, revoke, or terminate this permit for (1) noncompliance
with applicable statutes, regulations, or terms and conditions of the
authorization; (2) for failure of the holder to exercise the rights and
privileges granted; (3) with the consent of the holder; or (4) when, by its
terms, a fixed agreed upon condition, event, or time occurs. Prior to
suspension, revocation, or termination, the authorized officer shall give the
holder written notice of the grounds for such action and reasonable time to
correct curable noncompliance.
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<PAGE> 19
IX. RENEWAL.
A. Renewal. The authorized use may be renewed. Renewal requires
the following conditions: (1) the land use allocation is compatible with the
Forest Land and Resource Management Plan; (2) the site is being used for the
purposes previously authorized and; (3) the enterprise is being continually
operated and maintained in accordance with all the provisions of the permit.
In making a renewal, the authorized officer may modify the terms, conditions,
and special stipulations.
X. RIGHTS AND RESPONSIBILITIES UPON TERMINATION OR NONRENEWAL.
A. Removal of Improvements. Except as provided in Clause VIII.
A, upon termination or revocation of this special use permit by the Forest
Service, the holder shall remove within a reasonable time as established by the
authorized officer, the structures and improvements, and shall restore the site
to a condition satisfactory to the authorized officer, unless otherwise waived
in writing or in the authorization. If the holder fails to remove the
structures or improvements within a reasonable period, as determined by the
authorized officer, they shall become the property of the United States without
compensation to the holder, but that shall not relieve the holder's liability
for the removal and site restoration costs.
XI. MISCELLANEOUS PROVISIONS.
A. Members of Congress. No Member of or Delegate to Congress, or
Resident Commissioner shall be admitted to any share or part of this agreement
or to any benefit that may arise herefrom unless it is made with a corporation
for its general benefit.
B. Inspection, Forest Service. The Forest Service shall monitor
the holder's operations and reserves the right to inspect the permitted
facilities and improvements at any time for compliance with the terms of this
permit. Inspections by the Forest Service do not relieve the holder of
responsibilities under other terms of this permit.
C. Regulating Services and Rates. The Forest Service shall have
the authority to check and regulate the adequacy and type of services provided
the public and to require that such services conform to satisfactory standards.
The holder may be required to furnish a schedule of prices for sales and
services authorized by the permit. Such prices and services may be regulated
by the Forest Service: Provided, that the holder shall not be required to
charge prices significantly different than those charged by comparable or
competing enterprises.
D. Advertising. The holder, in advertisements, signs, circulars,
brochures, letterheads, and like materials, as well as orally, shall not
misrepresent in any way either the accommodations provided, the status of the
permit, or the area covered by it or the vicinity. The fact that the permitted
area is located on the National Forest shall be made readily apparent in all of
the holder's brochures and print advertising regarding use and management of
the area and facilities under permit.
E. Bonding. The authorized officer may require the holder to
furnish a bond or other security to secure all or any of the obligations
imposed by the terms of the authorization or any applicable law, regulation, or
order.
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Bonds, Performance. Use the following text, when bonding is called
for: As a further guarantee of the faithful performance of the provisions of
terms and conditions N/A of this permit, the holder agrees to deliver and
maintain a surety bond or other acceptable security in the amount of N/A .
Should the sureties or the bonds delivered under this permit become
unsatisfactory to the Forest Service, the holder shall, within thirty (30) days
of demand, furnish a new bond with surety, solvent and satisfactory to the
Forest Service. In lieu of a surety bond, the holder may deposit into a
Federal depository, as directed by the Forest Service, and maintain therein,
cash in the amounts provided for above, or negotiable securities of the United
States having a market value at the time of deposit of not less than the dollar
amounts provided above.
The holder's surety bond shall be released, or deposits in lieu of a
bond, shall be returned thirty (30) days after certification by the Forest
Service that priority installations under the development plan are complete,
and upon furnishing by the holder of proof satisfactory to the Forest Service
that all claims for labor and material on said installations have been paid or
released and satisfied. The holder agrees that all moneys deposited under this
permit may, upon failure on his or her part to fulfill all and singular the
requirements herein set forth or made a part hereof, be retained by the United
States to be applied to satisfy obligations assumed hereunder, without
prejudice whatever to any rights and remedies of the United States.
Prior to undertaking additional construction or alteration work not
provided for in the above terms and conditions or when the improvements are to
be removed and the area restored, the holder shall deliver and maintain a
surety bond in an amount set by the Forest Service, which amount shall not be
in excess of the estimated loss which the Government would suffer upon default
in performance of this work.
F. Water Rights. This authorization confers no rights to the use
of water by the holder. Such rights must be acquired under State law.
G. Current Addresses. The holder and the Forest Service shall
keep each informed of current mailing addresses including those necessary for
billing and payment of fees.
H. Identification of Holder. Identification of the holder shall
remain sufficient so that the Forest Service shall know the true identity of
the entity.
Corporation Status Notification:
1. The holder shall notify the authorized officer within fifteen
(15) days of the following changes:
a. Names of officers appointed or terminated.
b. Names of stockholders who acquire stock shares causing their
ownership to exceed 50 percent of shares issued or otherwise acquired,
resulting in gaining controlling interest in the corporation.
2. The holder shall furnish the authorized officer:
a. A copy of the articles of incorporation and bylaws.
b. An authenticated copy of a resolution of the board of
directors specifically authorizing a certain individual or individuals to
represent the holder in dealing with the Forest Service.
c. A list of officers and directors of the corporation and their
addresses.
d. Upon request, a certified list of stockholders and amount of
stock owned by each.
e. The authorized officer may require the holder to furnish
additional information as set forth in 36 CFR 251.54(e)(1)(iv).
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Partnership Status Notification:
The holder shall notify the authorized officer within fifteen (15) days of the
following changes. Names of the individuals involved shall be included with
the notification.
1. Partnership makeup changes due to death, withdrawal, or
addition of a partner.
2. Party or parties assigned financed interest in the partnership
by existing partner(s).
3. Termination, reformation, or revision of the partnership
agreement.
4. The acquisition of partnership interest, either through
purchase of an interest from an existing partner or partners, or
contribution of assets, that exceeds 50 percent of the partnership permanent
investment.
I. Archaeological-Paleontological Discoveries. The holder shall
immediately notify the authorized officer of any and all antiquities or other
objects of historic or scientific interest. These include, but are not limited
to, historic or prehistoric ruins, fossils, or artifacts discovered as the
result of operations under this permit, and shall leave such discoveries intact
until authorized to proceed by the authorized officer. Protective and
mitigative measures specified by the authorized officer shall be the
responsibility of the permit holder.
J. Protection of Habitat of Endangered, Threatened, and Sensitive
Species. Location of areas needing special measures for protection of plants
or animals listed as threatened or endangered under the Endangered Species Act
(ESA) of 1973, as amended, or listed as sensitive by the Regional Forester
under authority of FSM 2670, derived from ESA Section 7 consultation, may be
shown on a separate map, See Exhibit E, hereby made a part of this permit, or
identified on the ground. Protective and mitigative measures specified by the
authorized officer shall be the responsibility of the permit holder.
If protection measures prove inadequate, if other such areas are
discovered, or if new species are listed as Federally threatened or endangered
or as sensitive by the Regional Forester, the authorized officer may specify
additional protection regardless of when such facts become known. Discovery of
such areas by either party shall be promptly reported to the other party.
K. Superior Clauses. In the event of any conflict between any of
the preceding printed clauses or any provision thereof, and any of the
following clauses or any provision thereof, the preceding clauses shall
control.
L. Superseded Permit. This permit replaces a special use permit
issued to:
SKI LIFTS, INC. (TERM) on NOVEMBER 3 , 1983.
- -------------------------------- -----------------------------
SKI LIFTS, INC. (ANNUAL) on NOVEMBER 3 , 1983.
- -------------------------------- -----------------------------
(Holder Name) (Date)
signed by J.D. MacWilliams, Forest Supervisor and
PACIFIC WEST MOUNTAIN RESORT on NOVEMBER 24 , 1982.
- -------------------------------- -----------------------------
PACIFIC WEST MOUNTAIN RESORT on NOVEMBER 24 , 1982.
- -------------------------------- -----------------------------
(Holder Name) (Date)
signed by S.F. Hanna, (for) Forest Supervisor.
M. Disputes. Appeal of any provisions of this authorization or
any requirements thereof shall be subject to the appeal regulations at 36 CFR
251, Subpart C, or revisions thereto. The procedures for these appeals are set
forth in 36 CFR 251 published in the Federal Register at 54 CFR 3362, January
23, 1989.
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<PAGE> 22
N. Master Development Plan. The Holder will submit a new Master
Development Plan by December 31, 1995. (R.O. Approved)
O. The Holder is authorized to conduct programs of instruction in
cross-country ski touring and basic outdoor living including competitive events
and trail grooming, on the permit area and in locations on National Forest land
outside the permit area as approved and designated in writing, by the District
Ranger. (R.O. Approved)
P. For the purpose of protecting public safety and property, the
Holder is authorized to conduct avalanche control work on the permit area and
in locations on National Forest land outside the permit area as identified and
approved in the Winter Operating Plan. (R.O. Approved)
Public reporting burden for this collection of information is
estimated to average 12 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and reviewing the collection of information. Send
comments regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden, to Department
of Agriculture, Clearance Officer, OIRM, Room 404-W, Washington D.C. 20250;
and to the Office of Management and Budget, Paperwork Reduction Project (OMB #
0596-0103), Washington, D.C. 20503.
