UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 25, 1999
--------------------------------
Commission File Number 1-13507
--------------------------------
American Skiing Company
(Exact name of registrant as specified in its charter)
Maine 04-3373730
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 450
Bethel, Maine 04217
(Address of principal executive office) (Zip Code)
(207) 824-8100 (Registrant's telephone number, including area code) Not
Applicable
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of
common stock were 14,760,530 shares of Class A common stock, $.01 par value, and
15,526,243 shares of common stock, $.01 par value, as of June 9, 1999.
<PAGE>
American Skiing Company and Subsidiaries
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Statement of Operations (unaudited)
for the three months ended April 25, 1999 and April 26, 1998..........1
Condensed Consolidated Statement of Operations (unaudited)
for the nine months ended April 25, 1999 and April 26, 1998...........2
Condensed Consolidated Balance Sheet
as of April 25, 1999 (unaudited) and July 26, 1998....................3
Condensed Consolidated Statement of Cash Flows (unaudited)
for the nine months ended April 25, 1999 and April 26, 1998...........4
Notes to (unaudited) Condensed Consolidated Financial Statements......5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General...............................................................9
Liquidity and Capital Resources.......................................9
Changes in Results of Operations.....................................18
Changes in Financial Condition.......................................22
Year 2000 Disclosure.................................................23
Forward-Looking Statements...........................................26
Item 3. Quantitative and Qualitative Disclosures
About Market Risk..............................................26
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.............................27
i
<PAGE>
American Skiing Company and Subsidiaries
<TABLE>
Part I - Financial Information
Item 1 Financial Statements
Condensed Consolidated Statement of Operations
(In thousands, except share and per share amounts)
<CAPTION>
For the three months ended
April 25, 1999 April 26, 1998
(unaudited)
<S> <C> <C>
Net revenues:
Resort $ 154,317 $ 144,245
Real estate 10,324 40,914
----------------- ------------------
Total net revenues 164,641 185,159
Operating expenses:
Resort 74,573 66,094
Real estate 8,554 28,451
Marketing, general and administrative 14,519 11,429
Depreciation and amortization 19,731 17,960
----------------- ------------------
Total operating expenses 117,377 123,934
----------------- ------------------
Income from operations 47,264 61,225
Interest expense 10,144 7,486
----------------- ------------------
Income before provision for income taxes 37,120 53,739
Provision for income taxes 14,787 20,958
----------------- ------------------
Income before preferred stock dividends and accretion 22,333 32,781
Accretion of discount and dividends accrued on
mandatorily redeemable preferred stock 1,096 1,091
----------------- ------------------
Net income available to common shareholders $ 21,237 $ 31,690
================= ==================
Accumulated deficit, beginning of period $ (31,036) $(11,987)
Net income available to common shareholders 21,237 31,690
----------------- ------------------
Retained earnings (accumulated deficit), end of period $ (9,799) $ 19,703
================= ==================
Basic earnings per common share (note 7)
Net income available to common shareholders $ 0.70 $ 1.05
================= ==================
Diluted earnings per common share (note 7)
Net income available to common shareholders $ 0.69 $ 1.03
================= ==================
Weighted average common shares outstanding - basic 30,286,773 30,265,552
================= ==================
Weighted average common shares outstanding - diluted 30,630,173 30,840,085
================= ==================
See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.
</TABLE>
1
<PAGE>
American Skiing Company and Subsidiaries
<TABLE>
Condensed Consolidated Statement of Operations
(In thousands, except share and per share amounts)
<CAPTION>
For the nine months ended
April 25, 1999 April 26, 1998
(unaudited)
<S> <C> <C>
Net revenues:
Resort $ 277,833 $ 264,141
Real estate 21,109 49,614
------------------ ------------------
Total net revenues 298,942 313,755
Operating expenses:
Resort 171,897 147,313
Real estate 20,459 34,706
Marketing, general and administrative 43,267 31,281
Stock compensation charge (note 10) - 14,254
Depreciation and amortization 41,450 34,475
------------------ ------------------
Total operating expenses 277,073 262,029
------------------ ------------------
Income from operations 21,869 51,726
Interest expense 29,213 25,028
------------------ ------------------
Income (loss) before provision for (benefit from) income taxes and
minority interest in loss of subsidiary (7,344) 26,698
Provision for (benefit from) income taxes (768) 10,413
Minority interest in loss of subsidiary - (456)
------------------ ------------------
Income (loss) before extraordinary items (6,576) 16,741
Extraordinary loss, net of income tax benefit of $3,248 - 5,081
------------------ ------------------
Income (loss) before preferred stock dividends and accretion (6,576) 11,660
Accretion of discount and dividends accrued on
mandatorily redeemable preferred stock 3,234 4,262
------------------ ------------------
Net income (loss) available to common shareholders $ (9,810) $ 7,398
================== ==================
Retained earnings, beginning of year $ 11 $ 12,305
Net income (loss) available to common shareholders (9,810) 7,398
----------------- ------------------
Retained earnings (accumulated deficit), end of period $ (9,799) $ 19,703
================== ==================
Basic earnings (loss) per common share (note 7)
Income (loss) before extraordinary items $ (0.32) $ 0.51
Extraordinary loss - (0.21)
----------------- ------------------
Net income (loss) available to common shareholders $ (0.32) $ 0.30
================= ==================
Diluted earnings (loss) per common share (note 7)
Income (loss) before extraordinary items $ (0.32) $ 0.51
Extraordinary loss - (0.21)
----------------- ------------------
Net income (loss) available to common shareholders $ (0.32) $ 0.30
================= ==================
Weighted average common shares outstanding - basic 30,286,357 24,313,067
================== ==================
Weighted average common shares outstanding - diluted 30,286,357 24,656,151
================== ==================
See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.
</TABLE>
2
<PAGE>
American Skiing Company and Subsidiaries
<TABLE>
Condensed Consolidated Balance Sheet
(In thousands, except share and per share amounts)
<CAPTION>
April 25, 1999 July 26, 1998
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 9,107 $ 15,370
Restricted cash 6,815 6,260
Accounts receivable 13,009 7,538
Inventory 13,357 13,353
Prepaid expenses 2,445 3,709
Deferred income taxes 652 1,413
----------------- ------------------
Total current assets 45,385 47,643
Property and equipment, net 529,643 521,139
Real estate developed for sale 154,291 78,636
Goodwill 77,341 78,687
Intangible assets 23,089 23,706
Deferred financing costs 9,585 9,212
Long-term investments 6,147 7,397
Other assets 18,111 14,479
----------------- ------------------
Total assets $ 863,592 $ 780,899
================= ==================
Liabilities, Mandatorily Redeemable Preferred Stock and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 19,691 $ 44,153
Accounts payable and other current liabilities 94,835 44,372
Deposits and deferred revenue 20,771 10,215
Demand note, Principal Shareholder 1,846 1,846
----------------- ------------------
Total current liabilities 137,143 100,586
Long-term debt, excluding current portion 263,739 211,570
Subordinated notes and debentures, excluding current portion 127,672 127,497
Other long-term liabilities 11,719 10,484
Deferred income taxes 21,190 22,719
Minority interest in subsidiary 392 375
----------------- ------------------
Total liabilities 561,855 473,231
Mandatorily Redeemable 10 1/2% Repriced Convertible Preferred Stock par value of
$1,000 per share; 40,000 shares authorized; 36,626 shares issued and
outstanding; including cumulative dividends in arrears (redemption value of
$39,464 and $42,698, respectively) 42,698 39,464
Shareholders' Equity
Common stock, Class A, par value of $.01 per share; 15,000,000 shares authorized;
14,760,530 issued and outstanding 148 148
Common stock, par value of $.01 per share; 100,000,000 shares
authorized; 15,526,243 and 15,525,022 issued and outstanding, respectively 155 155
Additional paid-in capital 268,535 267,890
Retained earnings (accumulated deficit) (9,799) 11
----------------- ------------------
Total shareholders' equity 259,039 268,204
================= ==================
Total liabilities, mandatorily redeemable preferred stock and shareholders' equity $ 863,592 $ 780,899
================= ==================
See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
American Skiing Company and Subsidiaries
<TABLE>
Condensed Consolidated Statement of Cash Flows
(In thousands)
<CAPTION>
For the nine months ended
April 25, 1999 April 26, 1998
(unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (6,576) $ 11,660
Adjustments to reconcile net loss to net cash used in operating activities:
Minority interest in loss of subsidiary - (456)
Depreciation and amortization 41,450 33,088
Amortization of discount on debt 247 2,183
Deferred income taxes (768) 6,960
Stock compensation charge 644 14,254
Extraordinary loss - 8,329
Gain/loss from sale of assets 95 -
Decrease (increase) in assets:
Restricted cash (555) (733)
Accounts receivable (5,471) (14,287)
Inventory (4) (2,475)
Prepaid expenses 1,264 (490)
Real estate developed for sale (71,549) (45,919)
Other assets (3,632) (5,657)
Increase (decrease) in liabilities:
Accounts payable and other current liabilities 50,463 13,630
Deposits and deferred revenue 10,556 (2,914)
Other long-term liabilities 1,235 (6,161)
----------------- -----------------
Net cash provided by operating activities 17,399 11,012
----------------- -----------------
Cash flows from investing activities
Payments for purchases of businesses, net of cash acquired - (294,364)
Capital expenditures (43,319) (70,371)
Long-term investments 1,250 497
Assets held for sale - -
Proceeds from sale of assets 365 11,599
Other, net 5 -
----------------- -----------------
Net cash used in investing activities (41,699) (352,639)
----------------- -----------------
Cash flows from financing activities
Borrowings (repayments) under New Credit Facility (46,794) 155,787
Repayment of Old Credit Facility - (59,623)
Proceeds from long-term debt 19,920 9,062
Proceeds from non-recourse real estate debt 71,223 31,219
Repayment of long-term debt (6,730) (9,619)
Repayment of non-recourse real estate debt (18,211) -
Deferred financing costs (1,371) (3,255)
Proceeds from initial public offering - 244,555
Repayment of subordinated notes - (21,882)
Proceeds from issuance of mandatorily redeemable securities - 17,500
Cash payment in connection with early retirement of debt - (5,087)
================= =================
Net cash provided by financing activities 18,037 358,657
================= =================
Net increase (decrease) in cash and cash equivalents (6,263) 17,030
Cash and cash equivalents, beginning of period 15,370 15,558
----------------- -----------------
Cash and cash equivalents, end of period $ 9,107 $ 32,588
================= =================
See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
American Skiing Company and Subsidiaries
Notes to (unaudited) Condensed Consolidated Financial Statements
1. Change in Accounting Estimate. Effective July 27, 1998, the Company
extended the estimated useful lives of certain of its ski lifts. As a result of
this change in estimate, the Company realized a decrease in depreciation expense
of approximately $0.7 million over the period including the second and third
quarters of fiscal 1999, as the Company records a full year of depreciation on
ski-related assets evenly over the second and third quarters of its fiscal year.
This reduction of depreciation expense has resulted in an increase in net
earnings per common share of $0.01 for the three months ended April 25, 1999 and
$0.02 for the nine months ended April 25, 1999. The Company is continuing to
evaluate the current depreciable lives of various other assets to ensure they
appropriately reflect their actual useful lives.
2. General. In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of April 25, 1999, the
results of operations for the three and nine months ended April 25, 1999 and
April 26, 1998, and the statement of cash flows for the nine months ended April
25, 1999 and April 26, 1998. All adjustments are of a normal recurring nature.
The unaudited condensed consolidated financial statements should be read in
conjunction with the following notes and the Company's consolidated financial
statements in the Form 10-K, filed with the Securities and Exchange Commission
on October 27, 1998.
3. Inventories. Inventories are stated at the lower of cost (first-in,
first-out) or market, and consist primarily of retail goods, food and beverage
products and operating supplies.
4. Property and Equipment. The Company has identified non-strategic
assets with a carrying value of approximately $15 million for sale. These assets
are currently classified as property and equipment and are still in use by the
Company, but the Company expects these assets to be sold during the next nine
months. The Company has reviewed these assets for impairment in accordance with
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", and has made no adjustments to the
carrying values based on the results of such review.
5. Income Taxes. The expense (benefit) for taxes on income (loss) is
based on a projected nine month effective tax rate of 10.5%. The net deferred
income tax liability includes the cumulative reduction in current income taxes
payable resulting principally from the excess of depreciation reported for
income tax purposes over that reported for financial reporting purposes.
6. Seasonal Business. Results for interim periods are not indicative of
the results expected for the year due to the seasonal nature of the Company's
business.
7. Earnings (loss) per Common Share. Effective January 25, 1998, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 specifies the computation, presentation, and disclosure
requirements for earnings per share for public entities. Earnings (loss) per
common share for the three and nine months ending April 25, 1999 and April 26,
1998 were determined based on the following data:
5
<PAGE>
American Skiing Company and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 25, April 26, April 25, April 26,
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited) (unaudited)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income (loss)
Income (loss) before preferred stock dividends and
accretion and extraordinary items $ 22,333 $ 32,781 $ (6,576) $ 16,741
Accretion of discount and dividends accrued on
mandatorily redeemable preferred stock (1,096) (1,091) (3,234) (4,262)
-------------- -------------- -------------- --------------
Income (loss) before extraordinary items 21,237 31,690 (9,810) 12,479
Extraordinary loss - - - (5,081)
============== ============== ============== ==============
Net income (loss) available to common shareholders $ 21,237 $ 31,690 $ (9,810) $ 7,398
============== ============== ============== ==============
Shares
Total weighted average shares outstanding (basic) 30,287 30,266 30,286 24,313
Dilutive common stock options 343 574 - 343
============== ============== ============== ==============
Total weighted average shares outstanding (diluted) 30,630 30,840 30,286 24,656
============== ============== ============== ==============
</TABLE>
The Company currently has outstanding 36,626 shares of Mandatorily Redeemable
Convertible Preferred Stock which are convertible into shares of the Company's
Common Stock. The Common Stock shares into which these securities are
convertible have not been included in the dilutive share calculation in
accordance with the if-converted method as the impact of their inclusion would
be anti-dilutive.
8. Reclassifications. Certain amounts in the prior year's unaudited
condensed consolidated financial statements and the audited financial statements
as filed with the Securities and Exchange Commission on October 27, 1998 have
been reclassified to conform to the current period presentation.
9. Pro forma disclosure. The following unaudited pro forma statement of
operations for the nine months ended April 26, 1998 is presented for comparative
purposes. The pro forma results assume that the acquisition of Steamboat and
Heavenly on November 12, 1997 and the initial public offering of the Company on
November 6, 1997 were consummated on July 26, 1997. Pro forma results are not
indicative of what actual results would have been, nor an indication of future
results.
Consolidated Statement of Operations
(In thousands, except per share data)
Pro Forma
For the nine
months ended
April 26, 1998
(unaudited)
Total net revenues $317,361
================
Income (loss) before extraordinary items $ 9,192
================
Net loss available to common shareholders $ (151)
================
Basic and diluted loss per share
Income (loss) before extraordinary items $ 0.16
================
Net loss available to common shareholders $ (0.01)
================
6
<PAGE>
10. Stock option plan. The Company recorded a compensation expense
charge of $14.3 million in the first quarter of fiscal 1998 to recognize
compensation expense for stock options granted to certain key members of
management. This charge is based on the difference between the exercise price of
$2.00 per share of common stock and the fair market value as of the date of
grant of $18.00 per share. Under these grant agreements, the Company agreed to
pay the optionees a fixed tax "bonus" to provide for certain tax liabilities
that the optionees may incur upon exercise. The estimated amount of the tax
liability payment of $5.7 million was fully accrued along with the stock option
compensation charge of $8.6 million. During the three and nine months ended
April 25, 1999 the Company recorded stock compensation expense of $0.1 million
and $0.6 million, respectively, which represents the vesting of additional stock
options. Such amounts are included in marketing, general and administrative
expenses in the accompanying condensed consolidated statement of operations for
the three and nine months ended April 25, 1999.
11. Long Term Debt. The Company established a senior credit facility on
November 12, 1997 (as amended to date, the "Senior Credit Facility"). The Senior
Credit Facility is divided into two sub-facilities, $65 million of which is
available for borrowings by ASC East, Inc. and its subsidiaries (the "East
Facility") and $150 million of which is available for borrowings by ASC Utah and
ASC West, Inc. and its subsidiaries (the "West Facility"). The East Facility
consists of a six-year revolving credit facility in the amount of $35 million
and an eight-year term facility in the amount of $30 million. The West Facility
consists of a six-year revolving facility in the amount of $75 million and an
eight-year term facility in the amount of $75 million.
The Company negotiated an amendment to the Senior Credit Facility on
March 3, 1999 (the "Credit Facility Amendment") which significantly modifies the
covenant requirements for the second and third fiscal quarters of 1999 and on a
prospective basis. The Credit Facility Amendment requires minimum quarterly
EBITDA levels and places a maximum range of non-real estate capital expenditures
for fiscal 2000 of between $15 and $20 million, with maximum levels depending on
the Company's ability to consummate sales of certain non-strategic assets, as
defined in the Credit Facility Amendment. Following fiscal 2000, annual resort
capital expenditures (exclusive of real estate) are capped at the lesser of (i)
$35 million or (ii) the total of consolidated EBITDA for the four fiscal
quarters ended April of the previous fiscal year less consolidated debt service
for the same period.
On January 8, 1999, the Company's real estate development holding
company, American Skiing Company Resort Properties, Inc. ("Resort Properties"),
closed on a term loan facility (the "Resort Properties Term Facility") with
BankBoston. The Resort Properties Term Facility has a maximum principal amount
of $58 million, bears interest at a variable rate equal to BankBoston's base
rate plus 8.25%, or a current rate of 16% per annum (payable monthly in arrears)
and matures on June 30, 2001. The terms of the Resort Properties Term Facility
are subject to change as the arrangement becomes fully syndicated. The Resort
Properties Term Facility is currently fully underwritten by BankBoston. The
Resort Properties Term Facility is collateralized by security interests in, and
mortgages on, substantially all of Resort Properties' assets, which primarily
consist of undeveloped real property and the stock of its real estate
development subsidiaries (including Grand Summit Resort Properties, Inc.
("GSRP"), the Company's hotel development subsidiary). As of April 25, 1999, the
total assets that collateralized the Resort Properties Term Facility, and are
included in the accompanying condensed consolidated balance sheet, had a book
value of approximately $194.2 million. The Resort Properties Term Facility is
non-recourse to the Company and its resort operating subsidiaries, however,
7
<PAGE>
alterations in the Resort Properties Term Facility resulting from syndication
requirements could also modify the non-recourse nature of that facility to the
Company and its resort operating subsidiaries (other than ASC East and its
resort operating subsidiaries).
On September 25, 1998, GSRP closed on a construction loan facility with
TFC Textron Financial (the "Textron Facility"). The Textron Facility matures on
September 24, 2002. The principal of the Textron Facility is payable
incrementally as quartershare sales are closed at the rate of 80% of the net
proceeds of each closing. The Textron Facility is collateralized by mortgages
against the project sites (including the completed Grand Summit Hotels at
Killington, Mt. Snow, Sunday River and Attitash Bear Peak), and is subject to
covenants, representations and warranties customary for this type of
construction facility. The Textron Facility is non-recourse to the Company and
its resort operating subsidiaries (although it is collateralized by substantial
assets of GSRP ($64.5 million as of April 25, 1999), which comprise substantial
assets of the Company).
The Textron Facility was structured to finance two of the Company's hotel
projects, one at The Canyons and one at Steamboat. In early March, 1999 Textron
advised GSRP that it was having difficulties syndicating the Steamboat portion
of the Textron Facility. On March 8, 1999, GSRP released Textron from any
further obligation to syndicate the Steamboat portion of the Textron Facility.
On April 8, 1999, Textron renewed its commitment to fund the initial $12 million
in construction draws on the Steamboat portion of the Textron Facility. The
amendment to the Textron Facility further modified the loan to provide for a
total syndication requirement of $105 million, in order for the Textron Facility
to be considered "fully funded". In addition, in order to facilitate
syndication, the interest rate of the Textron Facility was changed from prime
plus 1.5% per annum to prime plus 2.5% per annum. Also on April 8, 1999, Resort
Properties and BankBoston amended the Resort Properties Term Facility to provide
that BankBoston would not declare a default under the Resort Properties Term
Facility, due to the Textron Facility not being fully syndicated, until July 8,
1999, so long as Textron continued to fund the Steamboat portion of the Textron
Facility. During the period from April 8, 1999 through July 8, 1999, Textron,
BankBoston and Resort Properties agreed to coordinate their efforts to syndicate
the balance of the Textron Facility. On June 1, 1999, Textron notified Resort
Properties that it had received written commitments for the syndication of an
additional $40 million of the Textron Facility, which, following execution of
documentation adding those additional lenders to the Textron Facility, will
bring the total syndicated amount of the Textron Facility to $110 million and
cause the Textron Facility to be fully funded. Upon closing of the $40 million
in syndication commitments, the proceeds of the Textron Facility will
consequently be available to fund the expected remaining project costs of the
hotels at both The Canyons and Steamboat.
On December 19, 1998, Canyons Resort Properties, Inc., (a wholly owned
subsidiary of Resort Properties), and KeyBank, N.A. closed on a construction
loan facility (the "Key Facility") for an additional hotel project (the Sundial
Lodge) at The Canyons. The Key Facility has a maximum principal amount of $29
million, bears interest at a rate of prime plus 1/4% per annum (payable monthly
in arrears), and matures on June 30, 2000. The Key Facility is collateralized by
a mortgage and security interest in the Sundial Lodge project, a $5.8 million
payment guaranty of Resort Properties, and a full completion guaranty of Resort
Properties. The Key Facility is non-recourse to the Company and its resort
operating subsidiaries.
12. Commitments and Contingencies. The Company's President, Chief
Executive Officer and majority shareholder (the "Majority Shareholder") is the
obligor under a margin loan (the "Margin Loan") with ING (U.S.) Capital
Corporation ("ING"). The Margin Loan has two different maintenance bases: (i)
8
<PAGE>
one which requires that the aggregate market value of the collateral be at a
certain level in order to take additional advances under the arrangement to make
interest payments (the "Advance Base") and (ii) one which requires that the
aggregate market value of the collateral be at a certain level in order to avoid
a default under the terms of the Margin Loan (the "Minimum Base"). The Margin
Loan is collateralized by the Majority Shareholder's 833,333 shares of the
Company's Common Stock and 14,760,530 shares of the Company's Class A Common
Stock and a note receivable from one of the Company's subsidiaries. At any time
that the aggregate market value of the collateral is below the Minimum Base, the
Majority Shareholder is required either to pay down the balance of the Margin
Loan or to pledge additional collateral. The Company is not liable for nor do
any of its assets collateralize the Margin Loan. However, a default under the
Margin Loan that is not cured within the applicable grace period could result in
a realization by ING of some or all of the Majority Shareholder's shares of the
Company's Common and Class A Common Stock which could result in a change in
control of the Company. A change in control of the Company could cause a default
under one or more of the Company's major credit facilities, which would likely
be material and adverse to the Company, and could also limit the annual
utilization of the Company's current net operating losses for income taxes under
section 382 of the Internal Revenue Code.