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<PAGE> 23
LIST OF EXHIBITS
Exhibit "A" Permit & Development Boundary Map
Exhibit "B" List of Holder's Improvements
Exhibit "C" Ownership Proration Based on Slope Transport Feet
Exhibit "D" Gross Fixed Assets (GFA) Value Sheet
Exhibit "E" Habitat Map for Threatened, Endangered and
Sensitive Species. (This map will be provided by
December 1, 1993.)
Exhibit "F" Existing Site Development & Facilities Map (On File
at Ranger District and Forest Supervisor's Office)
<PAGE> 24
[MAP]
EXHIBIT A
Special Use Permit Boundary
Ski Lifts, Inc.
<PAGE> 25
EXHIBIT B
LIST OF HOLDER'S IMPROVEMENTS
SKI LIFTS, INC. (161) SPECIAL USE AUTHORIZATION
DESCRIPTION
SKI ACRES PROPERTIES:
1. Main Lodge
2. Annex - Ski Rental
3. Ski Patrol Building
4. "North Shore" Ski School
5. Alpine Ski School
6. "Ski Co." Ski School
7. "ISS" Ski School
8. Snack Bar Building
9. "Bellevue" Ski School
10. "Powder Pigs" Ski School
11. "Pro Patrol" Mervos Apt.
12. Boeing Ski School
13. Maintenance Shop
14. Cross Country Building
15. S.P.I. Building
16. "Webb" Jaycee Building
SKI LIFTS PROPERTIES:
17. Main Lodge (Alpenhaus)
18. Ski Patrol Building
19. Day Lodge
20. Employee Housing
21. Warming Building (Thunderbird)
22. Old Maintenance Building
23. New Maintenance Shop
24. Ticket Pavilion
ALPENTAL PROPERTIES:
25. Main Lodge
26. Webb Building
27. Maintenance Building
28. Food Storage Building
29. Foot Bridge
30. New Day Lodge
31. Restroom Pavilion
32. Mercer Island Office Contents
HYAK PROPERTIES:
33. Lodge
34. Water Tank
35. Maintenance Shop
36. Pump House
37. Mountain Top Building
<PAGE> 26
EXHIBIT B (Continued)
LIST OF HOLDER'S IMPROVEMENTS
SKI LIFTS, INC. (161) SPECIAL USE AUTHORIZATION
SKI LIFTS EQUIPMENT DESCRIPTION
SKI ACRES:
1. #7 Riblet Double Chair "Holiday"
2. #6 Riblet Double Chair "Galery"
3. Riblet Single Chair (Dismantled)
4. #4 Riblet Double Chair "Alpine"
5. #3 Riblet Double Chair "Bonanza"
6. #2 Riblet Double Chair "Condominium"
7. #1 Riblet Double Chair "Easy Street"
8. #5 CTEC Triple Chair "Triple 60"
8A. #21 Riblet Chair - Silver Fir
SNOQUALMIE:
9. #10 Yellow Heron Chair "Thunderbird"
10. #13 Orange Riblet Double Chair "Big Bill"
11. #14 Red Riblet Double Chair "360"
12. #12 Blue Riblet Double Chair "Dodge Ridge"
13. #11 Red Riblet Double Chair "Beaver Lake"
14. #15 Green Thiokol Double Chair "Julies"
15. #8 Purple Riblet Triple Chair "Wild Side"
16. #9 Light Blue Thiokol Triple Chair "Easy Rider"
17. #20 Silver Poma Quad Chair
ALPENTAL:
18. #16 1967 Riblet Chair "Debbies Gold"
19. #17 1967 Riblet Chair "Edelweiss"
20. #18 1967 Riblet Chair "Sessel"
21. #19 1971 Riblet Chair "St. Bernard"
HYAK:
Chair No. 1
Chair No. 2 - 1968 Riblet Double
Chair No. 3 - 1975 Riblet Double
Night Lighting
16 Rope Tows
<PAGE> 27
EXHIBIT C
OWNERSHIP PRORATION BASED ON SLOPE TRANSPORT FEET
SKI LIFTS, INC.
(Alpental-Ski Acres-Snoqualmie Summit-Hyak)
<TABLE>
<CAPTION>
LIFT CAPACITY SLOPE DISTANCE BY OWNERSHIP SLOPE TRANSPORT FEET
NO. PER/HOUR (in feet) (Slope Length & Capacity)
National National
Forest Private Total Forest Private Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,200 - 1,841 1,841 - 2,209,000 2,209,000
2 1,340 - 1,348 1,348 - 1,806,320 1,806,320
3 1,200 220 3,740 3,960 264,000 4,488,000 4,572,000
4 1,200 240 3,520 3,760 288,000 4,224,000 4,512,000
5 1,800 - 2,200 2,200 - 3,996,000 3,996,000
6 1,400 - 1,527 1,527 - 2,137,800 2,137,800
7 1,200 - 1,384 1,384 - 1,660,800 1,660,800
8 1,500 1,987 30 2,017 2,980,000 45,000 3,025,500
9 1,500 1,120 - 1,120 1,680,000 - 1,680,000
10 600 3,810 100 3,910 2,286,000 60,000 2,346,000
11 1,400 - 1,005 1,005 - 1,407,000 1,407,000
12 1,200 2,610 - 2,610 3,132,000 - 3,132,000
13 1,200 2,880 - 2,880 3,456,000 - 3,456,000
14 1,200 2,730 - 2,730 3,276,000 - 3,276,000
15 1,200 1,501 - 1,501 1,801,200 - 1,801,200
16 1,200 4,256 - 4,256 5,107,200 - 5,107,200
17 1,000 2,944 - 2,944 2,944,000 - 2,944,000
18 1,200 1,748 - 1,748 2,097,000 - 2,097,000
19 1,200 812 - 812 974,000 - 974,000
20 2,400 1,567 - 1,567 3,760,000 - 3,760,000
21 1,800 4,025 - 4,024 7,245,000 - 7,245,000
22 2,000* - 230 230 - 460,000 460,000
23 2,000* - 525 525 - 1,050,000 1,050,000
24 1,800* - 350 350 - 630,000 630,000
25 800* - 200 200 - 160,000 160,000
26 900 - 650 650 - 585,000 585,000
27 800* 150 - 150 120,000 - 120,000
28 900 350 - 350 315,000 - 315,000
29 900 - 460 460 - 414,000 414,000
30 900 320 - 320 288,000 - 288,000
31 900 500 - 500 450,000 - 450,000
32 900 400 - 400 380,000 - 380,000
1 Hyak 1,000 580 4,120 4,700 580,000 4,120,000 4,700,000
2 Hyak 1,200 - 1,600 1,600 - 1,920,000 1,920,000
3 Hyak 1,150 583 2,017 2,600 670,450 2,319,000 2,990,000
Nat'l Forest Private Total
GRAND TOTALS - 45,019,000 33,692,670 78,711,690
------------
PERCENTAGES -
-----------
Private - 42.81
National Forest - 57.19
</TABLE>
* Double rope tow
Lift numbers keyed to 91/92 Ski Area Trail Map (Except Pacific West/Hyak).
<PAGE> 28
EXHIBIT D
GFA - SKI LIFTS, INC.
(for new permit)
<TABLE>
<S> <C>
SKI LIFTS - based on 9/30/91 yearend reports 100%
------
$14,429,474
-----------
TOTAL SKI LIFTS $14,429,474
PAC WEST - based on 10/31/88 yearend reports 100%
------
1/$1,159,046
1/ Excludes -22,500 for ski shop offsite
- -- which had been included in depreciation
schedule.
Less reduction for Ski Patrol
building not included in
purchase of Pac West -10,321
-----------
TOTAL PAC WEST $ 1,148,725
===========
TOTAL GFA FOR AT 100% FOR INCLUSION IN PERMIT $15,578,199
</TABLE>
<PAGE> 29
EXHIBIT F
Existing Site Development & Facilities Map
ON FILE AT RANGER DISTRICT OFFICE AND FOREST SUPERVISOR'S OFFICE
<PAGE> 30
FS-2700-23 (7/93)
OMB No. 0596-0082
(Expires 7/30/96)
- ------------------------------------------------------------------------------
US DEPARTMENT OF AGRICULTURE Holder No. Type Site Authority
Forest Service 4127-09 161 545
----------------------------------------------
AMENDMENT Issue Date Expir. Date Region
FOR 12/23/92 12/31/32 06
SPECIAL-USE PERMIT ----------------------------------------------
Forest District State County
05 05 53 033
- ------------------------------------------------------------------------------
This Amendment is attached to and made a part of the Term special-use permit
for Ski Area issued to Ski Lifts, Inc. on December 23, 1992 which is hereby
amended as follows:
Delete:
XI. MISCELLANEOUS PROVISIONS.
N. Master Development Plan. The Holder will submit a new Master
Development Plan by December 31, 1995. (R.O. Approved)
Add:
N. Master Development Plan. The Holder will submit a new Master
Development Plan by December 31, 1997. (R.O. Approved)
This Amendment is accepted subject to the conditions set forth herein, and to
conditions ____ to ____ attached hereto and made a part of this Amendment.
================================================================================
Holder: David R. Moffett Authorized Officer: Dennis Becker
---------------------- -------------------------
Holder: Ski Lifts, Inc. Title: Forest Supervisor
---------------------- -------------------------
Date: 6/7/95 Date: 6/9/95
---------------------- -------------------------
================================================================================
Public reporting burden for this collection of information, if requested, is
estimated to average 1 hour per response for annual financial information;
average 1 hour per response to prepare or update operation and/or maintenance
plan; average 1 hour per response for inspection reports; and an average of 1
hour for each request that may include such things as reports, logs, facility
and user information, sublease information, and other similar miscellaneous
information requests. This includes the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed,
and completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, AG Box 7630, Washington D.C. 20250; and
to the Office of Management and Budget, Paperwork Reduction Project (OMB#
0596-0082), Washington, D.C. 20503.
<PAGE> 1
EXHIBIT 10.17
FS-2700-4
(09/92)
Holder No. Issue Date Expir. Date
U.S. DEPARTMENT OF AGRICULTURE 4127-19
Forest Service 4127-20 05/01/96 04/30/97
Type Site(s) Authority Auth. Type
352, 157 002, 121 0022
SPECIAL-USE PERMIT
Region/Forest/District State/County
06/05/05 53/033
Authority: Organic Administration Act
of June 4, 1897,
Section 7 of the Granger-Thye Cong. Dist. Latitude Longitude
Act of April 24, 1950 08 - - - -
Ski Lifts, Inc. of 7900 SE. 28th St., Suite 200
- -----------------------------------------------------------------
(Holder Name) (Billing Address-1)
- -----------------------------------------------------------------
Mercer Island, Washington 98040
- ----------------------------------------------------------------------------
(Billing Address-2) (City) (State) (Zip Code)
- ----------------------------------------------------------------------------
(hereinafter called the Holder) is hereby authorized to use or occupy National
Forest System lands, to use subject to the conditions set out below, on the Mt.
Baker-Snoqualmie National Forest.
This permit covers .10 acres and is described as the SE 1/4 of the NW 1/4 of
Section 4, Township 22 North, Range 11 East, Willamette Meridian, behind
Snoqualmie Pass Guard Station as shown on the location maps, Exhibits 1 and 2,
attached hereto and made a part hereof this permit, and is issued for the
purpose of: operation and maintenance of an 8 ft. by 20 ft. wooden building and
an 8 ft. by 20 ft. storage trailer. In addition, this permit covers .25 acres
and is described as the SE 1/4 of the NW 1/4 of Section 4, Township 22 North,
Range 11 East, Willamette Meridian as shown on the location maps, Exhibits 1
and 3, attached hereto and made a part hereof this permit, and is issued for
the purpose of: using Forest Service Guard Station, building number 1034 for
storage of supplies and equipment for the Ski-For-All program. Use is
authorized for portions of the bottom floor as designated on Exhibit 4,
attached hereto and made a part hereof this permit. The second and third floor
will be used for employee housing for managers of SLI and for children's ski
school. Operations and maintenance of said premises will be in conformance
with the Operations and Maintenance Plan, Attachment A, attached hereto and
made a part hereof.
The above described or defined area shall be referred to herein as the "permit
area".
TERMS AND CONDITIONS
I. AUTHORITY AND GENERAL TERMS OF THE PERMIT
A. Authority. This permit is issued pursuant to the authorities enumerated at
Title 36, Code of Federal Regulations, Section 251 Subpart B, as amended. This
permit, and the activities or use authorized, shall be subject to the terms and
conditions of the Secretary's regulations and any subsequent amendment to them.
B. Authorized Officer. The authorized officer is the Forest Supervisor or a
delegated subordinate officer.
<PAGE> 2
C. License. This permit is a license for the use of federally owned land and
does not grant any permanent, possessory interest in real property, nor shall
this permit constitute a contract for purposes of the Contract Disputes Act of
1978 (41 U.S.C. 611). Loss of the privileges granted by this permit by
revocation, termination, or suspension is not compensable to the holder.
D. Amendment. This permit may be amended in whole or in part by the Forest
Service when, at the discretion of the authorized officer, such action is
deemed necessary or desirable to incorporate new terms, conditions, and
stipulations as may be required by law, regulation, land management plans, or
other management decisions.
E. Existing Rights. This permit in subject to all valid rights and claims of
third parties. The United States is not liable to the holder for the exercise
of any such right or claim.
F. Nonexclusive Use. Unless expressly provided in additional terms, this
permit is not exclusive. The Forest Service reserves the right to use or allow
others to use any part of the permit area for any purpose.
G. Public Access and Use. Unless specifically limited under additional terms
to this permit, the holder agrees to allow the public free and unrestricted
access to and use of the permit area at all times for all lawful purposes. To
facilitate public use of the permit area, all existing roads or roads as may be
constructed by the holder shall remain open to the public, except for roads as
may be closed by joint agreement of the holder and the authorized officer.
H. Forest Service Right of Entry and Inspection. The Forest Service shall have
free and unrestricted access at all times, including the right to enter into
all buildings, dwellings, and other facilities to ensure compliance with the
terms and conditions of this permit. In addition, the Forest Service may enter
the authorized facilities for any purpose or reason consistent with any right
or obligation of the United States under any law or regulation.
I. Assignability. This permit in not assignable or transferable. If the
holder through death, voluntary sale or transfer, enforcement of contract,
foreclosure, or other valid legal proceeding shall cease to be the owner of the
improvements, this permit shall terminate.
J. Permit Limitations. Nothing in this permit allows or implies permission to
build or maintain any structure or facility, or to conduct any activity unless
specifically provided for in this permit. Any use not specifically identified
in this permit must be approved by the authorized officer in the form of a new
permit or permit amendment.
II. TENURE AND ISSUANCE OF A NEW PERMIT
A. Expiration at the End of the Authorized Period. This permit will expire at
midnight on April 30, 1997. Expiration shall occur by operation of law and
shall not require notice, any decision document, or any environmental analysis
or other documentation.
C. Minimum Use or Occupancy of the Permit Area. Use or occupancy of the permit
area shall be exercised at least 20 days each year, unless otherwise authorized
in writing under additional terms of this permit.
D. Notification to Authorized Officer. If the holder desires issuance of a new
permit after expiration, the holder shall notify the authorized officer in
writing not less than six (6) months prior to the expiration date of this
permit.
<PAGE> 3
E. Conditions for Issuance of a New Permit. At the expiration or termination
of an existing permit, a new permit may be issued to the holder of the previous
permit or to a new holder subject to the following conditions:
1. The authorized use is compatible with the land use allocation in the
Forest Land and Resource Management Plan.
2. The permit area is being used for the purposes previously authorized.
3. The permit area is being operated and maintained in accordance with the
provisions of the permit.
4. The holder has shown previous good faith compliance with the terms and
conditions of all prior or other existing permits, and has not engaged in any
activity or transaction contrary to Federal contracts, permits, laws, or
regulation.
F. Discretion of Forest Service. Notwithstanding any provisions of any prior
or other permit, the authorized officer may prescribe new terms, conditions,
and stipulations when a new permit is issued. The decision whether to issue a
new permit to a holder or successor in interest is at the absolute discretion
of the Forest Service.
III. RESPONSIBILITIES OF THE HOLDER
A. Plans. If required by the authorized officer, all plans for development,
layout, construction, reconstruction, or alteration of improvements on the
permit area, as well as revisions of such plans, must be prepared by a licensed
engineer, architect, and/or landscape architect. Such plans must be approved
in writing by the authorized officer or a designated representative before the
commencement of any work. A holder may be required to furnish as-built plans,
maps or surveys, or other similar information, upon completion of construction.
B. Maintenance. The holder shall maintain the improvements and permit area to
standards of repair, orderliness, neatness, sanitation, and safety acceptable
to the authorized officer, and consistent with applicable Federal, State, and
local health and safety and other requirements.
C. Hazard Analysis. The holder has a continuing responsibility to identify and
abate hazardous conditions on the permit area which could affect the
improvements or pose a risk of injury to individuals. Any actions to abate
such hazards shall be performed after consultation with the authorized officer.
D. Compliance with Laws, Regulations, and other Legal Requirements. The
holder, in exercising the uses authorized by this permit, will assume
responsibility for compliance with the regulations of the Department of
Agriculture and all Federal, State, county, and municipal laws, ordinances, or
regulations which are applicable to the area or operations covered by this
permit. The obligations of the holder under this permit are not contingent
upon any duty of the Forest Service to inspect the premises. A failure by the
Forest Service, or other governmental officials, to inspect in not a defense to
noncompliance with any of the terms and conditions of this permit.
E. Fire Prevention and Suppression. The holder shall take all reasonable
precautions to prevent and suppress forest fires. Open fires are prohibited
except with written permit from the authorized officer or the authorized
officer's agent.
F. Change of Address. The holder shall immediately notify the authorized
officer of a change in address.
G. Change in Ownership of the Authorized Improvements. This permit is not
assignable and terminates upon change of ownership of the improvements. The
holder shall immediately notify the authorized officer when a change in
ownership of the improvements is pending. Notification by the present holder
and potential owner shall be executed using Form FS-2700-3, Special Use
Application and Report, or Form FS-2700-3a, Request for Termination of and
Application for Special-Use Permit. Upon receipt of the proper
<PAGE> 4
documentation, the authorized officer may issue a permit to the new owner of
the improvements.
IV. LIABILITY
For purposes of this section, "holder" includes the holder's heirs, assigns,
agents, employees, and contractors.
A. Risk of Loss. The holder assumes all risk of loss of the property. Loss to
the property may result from, but is not limited to, theft, vandalism, fire,
avalanches, rising waters, winds, falling limbs or trees, and acts of God. If
the authorized improvements are destroyed or substantially damaged, the
authorized officer shall conduct an analysis to determine whether the
improvements can be safely occupied in the future and whether rebuilding should
be allowed.