On March 3, 1999, as additional security for the Margin Loan, the
Majority Shareholder pledged to ING a promissory note from one of the Company's
subsidiaries to the Majority Shareholder. The balance of the note as of April
25, 1999 was $1.8 million. The note was established in order to cover certain
income tax liabilities generated when the Company's subsidiary (which at the
time was wholly owned by the Majority Shareholder) converted from an S
Corporation to a C Corporation as defined by the Internal Revenue Code. The
pledge of the note was required to enable the Majority Shareholder to obtain an
interest advance under the Margin Loan without violating the Advance Base
maintenance base.
During the last two weeks of April 1999, there were three separate days
when the Maintenance Base of the Margin Loan was below the required minimum
collateral base. ING waived this violation with the understanding that the
Majority Shareholder would develop a plan to reduce the outstanding balance on
the Margin Loan.
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The following is management's discussion and analysis of financial
condition and results of operations for the three and nine months ended April
25, 1999. As you read the material below, we urge you to carefully consider our
condensed, consolidated financial statements and related notes contained
elsewhere in this report and the audited financial statements and related notes
contained in our Form 10-K filed with the Securities and Exchange Commission on
October 27, 1998.
Liquidity and Capital Resources
Short-Term. The Company's primary short-term liquidity needs are
funding seasonal working capital requirements, continuing and completing real
estate development projects, funding its summer 1999 capital improvement program
9
<PAGE>
and servicing indebtedness. Cash requirements for ski-related and real estate
development activities are provided by separate sources. The Company's primary
sources of liquidity for ski-related working capital and ski-related capital
improvements are cash flow from operations of its non-real estate subsidiaries
and borrowings under the Senior Credit Facility (as hereinafter defined). Real
estate development and real estate working capital is funded primarily through
construction financing facilities established for major real estate development
projects and through a term loan facility established through the Company's real
estate development holding company, American Skiing Company Resort Properties,
Inc. ("Resort Properties"). The construction financing facilities and Resort
Properties Term Facility (collectively, the "Real Estate Facilities") are
without recourse to the Company and its resort operating subsidiaries. The Real
Estate Facilities are collateralized by significant real estate assets of Resort
Properties and its subsidiaries, including, without limitation, the assets and
stock of Grand Summit Resort Properties, Inc. ("GSRP"), the Company's primary
hotel development subsidiary. As of April 25, 1999, the book value of the total
assets that collateralized the Real Estate Facilities, and are included in the
accompanying condensed consolidated balance sheet, were approximately $194.2
million.
Resort Liquidity. The Company established a senior credit facility on
November 12, 1997 (as amended to date, the "Senior Credit Facility"). The Senior
Credit Facility is divided into two sub-facilities, $65 million of which ($5.4
million of which was available at June 1, 1999) is available for borrowings by
ASC East, Inc. and its subsidiaries (the "East Facility") and $150 million of
which ($12.9 million of which was available at June 1, 1999) is available for
borrowings by ASC Utah and ASC West, Inc. and its subsidiaries (the "West
Facility"). The East Facility consists of a six-year revolving credit facility
in the amount of $35 million and an eight-year term facility in the amount of
$30 million. The West Facility consists of a six-year revolving facility in the
amount of $75 million and an eight-year term facility in the amount of $75
million.
The Senior Credit Facility contains restrictions on the payment of
dividends by the Company on its common stock. Those restrictions prohibit the
payment of dividends in excess of 50% of the Company's consolidated net income
after July 31, 1997, and further prohibit the payment of dividends under any
circumstances when the effect of such payment would be to cause the Company's
debt to EBITDA (as defined within the credit agreement) ratio to exceed 4.0 to
1. Based upon these restrictions (as well as additional restrictions discussed
below), the Company does not expect that it will be able to pay dividends on its
common stock during either the current or next fiscal year.
The maximum availability under the revolving facilities will reduce over
the term of the Senior Credit Facility by certain prescribed amounts. The term
facilities amortize at an annual rate of approximately 1.0% of the principal
amount for the first six years with the remaining portion of the principal due
in two substantially equal installments in years seven and eight. Beginning in
July 1999, the Senior Credit Facility requires mandatory prepayment of 50% of
the Company's excess cash flows during any period in which the ratio of the
Company's total senior debt to EBITDA exceeds 3.50 to 1. In no event, however,
will such mandatory prepayments reduce either revolving facility commitment
below $35 million. Management does not presently expect to generate excess cash
flows, as defined in the Senior Credit Facility, during fiscal 1999 or fiscal
2000.
The Senior Credit Facility contains affirmative, negative and financial
covenants customary for this type of credit facility, including maintenance of
certain financial ratios. Except for a leverage test, compliance with financial
covenants is determined on a consolidated basis notwithstanding the bifurcation
10
<PAGE>
of the Senior Credit Facility into sub-facilities. The East Facility is
collateralized by substantially all the assets of ASC East, Inc. and its
subsidiaries, except its real estate development subsidiaries (consisting of
Resort Properties and its subsidiaries), which are not borrowers under the
Senior Credit Facility. The West Facility is collateralized by substantially all
the assets of ASC Utah, ASC West, Inc. and its subsidiaries. Each of the East
and West facilities is collateralized by a guaranty of the Company, which
guaranty is secured by substantially all assets of the Company.
The revolving facilities are subject to annual 30-day clean down
requirements to an outstanding balance of not more than $10 million for the East
Facility and not more than $45 million for the West Facility, which clean down
period must include April 30 of each fiscal year. The Company completed the
clean down requirement for both the East Facility and the West Facility on April
30, 1999.
Due to the adverse weather conditions in the eastern United States and
Colorado during the Company's second fiscal quarter of 1999 and their effect on
the Company's second quarter revenue, EBITDA and net income, the Company entered
into an amendment to the Senior Credit Facility on March 3, 1999 (the "Credit
Facility Amendment") which significantly modified the covenant requirements of
the Senior Credit Facility for the second and third fiscal quarters of 1999 and
on a prospective basis. Based upon historical operations, management presently
anticipates that the Company will be able to meet the financial covenants of the
Senior Credit Facility, as amended by the Credit Facility Amendment. Failure to
meet one or more of these covenants could result in an event of default under
the Senior Credit Facility. In the event that such default were not waived by
the lenders holding a majority of the debt under the Senior Credit Facility,
such default would also constitute defaults under one or more of the Textron
Facility, the Key Facility, the Resort Properties Term Loan, and the Indenture
(each as hereinafter defined), the consequences of which would likely be
material and adverse to the Company.
The Credit Facility Amendment also places a maximum level of non-real
estate capital expenditures for fiscal 2000 of between $15 million and $20
million, with maximum levels depending on the Company's ability to consummate
sales of certain non-strategic assets. Following fiscal 2000, annual resort
capital expenditures (exclusive of real estate capital expenditures) are capped
at the lesser of (i) $35 million or (ii) the total of consolidated EBITDA (as
defined therein) for the four fiscal quarters ended in April of the previous
fiscal year less consolidated debt service for the same period.
The Company intends to use borrowings under the Senior Credit Facility
for seasonal working capital needs, summer 1999 resort capital improvements and
to build retail and other inventories prior to the start of the 1999-2000 ski
season. Due to the adverse weather conditions in the Company's second fiscal
quarter and their impact on the Company's fiscal 1999 cash flows, the Company
expects to maximize borrowings under the Senior Credit Facility sometime between
September and November of 1999. During this period, the Company expects to have
little, if any, borrowing availability under the Senior Credit Facility and will
have limited ability to fund unusual and/or unanticipated expenses. The working
capital deficit resulting from the Company's poor second quarter results will
likely negatively effect the Company's liquidity during the remainder of fiscal
1999 and through December of 1999.
The Company's liquidity is also significantly affected by its high
leverage. As a result of its leveraged position, the Company will have
significant cash requirements to service interest and principal payments on its
11
<PAGE>
debt. Consequently, cash availability for working capital needs, capital
expenditures and acquisitions is very limited. Furthermore, the Senior Credit
Facility and the Indenture each contain significant restrictions on the ability
of the Company and its subsidiaries to obtain additional sources of capital and
may affect the Company's liquidity. These restrictions include restrictions on
the sale of assets, restrictions on the incurrence of additional indebtedness
and restrictions on the issuance of preferred stock.
Due to the adverse weather conditions experienced by the Company during
its second fiscal quarter of 1999 and their resulting impact on the Company's
cash flows, the Company is taking the following steps in order to improve cash
flows for the remainder of fiscal 1999 and fiscal 2000: (a) the sale of some of
the Company's non-strategic assets (assets deemed by management not to be
significant to skiing and other resort activities or to real estate development
plans), (b) a reduction of capital expenditures for the remainder of fiscal 1999
and fiscal 2000, and (c) a reduction of the operating expenditures of the
Company and its subsidiaries. The Company's ability to meet its short term
liquidity requirements is largely dependent upon the successful implementation
of its plan to sell certain non-strategic assets and reduce short term operating
costs. There can be no assurance that the Company will continue to be able to
sell such assets and reduce costs or that the resulting proceeds and cost
savings will be sufficient to allow the Company to meet its short term liquidity
needs.
The Company has engaged Donaldson, Lufkin & Jenrette Securities
Corporation and ING Barings to explore strategic alternatives for the Company,
which may include the raising of equity and/or possible business combinations to
reduce the Company's leverage, increase liquidity, and better position the
Company to execute it's growth plan. There can be no assurance that the Company
will be able to consummate such a transaction.
ASC East, Inc. is prohibited under the indenture governing its $120
million 12% Senior Subordinated Notes due 2006 (the "Indenture") from paying
dividends or making other distributions to the Company, except under certain
circumstances (which are not currently applicable and are not anticipated to be
applicable in the foreseeable future). Therefore, ASC East, Inc.'s ability to
distribute excess cash to the Company for use by the Company or its other
subsidiaries (other than subsidiaries of ASC East) is, and will likely continue
to be, significantly limited. As of April 25, 1999, the amount of net assets of
ASC East, Inc. and its subsidiaries (including Resort Properties, GSRP, and
their respective subsidiaries) which are restricted under the Indenture was
approximately $75.8 million. These net assets are comprised of the following:
current assets of $35.9 million, intangible assets of $21.5 million, operating
assets of $460.6 million, net of current liabilities of $153.6 million and
long-term liabilities of $280.7 million. As of the end of the third fiscal
quarter of 1999, ASC East had $0 available for distribution to the Company under
the terms of the Indenture.
The Company issued $17.5 million of convertible-preferred stock and
$17.5 million of convertible notes in July, 1997 to fund development at The
Canyons. These securities were converted on November 12, 1997 into Mandatorily
Redeemable 10 1/2% Repriced Convertible Preferred Stock of the Company. The 10
1/2% Repriced Convertible Preferred Stock shares are exchangeable at the option
of the holder into shares of the Company's common stock at a conversion price of
$17.10 for each common share. In the event that the 10 1/2% Repriced Convertible
Preferred Stock is held to its maturity date of November 15, 2002, the Company
will be required to pay the holders the face value of $36.6 million plus
dividends in arrears. So long as the 10 1/2% Repriced Convertible Preferred
Stock remains outstanding, the Company may not pay any cash dividends on its
common stock unless all accrued dividends on the 10 1/2% Repriced Convertible
Stock have been paid up to date and in cash. Because the Company has been
accruing unpaid dividends on the 10 1/2% Repriced Convertible Preferred Stock,
the Company is not presently able to pay cash dividends on its common stock and
management does not expect that the Company will have this ability in the near
future.
The Company's President, Chief Executive Officer and majority
shareholder (the "Majority Shareholder") is the obligor under a margin loan (the
"Margin Loan") with ING (U.S.) Capital Corporation. The Margin Loan has two
different maintenance bases: (i) one which requires that the aggregate market
value of the collateral be at a certain level in order to take additional
advances under the arrangement to make interest payments (the "Advance Base")
and (ii) one which requires that the aggregate market value of the collateral be
at a certain level in order to avoid a default under the terms of the Margin
Loan (the "Minimum Base"). The Margin Loan is collateralized by the Majority
Shareholder's 833,333 shares of the Company's Common Stock and 14,760,530 shares
of the Company's Class A Common Stock. At any time that the aggregate market
12
<PAGE>
value of the collateral is below the Minimum Base, the Majority Shareholder is
required to either pay down the balance of the Margin Loan or to pledge
additional collateral. The Company is not liable for nor do any of its assets
collateralize the Margin Loan. However, a default under the Margin Loan that is
not cured within the applicable grace period could result in a realization by
ING of some or all of the Majority Shareholder's shares of the Company's Common
and Class A Common Stock which could result in a change in control of the
Company. A change in control of the Company could cause a default under one or
more of the Company's major credit facilities, which would likely be material
and adverse to the Company, and could also limit the annual utilization of the
Company's current net operating losses for income taxes under section 382 of the
Internal Revenue Code.
On March 3, 1999, as additional security for the Margin Loan, the
Majority Shareholder pledged to ING a promissory note from one of the Company's
subsidiaries to the Majority Shareholder. The balance of the note as of April
25, 1999 was $1.8 million. The note was established in order to cover certain
income tax liabilities generated when the Company's subsidiary (which at the
time was wholly owned by the Majority Shareholder) converted from an S
Corporation to a C Corporation as defined by the Internal Revenue Code. The
pledge of the note was required to enable the Majority Shareholder to obtain an
interest advance under the Margin Loan without violating the Advance Base
maintenance base.
During the last two weeks of April 1999, there were three separate days
when the Maintenance Base of the Margin Loan was below the required minimum
collateral base. ING waived this violation with the understanding that the
Majority Shareholder would develop a plan to reduce the outstanding balance on
the Margin Loan.
The Majority Shareholder has indicated to management of the company
that he has both the means and the intent to pay down and/or further
collateralize the Margin Loan as necessary to prevent a default under such loan.
The Company can provide no assurances that the Majority Shareholder will prevent
a default.
Real Estate Liquidity: Funding of working capital for Resort Properties is
provided through (1) revenue from real estate sales and related operations, (2)
13
<PAGE>
proceeds from a term loan facility between BankBoston and Resort Properties
established January 8, 1999 in the maximum principal amount of $58 million (the
"Resort Properties Term Facility") and (3) project-specific construction loans.
The Resort Properties Term Facility bears interest at a variable
rate equal to BankBoston's base rate plus 8.25%, or a current rate of 16% per
annum (payable monthly in arrears), and matures on June 30, 2001. As of June 1,
1999, $50.8 million was outstanding under the Resort Properties Term Facility.
The Resort Properties Term Facility is collateralized by security interests in,
and mortgages on, substantially all of Resort Properties' assets, which
primarily consist of undeveloped real property and the stock of its real estate
development subsidiaries (including GSRP). As of April 25, 1999, the book value
of the total assets that collateralized the Resort Properties Term Facilitity,
and are included in the accompanying condensed consolidated balance sheet, was
approximately $194.2 million. The Resort Properties Term Facility is
non-recourse to the Company and its resort operating subsidiaries.
In conjunction with the Resort Properties Term Facility, Resort
Properties entered into a syndication letter with BankBoston (the "Syndication
Letter") pursuant to which BankBoston agreed to syndicate up to $43 million of
the Resort Properties Term Facility. Under the terms of the Syndication Letter,
one or more of the terms of the Resort Properties Term Facility (excepting
certain terms such as the maturity date and commitment fee) may be altered
depending on the requirements for syndication of the facility. However, no
alteration of the terms of the facility may occur without the consent of Resort
Properties. Although Resort Properties expects the terms of the Resort
Properties Term Facility to remain substantially similar to those discussed
above, one or more of such terms could be altered in order to syndicate the
facility, and such alterations could be material and adverse to the Company. The
Syndication Letter also provides that, in the event that BankBoston is unable to
syndicate at least $33 million of the Resort Properties Term Facility on or
before July 9, 1999, then BankBoston may, at its option, require repayment of
the outstanding balance of the facility within 120 days of its request for
repayment by Resort Properties. As of June 1, 1999, BankBoston had not
syndicated any portion of the Resort Properties Term Facility. BankBoston has
not indicated to the Company whether it intends to require repayment pursuant to
the foregoing terms if the Resort Properties Term Facility is not syndicated. If
BankBoston were to require repayment, there can be no assurance that the Company
could secure replacement financing for the Resort Properties Term Facility. The
failure to secure replacement financing on terms similar to those existing under
the Resort Properties Term Facility could result in a material adverse effect on
the liquidity of Resort Properties and its subsidiaries, including GSRP, and
could also result in a default under the Indenture and the Senior Credit
Facility.
The Company runs substantially all of its real estate development
through single purpose subsidiaries, each of which is a wholly-owned subsidiary
of Resort Properties. In its fourth fiscal quarter of 1998, the Company
commenced construction on three new hotel projects (two at The Canyons in Utah
and one at Steamboat in Colorado). Two of these new hotel projects are Grand
Summit Hotels which are being constructed by GSRP. The Grand Summit Hotel at The
Canyons is being financed through a construction loan facility among GSRP and
various lenders, including TFC Textron Financial, the syndication agent and
14
<PAGE>
administrative agent, which closed on September 25, 1998 (the "Textron
Facility"). The Company's other Grand Summit Hotel is being constructed at the
Company's Steamboat resort in Colorado. The project was initially planned to be
financed through the Textron Facility. In early March, 1999, Textron advised
GSRP that it was having difficulties syndicating the Steamboat portion of the
Textron Facility. On March 8, 1999, GSRP released Textron from any further
obligation to syndicate the Steamboat portion of the Textron Facility.
On April 8, 1999, Textron renewed its commitment to fund the initial $12
million in construction draws on the Steamboat portion of the Textron Facility.
The amendment to the Textron Facility further modified the loan to provide for a
total syndication requirement of $105 million, in order for the Textron Facility
to be considered "fully funded". In addition, in order to facilitate
syndication, the interest rate of the Textron Facility was changed from prime
plus 1.5% per annum to prime plus 2.5% per annum. Also on April 8, 1999, Resort
Properties and BankBoston amended the Resort Properties Term Facility to provide
that BankBoston would not declare a default under the Resort Properties Term
Facility, due to the Textron Facility not being fully syndicated, until July 8,
1999, so long as Textron continued to fund the Steamboat portion of the Textron
Facility. During the period from April 8, 1999 through July 8, 1999, Textron,
BankBoston and Resort Properties agreed to coordinate their efforts to syndicate
the balance of the Textron Facility. On June 1, 1999, Textron notified Resort
Properties that it had received written commitments for the syndication of an
additional $40 million of the Textron Facility, and which, following execution
of documentation adding those additional lenders to the Textron Facility will
bring the total syndicated amount of the Textron Facility to $110 million and
cause the Textron Facility to be fully funded. Following full syndication, the
proceeds of the Textron Facility will consequently be available to fund the
expected remaining project costs of the hotels at both The Canyons and
Steamboat.
As of June 1, 1999, the amount outstanding under the Textron Facility was
$44.2 million. The Textron Facility matures on September 24, 2002. The principal
of the Textron Facility is payable incrementally as quartershare sales are
closed at the rate of 80% of the net proceeds of each closing. The Textron
Facility is collateralized by mortgages against the project sites (including the
completed Grand Summit Hotels at Killington, Mt. Snow, Sunday River and Attitash
Bear Peak), and is subject to covenants, representations and warranties
customary for this type of construction facility. The Textron Facility is
non-recourse to the Company and its resort operating subsidiaries (although it
is collateralized by substantial assets of GSRP, which comprise substantial
assets of the Company).
The remaining hotel project commenced by the Company in 1998, the
Sundial Lodge project at The Canyons, is being financed through a construction
loan facility between Canyons Resort Properties, Inc., (a wholly-owned
subsidiary of Resort Properties) and KeyBank, N.A. (the "Key Facility"). The Key
Facility has a maximum principal amount of $29 million, bears interest at a rate
of prime plus 1/4% per annum (payable monthly in arrears), and matures on June
30, 2000. Additional costs (approximately $8 million) for the Sundial Lodge
project have been financed through proceeds of the Resort Properties Term
Facility, which have been loaned on an intercompany basis by Resort Properties
to Canyons Resort Properties, Inc.. The Key Facility closed on December 19,
1998. The Company began drawing under the Key Facility in late April of 1999,
following completion of the required equity contribution (approximately $8
million) of the Company in the Sundial Lodge project. The Company had no
15
<PAGE>
advances outstanding under the Key Facility as of April 25, 1999, but subsequent
to the end of the quarter the Company has drawn $3.9 million from this facility.
The Key Facility is collateralized by a mortgage and security interest in the
Sundial Lodge project, a $5.8 million payment guaranty of Resort Properties, and
a full completion guaranty of Resort Properties. The Key Facility is
non-recourse to the Company and its resort operating subsidiaries (although it
is collateralized by substantial assets of Resort Properties and its
subsidiaries). As of April 25, 1999, the book value of the total assets that
collateralized the Real Estate Facilities, and are included in the accompanying
condensed consolidated balance sheet, were approximately $194.2 million.
Long-Term. The Company's primary long-term liquidity needs are to fund
skiing related capital improvements at certain of its resorts and development of
its slopeside real estate. The Company has invested over $175 million in skiing
related facilities in fiscal years 1997 and 1998 combined. As a result, the
Company expects its resort capital programs for the next several fiscal years to
be more limited in size. The fiscal 1999 resort capital program is expected to
total approximately $57 million, substantially all of which was expended or
fully committed prior to April 25, 1999. The fiscal 2000 resort capital program
is estimated at between $15 million and $20 million.
The Company's largest long-term capital needs relate to certain resort
capital expenditure projects and the Company's real estate development program.
For the next two fiscal years, the Company anticipates its annual maintenance
capital needs to be approximately $12 million. There is a considerable degree of
flexibility in the timing and, to a lesser degree, scope of the Company's growth
capital program. Although specific capital expenditures can be deferred for
extended periods, continued growth of skier visits, revenues and profitability
will require continued capital investment in on-mountain improvements. The
Company's practice is to finance on-mountain capital improvements through resort
cash flow and its Senior Credit Facility. The size and scope of the capital
improvement program will generally be determined annually depending upon future
availability of cash flow from each season's resort operations and future
borrowing availability and covenant restrictions under the Senior Credit
Facility. The Credit Facility Amendment places a maximum level of non-real
estate capital expenditures for fiscal 2001 and beyond at the lesser of (i) $35
million or (ii) the total of (a) consolidated EBITDA (as defined therein) for
the four fiscal quarters ended in April of the previous fiscal year less (b)
consolidated debt service for the same period. Management believes that these
capital expenditure amounts will be sufficient to meet the Company's needs for
non-real estate capital expenditures for the near future.
The Company's business plan anticipates the development of both Grand
Summit hotels and condominium hotels at several resorts, as well as resort
villages at Sunday River, Killington, The Canyons, Steamboat and Heavenly. The
timing and extent of these projects are subject to local and state permitting
requirements which may be beyond the Company's control, as well as to the
Company's cash flow requirements and availability of external capital.
Substantially all of the Company's real estate development is undertaken through
the Company's real estate development subsidiary, Resort Properties. Recourse on
indebtedness incurred to finance this real estate development is limited to
Resort Properties and/or its subsidiaries (including GSRP). Such indebtedness is
generally collateralized by the projects financed under the particular
indebtedness which, in some cases, constitutes a significant portion of the
assets of the Company. As of April 25, 1999, the total assets that
collateralized the Real Estate Facilities, and are included in the accompanying
condensed consolidated balances sheet, totaled approximately $194.2 million.