B. Damage to Property of the United States. The holder has an affirmative duty
to protect from injury and damage the land, property, and other interest of the
United States. Damage includes, but is not limited to, fire suppression costs
and all costs and damages associated with or resulting from the release or
threatened release of a hazardous substance occurring during or as a result of
the holder's activities on, or related to, the lands property, and other
interests covered by the permit.
1. The holder shall compensate in full the United States for damages
occurring under the terms of this permit or under any law or regulation
applicable to the National Forests. The holder shall be liable for all injury,
loss, or damage, including fire suppression, or other costs associated with
rehabilitation or restoration of natural resources, associated with the
holder's use or occupancy. Compensation shall include, but is not limited to,
the value of resources damaged or destroyed, the costs of restoration,
clean-up, or other mitigation, fire suppression or other types of abatement
costs, and all administrative, legal (including attorney fees), and other costs
in connection therewith.
2. With respect to roads, the holder shall be liable for damages to all
roads and trails of the United States open to public use caused by the holder's
use to the same extent as provided under paragraph IV (B)(1), except that
liability shall not include reasonable and ordinary wear and tear.
3. In addition to liability provided in this paragraph, the holder may
incur strict liability for certain high hazard situations if so provided by
additional clauses appended to this permit.
C. Indemnification and Liability of the United States. The holder shall comply
with all applicable federal, state, and local laws and regulations, including
but not limited to the Federal Water Pollution Control Act, 33 U.S.C. 1251 et
seq, the Oil Pollution Act, 33 U.S.C. 2701 et seq, the Clean Air Act, 42
U.S.C. 7401 et seq, the Resource Conservation and Recovery Act, 42 U.S.C. 6901
et seq, and the Comprehensive Environmental Response, Control, and Liability
Act, 42 U.S.C. 9601 et seq, as subsequently amended. The holder shall
indemnify, defend, and hold the United States harmless for any violations
incurred under any such laws and regulations or for any costs, damages, claims,
liabilities, and judgements arising from past, present, and future acts or
omissions of the holder in connection with the use and/or occupancy authorized
by this permit. This indemnification and hold harmless agreement includes, but
is not limited to, acts and omissions of the holder in connection with the use
and/or occupancy authorized by this permit which result in: (1) violations of
the above or any applicable laws and regulations; (2) judgements, claims, or
demands assessed against the United States; (3) costs, expenses, and damages
incurred by the United States; or (4) other releases or threatened releases on
or into land, property, and other interest of the United States by solid waste
and/or hazardous substance(s).
The holder's indemnification of the United States shall also include any damage
to life or property arising from the holder's occupancy or use of land,
property, and other interest of the United States. The United States has no
duty to inspect permit area or to warn of hazards and, if the United States
does inspect the permit area, it shall
<PAGE> 5
incur no additional duty nor liability for identified or non-identified
hazards. This covenant may be enforced by the United States in a court of
competent jurisdiction.
V. TERMINATION, REVOCATION, AND SUSPENSION
A. General. For purposes of this permit, "termination", "revocation", and
"suspension" refer to the cessation of uses and privileges under the permit.
"Termination" refers to the cessation of the permit under its own terms
without the necessity for any decision or action by the authorized officer.
Termination occurs automatically when, by the terms of the permit, a fixed or
agreed upon condition, event, or time occurs. For example, the permit
terminates at expiration. Terminations are not appealable.
"Revocation" refers to an action by the authorized officer to end the
permit because of noncompliance with any of the prescribed terms, or for
reasons in the public interest. Revocations are appealable.
"Suspension" refers to a revocation which is temporary and the privileges
may be restored upon the occurrence of prescribed actions or conditions.
Suspensions are appealable.
B. Revocation or Suspension. The Forest Service may suspend or revoke this
permit in whole or part for:
1. Noncompliance with Federal, State, or local laws and regulations.
2. Noncompliance with the terms and conditions of this permit.
3. Reasons in the public interest.
4. Abandonment or other failure of the holder to otherwise exercise the
privileges granted.
C. Opportunity to Take Corrective Action. Prior to revocation or suspension
for cause pursuant to Section V (B), the authorized officer shall give the
holder written notice of the grounds for each action and a reasonable time, not
to exceed 90 days, to complete the corrective action prescribed by the
authorized officer.
D. Removal of Improvements. Upon abandonment, revocation, termination, or
expiration of this authorization, the holder shall remove within a reasonable
time prescribed by the authorized officer all structures and improvements,
except those owned by the United States, and shall restore the site. If the
holder fails to remove all structures or improvements within the prescribed
period, they shall become the property of the United States and may be sold,
destroyed or otherwise disposed of without any liability to the United States.
However, the holder shall remain liable for all cost associated with their
removal, including costs of sale and impoundment, cleanup, and restoration of
the site.
VI. FEES
A. Termination for Nonpayment. This permit shall automatically terminate
without the necessity of prior notice when land use rental fees are 90 calendar
days from the due date in arrears.
B. The holder shall pay an annual fee of three thousand one hundred ninety
seven Dollars ($ 3,197.00) for the period from May 1 , 1996 to April 30 , 1997
and thereafter annually on N/A. Provided, charges for this use shall be made
or readjusted whenever necessary to place the charges on a basis commensurate
with the fair market value of the authorized use.
C. Payment Due Date. The payment due date shall be the close of business on
the date indicated on the bill of each calendar year payment is due. Payments
due the United States for this use shall be deposited at address indicated on
the bill in the form of a
<PAGE> 6
check, draft, or money order payable to "Forest Service, USDA." Payments shall
be credited on the date received by the designated Forest Service collection
officer or deposit location. If the due date for the fee or fee calculation
statement falls on a non workday, the charges shall not apply until the close
of business on the next workday.
D. Late Payment Interest. Pursuant to the Federal Claims Collection Act of
1966, as amended, 31 USC 3101, et seq., and regulations at 7 CFR Part 3,
Subpart B, an interest charge shall be assessed on any payment or financial
statement not received by the due date. Interest shall be assessed using the
most current rate prescribed by the United States Department of Treasury's
Fiscal Requirements Manual (TFRM-6-8020.20). Interest shall accrue from the
date the payment or financial statement was due. In the event that two or more
billings are required for delinquent accounts, administrative costs to cover
processing and handling of the delinquent debt will be assessed.
E. Additional Penalties. In the event of permit termination pursuant to
provisions VI (A), and prior to the issuance of a new permit, a penalty of 6
percent per year shall be assessed on any fee amount overdue in excess of 90
days from the payment due date. This penalty shall accrue from the due date of
the first billing or the date the fee calculation financial statement was due.
The penalty is in addition to interest and any other charges specified in the
above paragraph.
F. Disputed Fees. Disputed fees are due and payable by the due date. No
appeal of fees will be considered by the Forest Service without full payment of
the disputed amount. Adjustments, if necessary, will be made in accordance
with settlement terms or appeal decision.
G. Delinquent Fees.
1. Delinquent fees and other charges shall be subject to all rights and
remedies afforded the United States pursuant to Federal law and implementing
regulations (31 U.S.C. 3711 et seq.).
2. The authorized officer shall require payment of fees owed the United
States under any Forest Service authorization before issuance of a new permit.
VII. OTHER PROVISIONS
A. Members of Congress. No Member of or Delegate to Congress or Resident
Commissioner shall benefit from this permit either directly or indirectly,
except when the authorized use provides a general benefit to a corporation.
B. Appeals and Remedies. Any discretionary decisions or determinations by the
authorized officer are subject to the appeal regulations at 36 CFR 251, Subpart
C, or revisions thereto.
C. Removal and Planting of Vegetation. This permit does not authorize the
cutting of timber or other vegetation. Trees or shrubbery may be removed or
destroyed only after the authorized officer, or authorized officer's agent, has
approved, and has marked or otherwise designated that which may be removed or
destroyed. Timber cut or destroyed shall be paid for by the holder as follows:
Merchantable timber at appraised value and young-growth timber below
merchantable size at current damage appraisal value, provided that the Forest
Service reserves the right to dispose of the merchantable timber to others than
the holder at no stumpage cost to the holder. Trees, shrubs, and other plants
may be planted in such manner and in such places about the premises as may be
approved by the authorized officer.
D. Superior Clauses. In the event of any conflict between any of the preceding
printed clauses or any provision thereof and any of the following clauses or
any provision thereof, the preceding printed clauses shall control.
<PAGE> 7
E. The holder shall repair, replace, or restore any damage to or loss of the
premises covered by this permit caused by fire or other casualty including
consequential damages to said premises resulting from fire or other casualty,
including fires or other casualties beyond the control of and without the fault
of the holder, and shall have in force fire and other casualty insurance
covering the Government-owned improvements, the use of which is authorized by
this permit.
Such fire and other casualty insurance shall be in the amount of one hundred
fifty five thousand dollars ($155,000.00) and shall name the United States as
beneficiary of proceeds payable as a result of claims for damage for fire or
other casualty. The holder shall furnish the Forest Service an authenticated
copy of the insurance policy prior to occupancy and use. The policy shall also
contain a specific provision or rider to the effect that the policy will not be
cancelled or its provisions changed before 30 days written notice to the Forest
Supervisor. (B-9)
F. The holder shall dispose of refuse resulting from this use, including waste
materials, garbage, and rubbish of all kinds in the following manner: off
National Forest lands in appropriate receptacles. (B-34)
G. The holder shall protect the scenic esthetic values of the area under this
permit, and the adjacent land, as far as possible with the authorized use,
during construction, operation, and maintenance of the improvements. (D-3)
H. Superseded Permit - This permit supersedes a special use permit, type 157,
352 issued to Ski Lifts, Inc. on May 1, 1995 and amended August 15, 1995 for
the Ski-For-All program, authorized by Rudolph V. Edwards, Jr., District Ranger
for the North Bend Ranger District. (X-18)
THIS PERMIT IS ACCEPTED SUBJECT TO THE CONDITIONS SET OUT ABOVE.
HOLDER NAME: Ski Lifts, Inc. U.S. DEPARTMENT OF AGRICULTURE
--------------- FOREST SERVICE
By: /s/ Dave Moffett By: /s/ Rudolph V. Edwards, Jr.
-------------------- -----------------------------
Dave Moffett Rudolph V. Edwards, Jr.
President District Ranger
Date: 7/12/96 Date: 7/12/96
-------------- ------------------
<PAGE> 8
ATTACHMENT A
OPERATION AND MAINTENANCE PLAN
352 Granger/The Permit
Snoqualmie Pass Guard Station
This Operation and Maintenance Plan describes the responsibilities of Ski
Lifts, Inc. (SLI) - while occupying the Snoqualmie Pass Guard Station, Forest
Service building Number 1034. It is effective from the date of the special use
authorization to the expiration or termination of the authorization.
Item 1. Locks (See Exhibit 4):
a. Door to outside (culvert entrance) will need to be keyed for Ski
Lifts, Inc., Ski-For-All, and Forest Service access. SLI will
provide this lock.
b. Back storage room being used by Ski-For-All - SFA will supply
the Forest Service Visitor Information Center with a key to the
area.
Item 2. When SLI takes occupancy, the existing locks needing to be replaced
will be removed by SLI and given to the Forest Service. SLI will install their
own locks for the duration of the permit. At the termination of the permit,
the Forest Service locks will be reinstalled by SLI at their expense.
Item 3. The authorization is a non-exclusive use of all permitted areas. The
Forest Service shall have free and unrestricted access at all times to ensure
compliance with the terms and conditions of this permit.
Item 4. All permitted areas will require a minimum of four foot clearance for
ingress and egress.
Item 5. SLI will remove all temporary structures prior to expiration date of
permit.
Item 6. Snow plowing - SLI will provide this service as needed for access to
the permit area including the front and sides of the Guard Station.
Item 7. Electricity - The monthly bill will be split as follows: the Forest
Service occupies 42.3% of the building and SLI 57.7%. SLI agrees to have the
power bills sent to them for their payment and at the end of the permit term,
will bill the Forest Service lump sum for its share at the rate of: May 1
through October 31 - 91.6%
November 1 through April 30 - 42.3%
Item 8. Oil - SLI will pay this bill. The oil tank will be filled by SLI when
the permit terminates.
Item 9. Water and Sewer - The monthly bill will be split as follows: the Forest
Service has 33% of the billing units, and SLI has 67%. There are a total of
2.1 billing units, as calculated by the Snoqualmie Pass Sewer and Water
District. The Sewer and Water District charges a minimum of $73 per billing
unit per month for a total of $153.30. At 33% of the billing units, the Forest
Service owes $50.59 per month for its share of water and sewer service. SLI
will have the sewer and water bills sent to them for their payment, and at the
end of the permit term, will bill the Forest Service lump sum for its share at
the rate of:
May 1 through October 31 - 100%
November 1 through April 30 - $50.59 SLI agrees to pay any costs above this
amount.
<PAGE> 9
Item 10. Phone - each party has its own phone line and will pay its own bills.
Item 11. Garbage - each party will make its own arrangements and pay its own
bills.
Item 12. The Forest Service is leaving the stove, refrigerator and dishwasher
in the building for use by SLI. At the termination of the permit these will be
cleaned, as well as the rest of the permitted area.
Item 13. All improvements made to the building must have prior written
authorization from the Forest Service and become the property of the Government
upon expiration or termination.
Item 14. SLI will be responsible for the maintenance of all appliances used in
their operations, including but not limited to the stove, refrigerator,
dishwasher, furnace and hot water heater. Forest Service will be responsible
for replacement of the furnace and hot water heater if these items require
replacement.
Item 15. Only employees in management positions for Ski Lifts, Inc. are
authorized to use the premises for employee housing. This use in limited to
six (6) persons at one time.
Item 16. SLI agrees to continue in force property insurance in the amount of
$155,000 insuring the building. Current policy expired 10/01/95.
Item 17. SLI will be responsible to ensure that all local fire and health
regulations are being followed, including but not limited to emergency fire
escapes and smoke alarms.
Item 18. For the purpose of this permit, SLI will report all gross revenue
generated from use of the Snoqualmie Pass Guard Station as part of and in
accordance to their Ski Area Permit.
<PAGE> 10
EXHIBIT 1
MAP OF
SKI LIFT INC./SKIFORALL
BASE AREA SEGMENT
SNOQUALMIE SUMMIT SKI AREA
<PAGE> 11
EXHIBIT 2
MAP
<PAGE> 12
EXHIBIT 3
MAP
<PAGE> 13
EXHIBIT 4
BUILDING #1034
BOTTOM FLOOR PLAN
<PAGE> 1
EXHIBIT 12.1
BOOTH CREEK SKI HOLDINGS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
THREE MONTHS ENDED YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1997 OCTOBER 31, 1996 JANUARY 31, 1997
------------------ ---------------- ------------------
<S> <C> <C> <C>
EARNINGS
Income (loss) before income taxes.......... $1,578 $(11,981) $(3,336)
Fixed charges.............................. 3,054 16,855 4,494
Preferred stock dividend requirement....... (21) (443) (71)
------- -------- -------
Total Earnings........................ $4,611 $ 4,431 $ 1,087
======= ======== =======
FIXED CHARGES
Interest (expensed or capitalized)......... $1,947 $ 14,826 $ 3,706
Portion of rent expense representative of
interest................................. 484 726 502
Amortization of deferred financing fees.... 602 860 215
Preferred stock dividend requirement....... 21 443 71
------- -------- -------
Total Fixed Charges................... $3,054 $ 16,855 $ 4,494
======= ======== =======
RATIO OF EARNINGS TO FIXED CHARGES......... 1.51 -- --
======= ======== =======
COVERAGE DEFICIENCY........................ $ -- $(12,424) $(3,407)
======= ======== =======
</TABLE>
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANTS
Subsidaries of Booth Creek Ski Holdings, Inc.
Trimont Land Company d/b/a Northstar-at-Tahoe (California)
Sierra-at-Tahoe, Inc. (Delaware)
Bear Mountain, Inc. (Delaware)
Booth Creek Ski Acquisition Corp. (Delaware)
-- Waterville Valley Ski Resort, Inc. (Delaware)
-- Mount Cranmmore Ski Resort, Inc. (Delaware)
Ski Lifts, Inc. (Washington)
Grand Targhee Incorporated (Delaware)
-- B-V Corporation (Wyoming)
-- Targhee Company (Delaware)
-- Targhee Ski Corp. (Delaware)
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 3, 1997, in the Registration Statement
(Form S-4) and related Prospectus of Booth Creek Ski Holdings, Inc. for the
registration of $116,000,000 of its Series B 12.5% Senior Notes due 2007.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
April 24, 1997
<PAGE> 2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated January 25, 1997, with respect to the financial
statements of Waterville Valley Ski Area Ltd. included in the Registration
Statement (Form S-4) and related Prospectus of Booth Creek Ski Holdings, Inc.
for the registration of $116,000,000 of its Series B 12.5% Senior Notes due
2007.
ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on the financial statements of The Resort Group of Fibreboard Corporation
dated November 22, 1996 (and to all references to our Firm) included in or made
a part of this registration statement on Form S-4.
ARTHUR ANDERSEN LLP
San Francisco, California
April 24, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of
Booth Creek Ski Holdings, Inc. of our report on our audits of the financial
statements of Ski Lifts, Inc. as of September 30, 1996 and 1995 and for each of
the three years in the period ended September 30, 1996, dated December 9, 1996,
except for Note 13 to the financial statements as to which the date is December
19, 1996, which report includes an explanatory paragraph describing Ski Lifts,
Inc.'s change in method of accounting for income taxes and an emphasis of a
matter paragraph describing an agreement in principle to sell the stock of Ski
Lifts, Inc. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
Seattle, Washington
April 24, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF FELDHAKE & ASSOCIATES, P.C.,
INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated June 20, 1996, except for Note 11 for which the date
is January 27, 1997, with respect to the financial statements of Grand Targhee
Incorporated included in the Registration Statement (Form S-4) and related
Prospectus of Booth Creek Ski Holdings, Inc. for the registration of
$116,000,000 of its Series B 12.5% Senior Notes due 2007.
FELDHAKE & ASSOCIATES, P.C.
Englewood, Colorado
April 24, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
----------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Warren L. Tischler
Senior Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
BOOTH CREEK SKI HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1359604
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Highway 267 and Northstar Drive
Truckee, California 96160
(916) 562-1010 (Zip Code)
(Address of principal executive offices)
<PAGE> 2
Trimont Land Company
Sierra-at-Tahoe, Inc.
Bear Mountain, Inc.
Waterville Valley Ski Resort,Inc.
Mount Cranmore Ski Resort, Inc.
Ski Lifts, Inc.
Grand Targhee Incorporated
B-V Corporation
Targhee Company
Targhee Ski Corp.