Resort Properties' seven existing development projects are currently being
funded by the Resort Properties Term Facility, the Textron Facility and the Key
Facility.
The Company expects to undertake future real estate development
projects through special purpose subsidiaries with financing provided
principally on a non-recourse basis to the Company and its resort operating
subsidiaries. Although this financing is expected to be non-recourse to the
Company and its resort subsidiaries, it will likely be collateralized by
16
<PAGE>
existing and future real estate projects of the Company which may constitute
significant assets of the Company. Required equity contributions for these
projects must be generated before those projects can be undertaken. Potential
sources of equity contributions include sales proceeds from existing real estate
projects and assets, and potential sales of equity interests in Resort
Properties and/or its real estate development subsidiaries. Financing
commitments for future real estate development do not currently exist, and no
assurance can be given that they will be available or established. The Company
will be required to establish both equity sources and construction facilities or
other financing arrangements for these projects before undertaking each
development.
The Company from time to time considers potential acquisitions which,
based upon the historical performance of the target entities, are expected to be
accretive to earnings. There are not currently any funding sources immediately
available to the Company for such acquisitions. The Company would need to
establish such sources prior to consummating any such acquisition.
17
<PAGE>
Changes in Results of Operations
Third Quarter of Fiscal 1999 compared to Third
Quarter of Fiscal 1998.
1. Resort revenues. Resort revenues increased $10.1 million, or 7%, from $144.2
million for the three months ended April 26, 1998 to $154.3 million for the
three months ended April 25, 1999. The increase is attributable to the
following: a) $2.5 million, or 3.2%, increase in ticket sales due to higher
yields on lower skier visits; b) $2.3 million or 12.5% increase in food and
beverage revenue and $1.1 million, or 5.9%, increase in retail sales due to
additional outlets; c) $1.9 million, or 14.9%, increase in skier development
revenue due to the establishment of a new skier development program which
included the opening of four new Perfect Turn Discovery Centers; d) $1.7
million, or 14.8%, increase in lodging revenue due to the addition of two new
hotels; and e) $0.6 million increase in other miscellaneous revenue sources.
2. Real estate revenues. Real estate revenues decreased $30.6 million, or 74.8%,
from $40.9 million for the three months ended April 26, 1998 to $10.3 million
for the three months ended April 25, 1999. The majority of this decrease is
attributable to substantial revenues recognized in fiscal 1998 from closings of
pre-sold quartershare units at the Company's Grand Summit Hotels at Killington
and Mt. Snow and the absence of new real estate inventory in fiscal 1999. These
two projects were completed during the third fiscal quarter of 1998, at which
time the company realized approximately $28.1 million in sales revenue. The
Jordan Grand Hotel was completed during the second quarter of fiscal 1998 and
generated revenue of $7.9 million during the third quarter of 1998. During the
third fiscal quarter of 1999, the Company realized $7.7 million in on-going
sales of quartershare units at all three hotels.
3. Cost of resort operations. Cost of resort operations increased $8.5 million,
or 12.9%, from $66.1 million for the three months ended April 26, 1998 to $74.6
million for the three months ended April 25, 1999. The majority of this increase
is due to: a) $0.9 million in additional snowmaking costs due to the lack of
natural snow at the Company's eastern resorts; b) $1.6 million in additional
costs associated with increased food and beverage outlets; c) $0.6 million in
skier development costs associated with a new skier development program which
included four new Perfect Turn Discovery Centers; d) $1.4 million in lodging
costs associated with the opening of two new hotels; and e) $1.6 million
increase in property taxes due to increased tax rates in Vermont and an
increased asset base at The Canyons.
4. Cost of real estate operations. Cost of real estate operations decreased
$19.9 million, or 51.9%, from $28.5 million for the three months ended April 26,
1998 to $8.6 million for the three months ended April 25, 1999. This decrease is
attributable to substantial cost recognized in the third quarter of 1998 from
closings of pre-sold quartershare units at the Company's Grand Summit Hotels at
Killington and Mt. Snow. The Summit projects were completed in the third quarter
of 1998, at which time the Company realized costs of approximately $16.9
million. The Jordan Grand Hotel was completed in the second quarter of 1998,
during the third quarter of 1998 realized costs totaled $4.1 million. The cost
associated with the on-going sales of quartershare units at all three of these
hotels in the third quarter of 1999 totaled $4.1 million.
18
<PAGE>
5. Marketing, general and administrative. Marketing, general and administrative
expense increased $3.1 million, or 27.2%, from $11.4 million for the three
months ended April 26, 1998 to $14.5 million for the three months ended April
25, 1999. This increase can be attributable to the following: a) a planned
increase in marketing of $1.3 million at all of the resorts; b) $0.8 million due
to severance payments and restructuring of management compensation; c) $0.3
million resulting from the expansion of management information systems; and d)
$0.7 million increase associated with the increased scope of the Company's
operations.
6. Depreciation and amortization. Depreciation and amortization increased $1.7
million, or 9.4%, from $18.0 million for the three months ended April 26, 1998
to $19.7 million for the three months ended April 25, 1999 primarily due to
additional depreciation related to the Company's capital improvements of
approximately $52 million in the fourth quarter of 1998 and first three quarters
of fiscal 1999. This increase is offset slightly by the change in the estimated
useful lives of certain of the Company's ski-related assets, which decreased
depreciation expense by $0.3 million compared to the third fiscal quarter of
1998. See footnote 1 to the Company's financial statements - Change in
Accounting Estimate.
7. Interest expense. Interest expense increased $2.6 million, or 34.7%, from
$7.5 million for the three months ended April 26, 1998 to $10.1 million for the
three months ended April 25, 1999 mainly due to increased debt levels associated
with financing the Company's recent capital improvements and real estate
projects.
8. Provision for income taxes. Provision for income taxes decreased $6.2 million
from $21.0 million for the three months ended April 26, 1998 to $14.8 million
for the three months ended April 25, 1999. The change is primarily attributable
to the decrease in the Company's pre-tax income for the three months ended April
25, 1999 as compared to the Company's pre-tax income for the three months ended
April 26, 1998.
First Nine months of Fiscal 1999 compared to First
Nine Months of Fiscal 1998.
1. Resort revenues. Resort revenues increased $13.7 million, or 5.2%, from
$264.1 million for the nine months ended April 26, 1998 to $277.8 million for
the nine months ended April 25, 1999. The inclusion of the results from
Steamboat and Heavenly resorts for the first fiscal quarter of 1999 accounts for
a $3.6 million increase (the results of Steamboat and Heavenly for fiscal 1998
are only included for the period commencing with the purchase of these resorts
on November 12, 1997). The remaining increase is attributable to the following:
a) $4.0 million, or 12.6%, increase in food and beverage and $3.3 million, or
9.1%, increase in retail sales associated with additional outlets; b) $1.8
million, or 7.9%, increase in skier development associated with a new skier
development program which included the opening of four new Perfect Turn
Discovery Centers; c) $3.9 million, or 16.2%, increase in lodging revenue
associated with the opening of three new hotels; and d) $2.5 million, or 134.5%,
increase in sponsorship marketing revenue due to the increased number of
sponsors and increase in funds received from existing sponsors. The increases in
revenues were offset by a decrease of $1.3 million, or 0.8%, in ticket revenue
due to a decrease in skier visits, and $2.3 million in other miscellaneous
revenue sources.
19
<PAGE>
2. Real estate revenues. Real estate revenues decreased $28.5 million, or 57.5%,
from $49.6 million for the nine months ended April 26, 1998 to $21.1 million for
the nine months ended April 25, 1999. The majority of this decrease is
attributable to the substantial revenues recognized in fiscal 1998 from closings
of pre-sold quartershare units at the Company's Grand Summit Hotels at
Killington, Mt. Snow and Sunday River. These projects were completed during the
second and third fiscal quarters of 1998, at which time the Company realized
$42.4 million in sales revenue for the nine months ended April 26, 1998. For the
nine months ended April 25, 1999 the Company realized $14.0 million in on-going
sales of quartershare units.
3. Cost of resort operations. Cost of resort operations increased $24.6 million,
or 16.7%, from $147.3 million for the nine months ended April 26, 1998 to $171.9
million for the nine months ended April 25, 1999. The inclusion of the Steamboat
and Heavenly resorts for the first fiscal quarter of 1999 accounts for $8.6
million of the increase (the results of Steamboat and Heavenly for fiscal 1998
are only included for the period commencing with the purchase of these resorts
on November 12, 1997). The majority of the remaining increase is attributable to
the following: a) $4.8 million in lodging costs associated with the operation of
three new hotels; b) $1.2 million increase associated with a new skier
development program which included the operation of four new Perfect Turn
Discovery Centers; c) $3.6 million in food and beverage and retail costs
associated with increased outlets; d) $1.1 million increase in snowmaking due to
the lack of natural snow at the Company's eastern resorts; e) $1.5 million
increase in property taxes due to increased tax rates in Vermont and an
increased asset base at The Canyons; and f) $1.0 million increase in event costs
associated with marketing sponsorship.
4. Cost of real estate operations. Cost of real estate operations decreased
$14.2 million, or 40.9%, from $34.7 million for the nine months ended April 26,
1998 to $20.5 million for the nine months ended April 25, 1999. This decrease is
attributable to the substantial cost recognized in the third quarter of 1998
from closings of pre-sold quartershare units at the company's Grand Summit
Hotels at Killington, Mt. Snow and Sunday River. These projects were completed
in the second and third quarters of fiscal 1998. The cost associated with the
revenue realized for the nine months ended April 26, 1998 totaled $24.8 million.
The cost associated with the on-going sales of these units in the third quarter
of 1999 totaled $8.3 million. The remaining $2.2 million difference is
attributable mainly to the write-off of $0.7 million in prepaid advertising and
commission charges incurred in generating pre-sale contracts, some of which have
subsequently expired, for a Grand Summit Hotel at the Company's Sugarbush
resort. The timing of development for the Sugarbush project is expected to be
re-evaluated by the Company during next year's skiing season. Additionally, $0.8
million of expenses were incurred during the second quarter of fiscal 1999
relating to the Company's unsuccessful $300 million bond offering which was
undertaken to provide additional financing for the Company's real estate
projects.
5. Marketing, general and administrative. Marketing, general and administrative
expense increased $12.0 million, or 38.3%, from $31.3 million for the nine
months ended April 26, 1998 to $43.3 million for the nine months ended April 25,
1999. The inclusion of the Steamboat and Heavenly resorts for the first fiscal
quarter of 1999 accounts for $5.0 million of the increase. The remaining
increase can be attributed to the following: a) a planned increase in marketing
expenses at the all resorts of $2.9 million; b) a stock compensation charge
relating to the vesting of additional shares of management stock options of $0.6
20
<PAGE>
million; c) $0.6 million of additional expenses resulting from the expansion of
management information services functions; d) $2.0 million of severance payments
and restructuring of management compensation; and e) $0.6 million increase in
costs associated with being a public company.
6. Stock compensation charge. Stock compensation charges decreased $14.3
million, or 100%. This charge was recognized during the nine months ended April
26, 1998 to reflect stock options granted to certain members of senior
management in relation to the Company's initial public offering. Approximately
$0.6 million of stock compensation charges for the vesting of additional options
was expensed for the nine months ended April 25, 1999 to marketing, general and
administrative. [See footnote 10 - Stock Option Plan].
7. Depreciation and amortization. Depreciation and amortization increased $7.0
million, or 20.3%, from $34.5 million for the nine months ended April 26, 1998
to $41.5 million for the nine months ended April 25, 1999. The inclusion of the
Steamboat and Heavenly resorts for the first fiscal quarter of 1999 accounts for
$1.6 million of the increase. The remaining increase is primarily due to
additional depreciation on capital improvements of approximately $52 million
made this year. These increases are slightly offset by the change in the
estimated useful lives of certain of the Company's ski-related assets, which
decreased depreciation expense by $0.7 million compared to the first nine months
of 1998. [See footnote 1 - Change in Accounting Estimate].
8. Interest expense. Interest expense increased $4.2 million, or 16.8%, from
$25.0 million for the nine months ended April 26, 1998 to $29.2 million for the
nine months ended April 25, 1999 mainly due to increased debt levels associated
with financing the Company's recent capital improvements and real estate
projects.
9. Provision for (benefit from) income taxes. Provision for (benefit from)
income taxes decreased $11.2 million from a provision of $10.4 million to a
benefit of $0.8 million, which is primarily attributable to the increase in the
Company's pre-tax loss for the nine months ended April 25, 1999 as compared to
the nine months ended April 26, 1998, when the Company had pre-tax income. The
benefit for the nine months ended April 25, 1999 was reduced from the statutory
rate due primarily to a decrease in estimated deferred tax benefits relating to
stock compensation tax benefits.
10. Accretion of discount and dividends accrued on mandatorily redeemable
preferred stock. Accretion of discount and dividends accrued on mandatorily
redeemable preferred stock decreased $1.1 million, or 25.6%, from $4.3 million
for the nine months ended April 26, 1998 to $3.2 million for the nine months
ended April 25, 1999. The decrease is primarily attributable to $0.9 million in
additional accretion recognized during the nine months ended April 26, 1998
relating to a conversion feature on the Company's Series A 14% Exchangeable
Preferred Stock, that allowed holders of these securities to convert to shares
of the Company's Common Stock at a 5% discount to the Company's initial public
offering price. An additional $0.9 million of the decrease is due to
amortization of issuance costs recognized for the nine months ended April 26,
1998 related to the Company's Series A 14% Exchangeable Preferred Stock upon its
conversion into Mandatorily Redeemable 10 1/2 % Repriced Convertible Preferred
Stock. These decreases were offset by the full nine months accretion for this
year and the compounding effect of the dividend accrual.
21
<PAGE>
Changes in Financial Condition
Third Quarter of Fiscal 1999 Compared to Fiscal Year End 1998
1. Cash and cash equivalents: Cash and cash equivalents decreased $6.3 million,
or 40.9%, from a balance of $15.4 million at July 26, 1998 to a balance of $9.1
million at April 25, 1999. The decrease is primarily attributable to an
investment made in the Company's real estate subsidiaries of $5.5 million from
proceeds of the Company's initial public offering.
2. Accounts receivable: Accounts receivable increased $5.5 million, or 73.3%,
from a balance of $7.5 million at July 26, 1998 to a balance of $13.0 million at
April 25, 1999. The increase is primarily attributable to an increase in
receivables of $5.3 million at the Company's resorts due to the increased
business activity concurrent with the ski season.
3. Prepaid expenses: Prepaid expenses decreased $1.3 million, or 35.1%, from a
balance of $3.7 million at July 26, 1998 to a balance of $2.4 million at April
25, 1999. The write off of sales and marketing expenses relating to the
Sugarbush Grand Summit Hotel project, which has been postponed, accounts for
$0.7 million of the decrease. The remaining decrease is primarily attributable
to the recognition of various prepaid advertising, insurance and other costs
which were expensed over the 1998/99 ski season.
4. Property, plant and equipment, net: Property, plant and equipment, net,
increased $8.5 million, or 1.6%, from a balance of $521.1 million at July 26,
1998 to a balance of $529.6 million at April 25, 1999. The increase is primarily
attributable to resort related capital improvements of $52.3 million, less $38.3
million in depreciation expense, $0.5 million in asset sales and $2.4 million in
assets transferred to real estate developed for sale.
5. Real estate developed for resale: Real estate developed for resale increased
$75.7 million, or 96.3%, from a balance of $78.6 million at July 26, 1998 to a
balance of $154.3 million at April 25, 1999. The increase is primarily
attributable to the development of the Sundial Lodge project at The Canyons and
Grand Summit Resort Hotel projects at The Canyons and Steamboat, slightly offset
by sales of the eastern Grand Summit Hotel inventory.
6. Long-term investments: Long-term investments decreased $1.3 million, or
17.6%, from a balance of $7.4 million at the year ended July 26, 1998 to a
balance of $6.1 million at the quarter ended April 25, 1999. The decrease is
primarily attributable to the maturity of certain long-term investments at the
Company's captive insurance subsidiary which were held as cash at April 25, 1999
and were re-invested in long-term investments subsequent to the quarter end.
7. Other assets: Other assets increased $3.6 million, or 24.8%, from a balance
of $14.5 million at July 26, 1998 to a balance of $18.1 million at April 25
1999. The increase is primarily attributable to $3.4 million in land option
payments made at The Canyons.
8. Current portion of long-term debt: Current portion of long-term debt
decreased $24.5 million, or 55.4% from a balance of $44.2 million at July 26,
22
<PAGE>
1998 to a balance of $19.7 million at April 25, 1999. The decrease is primarily
attributable to a net pay down of the Company's Senior Credit Facility
consistent with the seasonal nature of the Company's cash flows.
9. Accounts payable and other current liabilities: Accounts payable and other
accrued liabilities increased $50.5 million, or 113.5%, from a balance of $44.4
million at July 26, 1998 to a balance of $94.8 million at April 25, 1999. The
increase is attributable to i) an increase of $14.0 million relating to the
construction projects at the Company's real estate subsidiaries, ii) an increase
of $5.6 million in accrued interest due to the timing of various interest
payments, and iii) increases of $21.7 million in trade accounts payable and $9.1
million in other accruals due to the seasonal operating cycle of the Company's
business and timing of payments.
10. Deposits and deferred revenue: Deposits and deferred revenue increased $10.6
million, or 103.9%, from a balance of $10.2 million at July 26, 1998 to a
balance of $20.8 million at April 26, 1999. The change is attributable to i) an
increase of $5.6 million in sales deposits taken at the Company's real estate
subsidiaries, ii) a deposit of $3.0 million relating to non-strategic asset
sales and iii) an increase of $2.0 million relating to deferred revenue
associated with the Company's prepaid ticket programs.
11. Long-term debt, excluding current portion: Long-term debt, excluding current
portion, increased $52.2 million, or 24.7%, from a balance of $211.6 million at
July 26, 1998 to a balance of $263.8 million at April 25, 1999. The increase is
attributable to i) a $48.6 million increase in debt at the Company's real estate
subsidiaries to finance construction of Grand Summit Resort Hotels at The
Canyons and Steamboat and to finance the Sundial Lodge at The Canyons, ii) a
$16.0 million decrease in debt due to net repayments on the Company's Senior
Credit Facility and iii) an $18.7 million increase in capital leases to finance
capital improvements.
12. Other long-term liabilities: Other long-term liabilities increased $1.2
million, or 11.4%, from a balance of $10.5 million at July 26, 1998 to a balance
of $11.7 million at April 25, 1999. The increase is primarily attributable to
cash received on an interest rate swap agreement used as a cash flow hedge on
the Senior Subordinated Notes of the Company's subsidiary, ASC East, Inc.,
offset by a reduction in self insurance reserve requirements at the Company's
captive insurance subsidiary.
13. Mandatorily redeemable repriced convertible preferred stock: Mandatorily
redeemable repriced convertible preferred stock increased $3.2 million, or 8.1%,
from a balance of $39.5 million at July 26, 1998 to a balance of $42.7 million
at April 26, 1999. The increase is attributable to the accretion of the
dividends payable for the period.
14. Retained earnings: Retained earnings decreased $9.8 million from a balance
of $11 thousand at July 26,1998 to an accumulated deficit of $9.8 million at
April 25, 1999. The decrease is attributable to the Company's net loss for the
period.
Year 2000 disclosure
Background
The "Year 2000 Problem" is the result of many existing computer
programs and embedded chip technologies containing programming code in which
calendar year data is abbreviated by using only two digits rather than four to
refer to a year. As a result of this, some of these programs fail to operate or
23
<PAGE>
may not properly recognize a year that begins with "20" instead of "19". This
may cause such software to recognize a date using "00" as the year 1900 rather
than the year 2000. Even systems and equipment that are not typically thought of
as computer-related often contain embedded hardware or software that may
improperly understand dates beginning with the year 2000. Inability of systems
to properly recognize the year 2000 could result in system failure or
miscalculations causing disruptions to operations, including temporary inability
to process transactions or engage in normal business activities.
The Company has developed a Year 2000 task force with representation
throughout the organization. The task force has developed a comprehensive
strategy to systematically evaluate and update systems as appropriate. In some
cases, no system changes are necessary or the changes have already been made. In
all other cases, modifications are planned to prepare the Company's systems to
be Year 2000 compliant by September 1999. The disclosure below addresses the
Company's Year 2000 Project.
Company's state of readiness
The Year 2000 Project is divided into three initiatives: (i)
Information Technology ("IT") Systems, (ii) Non-IT Systems and (iii) related
third party providers. The Company has identified the following phases with
actual or estimated dates of completion: 1) identify an inventory of systems,
(completed April 30, 1999), 2) gather certificates and warranties from
providers, (completed April 30, 1999), 3) determine required actions and
budgets, (completed April 30, 1999), 4) perform remediation and tests (expected
to be completed by September 1, 1999) and 5) designing contingency and business
continuation plans for each Company location (expected to be completed by June
30, 1999).
The following is a summary of the different phases and progress to date
for each initiative identified above:
IT Systems: The Company has continuously updated or replaced older
technology with more current technology. As the Company has acquired ski
resorts, it updated certain technology at these resorts. The Company's main IT
systems include an enterprise-wide client server financial system, an
enterprise-wide client server ticketing and direct to lift system, a mid-range
enterprise-wide payroll system, various point of sale and property management
systems, upgraded personal computers, wide area networking and local area
networking. Phases 1 through 3 are complete and the remaining phases are
currently on schedule. During phase 1 and 2, the Company noted that its
Sugarloaf and Sugarbush resorts have not yet converted to Year 2000 compliant
lodging systems. The Company expects to convert these two resorts to Year 2000
compliant systems by August 1, 1999. The Company has estimated that all
deficiencies will be remedied by September 1, 1999, which is in accordance with
the original timetable.
Non-IT Systems: Internal non-IT systems are comprised of faxes,
copiers, printers, postal systems, security systems, ski lifts, elevators and
telecommunication systems. Phases 1 through 3 are complete. The Company has
estimated that remediation will be completed by September 1, 1999, which is in
accordance with the original timetable.
24
<PAGE>
Related third party providers: The Company has identified its major
related third party providers as certain utility providers, employee benefit
administrators and supply vendors. Phases 1 through 3 are complete. The Company
has estimated that remediation will be completed by September 1, 1999, which is
in accordance with the original timetable.
Actual and anticipated costs
The total cost associated with required modifications to become Year
2000 compliant is not expected to be material to the Company's financial
position. The estimated total cost of the Year 2000 Project is approximately
$295,000. This estimate includes Information System conversions for Year 2000
compliant lodging systems at Sugarloaf. The Company had planned to update these
systems regardless of Year 2000 issues to standardize systems within American
Skiing Company resorts. The total amount expended on the Year 2000 Project
through April 25, 1999 was $100,000. As of April 25, 1999, the estimated future
costs of the Year 2000 Project are $195,000, of which approximately (1) $0
related to costs to modify software, hire internal personnel and hire outsourced
Year 2000 solution providers and (2) $195,000 related to replacement costs of
non-compliant IT systems. The anticipated costs related to non-IT systems is
deemed by management to be immaterial.
Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 Project is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem. The Company believes that, with the implementation of new business
systems and completion of the Year 2000 Project as scheduled, the possibility of
significant interruptions of normal operations should be reduced. Readers are
cautioned that forward-looking statements contained in the Year 2000 Update
should be read in conjunction with the Company's disclosures under the heading:
"Forward-Looking Statements".
Contingency plans
As of April 25, 1999, the Company had not completed the development of
a contingency plan related to Year 2000. The Company expects to complete the
contingency plan by June 30, 1999, 30 days behind the original schedule.
25
<PAGE>
Forward-Looking Statements
The above information includes forward-looking statements, the
realization of which may be impacted by the factors discussed below. The
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 (the "Act"). This report
contains forward looking statements that are subject to risks and uncertainties,
including, but not limited to, uncertainty as to future financial results,
substantial leverage of the Company, the capital intensive nature of development
of the Company's ski resorts; rapid and substantial growth that could place a
significant strain on the Company's management, employees and operations;
uncertainties associated with fully syndicating the Resort Properties Term
Facility, the Textron Facility and various capital leases; uncertainties
associated with obtaining additional financing for future real estate projects
and to undertake future capital improvements; demand for and costs associated
with real estate development; change in market conditions affecting the interval
ownership industry; regulation of marketing and sales of the Company's
quartershare interests; seasonality of resort revenues; fluctuations in
operating results; the Company's ability to sell non-strategic assets to the
extent planned; dependence on favorable weather conditions; the discretionary
nature of consumers' spending for skiing and resort real estate; competition;
regional and national economic conditions; laws and regulations relating to the
Company's land use, development, environmental compliance and permitting
obligations; renewal or extension terms of the Company's leases and United
States Forest Service permits; industry competition; the adequacy of water
supply; the ability of the Company to make its information technology assets and
systems year 2000 compliant and the costs of any modifications necessary in that
regard; and other risks detailed from time to time in the Company's filings with
the Securities and Exchange Commission. These risks could cause the Company's
actual results for fiscal year 1999 and beyond to differ materially from those
expressed in any forward looking statements made by, or on behalf of, the
Company. The foregoing list of factors should not be construed as exhaustive or
as any admission regarding the adequacy of disclosures made by the Company prior
to the date hereof or the effectiveness of said Act.
Item 3
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in information relating to
market risk since the Company's disclosure included in Item 7A of Form 10-K as
filed with the Securities and Exchange Commission on October 27, 1998.
26
<PAGE>
Part II - Other Information
Item 6
Exhibits and Reports on Form 8-K
a) Exhibits
Included herewith is the Financial Data Schedule submitted as Exhibit
27 in accordance with Item 601(c) of Regulation S-K. Also included are the
following material agreements entered into in the Company's third fiscal quarter
of 1999.
Exhibit No. Description
- ----------- -----------
1) First Amendment Agreement Re: Loan and Security Agreement Among Grand
Summit Resort Properties, inc., as Borrower and Textron Financial
Corporation, as Administrative Agent dated as of April 5, 1999
2) Forbearance Agreement date as of March 8, 1999, between American
Skiing Company Resort Properties, Inc. and BankBoston, N.A., as Agent
3) Amended and Restated Forbearance Agreement dated as of April 20, 1999
between American Skiing Company Resort Properties, Inc. and
BankBoston, N.A., as Agent
b) Reports on Form 8-K
The Company filed a Form 8-K on March 19, 1999, reporting the
resignation of PriceWaterhouseCoopers, LLP as its independent accountants.
The Company filed a Form 8-K on April 1, 1999, reporting the
appointment of Arthur Andersen, LLP as its new independent accountants.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 9, 1999 /s/ Christopher E. Howard
- ---------------------------- ----------------------------
Christopher E. Howard
Executive Vice President
(Duly Authorized Officer)
Date: June 9, 1999 /s/ Mark J. Miller
- -------------------------------- ----------------------------
Mark J. Miller
Senior Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
28
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-26-1998
<PERIOD-END> APR-25-1999
<CASH> 9,107,000
<SECURITIES> 0
<RECEIVABLES> 13,009,000
<ALLOWANCES> 0
<INVENTORY> 13,357,000
<CURRENT-ASSETS> 45,385,000
<PP&E> 529,643,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 863,592,000
<CURRENT-LIABILITIES> 137,143,000
<BONDS> 127,672,000
42,698,000
0
<COMMON> 303,000
<OTHER-SE> 258,736,000
<TOTAL-LIABILITY-AND-EQUITY> 863,592,000
<SALES> 21,109,000
<TOTAL-REVENUES> 298,942,000
<CGS> 20,459,000
<TOTAL-COSTS> 192,356,000
<OTHER-EXPENSES> 43,267,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,213,000
<INCOME-PRETAX> (7,344,000)
<INCOME-TAX> (768,000)
<INCOME-CONTINUING> (6,576,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,810,000)
<EPS-BASIC> (0.32)
<EPS-DILUTED> (0.32)
</TABLE>
FIRST AMENDMENT AGREEMENT
RE:
LOAN AND SECURITY AGREEMENT
AMONG
GRAND SUMMIT RESORT PROPERTIES, INC., AS BORROWER
AND
TEXTRON FINANCIAL CORPORATION, AS ADMINISTRATIVE AGENT
AND
THE LENDERS LISTED HEREIN, AS LENDERS
DATED AS OF APRIL 5, 1999
<PAGE>
FIRST AMENDMENT AGREEMENT
THIS FIRST AMENDMENT AGREEMENT (as amended from time to time, this
"First Amendment Agreement"), dated as of April 5, 1999, among GRAND SUMMIT
RESORT PROPERTIES, INC., a Maine corporation, (herein referred to as "GSRP"),
the lenders listed on the signature pages hereof (each individually referred to
herein as a "Lender" and, collectively, the "Lenders"), TEXTRON FINANCIAL
CORPORATION, a Delaware corporation, as agent for the Lenders (in such capacity
herein referred to as the "Administrative Agent").
W I T N E S S E T H:
A. WHEREAS, GSRP entered into that certain Loan and Security Agreement dated as
of September 1, 1998 (as amended to but excluding the date hereof, "Existing
LSA" and, as amended hereunder, "Amended LSA"), pursuant to which the Lenders
agreed to make loans to GSRP in accordance with the terms of Existing LSA;
B. WHEREAS, capitalized terms used herein shall have the meanings ascribed to
the same in the Existing LSA;
C. WHEREAS, the parties to the Existing LSA have agreed to certain amendments to
the Existing LSA, as described and set forth below;
D. WHEREAS, Parent has obtained interim financing (the "BankBoston Interim
Steamboat Project Advance") of $3,044,713 in respect of the Steamboat Project
from BankBoston, N.A., as agent and as the sole lender under that certain
Amended and Restated Credit Agreement, dated as of January 8, 1999 (as amended
from time to time, the "Parent/BKB Credit Facility");
E. WHEREAS, in connection with such BankBoston Interim Steamboat Project
Advance, the Administrative Agent assigned to BankBoston, N.A. all of the
Steamboat Security Documents and the Lenders agreed in a letter among GSRP and
the Lenders dated March 10, 1999 to remove the Steamboat Project from the
financings contemplated under the Existing LSA and to permit GSRP to issue a
guaranty in respect of the Parent's indebtedness under the Parent/BKB Credit
Facility;
F. WHEREAS, Textron Financial Corporation, solely in its capacity as a lender
under the Existing LSA (in such lending capacity only, "Textron") agreed to
make, pursuant to that certain letter agreement (the "Overadvance Letter
Agreement") between Textron and GSRP dated April 5, 1999, an overadvance of
$2,211,304.86 (the "Overadvance") in respect of its Canyons Construction Project
Advance Commitment, the proceeds of which were to be used by GSRP to pay
construction costs of the Steamboat General Contractor in respect of the
Steamboat Project and certain other expenses of GSRP;
<PAGE>
G. WHEREAS, on April 5, 1999 Textron made the Overadvance, GSRP used the
proceeds to pay construction costs of the Steamboat General Contractor in
respect of the Steamboat Project and certain other expenses of GSRP and
BankBoston, N.A. commenced the reassignment to the Administrative Agent of all
of the Steamboat Security Documents, the reassignment to Textron and Green Tree
of their respective Steamboat Construction Project Advance Notes and Steamboat
Inventory Advance Notes and the releasing of the guaranty issued by GSRP in
respect of the Parent/BKB Credit Agreement; BankBoston, N.A. delivered to
Textron a letter dated April 5, 1999 in which it confirmed the foregoing;
H. WHEREAS, the Overadvance Letter Agreement was not consented to by Green Tree
Financial Servicing Corporation ("Green Tree") and, as a consequence thereof,
Textron agreed in the Overadvance Letter Agreement that the Overadvance would be
payable out of the proceeds of Collateral only after the Obligations under the
Existing LSA (other than the Overadvance) were paid first;
I. WHEREAS, the Overadvance Letter Agreement contemplated the reassignment from
BankBoston, N.A. of all of the Steamboat Security Documents and Steamboat
Obligations and the creation of a limited $12,000,000 aggregate Steamboat
Construction Project Advance Commitment (the "Interim Steamboat Construction
Project Advance Commitment") that would be available to GSRP during the period
(the "Syndication Period") commencing on the First Amendment Closing Date (as
hereinafter defined) and ending on the earlier of (a) July 6, 1999 or (b) the
date (the "Full Syndication Date") on which both of the following events shall
have occurred: (i) additional Steamboat Construction Project Advance Commitments
and additional Canyons Construction Project Advance Commitments shall have been
obtained by GSRP such that, after giving effect to the current commitments of
Textron and Green Tree under the Amended LSA (after giving full effect to the
repayment of the Loans in respect of the 1997 Projects) and such additional
commitments, there would be in effect $45,200,000 of Canyons Construction
Project Advance Commitments and $56,300,000 of Steamboat Construction Project
Advance Commitments and (ii) GSRP shall have raised and funded, either itself or
through a wholly-owned special purpose subsidiary (the "GSRP SPV"), as much
mezzanine debt, up to a maximum amount of $25,000,000, as the Administrative
Agent may require, which mezzanine debt would be junior and subordinate (on
terms and conditions satisfactory to Textron and Green Tree) as to both payment
and lien to the Obligations and the liens and security interests of the
Administrative Agent in and to the Collateral (the "Mezzanine Debt");
J. WHEREAS, Textron has agreed to reallocate its current commitments under the
Existing LSA in respect of the Steamboat Project and the Canyons Project such
that (a) it shall maintain the Interim Steamboat Construction Project Advance
Commitment and (b) it shall maintain a Canyons Construction Project Advance
Commitment equal to the remainder of (i) $40,000,000 minus the sum of (A) the
Interim Steamboat Construction Project Advance Commitment and (B) the aggregate
of the outstanding principal balances of its Jordan Bowl Inventory Advance Note,
its Attitash Inventory Advance Note, its Killington Inventory Advance Note and
its Mt. Snow Inventory Advance Note;
<PAGE>
K. WHEREAS, Green Tree has agreed to reallocate its current commitments under
the Existing LSA in respect of the Steamboat Project and the Canyons Project
such that it shall maintain a Canyons Construction Project Advance Commitment
equal to the remainder of (i) $30,000,000 minus the aggregate of the outstanding
principal balances of its Jordan Bowl Inventory Advance Note, its Attitash
Inventory Advance Note, its Killington Inventory Advance Note and its Mt. Snow
Inventory Advance Note;
L. WHEREAS, in connection with the consummation of this First Amendment
Agreement, the Overadvance will be transferred from Textron's Canyons
Construction Project Advance Commitment to the Interim Steamboat Construction
Project Advance Commitment and from a utilization of the Canyons Construction
Project Borrowing Base and the Canyons Construction Project Advance Note of
Textron to the Steamboat Construction Project Borrowing Base and the Steamboat
Construction Project Advance Note of Textron;
M. WHEREAS, Textron and Green Tree have agreed that any Steamboat Construction
Project Advances made in respect of the Interim Steamboat Construction Project
Advance Commitment (herein referred to as an "Interim Steamboat Construction
Project Advance") will, in accordance with the Existing LSA, have a priority
claim to the Steamboat collateral and cash flow as contemplated, for example, in
Section 2.5(d)(i) and Section 8.2(c)(i) of the Existing LSA, but that any claim
in respect of such Interim Steamboat Construction Project Advances in and to the
Cash Collateral Account will be subordinate and junior to the payment of all
other Obligations unless and until Green Tree shall have decided, in its sole
discretion, to participate in such Advances; this recital is not intended to
have application to any Steamboat Construction Project Advances made after the
Syndication Date as long as such Advances are not in respect of the Interim
Steamboat Construction Project Advance Commitment;
N. WHEREAS, the Parent is entering into an Amended and Restated Forbearance
Agreement with BankBoston, N.A. dated as of April 20, 1999 (the "Syndication
Standstill Agreement"), a copy of which is attached hereto as Schedule 2;
<PAGE>
O. WHEREAS, Green Tree may, in its sole discretion, decide to participate in the
Interim Steamboat Construction Project Advance Commitment; if Green Tree should
decide to do so, then, on and after the date on which Textron and Green Tree
inform GSRP of this fact, in writing, each reference to the "Interim Steamboat
Construction Project Advance Commitment" shall be deemed a reference to the
portion thereof allocated by such writing to Textron and the portion thereof
allocated by such writing to Green Tree; their respective Canyons Construction
Project Advance Commitments will be adjusted to reflect the reduction thereof by
the allocated amounts of their respective Interim Steamboat Construction Project
Advance Commitments (in the case of Textron, such reduction of its Canyons
Construction Project Advance Commitment will decrease from the $12,000,000
originally provided for herein and, in the case of Green Tree, such reduction
will be new as there currently is no reduction in its Canyons Construction
Project Advance Commitment in respect of the Interim Steamboat Construction
Project Advance Commitment); and Textron and Green Tree shall make such
adjustments between themselves, as they shall have agreed to, in order to
allocate any outstanding principal amount of the Interim Steamboat Construction
Project Advances from the Steamboat Construction Project Advance Note of Textron
to the Steamboat Construction Project Advance Note of Green Tree; all of the
aforesaid amendments and modifications to the Existing LSA, as amended hereby,
will be effected automatically, upon the delivery of said writing to GSRP,
without the need for any further action on the part of any party hereto;
P. WHEREAS, it is the express intention of the parties hereto that all of the
funding conditions in the Existing LSA applicable to Canyons Construction
Project Advances shall continue to apply to each and every Canyons Construction
Project Advance made prior, during or after the Syndication Period;
Q. Intentionally Omitted;
R. WHEREAS, GSRP has revised the Budget for the Steamboat Project, a copy of
which is attached hereto as Schedule 5; the Budget for the Canyons Project
remains unmodified and the construction of the Canyons Project has progressed in
accordance with such Budget and its construction timeline;
S. WHEREAS, the Parent and GSRP have revised the "Budget," as defined in the
Parent/BKB Credit Facility, a copy of which is attached hereto as Schedule 6
(the "Parent Revised Budget"); the Parent Revised Budget has been approved by
BankBoston, N.A.;
T. WHEREAS, the Parent currently intends to request during the Syndication
Period draws under the Parent/BKB Credit Facility set forth on Schedule 7
attached hereto, which draws are consistent with the Parent Revised Budget and
at a maximum aggregate $5,500,000;
U. WHEREAS, GSRP will be requesting during the Syndication Period Canyons
Construction Project Advances set forth on Schedule 8 attached hereto, which
draws are consistent with the Budget for the Canyons Project and at a maximum
aggregate $11,204,501 (including the Canyons Interest Advances);
V. WHEREAS, GSRP will be requesting during the Syndication Period the Interim
Steamboat Construction Project Advances set forth on Schedule 9 attached hereto,
which advances are consistent with the revised Budget for the Steamboat Project
and at a maximum aggregate $14,690,067 (including the Overadvance and Steamboat
Interest Advances); GSRP acknowledges that the present level of the Interim
Steamboat Construction Project Advance Commitment would require it to postpone
or otherwise defer a portion of the aforesaid planned expenditures under, and
consistent with the terms of, the Steamboat Construction Contract or obtain
payment thereof from sources other than Interim Steamboat Construction Project
Advances; and
<PAGE>
W. WHEREAS, Textron, BankBoston, N.A. and GSRP have entered into that certain
syndication letter, dated as of April 20, 1999 (the "Syndication Letter")
pursuant to which GSRP has agreed to pay to Textron and BankBoston, N.A. certain
fees in respect of the syndication of commitments thereunder;
NOW, THEREFORE, in consideration of the Administrative Agent's, the
Lenders' and GSRP's agreements hereunder, and in consideration of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Administrative Agent, the Lenders and GSRP hereby agree as
follows:
1. RECITALS.
The recitals are hereby incorporated into and made part of this First
Amendment Agreement. Consistent with recital I above, the Lenders agree that,
upon the incurrence of the Mezzanine Debt on terms and conditions acceptable to
the Lenders, GSRP may, if required by the terms of the Mezzanine Debt, assign,
transfer and contribute the Canyons Project and the Steamboat Project to the
GSRP SPV (subject to all of the Liens provided for herein and in the other
Security Documents) and, in connection therewith, the Lenders and GSRP shall
amend the Amended LSA to add GSRP SPV as a co-borrower; such amendment to be in
form and substance satisfactory to the Lenders and GSRP.
2. STEAMBOAT PROJECT; SUGARBUSH PROJECT; SUGARLOAF PROJECT.
Anything contained in any other written agreement or letter to the
contrary notwithstanding, all of the Steamboat Security Documents and all of the
Steamboat Construction Project Advance Notes and other Steamboat Project-related
Collateral continues to be part of the Security Documents, Collateral and
Obligations under the Existing LSA, as amended hereby. For purposes of the
Amended LSA and all other Security Documents, Interim Steamboat Construction
Project Advances shall be deemed to be Steamboat Construction Project Advances
thereunder and, except as expressly provided for herein, all of the terms and
provisions of the Amended LSA and other Security Documents shall be applicable
thereto.
All references to the Sugarbush Project and all "Sugarbush" defined
terms and "Sugarbush" related exhibits and references in the Existing LSA and
the other Security Documents are hereby deleted. No commitments under the
Amended LSA shall exist in respect of the Sugarbush Project.
All references to the Sugarloaf Project and all "Sugarloaf" defined
terms and "Sugarloaf" related exhibits and references in the Existing LSA and
the other Security Documents are hereby deleted. No commitments under the
Amended LSA shall exist in respect of the Sugarloaf Project.
<PAGE>
3. AMENDMENTS OF EXISTING LSA.
The Existing LSA is hereby amended as follows:
(a) Amended and Restated Defined Terms. The defined terms in
the recitals of this First Amendment Agreement are hereby incorporated
into Section 1.1 of the Existing LSA in such a manner as to maintain
the alphabetical ordering thereof. The following existing defined terms
in the Existing LSA are hereby amended and restated in their entirety
and the new terms set forth below are hereby added to Section 1.1 of
the Existing LSA:
Aggregate Construction Project Borrowing Base --
means, on any date, the result of (a) the Maximum Outstanding
Loan Limit, minus (b) the sum of (i) the aggregate outstanding
principal balance of all Inventory Advances as of such date
and (ii) the aggregate outstanding principal balance of all
Interest Advances as of such date.
Attitash Inventory Required Lenders -- means any two
or more of the Attitash Inventory Advance Lenders having or
holding 66-2/3% or more of the Attitash Loan Exposure.
Canyons Construction Project Borrowing Base -- means,
on any date and with respect to the Canyons Project, 80% of
the aggregate amount of
(a) Construction Costs for the Canyons
Project, FF&E Costs for the Canyons Project and
Sales, Marketing & Other Costs for the Canyons
Project incurred and paid for by GSRP on or prior to
such date in respect of the Canyons Project under and
in accordance with the Budget for the Canyons Project
plus
(b) pre-development expenses and land values
(net of mortgage debt) for such Project set forth on
Schedule 1 hereto,
provided that the "Canyons Project Borrowing Base" shall, in
no case, exceed the lesser of:
(i) the remainder of (1) $45,200,000 minus (2) 50% of
the original outstanding principal amount of the Mezzanine
Debt, if any; and
<PAGE>
(ii) the remainder of (A) the Maximum
Outstanding Loan Limit, minus (B) the sum of (1) the
aggregate outstanding principal balance of all
Construction Project Advances other than Canyons
Construction Project Advances as of such date, (2)
the aggregate outstanding principal balance of all
Inventory Advances as of such date and (3) the
aggregate outstanding principal balance of Interest
Advances other than Canyons Interest Advances as of
such date.
Canyons Construction Project Required Lenders --
means any two or more of the Canyons Construction Project
Advance Lenders having or holding 66-2/3% or more of the
Canyons Loan Exposure.
Canyons Inventory Required Lenders -- means any two
or more of the Canyons Inventory Advance Lenders having or
holding 66-2/3% or more of the Canyons Loan Exposure.
First Amendment Agreement -- means that certain First
Amendment Agreement, dated as of April 5, 1999, to this
Agreement.
Interest Rate -- means, with respect to the Steamboat
Loan, the Canyons Loan, the Jordan Bowl Loan, the Attitash
Loan, the Killington Loan and/or the Mt. Snow Loan, (a) prior
to the Full Syndication Date, the Original Prime Interest Rate
and (b) on and after the Full Syndication Date, the New Prime
Rate or the LIBOR Interest Rate, as may be selected by all of
the Lenders that have made Advances in respect of the
applicable Loan upon not less than 30 days' prior written
notice to GSRP, provided that, in connection with the first
Advance in respect of any such Loan, the selection of a Prime
Interest Rate or a LIBOR Interest Rate shall be made
contemporaneously with the making of such Advance and no
advance notification need be given and provided further that,
if no such selection or notification shall have been made, the
Prime Interest Rate shall be deemed to have been selected with
respect to the applicable Loan.
Jordan Bowl Inventory Required Lenders -- means any
two or more of the Jordan Bowl Inventory Advance Lenders
having or holding 66-2/3% or more of the Jordan Bowl Loan
Exposure.
Killington Inventory Required Lenders -- means any
two or more of the Killington Inventory Advance Lenders having
or holding 66-2/3% or more of the Killington Loan Exposure.
LIBOR Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) the remainder (if positive) of
(1) the sum of 2.50% plus the Prime Rate
then in effect for such month minus
(2)One-Month LIBOR then in effect for such
month, plus
<PAGE>
(ii) One-Month LIBOR then in effect
for such month.
"One-Month LIBOR" shall mean, with respect to any calendar
month, the rate published on the second London Business Day
immediately preceding such calendar month in The Wall Street
Journal (Eastern Coast edition published in the United States
of America) for deposits maturing thirty (30) days after
issuance under the caption "Money Rates, London Interbank
Offered Rates (LIBOR)" or, if, but only if, the Wall Street
Journal (East Coast edition published in the United States of
America) ceases to exist or to be published or ceases to
report the aforesaid rate, the rate per annum in respect of
one month London inter-bank offered deposits as reported in
another reputable United States of America financial
publication or newspaper or on a reputable electronic service
as may be designated, in either case, by the Administrative
Agent.
If the eurodollar interest rate market ceases to function, or
it becomes impossible, impractical or illegal to readily,
currently and accurately determine One-Month LIBOR, or
One-Month LIBOR no longer currently and accurately reflects
the interest rates for obligations of a similar nature, term
and amount as the Loan, then the Administrative Agent shall
forthwith give notice thereof to GSRP and the Prime Interest
Rate shall replace the LIBOR Interest Rate for all purposes
hereunder. The Prime Interest Rate shall remain in place until
the Administrative Agent shall determine that LIBOR Interest
Rate is again reliably available.
Any other provision in this Agreement notwithstanding, in the
event that any federal, state, local or foreign law or any
governmental rule, regulation, treaty, policy, guideline or
directive in respect thereof shall make it unlawful for any
Lender to maintain its eurodollar funding of its respective
portion of the Loan, then the LIBOR Interest Rate borne by
such portion of the Loan shall automatically be converted to
the Prime Interest Rate, as provided above, on the earlier of
(i) the first day of the then next calendar month and (b)
immediately upon notification from such holder.
<PAGE>
To the extent that the LIBOR Interest Rate is applicable, GSRP
agrees to pay to each Lender all costs incurred by such Lender
that are attributable to its portion of the Loan or the
performance of its obligations hereunder and that occur by
reason of the promulgation of any law, regulation or treaty or
any change therein or in the application or interpretation
thereof or by reason of the compliance by the Lender with any
direction, requirement or request of any governmental
authority, including, without limitation, any such cost
resulting from (1) the imposition or amendment of any tax
(other than a tax measured by the overall net income of the
Lender), (2) the imposition or amendment of any reserve,
special deposit or similar requirement against assets of,
liabilities of, deposits with or for the account of, or loans
by, the Lender or (3) the imposition or amendment of any
capital requirements or provisions relating to capital
adequacy that have the effect of reducing the rate of return
on the Lender's capital as a consequence of the Loan (or its
portion thereof) or its obligations hereunder to a level below
that which it could have achieved but for such adoption,
change or compliance. If such Lender has sold one or more
participations in its share of the Loan, in accordance with
the terms hereof, costs incurred by the participants thereof
shall be deemed attributable to such share of the Loan for
purposes of this paragraph, provided that GSRP shall not be
required to reimburse such Lender for an amount greater than
the amount that would have been due if such Lender had not
sold participations hereunder. A certificate of the Lender
delivered to GSRP in respect of the aforesaid costs shall be
final and binding absent manifest error. Such costs shall be
payable together with the then next scheduled interest payment
hereunder.
For purposes of this definition, "London Business Day" means a
day other than (aa) a Saturday, (bb) a Sunday or (cc) a day on
which dealings in deposits in U.S. dollars are not transacted
in the London interbank market.
Maximum Outstanding Loan Limit - means, at any
time,(a) if no Mezzanine Debt is required, $105,000,000 or (b)
if Mezzanine Debt is required, the lesser of (i) $145,000,000
and (ii) the remainder of (y) $153,000,000 minus (z) the
amount of Mezzanine Debt originally raised and funded by
either GSRP or the GSRP SPV.
Mt. Snow Inventory Required Lenders -- means any two or
more of the Mt. Snow Inventory Advance Lenders having or
holding 66-2/3% or more of the Mt. Snow Loan Exposure.
New Prime Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) 2.50%, plus
(ii) the Prime Rate then in effect
for such month.
<PAGE>
To the extent that the interest rate for any calendar month
shall be based upon the Prime Rate, such Prime Rate shall be
the Prime Rate in effect at 9:00 a.m. (Eastern time) on the
1st day of such month. The term "Prime Rate" shall mean the
"prime rate" as announced from time to time by Chase Manhattan
Bank, New York, New York or any successor thereto. In the
event Chase Manhattan Bank, New York, New York or any
successor thereto, shall discontinue announcement of said
Prime Rate, a comparable index designated by the Lender shall
be used in calculating the Interest Rate. It is expressly
agreed that the use of the term "prime rate" or any other
similar designation is not intended to, nor does it, imply
that said rate of interest is a preferred rate of interest or
one which is offered by Chase Manhattan Bank, New York, New
York or any successor thereto to its most creditworthy
customers.
Original Prime Interest Rate -- means, with respect
to any calendar month, a per annum rate of interest equal to
the greater of:
(a) 9.25%, or
(b) the sum of
(i) 1.50%, plus
(ii) the Prime Rate then in effect
for such month.
To the extent that the interest rate for any calendar month
shall be based upon the Prime Rate, such Prime Rate shall be
the Prime Rate in effect at 9:00 a.m. (Eastern time) on the
1st day of such month. The term "Prime Rate" shall mean the
"prime rate" as announced from time to time by Chase Manhattan
Bank, New York, New York or any successor thereto. In the
event Chase Manhattan Bank, New York, New York or any
successor thereto, shall discontinue announcement of said
Prime Rate, a comparable index designated by the Lender shall
be used in calculating the Interest Rate. It is expressly
agreed that the use of the term "prime rate" or any other
similar designation is not intended to, nor does it, imply
that said rate of interest is a preferred rate of interest or
one which is offered by Chase Manhattan Bank, New York, New
York or any successor thereto to its most creditworthy
customers.
Steamboat Construction Project Borrowing Base --
means, on any date and with respect to the Steamboat Project,
80% of the aggregate amount of
(a) Construction Costs for the Steamboat
Project, FF&E Costs for the Steamboat Project and
Sales, Marketing & Other Costs for the Steamboat
Project incurred and paid for by GSRP on or prior to
such date in respect of the Steamboat Project under
and in accordance with the Budget for the Steamboat
Project plus
(b) pre-development expenses and land values
(net of mortgage debt) for such Project set forth on
Schedule 1 hereto,
provided that the "Steamboat Construction Project Borrowing
Base" shall, in no case, exceed the lesser of:
<PAGE>
(i) the remainder of (1) $56,300,000 minus
(2) 50% of the original outstanding principal
balance of the Mezzanine Debt, if any; and
(ii) the remainder of (A) Maximum
Outstanding Loan Limit, minus (B) the sum of (1) the
aggregate outstanding principal balance of all
Construction Project Advances other than Steamboat
Construction Project Advances as of such date, (2)
the aggregate outstanding principal balance of all
Inventory Advances as of such date and (3) the
aggregate outstanding principal balance of Interest
Advances other than Steamboat Interest Advances as of
such date.
(b) Amendment of Sections 2.1(a) and (b) of the Existing LSA.
Sections 2.1(a) and (b) of the Existing LSA are hereby amended and
restated in its entirety as follows:
2.1 Construction Project Advances.
(a) Steamboat Construction Project Advances.
Except as provided in the final proviso to this
clause (a), each of the Steamboat Construction
Project Advance Lenders agrees, pursuant to the terms
of this Agreement and subject to the satisfaction of
the conditions precedent in Section 6 of this
Agreement, to make its Pro Rata Share of one or more
advances in respect of the Steamboat Project (such
advances, with respect to the Steamboat Project, are
individually referred to as a "*Steamboat
Construction Project Advance" and collectively as the
"*Steamboat Construction Project Advances") to GSRP
from time to time during the Steamboat Commitment
Period, provided that
(i) no Steamboat Construction Project Advance shall be
made
(A) unless the proceeds
thereof are to be used to satisfy
Construction Costs in respect of the
Steamboat Project, FF&E Costs in
respect of the Steamboat Project
and/or Sales, Marketing & Other
Costs in respect of the Steamboat
Project and no Equity Moneys or
Mezzanine Debt proceeds are
available that are designated
pursuant to the Budget for the
Steamboat Project to be used to
satisfy such Costs;
<PAGE>
20
(B) if the proceeds thereof
are to be used to reimburse GSRP for
any Equity Moneys used to satisfy
the minimum cash equity requirements
for the Steamboat Project or
Mezzanine Debt, in each case,
previously used to satisfy
Construction Costs in respect of the
Steamboat Project, FF&E Costs in
respect of the Steamboat Project
and/or Sales, Marketing & Other
Costs in respect of the Steamboat
Project (provided that the proceeds
may be used to repay the BankBoston
Interim Steamboat Project Advance
per Part II of Schedule 1 to the
First Amendment Agreement);
(C) if a Default or Event
of Default shall then exist that has
not been waived by the Steamboat
Construction Project Required
Lenders, and
(D) if the aggregate amount
of the purchase prices payable under
Validated Contracts arising from the
sale of Steamboat Quartershare
Interests is less than $16,500,000,
provided that, until the earlier of
(I) December 31, 1999 and (II) 60
days after GSRP shall have obtained
its subdivision license in Colorado,
GSRP may satisfy the requirements
under this clause (D) by having
Reservation Contracts having an
aggregate amount of purchase prices
of not less than $23,700,000;
(ii) (A) on the date of the making
of any Steamboat Construction Project
Advance (and after giving effect thereto)
the aggregate outstanding principal amount
of all Construction Project Advances made
hereunder with respect to all of the
Projects shall not exceed the Aggregate
Construction Project Borrowing Base,
determined as of such date, and (B) on the
date of the making of any Steamboat
Construction Project Advance hereunder (and
after giving effect thereto) the aggregate
original principal amount of all Advances
made hereunder shall not exceed
$177,000,000, provided that in making such
calculation there shall be no duplication in
respect of any Construction Project Advance
or Advances which shall have been refinanced
by an Inventory Advance;
<PAGE>
(iii) on the date of the making of
any Steamboat Construction Project Advance
(and after giving effect thereto) (A) the
aggregate original principal amount of all
Steamboat Construction Project Advances made
hereunder shall not exceed the amount
described in clause (a) of the definition of
Steamboat Construction Project Borrowing
Base (without giving effect to the proviso
with respect thereto) determined as of such
date and (B) on the date of the making of
any Steamboat Construction Project Advance
(and after giving effect thereto) the
aggregate outstanding principal amount of
all Steamboat Construction Project Advances
and all Steamboat Interest Advances made
hereunder shall not exceed the Steamboat
Construction Project Borrowing Base,
determined as of such date (inclusive of the
proviso set forth in the definition
thereof);
(iv) the original principal amount
of each Steamboat Construction Project
Advance to be made in respect of
Construction Costs of the Steamboat Project,
at the time of the making thereof, shall
have been determined by excluding from such
Construction Costs a contractor's retainage
of not less than 10% of the first one-half
of the applicable Construction Costs (such
10% so reserved from any such Construction
Costs is referred to herein as the
"Steamboat Retainage Amount;" for purposes
of the avoidance of doubt, the Steamboat
Retainage Amount shall be based upon the
full amount of certified Construction Costs
for the Steamboat Project and shall remain
as a retainage until the final payment
thereof), provided that, in connection with
the Steamboat Final Construction Cost
Advance and subject to the requirements of
Section 6.4 hereof, this clause (iv) shall
not operate and the aggregate unutilized
Steamboat Retainage Amounts may then be
borrowed in their entirety and provided
further that the Administrative Agent, as
directed by the Steamboat Construction
Project Required Lenders and upon GSRP's
submission of a written request therefor
(which request shall be based upon the
completion of construction work at the
Steamboat Project by a subcontractor or by
the General Contractor for the Steamboat
Project and the desire of GSRP to pay such
subcontractor or the General Contractor for
such work), may agree to advance any or all
of such unutilized Steamboat Retainage
Amounts prior to the making of the Steamboat
Final Construction Cost Advance upon such
terms and conditions as it may require;
(v) the original principal amount of
the Steamboat Final Construction Cost
Advance, assuming compliance with clauses
(ii) and (iii) above, shall not exceed 100%
of the aggregate amount of the Steamboat
Retainage Amounts then owing to the General
Contractor for the Steamboat Project under
the Construction Contract for the Steamboat
Project, as of the date of the making of
such *Steamboat Final Construction Cost
Advance;
<PAGE>
(vi) no more than one Steamboat
Construction Project Advance shall be made
during any weekly period and no Steamboat
Construction Project Advance shall be made
if any other Construction Project Advance
was made during such weekly period;
(vii) each Steamboat Construction
Project Advance shall only relate or be
attributable only to the Steamboat Project;
and
(viii) no Steamboat Construction
Project Advance shall be in an amount of
less than $50,000 and no Steamboat
Construction Project Advance shall be made
until Lenders shall have been obtained and
have agreed hereunder to provide commitments
of at least $56,300,000 of Steamboat
Construction Project Advances and
$46,200,000 of Canyons Construction Project
Advances (counting with respect to such
amount the Canyons Construction Project
Advance Commitments of Textron Financial
Corporation and Green Tree Financial
Servicing Corporation);
provided that, with respect to the making of any
Steamboat Construction Project Advance in respect of
the Interim Steamboat Construction Project Advance
Commitment (an "Interim Steamboat Construction
Project Advance"), the conditions set forth on Part 1
of Schedule 1 to the First Amendment Agreement and
not the conditions set forth above shall be
applicable;
(b) Canyons Construction Project Advances.
Each of the Canyons Construction Project Advance
Lenders agrees, pursuant to the terms of this
Agreement and subject to the satisfaction of the
conditions precedent in Section 6 of this Agreement,
to make its Pro Rata Share of one or more advances in
respect of the Canyons Project (such advances, with
respect to the Canyons Project, are individually
referred to herein as a "Canyons Construction Project
Advance" and collectively as the "Canyons
Construction Project Advances") to GSRP from time to
time during the Canyons Commitment Period, provided
that
(i) no Canyons Construction Project Advance shall be
made
<PAGE>
(A) unless the proceeds
thereof are to be used to satisfy
Construction Costs in respect of the
Canyons Project, FF&E Costs in
respect of the Canyons Project
and/or Sales, Marketing & Other
Costs in respect of the Canyons
Project and no Equity Moneys or
Mezzanine Debt are available that
are designated to be used to satisfy
such Costs pursuant to the Budget
for the Canyons Project;
(B) if the proceeds thereof
are to be used to reimburse GSRP for
any Equity Moneys used to satisfy
cash minimum equity requirements for
the Canyons Project or Mezzanine
Debt, in each case, previously used
to satisfy Construction Costs in
respect of the Canyons Project, FF&E
Costs in respect of the Canyons
Project and/or Sales, Marketing &
Other Costs in respect of the
Canyons Project;
(C) if a Default or Event
of Default shall then exist that has
not been waived by the Canyons
Construction Project Required
Lenders, and
(D) if the aggregate amount
of the purchase prices payable under
Validated Contracts arising from the
sale of Canyons Quartershare
Interests is less than $31,700,000;
(ii) (A) on the date of the making
of any Canyons Construction Project Advance
(and after giving effect thereto) the
aggregate outstanding principal amount of
all Construction Project Advances made
hereunder with respect to all of the
Projects shall not exceed the Aggregate
Construction Project Borrowing Base,
determined as of such date, and (B) on the
date of the making of any Canyons
Construction Project Advance hereunder (and
after giving effect thereto) the aggregate
original principal amount of all Advances
made hereunder shall not exceed
$177,000,000, provided that in making such
calculation there shall be no duplication in
respect of any Construction Project Advance
or Advances which shall have been refinanced
by an Inventory Advance;
<PAGE>
(iii) on the date of the making of
any Canyons Construction Project Advance
(and after giving effect thereto) (A) the
aggregate original principal amount of all
Canyons Construction Project Advances made
hereunder shall not exceed the amount
described in clause (a) of the definition of
Canyons Construction Project Borrowing Base
(without giving effect to the proviso with
respect thereto) determined as of such date
and (B) on the date of the making of any
Canyons Construction Project Advance (and
after giving effect thereto) the aggregate
outstanding principal amount of all Canyons
Construction Project Advances and all
Canyons Interest Advances made hereunder
shall not exceed the Canyons Construction
Project Borrowing Base, determined as of
such date (inclusive of the proviso set
forth in the definition thereof);
(iv) the original principal amount
of each Canyons Construction Project Advance
to be made in respect of Construction Costs
of the Canyons Project, at the time of the
making thereof, shall have been determined
by excluding from such Construction Costs a
contractor's retainage of not less than 10%
of the first one-half of the applicable
Construction Costs (such 10% so reserved
from any such Construction Costs is referred
to herein as the "Canyons Retainage Amount;"
for purposes of the avoidance of doubt, the
Canyons Retainage Amount shall be based upon
the full amount of certified Construction
Costs for the Canyons Project and shall
remain as a retainage until the final
payment thereof), provided that, in
connection with the Canyons Final
Construction Cost Advance and subject to the
requirements of Section 6.4 hereof, this
clause (iv) shall not operate and the
aggregate unutilized Canyons Retainage
Amounts may then be borrowed in their
entirety and provided further that the
Administrative Agent, as directed by the
Canyons Construction Project Required
Lenders and upon GSRP's submission of a
written request therefor (which request
shall be based upon the completion of
construction work at the Canyons Project by
a subcontractor or by the General Contractor
for the Canyons Project and the desire of
GSRP to pay such subcontractor or the
General Contractor for such work), may agree
to advance any or all of such unutilized
Canyons Retainage Amounts prior to the
making of the Canyons Final Construction
Cost Advance upon such terms and conditions
as it may require;
(v) the original principal amount of
the Canyons Final Construction Cost Advance,
assuming compliance with clauses (ii) and
(iii) above, shall not exceed 100% of the
aggregate amount of the Canyons Retainage
Amounts then owing to the General Contractor
for the Canyons Project under the
Construction Contract for the Canyons
Project, as of the date of the making of
such Canyons Final Construction Cost
Advance;
<PAGE>
(vi) no more than one Canyons
Construction Project Advance shall be made
during any weekly period and no Canyons
Construction Project Advance shall be made
if any other Construction Project Advance
was made during such weekly period;
(vii) each Canyons Construction
Project Advance shall only relate or be
attributable only to the Canyons Project;
and
(viii) no Canyons Construction
Project Advance shall be in an amount of
less than $50,000.
(c) References to $200,000,000 and $145,000,000 in the
Existing LSA. All references to "$200,000,000" in the Existing LSA and
in any other Security Documents are hereby automatically modified to
refer to "$177,000,000" without the need or requirement of any
additional action by any party hereto. All references to "$145,000,000"
in the Existing LSA and in any other Security Documents are hereby
automatically modified to refer to the "Maximum Outstanding Loan Limit"
without the need or requirement of any additional action by any party
hereto.
(d) Amendment of Section 2.3(c)(i). There is hereby added to
Section 2.3(c) (i) of the Existing LSA the following last sentence:
For the avoidance of doubt, each of the Steamboat
Loan, the Canyons Loan, the *Sugarbush Loan, the *Sugarloaf
Loan, the Jordan Bowl Loan, the Attitash Loan, the Killington
Loan and the Mt. Snow Loan, shall bear interest at the
Original Prime Interest Rate and on and after the Full
Syndication Date shall bear interest at the New Prime Interest
Rate or the LIBOR Interest Rate and the appropriate Project
Required Lenders may elect which rate shall apply, as provided
for in the definition of "Interest Rate."
(d) Section 2.5(c) of the Existing LSA. Section 2.5(c) of the
Existing LSA is hereby amended and restated in its entirety as follows:
(e) Borrowing Base Prepayments.
(i) If on any date the aggregate outstanding
principal amount of the Loan shall exceed the Aggregate
Construction Project Borrowing Base, determined as of such
date, GSRP shall immediately pay the amount of such excess to
the Administrative Agent together with interest accrued
thereon to (but not including) the date of such payment and
such amounts shall be applied by the Administrative Agent when
received in good, collected funds as set forth in Section
2.5(d) hereof to prepay ratably each outstanding Advance.
<PAGE>
(ii) If on any date the aggregate outstanding
principal amount of the Steamboat Loan shall exceed the
Steamboat Construction Project Borrowing Base, determined as
of such date, GSRP shall immediately pay the amount of such
excess to the Administrative Agent together with interest
accrued thereon to (but not including) the date of such
payment and such amounts shall be applied by the
Administrative Agent when received in good, collected funds as
set forth in Section 2.5(d) hereof to prepay the Steamboat
Loan, provided that, during the Syndication Period, the
Steamboat Construction Borrowing Base shall be limited to 80%
of the aggregate amount of Construction Costs and interest
costs for the Steamboat Project and shall, in no case, exceed
$12,000,000 .
If on any date the aggregate outstanding principal
amount of the Canyons Loan shall exceed the Canyons
Construction Project Borrowing Base, determined as of such
date, GSRP shall immediately pay the amount of such excess to
the Administrative Agent together with interest accrued
thereon to (but not including) the date of such payment and
such amounts shall be applied by the Administrative Agent when
received in good, collected funds as set forth in Section
2.5(d) hereof to prepay the Canyons Loan.
(iii) If on each of the following test dates the
aggregate outstanding principal amount of all Inventory
Advances (other the Inventory Advances in respect of the 1997
Projects) exceeds the maximum outstanding principal amount of
Inventory Advances set forth below, GSRP shall immediately pay
the amount of such excess to the Administrative Agent together
with interest accrued thereon to (but not including) the date
of such payment and such amounts shall be applied by the
Administrative Agent when received in good, collected funds as
set forth in Section 2.5(d) hereof ratably to all Inventory
Advances (other than Inventory Advances in respect of the 1997
Projects):
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ========================================================
Test Date Maximum Outstanding Principal Amount of Inventory
Advances
- ----------------------------------------------------------- ========================================================
- ----------------------------------------------------------- ========================================================
<S> <C>
March 31, 2001 the remainder of (1) $60,000,000 minus (2) the
original outstanding principal amount of the Mezzanine
Debt, if any
- ----------------------------------------------------------- ========================================================
- ----------------------------------------------------------- ========================================================
September 30, 2001 the remainder of (1) $40,000,000 minus (2) the
original outstanding principal amount of the Mezzanine
Debt, if any
- ----------------------------------------------------------- ========================================================
- ----------------------------------------------------------- ========================================================
March 31, 2002 the remainder of (1) $15,000,000 minus (2) the
original outstanding principal amount of the Mezzanine
Debt, if any
- ----------------------------------------------------------- ========================================================
- ----------------------------------------------------------- ========================================================
- ----------------------------------------------------------- ========================================================
</TABLE>
(f) Cash Collateral Account. For so long as any Interim
Steamboat Construction Project Advance is outstanding, no moneys from
the Cash Collateral Account or in respect of any Borrowing Base
prepayment (other than in respect of the Steamboat Construction Project
Borrowing Base) shall be allocated or distributed in respect thereof
unless and until all other Obligations shall have been paid in full,
provided that this clause (f) shall have no effect on and after the
Full Syndication Date or, if earlier, the date on which Green Tree
shall have elected, in its sole discretion, to participate in the
Interim Steamboat Construction Project Advance, as contemplated in
recital O of this First Amendment Agreement.