(Exact name of registrants as specified in their respective charters)
California 94-1640750
Delaware 68-0305344
Delaware 33-0679795
Delaware 84-1359820
Delaware 02-0492684
Delaware 02-0492680
Washington 91-0412837
Delaware 82-0307639
Wyoming -
Delaware 84-1360243
Delaware 68-0393702
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Series B 12-1/2% SENIOR NOTES DUE 2007
(Title of Indenture Securities)
<PAGE> 3
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None
<PAGE> 4
Item 16. List of Exhibits.
Exhibit
T1A(i)*-Copy of the Organization Certificate of Marine Midland Bank.
T1A(ii)*-Certificate of the State of New York Banking Department dated December
31, 1993 as to the authority of Marine Midland Bank to commence business.
T1A(iii)-Not applicable.
T1A(iv)*-Copy of the existing By-Laws of Marine Midland Bank as adopted on
January 20, 1994.
T1A(v)-Not applicable.
T1A(vi)*-Consent of Marine Midland Bank required by Section 321(b) of the Trust
Indenture Act of 1939.
T1A(vii)-Copy of the latest report of condition of the trustee (December 31,
1996), published pursuant to law or the requirement of its supervisory or
examining authority.
T1A(viii)-Not applicable.
T1A(ix)-Not applicable.
*Exhibits previously filed with the Securities and Exchange Commission with
Registration No. 33-53693 and incorporated herein by reference thereto.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York on the 11th day
of April, 1997.
MARINE MIDLAND BANK
By:/s/ Eileen M. Hughes
--------------------
Eileen M. Hughes
Assistant Vice President
<PAGE> 6
EXHIBIT T1A(vii)
<TABLE>
<CAPTION>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed
for accuracy or relevance, by the Federal Reserve System.
Please refer to page i, [1]
Table of Contents, for
the required disclosure
of estimated burden.
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices FFIEC 031
Report at the close of business December 31,
1996
This report is required by law; 12 U.S.C. Section 324 (State This report form is to be filed by banks with branches and
memberbanks); 12 U.S.C. Section 1817 (State nonmember banks); consolidated subsidiaries in U.S. territories and possessions,
and 12 U.S.C. Section 161 (National banks). Edge or Agreement subsidiaries, foreign branches, consoli-dated
foreign subsidiaries, or International Banking Facilities.
- ---------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for State NOTE: These instructions may in some cases differ from
nonmember banks and three directors for State member and generally accepted accounting principles.
National Banks.
I, Gerald A. Ronning, Executive VP & Controller We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the
supporting schedules) and declare that it has been examined
of the named bank do hereby declare that these Reports of by us and to the best of our knowledge and belief has been
Condition and Income (including the supporting schedules) prepared in conformance with the instructions issued by the
have been prepared in conformance with the instructions appropriate Federal regulatory authority and is true and
issued by the appropriate Federal regulatory authority and are correct.
true to the best of my knowledge and believe.
/s/ Bernard J. Kennedy
---------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Northrup R. Knox
- ---------------------------------------------- ---------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
1/27/97 /s/ Henry J. Nowak
- ---------------------------------------------- ---------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Bank: Return the original and one copy to the National Banks: Return the original only in the special return
appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of
the special return address envelope, return the original only
State Nonmember Banks: Return the original only in the to the FDIC, c/o Quality Data Systems, 2127 Espey Court,
special return address envelope provided. If express mail is Suite 204, Crofton, MD 21114.
used in lieu of the special return address envelope, return the
original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
FDIC Certificate Number / 0 / 0 / 5 / 8 / 9 /
---------------------
(RCRI 9030)
<PAGE> 8
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities
for your state publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
December 31, 1996
ASSETS
Thousands
of dollars
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $ 967,072
Interest-bearing balances ........................... 1,867,936
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 2,841,138
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 1,606,822
Securities purchased under
agreements to resell................................. 235,041
Loans and lease financing receivables:
Loans and leases net of unearned
income............................................... 14,555,533
LESS: Allowance for loan and lease
losses............................................... 415,451
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,140,082
Trading assets....................................... 891,546
Premises and fixed assets (including
capitalized leases).................................. 189,690
Other real estate owned................................. 1,144
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 17,549
Intangible assets....................................... 187,259
Other assets............................................ 399,875
Total assets............................................ 23,345,154
<PAGE> 9
LIABILITIES
Deposits:
In domestic offices.................................. 15,864,140
Noninterest-bearing.................................. 4,242,927
Interest-bearing..................................... 11,621,213
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................................. 3,036,069
Noninterest-bearing.................................. 0
Interest-bearing..................................... 3,036,069
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 1,225,738
Securities sold under agreements to
repurchase........................................... 58,491
Demand notes issued to the U.S. Treasury 181,786
Trading Liabilities...................................... 234,555
Other borrowed money:
With original maturity of one year
or less.............................................. 26,912
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 33,120
Bank's liability on acceptances
executed and outstanding................................ 17,549
Subordinated notes and debentures....................... 397,522
Other liabilities....................................... 386,942
Total liabilities....................................... 21,462,824
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,431
Undivided profits and capital reserves.................. 54,753
Net unrealized holding gains (losses)
on available-for-sale securities........................ 9,146
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,882,330
Total liabilities, limited-life
preferred stock, and equity capital..................... 23,345,154
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (1) THE
CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS OF BOOTH CREEK SKI HOLDINGS,
INC. AS OF JANUARY 31, 1997 AND FOR THE THREE MONTHS THEN ENDED AND (2) THE
BALANCE SHEET OF BOOTH CREEK SKI HOLDINGS, INC. AS OF OCTOBER 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001037253
<NAME> BOOTH CREEK SKI HOLDINGS INC
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS OTHER
<FISCAL-YEAR-END> OCT-31-1997 OCT-31-1996
<PERIOD-END> JAN-31-1997 OCT-31-1996
<CASH> 5,996 0
<SECURITIES> 0 0
<RECEIVABLES> 1,532 0
<ALLOWANCES> 12 0
<INVENTORY> 3,772 0
<CURRENT-ASSETS> 13,331 0
<PP&E> 125,118 0
<DEPRECIATION> 1,503 0
<TOTAL-ASSETS> 183,380 0
<CURRENT-LIABILITIES> 18,602 0
<BONDS> 114,980 0
3,500 0
0 0
<COMMON> 0 0
<OTHER-SE> 41,089 0
<TOTAL-LIABILITY-AND-EQUITY> 183,380 0
<SALES> 0 0
<TOTAL-REVENUES> 23,924 0
<CGS> 0 0
<TOTAL-COSTS> 15,493 0
<OTHER-EXPENSES> 4,304 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,563 0
<INCOME-PRETAX> 1,578 0
<INCOME-TAX> 474 0
<INCOME-CONTINUING> 1,089 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,089 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
To Tender for Exchange
12 1/2% Senior Notes due 2007
of
BOOTH CREEK SKI HOLDINGS, INC.
Pursuant to the Prospectus Dated , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997 UNLESS EXTENDED.
To: Marine Midland Bank, The Exchange Agent
By Registered or Certified Mail;
By Overnight Courier; or By Hand:
140 Broadway -- Level A
New York, New York 10005-1180
Attention: Corporate Trust Services
By Facsimile:
(212) 658-2292
Attention: Corporate Trust Services
Confirm by Telephone:
(212) 658-5931
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
The undersigned acknowledges receipt of the Prospectus, dated
, 1997 (the "Prospectus") of Booth Creek Ski Holdings, Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its Series B 12 1/2% Senior Notes due 2007 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement, for each $1,000
principal amount of its outstanding 12 1/2% Senior Notes due 2007 (the "Notes"),
of which $116,000,000 principal amount is outstanding. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on , 1997, unless
the Company, in its sole discretion, extends the Exchange Offer, in which case
the term shall mean the latest date and time to which the Exchange Offer is
extended. The term "Holder" with respect to the Exchange Offer means any person
in whose name Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. Capitalized terms used but not defined herein have the respective
meanings set forth in the Prospectus.
This Letter of Transmittal is to be used by holders of Notes if (i)
certificates representing the Notes are to be physically delivered to the
Exchange Agent herewith, (ii) tender of the Notes is to be made by book entry
transfer to the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering" by
any financial institution that is a participant in the Book-Entry Transfer
Facility and whose name appears on a security position listing as the owner of
Notes (such participants acting on behalf of holders, are referred to herein,
together with such holders, as "Authorized Holders") or (iii) tender of the
Notes is to be made according to the guaranteed delivery procedures described in
the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 2. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Notes must complete this
letter in its entirety.
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
Principal Amount of Tendered Notes:
----------------------------------------------------------------------
If Holders desire to tender Notes pursuant to the Exchange Offer and (i)
time will not permit this Letter of Transmittal, certificates representing Notes
or other required document to reach the Exchange Agent prior to the Expiration
Date, or (ii) the procedures for book-entry transfer cannot be completed prior
to the Expiration Date, such Holders may effect a tender of such Notes in
accordance with the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2 below.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (See Instruction 2):
Name of Registered or Acting Holder(s):
------------------------------------------------------------------
Window Ticket No. (if any):
-------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------------------------------------
Name of Eligible Institution
that Guaranteed Delivery:
----------------------------------------------------------------------------
If Delivered by Book-Entry
Transfer, the Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
PLEASE NOTE: THE COMPANY HAS AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER
THE EXPIRATION DATE, IT WILL MAKE COPIES OF THE PROSPECTUS AVAILABLE TO ANY
PARTICIPATING BROKER-DEALER FOR USE IN CONNECTION WITH RESALES OF THE
EXCHANGE NOTES; PROVIDED, HOWEVER, THAT THE COMPANY HAS NO OBLIGATION TO
AMEND OR SUPPLEMENT THE PROSPECTUS UNLESS IT HAS RECEIVED WRITTEN NOTICE
FROM A PARTICIPATING BROKER-DEALER OF ITS PROSPECTUS DELIVERY REQUIREMENTS
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WITHIN FIVE DAYS
FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER.