(g) Amendment of Steamboat Construction Project Advance
Commitment and Steamboat Inventory Advance Commitment. The Steamboat
Construction Project Advance Commitment of Textron is hereby decreased
to $0, provided that, as set forth in recital I of this First Amendment
Agreement, Textron hereby extends the Interim Steamboat Construction
Project Advance Commitment to GSRP for the Syndication Period (subject
to any adjustments with respect thereto contemplated in recital O of
this First Amendment Agreement). The Steamboat Construction Project
Advance Commitment of Green Tree is hereby decreased to $0 subject to
its decision to participate in the Interim Steamboat Construction
Project Commitment, as set forth in recital O of this First Amendment
Agreement. The Steamboat Inventory Advance Commitment of Textron is
hereby decreased to $0. The Steamboat Inventory Advance Commitment of
Green Tree is hereby decreased to $0. For the avoidance of doubt,
neither Textron nor Green Tree shall have any obligation or commitment
to extend any Steamboat Construction Project Advances or Steamboat
Inventory Advances, provided that, for so long as the conditions
precedent set forth on Part 1 to Schedule 1 to this First Amendment
Agreement are satisfied and then only during the Syndication Period,
Textron (and, to the extent, but only to extent, provided for in
recital O of the First Amendment Agreement, Green Tree) will extend
Interim Steamboat Construction Project Advances to GSRP pursuant to the
Interim Steamboat Project Advance Commitment.
<PAGE>
The Steamboat Construction Project Advance Note of Textron is hereby
amended to reflect the above as is Textron's signature block to the
Existing LSA. GSRP shall execute and deliver an allonge, in form and
substance satisfactory to Textron, reflecting the above and Textron
shall attach it to said Steamboat Construction Project Advance Note.
The Steamboat Construction Project Advance Note of Green Tree is hereby
amended to reflect the above as is Green Tree's signature block to the
Existing LSA. GSRP shall execute and deliver an allonge, in form and
substance satisfactory to Green Tree, reflecting the above and Green
Tree shall attach it to said Steamboat Construction Project Advance
Note. The Steamboat Inventory Advance Note of Textron is hereby amended
to reflect the above as is Textron's signature block to the Existing
LSA. GSRP shall execute and deliver an allonge, in form and substance
satisfactory to Textron, reflecting the above and Textron shall attach
it to said Steamboat Inventory Advance Note. The Steamboat Inventory
Advance Note of Green Tree is hereby amended to reflect the above as is
Green Tree's signature block to the Existing LSA. GSRP shall execute
and deliver an allonge, in form and substance satisfactory to Green
Tree, reflecting the above and Green Tree shall attach it to said
Steamboat Inventory Advance Note.
(h) Amendment of Canyons Construction Project Advance
Commitment and Canyons Inventory Advance Commitment.
(i) Textron's current Canyons Construction Project
Advance Commitment is hereby increased from
(A) $6,516,768.21 + {50% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by
Textron up to a maximum of $8,483,231.79} -- the
total possible amount of Canyons Construction Project
Advance Commitment shall not exceed $15,000,000 to
<PAGE>
(B) $28,128,755.86 + {100% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by
Textron up to a maximum of $11,871,244.14} + (without
duplication) {100% of the principal amount of the
portion of the Jordan Bowl Inventory Advance Note,
the Attitash Inventory Advance Note, the Killington
Inventory Advance Note and/or the Mt. Snow Inventory
Advance Note sold and assigned by Textron after the
First Amendment Closing Date pursuant to Section
2.6(b) of the Amended LSA and 100% of the principal
amount of the participations granted by Textron after
the First Amendment Closing Date in and to its Jordan
Bowl Inventory Advance Note, its Attitash Inventory
Advance Note, its Killington Inventory Advance Note
and/or its Mt. Snow Inventory Advance Note pursuant
to Section 2.6(a) of the Amended LSA} -- the total
possible amount of Canyons Construction Project
Advance Commitment shall not exceed $40,000,000 --
minus, in any case, (1) during the Syndication
Period, the Interim Steamboat Construction Project
Advance Commitment and (2) after the Syndication
Period, the aggregate outstanding principal amount of
all Interim Steamboat Construction Project Advances
and Steamboat Interest Advances made during the
Syndication Period unless the Full Syndication Date
shall have occurred and such Advances shall have been
consequently recharacterized as Steamboat
Construction Project Advances and Steamboat Interest
Advances made during the Steamboat Commitment Period
(the Syndication Period not being deemed, for
purposes of this subclause (B), as part of the
Steamboat Commitment Period) in which case this
clause (2) shall be deemed to be $0; clauses (1) and
(2) above are subject in any case to the adjustments
contemplated in recital O of this First Amendment
Agreement.
The Canyons Construction Project Advance Note of Textron is
hereby amended to reflect the above as is Textron's signature
block to the Existing LSA. GSRP shall execute and deliver an
allonge, in form and substance satisfactory to Textron,
reflecting the above and Textron shall attach it to said Note.
(ii) Textron's current Canyons Inventory Advance
Commitment is hereby increased from
(A) $6,516,768.21 + {50% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by
Textron up to a maximum of $8,483,231.79} -- the
total possible amount of Canyons Inventory Advance
Commitment shall not exceed $15,000,000 to
<PAGE>
(B) $28,128,755.86 + {100% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by
Textron up to a maximum of $11,871,244.14} + (without
duplication) {100% of the principal amount of the
portion of the Jordan Bowl Inventory Advance Note,
the Attitash Inventory Advance Note, the Killington
Inventory Advance Note and/or the Mt. Snow Inventory
Advance Note sold and assigned by Textron after the
First Amendment Closing Date pursuant to Section
2.6(b) of the Amended LSA and 100% of the principal
amount of the participations granted by Textron after
the First Amendment Closing Date in and to its Jordan
Bowl Inventory Advance Note, its Attitash Inventory
Advance Note, its Killington Inventory Advance Note
and/or its Mt. Snow Inventory Advance Note pursuant
to Section 2.6(a) of the Amended LSA} -- the total
possible amount of Canyons Inventory Advance
Commitment shall not exceed $40,000,000 minus, in any
case, the aggregate outstanding principal amount of
all Interim Steamboat Construction Project Advances
and Steamboat Interest Advances made during the
Syndication Period unless the Full Syndication Date
shall have occurred and such Advances shall have been
consequently recharacterized as Steamboat
Construction Project Advances and Steamboat Interest
Advances made during the Steamboat Commitment Period
(the Syndication Period not being deemed for purposes
of this subclause (B) to be part of the Steamboat
Commitment Period) in which case nothing shall be
subtracted from the foregoing amounts; clauses (1)
and (2) above are subject in any case to the
adjustments contemplated in recital O of the First
Amendment .
The Canyons Inventory Advance Note of Textron is hereby
amended to reflect the above as is Textron's signature block
to the Existing LSA. GSRP shall execute and deliver an
allonge, in form and substance satisfactory to Textron,
reflecting the above and Textron shall attach it to said Note.
(iii) Green Tree's current Canyons Construction
Project Advance Commitment is hereby increased from
(A) $6,516,768.21 + {50% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by Green
Tree up to a maximum of $8,483,231.79} -- the total
possible amount of Canyons Construction Project
Advance Commitment shall not exceed $15,000,000 to
(B) $18,128,755.86 + {100% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by Green
Tree up to a maximum of $11,871,244.14} + (without
duplication) {100% of the principal amount of the
portion of the Jordan Bowl Inventory Advance Note,
the Attitash Inventory Advance Note, the Killington
Inventory Advance Note and/or the Mt. Snow Inventory
Advance Note sold and assigned by Green Tree after
the First Amendment Closing Date pursuant to Section
2.6(b) of the Amended LSA and 100% of the principal
amount of the participations granted by Green Tree
after the First Amendment Closing Date in and to its
Jordan Bowl Inventory Advance Note, its Attitash
Inventory Advance Note, its Killington Inventory
Advance Note and/or its Mt. Snow Inventory Advance
Note pursuant to Section 2.6(a) of the Amended LSA}
-- the total possible amount of Canyons Construction
Project Advance Commitment shall not exceed
$30,000,000 (subject to ratable adjustments as
contemplated in Textron's Canyons Construction
Project Advance Commitment in the case that Green
Tree shall acquire a part of the Interim Steamboat
Construction Project Advance Commitment and the
Interim Steamboat Construction Project Advances, as
contemplated in recital O of this First Amendment
Agreement).
<PAGE>
The Canyons Construction Project Advance Note of Green Tree is
hereby amended to reflect the above as is Green Tree's
signature block to the Existing LSA. GSRP shall execute and
deliver an allonge, in form and substance satisfactory to
Green Tree, reflecting the above and Green Tree shall attach
it to said Note.
(iv) Green Tree's current Canyons Inventory Advance
Commitment is hereby increased from
(A) $6,516,768.21 + {50% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by Green
Tree up to a maximum of $8,483,231.79} -- the total
possible amount of Canyons Inventory Advance
Commitment shall not exceed $15,000,000 to
(B) $18,128,755.86 + {100% of each dollar of
principal repaid in respect of the Jordan Bowl
Inventory Advance Note, the Attitash Inventory
Advance Note, the Killington Inventory Advance Note
and the Mt. Snow Inventory Advance Note held by
Textron up to a maximum of $11,871,244.14} + (without
duplication) {100% of the principal amount of the
portion of the Jordan Bowl Inventory Advance Note,
the Attitash Inventory Advance Note, the Killington
Inventory Advance Note and/or the Mt. Snow Inventory
Advance Note sold and assigned by Green Tree after
the First Amendment Closing Date pursuant to Section
2.6(b) of the Amended LSA and 100% of the principal
amount of the participations granted by Green Tree
after the First Amendment Closing Date in and to its
Jordan Bowl Inventory Advance Note, its Attitash
Inventory Advance Note, its Killington Inventory
Advance Note and/or its Mt. Snow Inventory Advance
Note pursuant to Section 2.6(a) of the Amended LSA}
-- the total possible amount of Canyons Inventory
Advance Commitment shall not exceed $30,000,000
(subject to ratable adjustments as contemplated in
Green Tree's Canyons Inventory Advance Commitment in
the case that Green Tree shall acquire a part of the
Interim Steamboat Construction Project Advance
Commitment and the Interim Steamboat Construction
Project Advances, as contemplated in recital O of
this First Amendment Agreement).
The Canyons Inventory Advance Note of Green Tree is hereby
amended to reflect the above as is Green Tree's signature
block to the Existing LSA. GSRP shall execute and deliver an
allonge, in form and substance satisfactory to Green Tree,
reflecting the above and Green Tree shall attach it to said
Note.
<PAGE>
(i) Section 2.6(b) of the Existing LSA. Section 2.6(b) of the
Existing LSA is hereby amended and restated in its entirety as follows:
(b) Assignments. Each Lender shall have the right, at
any time, to sell, assign or transfer to any Eligible Assignee
all or any part of its Commitment or its Pro Rata Share of the
Steamboat Loan, the Canyons Loan, the Jordan Bowl Loan, the
Attitash Loan, the Killington Loan and/or the Mt. Snow Loan,
as the case may be, provided that
(i) No Lender shall assign any part of its
Loan prior to the Full Syndication Date without the
prior written consent of GSRP, which shall not be
unreasonably withheld; after the Full Syndication
Date, no consent of GSRP shall be required;
(ii) no such sale, assignment or transfer
shall, without the prior written consent of GSRP,
require GSRP to file a registration statement with
the Securities and Exchange Commission or apply to
qualify such sale, assignment or transfer under the
securities laws of any state,
(iii) no such sale, assignment or transfer
shall be effective unless and until an assignment
agreement effecting such sale, assignment or
transfer, in form and substance reasonably
satisfactory to the Administrative Agent, shall have
been accepted by the Administrative Agent, and
(iv) no such sale, assignment or transfer
shall be effected in an amount of less than
$1,000,000.
<PAGE>
To the extent of any such assignment in accordance with the
requirements of this Section 2.6(b), the assigning Lender
shall be relieved of its obligations with respect to its
respective Commitment and the portion of such Loan or Loans so
assigned that corresponds to such Commitment. Upon such
execution, delivery and acceptance from and after the
effective date specified in the aforesaid assignment
agreement, (A) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such assignment agreement,
shall have the rights and obligations of a Lender hereunder
that corresponds to the portion of the Loan so assigned and
(B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it
pursuant to such assignment agreement, relinquish its rights
and be released from its obligations under this Agreement to
the extent of the portion of such Loan or Loans so assigned.
The appropriate Commitments hereunder shall be modified to
reflect the acceptance of the assigned portion of the
appropriate Commitment by such assignee and to reflect any
remaining Commitment of such assigning Lender not so assigned
and, if any such assignment occurs after the issuance of the
Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its Note to GSRP for cancellation, and
thereupon new Notes shall be issued by GSRP to the assignee
and to the assigning Lender, substantially in the form of
Exhibits E-1, E-2, E-3, E-4, E-5, E-6, E-7, E-8, E-9, E-10,
E-11 or E-12, as the case may be, attached hereto with
appropriate insertions, to reflect the new appropriate
Commitments of the assignee and the assigning Lender. Except
as otherwise provided in this Section 2.6(b) and in Section
2.3(a)(i) hereof, no Lender shall, as between GSRP and such
Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment or transfer of all or any part
of its Commitment or its Pro Rata Share of the Loan.
(j) Section 2.7 of the Existing LSA. Section 2.7 of the
Existing LSA is hereby amended and restated in its entirety as follows:
2.7 Commitment Fee.
In connection with the Existing LSA (as defined in
the First Amendment Agreement), GSRP paid to Textron Financial
Corporation $600,000 for the $60,000,000 amount of commitments
provided for therein. Such fee was paid to Textron Financial
Corporation in its individual capacity and not as the
Administrative Agent or lender. GSRP hereby agrees that such
fees were fully earned and are nonrefundable. GSRP
acknowledges that Textron Financial Corporation has earned a
$100,000 fee in connection with its increase in its overall
commitments from $30,000,000 to $40,000,000 in the First
Amendment Agreement and such $100,000 fee shall be due and
payable from the first Canyons Construction Project Advance or
the first Steamboat Construction Project Advance made after
the First Amendment Closing Date. Further syndication fees are
payable to Textron Financial Corporation as provided for in
the Syndication Letter. Except as specifically set forth
above, no further fees are due and payable to Textron
Financial Corporation under this Section 2.7. GSRP hereby
acknowledges its obligations to pay such fees to Textron
Financial Corporation and further acknowledges that Textron
Financial Corporation has no obligation to obtain such
commitments and has not assured GSRP in any way of the success
of the same. No Lender (other than Textron Financial
Corporation) shall have any rights under this Section 2.7.
(k) New Section 3.15(c). A new section 3.15(c) is hereby to
the Existing LSA:
(c) Upgrading of Quartershare Interests.
If
<PAGE>
(i) the Administrative Agent shall
have executed and delivered to GSRP a
partial release of a Blanket Mortgage in
connection with the sale of a Quartershare
Interest, as provided for under Section
3.15(a) above,
(ii) the Administrative Agent was
paid the full Release Price in respect of
the sale of such Quartershare Interest under
said Section 3.15(a), and
(iii) GSRP and the Purchaser of such
Quartershare Interest shall have, subsequent
to the consummation of the sale of such
Quartershare Interest, determined to
"upgrade" such Quartershare Interest and, in
connection therewith, shall have entered
into the appropriate sale and exchange
documents (all of which shall be
satisfactory to Administrative Agent)
whereby the Purchaser of such "originally"
acquired Quartershare Interest is to convey
such Quartershare Interest back to GSRP and
is to enter into a Contract to purchase the
"upgraded" Quartershare Interest,
then the Administrative Agent shall apply the release
procedures set forth in Section 3.15(a) above with
respect to the consummation of the sale of such
"upgraded" Quartershare Interest upon the following
conditions (which shall be in addition to the
conditions set forth in Section 3.15(a) above and
shall take precedence over any conflicting conditions
set forth in said Section 3.15(a)):
(1) the Contract for the sale of
such "upgraded" Quartershare Interest shall
be consummated and, contemporaneously
therewith, the Purchaser shall have conveyed
to GSRP, via a warranty deed and for
valuable consideration, the "originally"
acquired Quartershare Interest subject to no
liens or encumbrances other than those that
encumbered such Quartershare Interest when
it was sold to such Purchaser by GSRP,
(2) the exchange of the "upgraded"
Quartershare Interest for the "originally"
acquired Quartershare Interest shall not
have been consummated more than 180 days
after the consummation of the purchase of
the "originally" acquired Quartershare
Interest,
(3) all other exchange documentation
entered into between GSRP, and such
Purchaser shall be satisfactory to the
Administrative Agent,
<PAGE>
(4) no Default or Event of Default
shall then exist,
(5) the applicable Purchaser shall
not have been the subject of a prior use of
this Section 3.15(c) with respect to any
Quartershare Interest previously purchased
by such Purchaser,
(6) the Release Price to be paid in
respect of the "upgraded" Quartershare
Interest shall be the remainder (if
positive) of (A) the Release Price otherwise
payable in respect of such "upgraded"
Quartershare Interest minus (B) the Release
Price paid in respect of the "originally"
acquired Quartershare Interest (for the
avoidance of doubt, the Release Price for
such "upgraded" Quartershare Interest will
be $0 if subclause (B) above is greater than
subclause (A) above), and
(7) the "originally" acquired
Quartershare Interest, which has been
contemporaneously reacquired by GSRP from
such Purchaser, shall be added to the
Collateral and made subject once again to
the Blanket Mortgage that originally
encumbered it (pursuant to a modification to
such Blanket Mortgage which shall be
satisfactory to the Administrative Agent)
and an appropriate endorsement to the Title
Insurance Policy {Blanket}, at the sole cost
of GSRP, reflecting such addition shall be
delivered to the Administrative Agent (for
the avoidance of doubt, the Release Price of
such Quartershare Interest shall be its
original Release Price).
(l) Conditions Precedent. Sections 6.2, 6.3, 6.5, 6.6, 6.7,
6.8, and 6.9 of the Existing LSA shall not be applicable to any Interim
Steamboat Construction Project Advance during the Syndication Period.
Schedule 1 attached hereto contains all conditions precedent applicable
to such Interim Steamboat Construction Project Advances. GSRP
represents and warrants to the Lenders and the Administrative Agent
that all deliveries and other conditions set forth in Section 6.1 with
respect to the Steamboat Construction Project Advances have been made
and/or satisfied.
(m) Section 7.6 of the Existing LSA. Section 7.6 of the
Existing LSA is amended and restated in its entirety as follows:
<PAGE>
GSRP shall not become or be liable in respect of any guaranty
except (a) the endorsement in the ordinary course of business
of negotiable instruments for deposit or collection, (b) the
guarantees provided for under the Parent Indenture, provided
that such guarantees are unsecured and junior and subordinate
in payment to the Obligations as provided for in the ASC
Indenture as of the Closing Date and (c) that certain guaranty
issued by GSRP in favor of BankBoston, N.A. under the
Parent/BKB Credit Facility, which guaranty, GSRP hereby
represents and warrants, has been released in connection with
the making of the Overadvance by Textron. The Borrower shall
not consent to or permit any modification or change in any of
the terms and provisions of any of the subordination
provisions referred to in clause (b) above. GSRP undertakes to
cause the Obligations hereunder to be"Designated Senior Debt"
under, and as defined in, the ASC Indenture to the extent that
the "Senior Agent," as such term is defined in the ASC
Indenture, has agreed to the same.
(n) Section 8.1(h) of the Existing LSA. Section 8.1(h) of the
Existing LSA is hereby amended and restated in its entirety as follows:
(h) Default by GSRP or Parent in Other Agreements --
(i) any default by GSRP, the Parent or any subsidiary thereof
in the payment of material indebtedness for borrowed money or
any guarantee issued by GSRP, the Parent or any subsidiary
thereof in respect of material indebtedness for borrowed
money; or (ii) any other default under such indebtedness which
accelerates or permits the acceleration (after the giving of
notice or passage of time, or both) of the maturity of such
indebtedness, whether or not such default has been waived by
the holder of such indebtedness; or (iii) if the Obligations
cease to be Senior Debt under, and as defined in, the ASC
Indenture, provided that no default under the Parent/BKB
Credit Facility shall cause any default under this clause (h)
for so long as the forbearance provisions of the Syndication
Standstill Agreement are in full force and effect;
4. OTHER COVENANTS OF GSRP.
GSRP hereby agrees as follows (each of such agreements being hereby
incorporated into the Existing LSA and becoming a part thereof):
(a) Syndication Standstill Agreement. GSRP agrees to give
Administrative Agent prompt written notice of any default of the Parent
under the Syndication Standstill Agreement or under the Parent/BKB
Credit Agreement and to also give the Administrative Agent prompt
written notice of the termination of BankBoston, N.A.'s forbearance
under the Syndication Standstill Agreement.
<PAGE>
(b) Mezzanine Debt. GSRP shall notify the Administrative Agent
promptly if there is any change in the source and/or terms and
conditions of the Mezzanine Debt, as set forth on Schedules 3 and 4
hereto. If GSRP reasonably believes that it will not be able to close
and receive funding of such Mezzanine Debt on or prior to July 6, 1999,
it shall immediately inform Administrative Agent of the same. GSRP
agrees to continue to use BankBoston, N.A. to assist it in obtaining
Mezzanine Debt and shall cooperate fully with BankBoston, N.A. in its
endeavors to assist GSRP with respect thereto. GSRP acknowledges that
Textron Financial Corporation, Green Tree Financial Servicing
Corporation and the Administrative Agent are relying upon GSRP's
efforts in connection with the obtaining of the Mezzanine Debt in
connection with entering into this First Amendment Agreement.
(c) Overadvance Letter Agreement. GSRP shall make the
submissions referred to in clause (ii) of the Overadvance Letter
Agreement. GSRP shall use its best efforts to comply with its
undertakings described in clause (iii)(9) of the Overadvance Letter
Agreement. The parties hereto agree that the execution and delivery by
BankBoston, N.A. of the Syndication Standstill Agreement will satisfy
the requirements in the Overadvance Letter Agreement for the delivery
of the "Bank Letter" referred to therein. The parties hereto agree that
the execution and delivery of this First Amendment Agreement will
satisfy the requirements in the Overadvance Letter Agreement referred
to in clauses (iii)(1), (2), (3) and (10).
(d) Others. GSRP agrees to deliver copies to BankBoston, N.A.
of all documents, certificates and requests required to be delivered
under Section 6 with respect to each Canyons Construction Project
Advance made during the Syndication Period and all documents,
certificates and requests required to be delivered under Schedule 1
attached hereto with respect to each Interim Steamboat Construction
Project Advance made during the Syndication Period. GSRP shall cause
the Parent to deliver to the Administrative Agent all documents,
certificates and requests that the Parent delivers to BankBoston, N.A.
under the Parent/BKB Credit Agreement in order to obtain advances
thereunder during the Syndication Period. GSRP agrees, consistent with
recital V. above, to defer construction expenditures during the
Syndication Period under, and consistent with the terms of, the
Steamboat Construction Contract so as to remain within the expenditure
limits of the Interim Steamboat Construction Project Advance Commitment
or to otherwise obtain payment of the same from a source other than the
Interim Steamboat Construction Project Advance Commitment. GSRP
covenants not to allow the modification of the Parent Revised Budget
without the prior written consent of the Administrative Agent and,
during the Syndication Period, to cause the Parent to deliver to each
of the Lenders monthly reconciliations with respect to such Parent
Revised Budget (together with written explanations of any material
variances). GSRP agrees to pay to Textron a fee of $100,000 which
represents a 1% fee on the increase of Textron's overall commitments
under the Existing LSA from $30,000,000 to $40,000,000, all as provided
for in Section 2.7 of the Amended LSA. All undertakings of GSRP made or
referred to in the recitals hereto are hereby incorporated into the
Existing LSA. All of GSRP undertakings set forth in this Section 4 are
hereby incorporated into the Existing LSA.
5. WARRANTIES AND REPRESENTATIONS
GSRP hereby represents and warrants as of the date hereof as follows,
which representations and warranties are hereby incorporated into and made part
of the Amended LSA:
<PAGE>
(a) Warranties and Representations True and Correct. Except as
otherwise disclosed on Schedule 10 attached hereto, each of the
representations and warranties contained in Section 4 of the Existing
LSA (other than Section 4.4 thereof) is true and correct as of the date
hereof. All of the statements, representations and warranties made by
or pertaining to GSRP in the recitals hereof are true and correct.
Without limiting the foregoing and in addition thereto, GSRP hereby:
(i) acknowledges that the following principal amounts
are outstanding on the following Notes held by the following
Lenders (each of the Lenders, by their execution of this First
Amendment Agreement, acknowledges that such amounts are
outstanding as of the date hereof):
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------- ------------------------------------- -------------------------------------
Holder Note Amount
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Textron Financial Corporation Attitash Inventory Note $424,070.47
Mt. Snow Inventory Note $5,287,222.48
Killington Inventory Note $2,865,110.42
Jordan Bowl Inventory Note $3,163,075.47
Canyons Construction Project $7,373,517.86 (includes Overadvance
Advance Note of $2,211,304.86)
Steamboat Construction Project $0
Advance Note
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Green Tree Financial Servicing Attitash Inventory Note $424,070.47
Corporation
Mt. Snow Inventory Note $5,287,222.48
Killington Inventory Note $2,865,110.42
Jordan Bowl Inventory Note $3,163,075.47
Canyons Construction Project $5,162,213.00
Advance Note
Steamboat Construction Project $0
Advance Note
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
(ii) represents and warrants, except with respect to
the Permitted Exceptions, that all Liens granted to the
Administrative Agent under the Existing LSA and the other
Security Documents are duly granted, valid, perfected and
prior in right to all other Liens that now or hereafter may be
granted to or held by any other Person.
<PAGE>
(iii) acknowledges that no claims, actions, causes
of actions, counterclaims as liabilities exist against, or
are held by it in respect of, any Lender, the Administrative
Agent, Textron Financial or Green Tree under the Existing
LSA or any of the Security Documents, and agrees, as further
inducement to Textron Financial's and Green Tree's entering
into this First Amendment Agreement, to release, waive and
discharge any such claims, actions, causes of actions,
counterclaims and/or liabilities and by executing this First
Amendment Agreement hereby so releases, waives and
discharges the same.
(b) Transaction Is Legal and Authorized. The execution and
delivery of this First Amendment Agreement, the Modification Documents
and the other documents and instruments contemplated herein, and
compliance by GSRP with all of the provisions of this First Amendment
Agreement, the Existing LSA, as amended hereby, and each of the other
documents set forth above are:
(i) within the corporate powers of GSRP;
(ii) valid and legal acts and will not conflict with,
or result in any breach in any of the provisions of, or
constitute a default under, or result in the creation of any
Lien (except Liens contemplated under any of the Security
Documents) upon any Property of GSRP under the provisions of,
any agreement, charter instrument, bylaw or other instrument
to which GSRP is a party or by which its Property may be
bound.
(c) Governmental Consent. Neither the nature of GSRP, or of
any of its businesses or Properties, or any relationship between GSRP
and any other Person, or any circumstance in connection with the
execution or delivery of this First Amendment Agreement and the other
documents contemplated in connection herewith, nor the operation of any
Project and the sale, or offering for sale, of any Quartershare
Interest of any of the Projects by GSRP, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of GSRP, as
a condition of the execution, delivery or performance of this First
Amendment Agreement and the other documents contemplated in connection
herewith.
(d) Restrictions of GSRP. GSRP will not be, on or after the
date hereof, a party to any contract or agreement which restricts its
right or ability to incur indebtedness under, or prohibits the
execution of, or compliance with, this First Amendment Agreement by
GSRP. GSRP has not agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its Property
constituting the Collateral, whether now owned or hereafter acquired,
to be subject to a Lien and all Liens in favor of the Administrative
Agent in respect of such Collateral remain in full force and effect
(except with respect to any Mezzanine Debt but only on terms and
conditions that will be acceptable to the Lenders).
(e) Brokers' Fees. There are no brokers and finders which are
entitled to receive compensation for their services rendered to GSRP
with respect to the transactions described in this First Amendment
Agreement.
<PAGE>
(f) No Defaults or Events of Default. No Default or Event of
Default has occurred or is continuing, nor does any event or condition
exist that would constitute a Default or an Event of Default upon the
execution and delivery of this First Amendment Agreement. Since the
Closing Date, no material adverse change has occurred in or in respect
of the Collateral or any one or more of the Projects.
6. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS FIRST AMENDMENT AGREEMENT
This First Amendment Agreement shall become effective on the date (the
"First Amendment Closing Date") on which the parties hereto shall have executed
this First Amendment Agreement and each of the following conditions shall have
been satisfied:
(a) Warranties and Representations True as of First Amendment
Closing Date. The warranties and representations contained or referred
to in this First Amendment Agreement shall be true in all material
respects on the First Amendment Closing Date with the same effect as
though made on and as of that date. The Administrative Agent shall have
received a certificate, in form and substance satisfactory to the
Administrative Agent, dated as of the First Amendment Closing Date,
signed by an Executive Vice-President or Vice President of GSRP and
certifying that the warranties and representations of GSRP contained in
this First Amendment Agreement are true in all material respects on the
First Amendment Closing Date.
(b) Secretary's Certificates.
The Administrative Agent shall have received a certificate of
the Secretary or any Assistant Secretary of GSRP, in form and substance
reasonably satisfactory to the Administrative Agent, dated as of the
First Amendment Closing Date, certifying
(i) the adoption by the Board of Directors of GSRP of
a resolution authorizing GSRP to enter into this First
Amendment Agreement and the transactions and instruments
contemplated hereby, and
(ii) the incumbency and authority of, and verifying
the specimen signatures of, the officers of GSRP authorized to
execute and deliver this First Amendment Agreement, the
Modification Agreements and the other documents contemplated
hereunder.
(c) Legal Opinion. GSRP shall have delivered to Administrative
Agent and the Lenders a legal opinion from its General Counsel in form
and substance reasonably satisfactory to the Lenders and Administrative
Agent.
(d) Expenses. GSRP shall have paid all fees and expenses
required to be paid by it pursuant to Section 11.2(d) of Existing LSA
pursuant to invoices or other bills submitted to GSRP.
(e) Consent. Each Lender shall have consented to this First
Amendment Agreement.
<PAGE>
(f) Other Documents.
(i) GSRP shall have executed each of the modification
agreements (collectively, the "Modification Agreements") to
each of the Blanket Mortgages, substantially in the forms of
Exhibits A1 through A6 attached hereto, and shall have been
delivered the same to the Administrative Agent.
(ii) Each of the other Persons that shall have
delivered subordination agreements to the Administrative Agent
in connection with the original closing of the Existing LSA
shall have executed this First Amendment Agreement to show its
consent to the same.
(iii) The Syndication Standstill Agreement shall have
been executed by the Parent and BankBoston, N.A. and shall be
in full force and effect. The BankBoston Interim Steamboat
Project Advance shall remain outstanding and shall have not
been accelerated or payment demanded in respect thereof.
(iv) The Steamboat Construction Project Advance Notes
and the Steamboat Inventory Advance Notes shall have delivered
to the Lenders together with appropriate allonges thereto by
BankBoston, N.A.
(v) GSRP shall have executed and delivered the
allonges referred to in Section 3(g) hereof.
(g) Other Deliveries. In consideration of Textron's making the
Overadvance and entering into this First Amendment Agreement, GSRP
agrees to deliver to Textron and Green Tree a general release of all
claims, actions, causes of actions, counterclaims and liabilities
whatsoever in form and substance satisfactory to Textron and Green
Tree, respectively.
7. MISCELLANEOUS
(a) Parties, Successors and Assigns. This First Amendment
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
(b) Governing Law. This First Amendment Agreement shall be
governed by the internal laws of the State of Maine. To the extent any
provision of this First Amendment Agreement is not enforceable under
applicable law, such provision shall be deemed null and void and shall
have no effect on the remaining portions of this First Amendment
Agreement.
<PAGE>
(c) Section Headings and Table of Contents and Construction.
The titles of the Sections appear as a matter of convenience only, do
not constitute a part hereof and shall not affect the construction
hereof. The words "herein," "hereof," "hereunder" and "hereto" refer to
this First Amendment Agreement as a whole and not to any particular
Section or other subdivision.
(d) Survival. All warranties, representations and covenants
made by GSRP herein or in any certificate or other instrument delivered
by it or on its behalf under this First Amendment Agreement shall be
considered to have been relied upon by the Lenders and shall survive
the execution and delivery of this First Amendment Agreement.
(e) Effect of Amendment. Except as explicitly amended by, or
otherwise provided for in, this First Amendment Agreement , the
Existing LSA, the Notes and the other Security Documents remain in full
force and effect under their respective terms as in effect immediately
prior to the effectiveness of this First Amendment Agreement, and GSRP
hereby affirms all of its obligations thereunder.
(f) Administrative Agent; Trust Agreement. The Lenders hereby
instruct the Administrative Agent, as administrative agent under the
Existing LSA and trustee under that certain Trust Agreement referred to
in the Maine Blanket Mortgage, to execute and deliver all necessary
instruments, certificates and documents required in its reasonable
judgment to consummate the transactions contemplated in this First
Amendment Agreement, including, without limitation, the Modification
Agreements.
[Remainder of page intentionally left blank. Next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment
Agreement as of the day and year first above written.
GSRP: Lender:
GRAND SUMMIT RESORT TEXTRON FINANCIAL
PROPERTIES, INC. CORPORATION
By______________________________ By_____________________________
Name: Name:
Title: Title:
Lender:
GREEN TREE FINANCIAL SERVICING
CORPORATION
By_____________________________
Name:
Title:
Administrative Agent:
TEXTRON FINANCIAL CORPORATION
By_______________________________
Name:
Title:
<PAGE>
AGREED AND CONSENTED TO:
L.B.O. HOLDING, INC.
By_____________________________
Name:
Title:
MOUNT SNOW, LTD.
By_____________________________
Name:
Title:
KILLINGTON, LTD.
By_____________________________
Name:
Title:
SUNDAY RIVER SKIWAY CORPORATION
By_____________________________
Name:
Title:
ASC UTAH, INC.
By_____________________________
Name:
Title:
<PAGE>
STEAMBOAT SKI & RESORT CORPORATION
By_____________________________
Name:
Title:
AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
By_____________________________
Name:
Title:
<PAGE>
Schedule 1
PART 1:
The following are conditions precedent to the making of an Interim Steamboat
Construction Project Advance:
(1) No Interim Steamboat Construction Project Advance shall be made
(a) unless the proceeds thereof are to be used to satisfy
Construction Costs in respect of the Steamboat Project and no Equity
Moneys are available that are designated to be used to satisfy such
Costs under the Budget for the Steamboat Project;
(b) if the proceeds thereof are to be used to reimburse GSRP
for any Equity Moneys previously used to satisfy Construction Costs in
respect of the Steamboat Project, FF&E Costs in respect of the
Steamboat Project and/or Sales, Marketing & Other Costs in respect of
the Steamboat Project;
(c) if a Default or Event of Default under Section 8.1(e) of
the Amended LSA shall then exist that has not been waived by the
Steamboat Construction Project Required Lenders,
(d) if the aggregate amount of the purchase prices payable
under Validated Contracts arising from the sale of Steamboat
Quartershare Interests is less than $16,500,000, provided that, until
the earlier of (I) December 31, 1999 and (II) 60 days after GSRP shall
have obtained its subdivision license in Colorado, GSRP may satisfy the
requirements under this clause (E) by having Reservation Contracts
having an aggregate amount of purchase prices of not less than
$23,700,000;
(2) On the date of the making of any Interim Steamboat Construction
Project Advance (and after giving effect thereto) the aggregate outstanding
principal amount of all Interim Steamboat Construction Project Advances
(including, without limitation, the Overadvance) and all Steamboat Interest
Advances shall not exceed $12,000,000;
(3) on the date of the making of any Interim Steamboat Construction
Project Advance (and after giving effect thereto) the aggregate original
principal amount of all Steamboat Construction Project Advances (including,
without limitation, the Overadvance) made hereunder shall not exceed the amount
described in clause (a) of the definition of Steamboat Construction Project
Borrowing Base (without giving effect to the proviso with respect thereto)
determined as of such date;
<PAGE>
(4) the original principal amount of each Interim Steamboat
Construction Project Advance to be made in respect of Construction Costs of the
Steamboat Project, at the time of the making thereof, shall have been determined
by excluding from such Construction Costs a contractor's retainage of 10% of the
first one-half of the applicable Construction Costs (such 10% so reserved from
any such Construction Costs is referred to herein as the "Steamboat Retainage
Amount;" for purposes of the avoidance of doubt, the Steamboat Retainage Amount
shall be based upon the full amount of certified Construction Costs for the
Steamboat Project and shall remain as a retainage until the final payment
thereof);
(5) no more than one Interim Steamboat Construction Project Advance
shall be made during any weekly period and no Interim Steamboat Construction
Project Advance shall be made if any other Construction Project Advance was made
during such weekly period;
(6) each Interim Steamboat Construction Project Advance shall only
relate or be attributable to the Steamboat Project;
(7) no Interim Steamboat Construction Project Advance shall be in
an amount of less than $50,000;
(8) BankBoston, N.A. shall have not terminated its forbearance under
the Syndication Waiver Agreement;
(9) no amendment or modification of the Syndication Waiver Agreement
shall have been effected that would have a material adverse effect on the
Steamboat Loan, the Steamboat Security Documents and/or the Collateral in
respect of the Steamboat Project without the prior written consent of the
Required Steamboat Lenders;
(10) BankBoston, N.A. shall have not declined to fund any advance under
the Parent/BKB Credit Agreement that was scheduled to be funded prior to, or is
scheduled to be funded contemporaneously with, the then current Interim
Steamboat Construction Project Advance;
(11) all requests and supporting materials (including, without
limitation, reconciliations to the Parent Revised Budget) delivered to
BankBoston, N.A. during the Syndication Period, as required under the Parent/BKB
Credit Agreement or the Syndication Waiver Agreement, prior to the then current
Interim Steamboat Construction Project Advance shall have also been delivered to
each of the Lenders and such materials shall show that the Parent, GSRP and the
Parent's other subsidiaries were in compliance with the Parent Revised Budget;
(12) GSRP shall have submitted to the Administrative Agent any
amendments and/or modifications to the Plans for the Steamboat Project, which
amendments and modifications shall be acceptable to the Administrative Agent in
its sole discretion. GSRP shall have submitted to the Administrative Agent any
amendments and/or modifications to the Budget for the Steamboat Project, which
amendments and/or modifications shall be acceptable to the Administrative Agent
in its sole discretion;
<PAGE>
(13) no change orders in respect of the Construction Contract for the
Steamboat Project or for any of the other Construction Projects shall have been
effected without the prior written consent of the Administrative Agent if any
such change order for such Project has a cost of in excess of $50,000 or if such
change order and all other such change orders for such Project have an aggregate
cost in excess of $200,000;
(14) no change orders in respect of the Construction Contract for the
Steamboat Project shall have been effected without the prior written consent of
the Administrative Agent if any such change order results in (i) a material
modification in the architectural, mechanical or structural design of the
building to be constructed in respect of such Project or (ii) a material change
in the quality of workmanship or materials to be used in any such building or
(iii) a delay in the final completion date for the construction of such building
beyond March 1, 2000;
(15) no material modifications to the architectural contract with the
Architect for the Steamboat Project shall have been effected without the prior
written consent of the Administrative Agent;
(16) the Construction Contract for the Steamboat Project shall not
have been terminated;
(17) a request for an Interim Steamboat Construction Project Advance
(a) shall be in writing,
(b) GSRP shall attach to such request a fully executed and
completed Construction Cost Certificate (with all attachments
thereto, including, without limitation, an Architect's
Construction Cost Certificate),
(c) shall show the calculation of any Retainage Amounts,
(d) shall certify that the conditions to borrowing set forth
in this Schedule are satisfied, and
(e) shall have been delivered to the office of the
Administrative Agent and the TFC Architect at least 10 Business
Days in advance of the requested funding date.
<PAGE>
The requirements in clause (a) through clause (e) above shall be
satisfied in the sole opinion of the Administrative Agent and the TFC
Architect. GSRP acknowledges that the Lenders making Interim Steamboat
Construction Project Advances shall not make such Advances in respect
of costs which have not been approved by them. The Lenders making
Construction Project Advances agree with GSRP that the costs set forth
in the revised Budget for the Steamboat Project are acceptable to them
and that neither they nor the Administrative Agent shall unreasonably
withhold its approval in respect of costs corresponding to those in
such revised Budget subject to (i) such costs conforming to the
amounts, conditions, assumptions and requirements of such revised
Budget, (ii) the proper incurrence and documentation of such costs, and
(iii) the submission of proper written certification in respect of such
costs from GSRP, the Steamboat General Contractor, the Architect for
the Steamboat Project and the TFC Architect, as provided for above.
(18) GSRP shall have delivered to the Administrative Agent title
insurance endorsements to the Title Insurance Policy {Blanket} in respect of the
Steamboat Project in form and substance reasonably satisfactory to the
Administrative Agent whereby the effective date of such Title Insurance Policy
{Blanket} shall be made the date of such funding, all exclusions and/or
exceptions not satisfactory to the Administrative Agent shall have been removed
or appropriate endorsements in respect thereof shall have been obtained. Such
Title Insurance Policy {Blanket} shall be in an amount not less than the sum of
the aggregate principal amount of the outstanding Construction Project Advances
and Interest Advances for the Steamboat Project on such funding date, after
giving effect to the making of such Interim Steamboat Construction Project
Advance. All premiums in respect of such endorsement to such Title Insurance
Policy {Blanket} shall have been paid in full and evidence thereof shall have
been delivered to the Administrative Agent;
(19) the proceeds of such Interim Steamboat Construction Project
Advance shall be disbursed by the Administrative Agent, acting as the
Disbursement Agent, directly to the Steamboat General Contractor or as such
General Contractor may direct in writing;
(20) all Loan Costs shall have been paid in full, provided that the
aggregate amount of fees payable by GSRP to the Administrative Agent, as the
Disbursement Agent, shall not exceed $40,000 (costs and expenses to be in
addition thereto) and the per Construction Project Advance portion thereof will
be approximately $3,077 (costs and expenses to be in addition thereto);
(21) the BankBoston Interim Steamboat Project Advance is outstanding
under the Parent/BKB Credit Agreement and has not been accelerated or otherwise
made immediately due and payable;
(22) in connection with the first Interim Steamboat Construction
Project Advance, all of the Security Documents that had previously been executed
and delivered to the Lenders and Administrative Agent by GSRP prior to the First
Amendment Agreement and assigned to BankBoston, as Agent under the Parent/BKB
Credit Agreement, pursuant to that certain Transfer and Assignment of
Instruments and Documents dated March 10, 1999 shall have been re-assigned and
conveyed and delivered back to the Administrative Agent and the Lenders and any
and all modifications effected thereto in connection with the BankBoston Interim
Steamboat Project Advance shall be acceptable to the Administrative Agent and
the Lenders, in their sole discretion, and all additional amendments,
modifications and allonges required or contemplated by the First Amendment
Agreement with respect thereto shall have been executed, delivered and recorded;
(23) in connection with the first Interim Steamboat Construction
Project Advance (and if not previously paid), GSRP shall have paid to Textron
the $100,000 commitment fee referred to in Section 4(e) of the First Amendment
Agreement;
<PAGE>
(24) each of the Modification Agreements shall have been recorded in
the land records of the appropriate jurisdiction and the subordinating parties
required to consent to the Modification Agreement for the Canyons Blanket
Mortgage shall have executed such Modification Agreement evidencing such consent
to the extent the same is required to preserve priority of lien of the Canyons
Blanket Mortgage. GSRP shall have assigned to Administrative Agent all
Property-Related Contracts not previously assigned; and
(25) GSRP shall have delivered the appropriate endorsements to the
Title Insurance Policy {Blanket} required in connection with the Modification
Agreements and such other endorsements necessary to reflect the re-assignment of
the Steamboat Security Documents, the making of the Overadvance and the
recharacterization of the Overadvance as an Interim Steamboat Construction
Project Advance.
(26) GSRP shall have delivered to the Administrative Agent a legal
opinion in respect of the Steamboat Project regarding its registration and
compliance with timeshare regulations in Colorado and copies of all material
subcontractor agreements.
PART II
Upon the full syndication of the Steamboat Construction Project
Advances and the Canyons Construction Project Advances, a portion of the
proceeds of the first Steamboat Construction Project Advance made thereafter may
be used by GSRP or the GSRP SPV, as the case may be, to make a distribution to
its "parent company" for the ultimate purpose of having the Parent pay the
BankBoston Interim Steamboat Project Advance.
<PAGE>
Schedule 2
[Syndication Standstill Agreement]
<PAGE>
Schedule 3
Intentionally Omitted.
<PAGE>
Schedule 4
Intentionally Omitted.
<PAGE>
Schedule 5
[Revised Steamboat Project Budget]
<PAGE>
Schedule 6
[Parent Revised Budget]
Please see Schedule 7 below.
<PAGE>
Schedule 7
[Parent Draws]
<PAGE>
Schedule 8
[Canyons Construction Project Advances]
<PAGE>
Schedule 9
[Interim Steamboat Construction Project Cost Advances]
<PAGE>
Schedule 10
The representation in Section 4.6 of the Existing LSA is hereby modified by
referring to the pending litigation among GSRP, Textron, Green Tree and Barr and
Barr relating to the Jordan Bowl Project.
The representation in Section 4.15 is hereby modified by referring to the
restriction on indebtedness contained in the Syndication Letter.
<PAGE>
Exhibit A-1 - 5
Exhibit A-1
MODIFICATION AGREEMENT No. 2
(Attitash)
THIS MODIFICATION AGREEMENT No.2 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Mortgagor"), whose address is P.O. Box 450, Sunday River
Road, Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a
Delaware corporation, as administrative agent for Textron Financial Corporation,
as lender, and Green Tree Financial Servicing Corporation, as lender
(collectively, the "Lenders") (in such capacity herein referred to as the
"Mortgagee"), having a mailing address of 40 Westminster Street, Providence,
Rhode Island 02903.