Name:
---------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------
Attention:
---------------------------------------------------------------------------
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal amount
of Notes should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
3
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BOX 1 - DESCRIPTION OF 12 1/2% SENIOR NOTES DUE 2007*
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED (MUST BE
NAME(S) AND ADDRESS(ES) OF REGISTERED CERTIFICATE AMOUNT REPRESENTED AN INTEGRAL MULTIPLE
HOLDER(S) (PLEASE FILL IN, IF BLANK) NUMBER(S) BY CERTIFICATE(S) OF $1,000**)
- --------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of 12 1/2% Senior Notes due 2007 will be deemed to have
tendered the entire aggregate principal amount represented by the column labeled
"Aggregate Principal Amount Represented by Certificate(s)." If the space
provided above is inadequate, list the certificate numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of 12 1/2% Senior
Notes due 2007. All other tenders must be in integral multiples of $1,000.
4
<PAGE> 5
BOX 2
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted for exchange,
are to be issued in the name of someone other than the undersigned.
Issue certificate(s) to:
Name
(PLEASE PRINT)
Address
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted Notes accepted
for exchange, are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Deliver certificate(s) to:
Name
(PLEASE PRINT)
Address
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX 4
BROKER-DEALER STATUS
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THIS LETTER OF
TRANSMITTAL TO NANCI N. NORTHWAY, CHIEF FINANCIAL OFFICER OF THE COMPANY,
VIA FACSIMILE: (916) 562-2419.
5
<PAGE> 6
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to Booth Creek Ski Holdings, Inc. (the "Company") the principal
amount of Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Notes with the
full power of substitution to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon, the
order of, the Company, (ii) deliver certificates for such Notes to the Company
and deliver all accompanying evidences of transfer and authenticity to, or upon
the order of, the Company and (iii) present such Notes for transfer on the books
of the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Notes, all in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Notes tendered
hereby and that the Company will acquire good, valid and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims, when the same are acquired by the Company.
The undersigned hereby further represents that any Exchange Notes acquired in
exchange for Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, that neither the undersigned nor any other such
person has any arrangement or understanding with any person to participate in
the distribution of such Exchange Notes and that neither the undersigned nor any
such other person is an "affiliate," as defined in Rule 405 under the Securities
Act, of the Company. In addition, the undersigned and any such person
acknowledge that (a) any person participating in the Exchange Offer for the
purpose of distributing the Exchange Notes must, in the absence of an exemption
therefrom, comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the Exchange Notes
and cannot rely on the position of the Staff of the Securities and Exchange
Commission enunciated in no-action letters and (b) failure to comply with such
requirements in such instance could result in the undersigned or such person
incurring liability under the Securities Act for which the undersigned or such
person is not indemnified by the Company. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the assignment, transfer and
purchase of the Notes tendered hereby. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in and does not
intend to engage in, a distribution of Exchange Notes. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a Prospectus in
connection with any resale of such Exchange Notes, however, by so acknowledging
and by delivering a Prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Unless
otherwise notified in accordance with the instructions set forth herein in Box 4
under "Broker-Dealer Status," the Company will assume that the undersigned is
not a Participating Broker-Dealer.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Notes when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
If any Notes tendered herewith are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Notes
will be returned, without expense, to the undersigned at the address shown below
or to a different address as may be indicated herein in Box 3 under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
6
<PAGE> 7
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representative, successors and assigns.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer -- Withdrawal of Tenders."
Unless otherwise indicated in Box 2 under "Special Registration
Instructions," please issue the certificates (or electronic transfers)
representing the Exchange Notes issued in exchange for the Notes accepted for
exchange and any certificates (or electronic transfers) for Notes not tendered
or not exchanged, in the name(s) of the undersigned. Similarly, unless otherwise
indicated in Box 3 under "Special Delivery Instructions," please send the
certificates, if any, representing the Exchange Notes issued in exchange for the
Notes accepted for exchange and any certificates for Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below in the undersigned's signature(s). In the event that both
"Special Registration Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the Exchange Notes issued
in exchange for the Notes accepted for exchange in the name(s) of, and return
any certificates for Notes not tendered or not exchanged to, the person(s) so
indicated. The undersigned understands that the Company has no obligation
pursuant to the "Special Registration Instructions" and "Special Delivery
Instructions" to transfer any Notes from the name of the registered Holder(s)
thereof if the Company does not accept for exchange any of the Notes so
tendered.
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available or (ii) who cannot deliver the Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2 regarding the
completion of this Letter of Transmittal printed below.
7
<PAGE> 8
The below lines must be signed by the registered holder(s) exactly as their
name(s) appear(s) on the Notes or by a participant in the Book-Entry Transfer
Facility, exactly as such participant's name appears on a security position
listing as the owner of the Notes, or by person(s) authorized to become
registered holder(s) by a properly completed bond power from the registered
holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If Notes to which this Letter of Transmittal relate are held of record by two or
more joint holders, then all such holders must sign this Letter of Transmittal.
PLEASE SIGN HERE WHETHER OR NOT
NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
- ------------------------------------------------
X
- ------------------------------------------------
Date:
- --------------------------------------------
Date:
- --------------------------------------------
Area Code and Telephone Number:
- -------------------------------------------------
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then such person must (i) set forth his or her full
title below and (ii) submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 5 regarding the completion of this
Letter of Transmittal printed below.
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
Signature(s) Guaranteed by an Eligible Institution:
- ---------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Address, Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated:
- --------------------------------------------------------------------------------
8
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR NOTES OR
BOOK-ENTRY CONFIRMATIONS. Certificates representing the tendered Notes (or a
confirmation of book-entry transfer into the Exchange Agent's account with the
Book-Entry Transfer Facility for tendered Notes transferred electronically), as
well as a properly completed and duly executed copy of this Letter of
Transmittal (or facsimile thereof), a Substitute Form W-9 (or facsimile thereof)
and any other documents required by this Letter of Transmittal must be received
by the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of certificates for Notes and all other required
documents is at the election and sole risk of the tendering holder and delivery
will be deemed made only when actually received by the Exchange Agent. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. As an alternative to delivery by mail, the holder may
wish to use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. Neither the Company nor the
Exchange Agent is under an obligation to notify any tendering holder of the
Company's acceptance of tendered Notes prior to the completion of the Exchange
Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available and who cannot deliver their
certificates for Notes (or comply with the procedures for book-entry transfer
prior to the Expiration Date), the Letter of Transmittal and any other documents
required by the Letter of Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Notes according to the guaranteed delivery
procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States (an "Eligible Institution");
(ii) prior to the Expiration Date, the Exchange Agent must have received
from the holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail, or hand
delivery) setting forth the name and address of the holder, the certificate
number or numbers of the tendered Notes, and the principal amount of tendered
Notes and stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof), together with the tendered Notes
(or a confirmation of book-entry transfer into the Exchange Agent's account with
the Book-Entry Transfer Facility for Notes transferred electronically) and any
other required documents will be deposited by the Eligible Institution with the
Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal and
certificates representing the tendered Notes in proper form for transfer (or a
confirmation of book-entry transfer into the Exchange Agent's account with the
Book-Entry Transfer Facility for Notes transferred electronically) must be
received by the Exchange Agent within three New York Stock Exchange trading days
after the Expiration Date.
Any holder who wishes to tender Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery relating to such Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery person.
3. TENDER BY HOLDER. Only a holder of Notes may tender such Notes in the
Exchange Offer. Any beneficial owner of Notes who is not the registered holder
and who wishes to tender should arrange with such holder to execute and deliver
this Letter of Transmittal on such owner's behalf or must, prior to completing
and executing this Letter of Transmittal and delivering such Notes, either make
appropriate arrangements to register ownership of the Notes in such owner's name
or obtain a properly completed bond power from the registered holder.
9
<PAGE> 10
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes is tendered, the tendering holder should fill in the principal
amount tendered in the column labeled "Aggregate Principal Amount Tendered" of
the box entitled "Description of Notes" (Box 1) above. The entire principal
amount of Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of Notes is
not tendered, Notes for the principal amount of Notes not tendered and Exchange
Notes exchanged for any Notes tendered will be sent to the holder at his or her
registered address (or transferred to the account of the Book-Entry Facility
designated above), unless a different address (or account) is provided in the
appropriate box on this Letter of Transmittal, as soon as practicable following
the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
MEDALLION GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by
the registered holder(s) of the Notes tendered herewith, the signatures must
correspond with the name(s) as written on the face of the tendered Notes without
alteration, enlargement, or any change whatsoever. If this Letter of Transmittal
is signed by a participant in the Book-Entry Transfer Facility, the signature
must correspond with the name as it appears on the security position listing as
the owner of the Notes.
If any of the tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Notes are held in different names on several Notes, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of Transmittal
documents as there are names in which tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder or Acting
Holder, and Exchange Notes are to be issued and any untendered or unaccepted
principal amount of Notes are to be reissued or returned to the registered
holder or Acting Holder, then, the registered holder or Acting Holder need not
and should not endorse any tendered Notes nor provide a separate bond power. In
any other case (including if this Letter of Transmittal is not signed by the
Acting Holder), the registered holder or Acting Holder must either properly
endorse the Notes tendered or transmit a properly completed separate bond power
with this Letter of Transmittal (in either case, executed exactly as the name(s)
of the registered holder(s) appear(s) on such Notes, and, with respect to a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Notes, exactly as the name(s) of the
participant(s) appear(s) on such security position listings), with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution unless such certificates or bond powers are signed by an Eligible
Institution.
If this Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and evidence satisfactory to the Company
of their authority to so act must be submitted with this Letter of Transmittal.
No medallion signature guarantee is required if (i) this Letter of
Transmittal is signed by the registered holder(s) of the Notes tendered herewith
(or by a participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of the Tendered Notes) and the issuance
of Exchange Notes (and any Notes not tendered or not accepted) are to be issued
directly to such registered holder(s) (or, if signed by a participant in the
Book-Entry Transfer Facility, any Exchange Notes or Notes not tendered or not
accepted are to be deposited to such participant's account at such Book-Entry
Transfer Facility) and neither the "Special Delivery Instructions" (Box 3) nor
the "Special Registration Instructions" (Box 2) has been completed, or (ii) such
Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box, the name and address (or account at the
Book-Entry Transfer Facility) in which the Exchange Notes and/or substitute
Notes for principal amounts not tendered or not accepted for exchange are to be
sent (or deposited), if different from the name and address or account of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the indicated and the tendering
holders should complete the applicable box.
10
<PAGE> 11
If no such instructions are given, the Exchange Notes (and any Notes not
tendered or not accepted) will be issued in the name of and sent to the Acting
Holder of the Notes or deposited at such Acting Holders' account at the
Book-Entry Transfer Facility.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Notes to it or its order pursuant to the
Exchange Offer. If, however, a transfer tax is imposed for any reason other than
the transfer and sale of Notes to the Company or its order pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or on any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption from
taxes therefrom is not submitted with this Letter of Transmittal, the amount of
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law required that a holder
of any Notes which are accepted for exchange must provide the Company (as payor)
with its correct taxpayer identification number ("TIN"), which, in the case of a
holder who is an individual, is his or her social security number. If the
Company is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among other, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report a interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Notes are registered in more than one name or are not in the name of the
actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Notes will be determined
by the Company, in its sole discretion, which determination will be final and
binding. The Company reserves the right to reject any and all Notes not validly
tendered or any Notes, the Company's acceptance of which would, in the opinion
of the Company or its counsel, be unlawful. The Company also reserves the right
to waive any conditions of the Exchange Offer or defects or irregularities in
tenders of Notes as to any ineligibility of any holder who seeks to tender Notes
in the Exchange Offer. The interpretation of the terms and conditions of the
Exchange Offer (includes this Letter of Transmittal and the instructions hereto)
by the Company shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Notes must be cured
within such time as the Company shall determine. The Company will use reasonable
efforts to give notification of defects or irregularities with respect to
tenders of Notes, but shall not incur any liability for failure to give such
notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer in the case of any
tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes on transmittal of this Letter of Transmittal will be
accepted.
11
<PAGE> 12
12. MUTILATED, LOST, STOLEN, OR DESTROYED NOTES. Any tendering holder whose
Notes have been mutilated, lost, stolen, or destroyed should contact the
Exchange Agent at the address indicated above for further instruction.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted tendered Notes when, as and if the Company has given
written and oral notice thereof to the Exchange Agent. If any tendered Notes are
not exchanged pursuant to the Exchange Offer for any reason, such unexchanged
Notes will be returned, without expense, to the undersigned at the address shown
above (or credited to the undersigned's account at the Book-Entry Transfer
Facility designated above) or at a different address as may be indicated under
"Special Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuit to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
12
<PAGE> 13
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: BOOTH CREEK SKI HOLDINGS, INC.
- ------------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity whose number you enter in
Part I below. See instructions if your name has changed.)
----------------------------------------------------------------------------------------------------------
Address
-----------------------------------------------------------------------------------------------------
City, State and ZIP Code----------------------------------------------------------------------------------
List account number(s) here (optional)-------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TAXPAYER
SUBSTITUTE IDENTIFICATION NUMBER ("TIN") IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number
BELOW or TIN
-------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2--Check the box if you are NOT subject PART 3--
INTERNAL REVENUE SERVICE to backup withholding under the provisions Awaiting TIN [ ]
of section 3408(a)(1)(C) of the Internal
Revenue Code because (1) you have not been
notified that you are subject to backup
withholding as a result of failure to report
all interest of dividends or (2) the
Internal Revenue Service has notified you
that you are no longer subject to backup
withholding. [ ]
-------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION--Under the penalties of perjury, I certify that the
TAXPAYER IDENTIFICATION information provided on this form is true, correct and complete.
NUMBER (TIN) SIGNATURE DATE
- -----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
13
<PAGE> 14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 1 OF 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501 (a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by a certain foreign organizations.
- - Payments made to a nominee.
- - Payments of interest not generally subject to backup withholding include the
following:
- - Payments of Interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payor.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b) (5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041 A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payors who must
report the payments to IRS. The IRS uses the numbers for identification
purposes. Payors must be given the numbers whether or not recipients are
required to file tax returns. Payors must generally withhold 20% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Certifications or affirmations
may subject you to criminal penalties including fines and/or imprisonment. FOR
ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
14
<PAGE> 15
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2 OF 2
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR -- Social Security numbers have nine digits separated by two hyphens: e.g.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g. 00-0000000. The table below will help determine the number to
give the Payor.
<TABLE>
<CAPTION>
- --------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF:
- --------------------------------------------------------------
<C> <S> <C>
1. For an individual account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for incompetent person(3)
a designated ward, minor,
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF:
- --------------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State
or local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
============================================================
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish the
ward's, minor's or incompetent person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
15
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
BOOTH CREEK SKI HOLDINGS, INC.
12 1/2% SENIOR NOTES DUE 2007
This form must be used by a holder of 12 1/2% Senior Notes due 2007 (the
"Notes") of Booth Creek Ski Holdings, Inc. (the "Company"), who wishes to tender
Notes to the Exchange Agent pursuant to the guaranteed delivery procedures
described in the "The Exchange Offer -- Guaranteed Delivery Procedures" of the
Prospectus, dated (the "Prospectus"), and in Instruction 2 to the
related Letter of Transmittal. Any holder who wishes to tender Notes pursuant to
such guaranteed delivery procedures must ensure that the Exchange Agent receives
this Notice of Guaranteed Delivery prior to the Expiration Date of the Exchange
Offer. Capitalized terms not defined herein have the meanings ascribed to them
in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , UNLESS EXTENDED (THE "EXPIRATION DATE").
To: Marine Midland Bank
(the "Exchange Agent")
By Facsimile: (212) 658-2292
Confirmation by Telephone: (212) 658-5931
By Mail, Overnight Courier or Hand Delivery:
140 Broadway -- Level A
New York, New York 10005-1180
Attn: Corporate Trust Services
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE,
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<S> <C> <C>
CERTIFICATE NUMBER(S) (IF AGGREGATE PRINCIPAL AMOUNT AGGREGATE PRINCIPAL AMOUNT
KNOWN) OF NOTES OR ACCOUNT REPRESENTED TENDERED
NUMBER AT THE BOOK-ENTRY
FACILITY
</TABLE>
<PAGE> 2
PLEASE SIGN AND COMPLETE
Signatures of Registered Holder(s) or
Date: , 1997
Authorized Signatory:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Name of Registered Holder(s):
- -------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s):
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Notes into the
Exchange Agent's account at Book-Entry Transfer Facility described in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the third New York Stock Exchange
trading day following the Expiration Date.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------ -----------------------------------------------------
Authorized Signature
Address: -------------------------------------------
Area Code and Telephone No.: ------------------- Name: ---------------------------------------------
Title:
-----------------------------------------------
Date: ---------------------------------------- , 1997
</TABLE>
DO NOT SEND NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
<PAGE> 4
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face of
the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT
FROM BENEFICIAL OWNER OF
BOOTH CREEK SKI HOLDINGS, INC.
12 1/2% SENIOR NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
(the "Prospectus"), of Booth Creek Ski Holdings, Inc.
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the 12 1/2% Senior Notes due 2007 (the "Notes")
held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT): $ of the 12 1/2%
Senior Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$ .
[ ] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (fill in state)
, (ii) the undersigned is acquiring the Exchange Notes
in the ordinary course of business of the undersigned, (iii) the undersigned is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, (iv) the undersigned acknowledges that any person participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospects delivery requirements of the Securities Act
of 1933, as amended (the "Act"), in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in no-
action letters that are discussed in the section of the Prospectus entitled "The
Exchange Offer -- Resales of the Exchange Notes," and (v) the undersigned is not
an "affiliate," as defined in Rule 405 under the Act, of the Company; (b) to
agree, on behalf of the undersigned, as set forth in the Letter of Transmittal;
and (c) to take such other action as necessary under the Prospectus or the
Letter of Transmittal to effect the valid tender of such Notes.
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes
for its own account as a result of market-making activities or other
trading activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THESE
INSTRUCTIONS TO NANCI N. NORTHWAY, CHIEF FINANCIAL OFFICER OF THE
COMPANY, VIA FACSIMILE: (916) 562-2419.
<PAGE> 2
SIGN HERE
Name of beneficial owner(s):
- --------------------------------------------------------------------------------
Signature(s):
- --------------------------------------------------------------------------------
Name (please print):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Telephone number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- ----------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