R E C I T A L S :
WHEREAS, Mortgagor has granted to Mortgagee a lien pursuant to that
certain Mortgage, Assignment of Rents and Security Agreement, dated as of August
1, 1997, by and between Mortgagor and Mortgagee, which was recorded August 21,
1997, in Book 1711 at Page 590 in the Office of the Carroll County, New
Hampshire Registry of Deeds and was amended by that certain Modification
Agreement dated as of September 1, 1998 and recorded September 28, 1998 in Book
1768 at Page 752 in the Office of the Carroll County, New Hampshire Registry of
Deeds (said Mortgage being referred to in this Agreement as the "Existing
Mortgage"); and
WHEREAS, Mortgagor, as assignor, executed an Assignment of Rents and
Leases dated as of August 1, 1997 to Mortgagee, as assignee, which was recorded
August 21, 1997, in Book 1711, at Page 622 in the Office of the Carroll County,
New Hampshire Registry of Deeds and was amended by that certain Modification
Agreement dated as of September 1, 1998 and recorded September 28, 1998 in Book
1768 at Page 752 in the Office of the Carroll County, New Hampshire Registry of
Deeds)(said Assignment of Rents and Leases being referred to in this Agreement
as the "Existing Assignment of Rents"); and
WHEREAS, Mortgagor and Mortgagee are, contemporaneously herewith,
entering into that certain First Amendment Agreement to Loan and Security
Agreement, dated as of April 5, 1999, pursuant to which Mortgagor and Mortgagee
are effecting certain changes in and to the Loan and Security Agreement dated as
of September 1, 1998 and referred to in the Existing Mortgage as "LSA II;" and
WHEREAS, Mortgagor and Mortgagee desire to amend the Existing Mortgage
and the Existing Assignment of Rents to reflect the aforesaid changes.
<PAGE>
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
1. Modification to the Existing Mortgage.
Each reference in the Existing Mortgage to the determination of the
rate of interest borne by the Notes II, as defined therein, shall be deemed a
reference to the definition of "Interest Rate," as set forth below:
Interest Rate -- means, with respect to the Steamboat
Loan, the Canyons Loan, the Jordan Bowl Loan, the Attitash
Loan, the Killington Loan and/or the Mt. Snow Loan, (a) prior
to the Full Syndication Date (as such term is defined in LSA
II), the Original Prime Interest Rate and (b) on and after the
Full Syndication Date, the New Prime Rate or the LIBOR
Interest Rate, as may be selected by all of the Lenders that
have made Advances in respect of the applicable Loan, as
provided for in LSA II.
LIBOR Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) the remainder (if positive) of
(1) the sum of 2.50% plus the Prime Rate (as
defined in LSA II) then in effect for such
month minus (2)One-Month LIBOR (as defined
in LSA II) then in effect for such month,
plus
(ii) One-Month LIBOR then in effect for
such month.
New Prime Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) 2.50%, plus
(ii) the Prime Rate then in effect for
such month.
<PAGE>
Original Prime Interest Rate -- means, with respect
to any calendar month, a per annum rate of interest equal to
the greater of:
(a) 9.25%, or
(b) the sum of
(i) 1.50%, plus
(ii) the Prime Rate then in effect
for such month.
Nothing in this clause (1) shall restrict or limit the application of a default
rate of interest, as provided for in LSA II, as such term is defined in the
Existing Mortgage. Each reference in the Existing Mortgage to "145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
"Maximum Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine
Debt (as defined in LSA II) is required, $105,000,000 or (b) if Mezzanine Debt
is required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in LSA II).
The Existing Mortgage, as modified herein, is hereby ratified and
confirmed by Mortgagor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Mortgage, as
herein modified, shall continue in full force and effect, affected by this
Agreement only to the extent of the amendments and modifications expressly set
forth herein.
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to "Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Mortgagor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement and in the aforesaid
Modification Agreement, neither the Existing Mortgage nor the Existing
Assignment of Rents has been modified or otherwise amended.
4. Miscellaneous.
<PAGE>
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
Signed and Acknowledged GRAND SUMMIT RESORT PROPERTIES, INC.
in the Presence of
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF MAINE )
) ss.
COUNTY OF )
PERSONALLY APPEARED the above-named ______________________________,
_____________________________ of Grand Summit Resort Properties, Inc. and
acknowledged the foregoing instrument to be his/her free act and deed in said
capacity and the free act and deed of said corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
Signed and Acknowledged TEXTRON FINANCIAL CORPORATION, as
in the Presence of: Administrative Agent
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this20th day of
April, 1999, by ______________, the _______________ of Textron Financial
Corporation, a Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A-2 - 5
Exhibit A-2
MODIFICATION AGREEMENT No. 2
(Killington)
THIS MODIFICATION AGREEMENT No.2 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Mortgagor"), whose address is P.O. Box 450, Sunday River
Road, Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a
Delaware corporation, as administrative agent for Textron Financial Corporation,
as lender, and Green Tree Financial Servicing Corporation, as lender
(collectively, the "Lenders") (in such capacity herein referred to as the
"Mortgagee"), having a mailing address of 40 Westminster Street, Providence,
Rhode Island 02903.
R E C I T A L S :
WHEREAS, Mortgagor has granted to Mortgagee a lien pursuant to that
certain Mortgage, Assignment of Rents and Security Agreement, dated as of
September 25, 1997, by and between Mortgagor and Mortgagee, which was recorded
September 25, 1997, in Book 159 at Page 121 in the Sherburne, Vermont Town
Clerk's Office and was amended by that certain Modification Agreement dated as
of September 1, 1998 and recorded October 14, 1998 in Book 174 at Page 168 in
the Sherburne, Vermont Town Clerk's Office (said Mortgage being referred to in
this Agreement as the "Existing Mortgage");
WHEREAS, Mortgagor has executed and delivered an Assignment of Rents
and Leases dated as of September 25, 1997 to Mortgagee, as assignee, which was
recorded September 25, 1997, in Book 159, at Page 141 in the Sherburne, Vermont
Town Clerk's Office and was amended by that certain Modification Agreement dated
as of September 1, 1998 and recorded October 14, 1998 in Book174 at Page 168 in
the Sherburne, Vermont Town Clerk's Office (said Assignment of Rents and Leases
being referred to in this Agreement as the "Existing Assignment of Rents"); and
WHEREAS, Mortgagor and Mortgagee are, contemporaneously herewith,
entering into that certain First Amendment Agreement to Loan and Security
Agreement, dated as of April 5, 1999, pursuant to which Mortgagor and Mortgagee
are, among other things, changing the rate of interest under that certain Loan
and Security Agreement dated as of September 1, 1998 and referred to in the
Existing Mortgage as "LSA II;" and
WHEREAS, Mortgagor and Mortgagee desire to amend the Existing Mortgage
and the Existing Assignment of Rents to reflect the aforesaid changes.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
<PAGE>
1. Modification to the Existing Mortgage.
Each reference in the Existing Mortgage to the determination of the
rate of interest borne by the Notes II, as defined therein, shall be deemed a
reference to the definition of "Interest Rate" as set forth below:
Interest Rate -- means, with respect to the Steamboat
Loan, the Canyons Loan, the Jordan Bowl Loan, the Attitash
Loan, the Killington Loan and/or the Mt. Snow Loan, (a) prior
to the Full Syndication Date (as such term is defined in LSA
II), the Original Prime Interest Rate and (b) on and after the
Full Syndication Date, the New Prime Rate or the LIBOR
Interest Rate, as may be selected by all of the Lenders that
have made Advances in respect of the applicable Loan, as
provided for in LSA II.
LIBOR Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) the remainder (if positive) of
(1) the sum of 2.50% plus the Prime Rate (as
defined in LSA II) then in effect for such
month minus (2)One-Month LIBOR (as defined
in LSA II) then in effect for such month,
plus
(ii) One-Month LIBOR then in effect
for such month.
New Prime Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) 2.50%, plus
(ii) the Prime Rate then in effect
for such month.
Original Prime Interest Rate -- means, with respect
to any calendar month, a per annum rate of interest equal to
the greater of:
(a) 9.25%, or
(b) the sum of
<PAGE>
(i) 1.50%, plus
(ii) the Prime Rate then in effect
for such month.
Nothing in this clause (1) shall restrict or limit the application of a default
rate of interest, as provided for in LSA II, as such term is defined in the
Existing Mortgage. Each reference in the Existing Mortgage to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
"Maximum Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine
Debt (as defined in LSA II) is required, $105,000,000 or (b) if Mezzanine Debt
is required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in LSA II).
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Mortgagor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement and in the aforesaid
Modification Agreement, neither the Existing Mortgage nor the Existing
Assignment of Rents has been modified or otherwise amended.
4. Miscellaneous.
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
Signed and Acknowledged GRAND SUMMIT RESORT PROPERTIES, in the Presence of:
INC.
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF MAINE )
) ss.
COUNTY OF )
PERSONALLY APPEARED the above-named ______________________________,
_____________________________ of Grand Summit Resort Properties, Inc. and
acknowledged the foregoing instrument to be his/her free act and deed in said
capacity and the free act and deed of said corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
Signed and Acknowledged TEXTRON FINANCIAL CORPORATION, as
in the Presence of: Administrative Agent
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this2 0th day of
April, 1999, by ______________, the _______________ of Textron Financial
Corporation, a Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A-3 - [PG NUMBER]
Exhibit A-3
MODIFICATION AGREEMENT No. 2
(Mount Snow)
THIS MODIFICATION AGREEMENT No.2 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Mortgagor"), whose address is P.O. Box 450, Sunday River
Road, Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a
Delaware corporation, as administrative agent for Textron Financial Corporation,
as lender, and Green Tree Financial Servicing Corporation, as lender
(collectively, the "Lenders") (in such capacity herein referred to as the
"Mortgagee"), having a mailing address of 40 Westminster Street, Providence,
Rhode Island 02903.
R E C I T A L S :
WHEREAS, Mortgagor has granted to Mortgagee a lien pursuant to that
certain Mortgage, Assignment of Rents and Security Agreement, dated as of
September 25, 1997, by and between Mortgagor and Mortgagee, which was recorded
September 25, 1997, in Book 155 at Page 582 in the Dover, Vermont Town Clerk's
Office and was amended by that certain Modification Agreement dated as of
September 1, 1998 and recorded October 14, 1998 in Book 167 at Page 57in the
Dover, Vermont Town Clerk's Office (said Mortgage being referred to in this
Agreement as the "Existing Mortgage"); and
WHEREAS, Mortgagor has executed and delivered Assignment of Rents and
Leases dated as of September 25, 1997 to Mortgagee, as assignee, which was
recorded September 25, 1997, in Book 156, at Page 001 in the Dover, Vermont Town
Clerk's Office and was amended by that certain Modification Agreement dated as
of September 1, 1998 and recorded October 14, 1998 in Book 167 at Page 57 in the
Dover, Vermont Town Clerk's Office said Assignment of Rents and Leases being
referred to in this Agreement as the "Existing Assignment of Rents"); and
WHEREAS, Mortgagor and Mortgagee are, contemporaneously herewith,
entering into that certain First Amendment Agreement to Loan and Security
Agreement, dated as of April 5, 1999, pursuant to which Mortgagor and Mortgagee
are, among other things, changing the rate of interest under that certain Loan
and Security Agreement dated as of September 1, 1998 and referred to in the
Existing Mortgage as "LSA II;" and
WHEREAS, Mortgagor and Mortgagee desire to amend the Existing Mortgage
and the Existing Assignment of Rents to reflect the aforesaid changes.
<PAGE>
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
1. Modification to the Existing Mortgage.
Each reference in the Existing Mortgage to the determination of the
rate of interest borne by the Notes II, as defined therein, shall be deemed a
reference to the definition of "Interest Rate" as set forth below:
Interest Rate -- means, with respect to the Steamboat
Loan, the Canyons Loan, the Jordan Bowl Loan, the Attitash
Loan, the Killington Loan and/or the Mt. Snow Loan, (a) prior
to the Full Syndication Date (as such term is defined in LSA
II), the Original Prime Interest Rate and (b) on and after the
Full Syndication Date, the New Prime Rate or the LIBOR
Interest Rate, as may be selected by all of the Lenders that
have made Advances in respect of the applicable Loan, as
provided in LSA II.
LIBOR Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) the remainder (if positive) of
(1) the sum of 2.50% plus the Prime Rate (as
defined in LSA II) then in effect for such
month minus (2)One-Month LIBOR (as defined
in LSA II) then in effect for such month,
plus
(ii) One-Month LIBOR then in effect
for such month.
New Prime Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) 2.50%, plus
(ii) the Prime Rate then in effect
for such month.
Original Prime Interest Rate -- means, with respect
to any calendar month, a per annum rate of interest equal to
the greater of:
<PAGE>
(a) 9.25%, or
(b) the sum of
(i) 1.50%, plus
(ii) the Prime Rate then in effect
for such month.
Nothing in this clause (1) shall restrict or limit the application of a default
rate of interest, as provided for in LSA II, as such term is defined in the
Existing Mortgage. Each reference in the Existing Mortgage to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
"Maximum Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine
Debt (as defined in LSA II) is required, $105,000,000 or (b) if Mezzanine Debt
is required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in LSA II).
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Mortgagor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement and in the aforesaid
Modification Agreement, neither the Existing Mortgage nor the Existing
Assignment of Rents has been modified or otherwise amended.
4. Miscellaneous.
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
Signed and Acknowledged GRAND SUMMIT RESORT PROPERTIES, in the Presence of:
INC.
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF )
) ss.
COUNTY OF )
PERSONALLY APPEARED the above-named ______________________________,
_____________________________ of Grand Summit Resort Properties, Inc. and
acknowledged the foregoing instrument to be his/her free act and deed in said
capacity and the free act and deed of said corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
Signed and Acknowledged TEXTRON FINANCIAL CORPORATION, as
in the Presence of: Administrative Agent
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 20th day of
April, 1999, by ______________, the _______________ of Textron Financial
Corporation, a Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A-4 - [PG NUMBER]
Exhibit A-4
MODIFICATION AGREEMENT No. 1
(Jordan Bowl)
THIS MODIFICATION AGREEMENT No. 1 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Grantor"), whose address is P.O. Box 450, Sunday River Road,
Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a Delaware
corporation, as trustee under that certain Collateral Trust Indenture for the
benefit of Textron Financial Corporation, as lender, and Green Tree Financial
Servicing Corporation, as lender (collectively, the "Lenders") (in such capacity
herein referred to as the "Grantee"), having a mailing address of 40 Westminster
Street, Providence, Rhode Island 02903.
R E C I T A L S :
WHEREAS, Grantor granted to Grantee a mortgage lien as provided in and
evidenced by that certain Mortgage, Assignment of Rents and Security Agreement,
dated as of September 1, 1998, by and between Grantor and Grantee, which was
recorded September 28, 1998, in Book 2614 at Page 152 in the Oxford County,
Maine Registry of Deeds (said Mortgage being referred to in this Agreement as
the "Existing Mortgage"); and
WHEREAS, Grantor has executed and delivered Assignment of Rents and
Leases dated as of September 1, 1998, as assignee, which was recorded September
28, 1998 in Book 2614, at Page 174 in the Oxford County, Maine Registry of Deeds
(the "Existing Assignment of Rents"); and
WHEREAS, Grantor and Grantee are, contemporaneously herewith, entering
into that certain First Amendment Agreement to Loan and Security Agreement,
dated as of April 5, 1999, pursuant to which Grantor and Grantee are, among
other things, changing the rate of interest under that certain Loan and Security
Agreement dated as of September 1, 1998 and referred to in the Existing Mortgage
as the "LSA;" and
WHEREAS, Grantor and Grantee desire to amend the Existing Mortgage and
the Assignment of Rents to reflect the aforesaid changes.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
<PAGE>
1. Modification to the Existing Mortgage.
Each reference in the Existing Mortgage to the determination of the
rate of interest borne by the Notes, as defined therein, shall be deemed a
reference to the definition of "Interest Rate" as set forth below:
Interest Rate -- means, with respect to the Steamboat
Loan, the Canyons Loan, the Jordan Bowl Loan, the Attitash
Loan, the Killington Loan and/or the Mt. Snow Loan, (a) prior
to the Full Syndication Date (as such term is defined in LSA),
the Original Prime Interest Rate and (b) on and after the Full
Syndication Date, the New Prime Rate or the LIBOR Interest
Rate, as may be selected by all of the Lenders that have made
Advances in respect of the applicable Loan, as provided for in
LSA II.
LIBOR Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) the remainder (if positive) of
(1) the sum of 2.50% plus the Prime Rate (as
defined in LSA ) then in effect for such
month minus (2)One-Month LIBOR (as defined
in LSA ) then in effect for such month, plus
(ii) One-Month LIBOR then in effect
for such month.
New Prime Interest Rate -- means, with respect to any
calendar month, a per annum rate of interest equal to the
greater of:
(a) 9.50%, or
(b) the sum of
(i) 2.50%, plus
(ii) the Prime Rate then in effect
for such month.
Original Prime Interest Rate -- means, with respect
to any calendar month, a per annum rate of interest equal to
the greater of:
(a) 9.25%, or
(b) the sum of
<PAGE>
(i) 1.50%, plus
(ii) the Prime Rate then in effect
for such month.
Nothing in this clause (1) shall restrict or limit the application a default
rate of interest, as provided for in the LSA , as such term is defined in the
Existing Mortgage. Each reference in the Existing Mortgage to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
"Maximum Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine
Debt (as defined in the LSA) is required, $105,000,000 or (b) if Mezzanine Debt
is required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in the LSA).
The following references in the Existing Mortgage are hereby amended
and restated in their entirety:
(1) "Steamboat Construction Project Advance Promissory Note
dated September 1, 1998, from Grantor to Textron Financial Corporation,
in the original stated principal amount of $15,000,000" is amended and
restated as follows: "Steamboat Construction Project Advance Promissory
Note dated September 1, 1998, from Grantor to Textron Financial
Corporation, in the original stated principal amount of $12,000,000;"
(2) "Steamboat Inventory Advance Promissory Note dated
September 1, 1998, from Grantor to Textron Financial Corporation, in
the original stated principal amount of $15,000,000" is amended and
restated as follows: "Steamboat Inventory Advance Promissory Note dated
September 1, 1998, from Grantor to Textron Financial Corporation, in
the original stated principal amount of $0";
(3) "Canyons Construction Project Advance Promissory Note
dated September 1, 1998, from Grantor to Textron Financial Corporation,
in the original stated principal amount of $15,000,000" is amended and
restated as follows: "Canyons Construction Project Advance Promissory
Note dated September 1, 1998, from Grantor to Textron Financial
Corporation, in the original stated principal amount of $40,000,000" ;
(4) "Canyons Inventory Advance Promissory Note dated September
1, 1998, from Grantor to Textron Financial Corporation, in the original
stated principal amount of $15,000,000" is amended and restated as
follows: "Canyons Inventory Advance Promissory Note dated September 1,
1998, from Grantor to Textron Financial Corporation, in the original
stated principal amount of $40,000,000;"
<PAGE>
(5) "Steamboat Construction Project Advance Promissory Note
dated September 1, 1998, from Grantor to Green Tree Financial Servicing
Corporation, in the original stated principal amount of $15,000,000" is
amended and restated: "Steamboat Construction Project Advance
Promissory Note dated September 1, 1998, from Grantor to Green Tree
Financial Servicing Corporation, in the original stated principal
amount of $0;"
(6) "Steamboat Inventory Advance Promissory Note dated
September 1, 1998, from Grantor to Green Tree Financial Servicing
Corporation, in the original stated principal amount of $15,000,000 is
amended and restated as follows: "Steamboat Inventory Advance
Promissory Note dated September 1, 1998, from Grantor to Green Tree
Financial Servicing Corporation, in the original stated principal
amount of $0;"
(7) "Canyons Construction Project Advance Promissory Note
dated September 1, 1998, from Grantor to Green Tree Financial Servicing
Corporation, in the original stated principal amount of $15,000,000" is
amended and restated as follows: "Canyons Construction Project Advance
Promissory Note dated September 1, 1998, from Grantor to Green Tree
Financial Servicing Corporation, in the original stated principal
amount of $30,000,000;"
(8) "Canyons Inventory Advance Promissory Note dated September
1, 1998, from Grantor to Green Tree Financial Servicing Corporation, in
the original stated principal amount of $15,000,000" is amended and
restated as follows: "Canyons Inventory Advance Promissory Note dated
September 1, 1998, from Grantor to Green Tree Financial Servicing
Corporation, in the original stated principal amount of $30,000,000."
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Mortgagor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement, neither the Existing
Mortgage nor the Existing Assignment of Rent has been modified or otherwise
amended.
4. Miscellaneous.
<PAGE>
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
Signed and Acknowledged GRAND SUMMIT RESORT PROPERTIES, in the Presence of: INC.
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF )
) ss.
COUNTY OF )
PERSONALLY APPEARED the above-named ______________________________,
_____________________________ of Grand Summit Resort Properties, Inc. and
acknowledged the foregoing instrument to be his/her free act and deed in said
capacity and the free act and deed of said corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
Signed and Acknowledged TEXTRON FINANCIAL CORPORATION, as
in the Presence of: Administrative Agent
_______________________________ By________________________________
Name: Name:
Title:
- -------------------------------
Name:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this ___ day of
_______________, 1999, by ______________, the _______________ of Textron
Financial Corporation, a Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A-5 - [PG NUMBER]
Exhibit A-5
MODIFICATION AGREEMENT No. 1
(Steamboat)
THIS MODIFICATION AGREEMENT No. 1 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Grantor"), whose address is P.O. Box 450, Sunday River Road,
Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a Delaware
corporation, as Beneficiary under that certain Combination Deed of Trust,
Security Agreement and Fixture Financing Statement, having a mailing address of
333 East River Drive, Suite 305, East Hartford, Connecticut06108.
R E C I T A L S :
WHEREAS, Grantor executed and delivered to Beneficiary that certain
Combination Deed of Trust, Security Agreement and Fixture Financing Statement,
dated as of September 1, 1998, which was recorded September 28, 1998, in Book
750 at Page 1631 in the Office of the Clerk and Recorder for Routt County,
Colorado (said Combination Deed of Trust, Security Agreement and Fixture
Financing Statement being referred to in this Agreement as the "Existing Deed of
Trust"); and
WHEREAS, Grantor executed and delivered to Beneficiary that certain
Assignment of Rents and Leases, dated as of September 1, 1998, which was
recorded September 28, 1998, in Book 750 at Page 1632 in the Office of the Clerk
and Recorder for Routt County, Colorado (said Assignment of Leases and Rents
being referred to in this Agreement as the "Existing Assignment of Rents") in
respect of the premises described on Exhibit A attached hereto; and
WHEREAS, Grantor and Grantee are, contemporaneously herewith, entering
into that certain First Amendment Agreement to Loan and Security Agreement,
dated as of April 5, 1999, pursuant to which Grantor and Grantee are effecting
certain changes under that certain Loan and Security Agreement dated as of
September 1, 1998 and referred to in the Existing Deed of Trust as the "LSA;"
and
WHEREAS, Grantor and Grantee desire to amend the Existing Deed of Trust
and the Existing Assignment of Rents to reflect the aforesaid changes.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
<PAGE>
1. Modification to the Existing Deed of Trust.
Each reference in the Existing Deed of Trust to "$145,000,000" shall be
deemed to be a reference to the"Maximum Outstanding Loan Limit. The "Maximum
Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine Debt (as
defined in the LSA) is required, $105,000,000 or (b) if Mezzanine Debt is
required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in the LSA). The reference in the
Existing Deed of Trust to the "Construction Project Advance Promissory Note from
Grantor to Textron Financial Corporation dated September 28, 1998 in the
original stated principal amount of $15,000,000" is hereby amended to read as
follows: "Construction Project Advance Promissory Note from Grantor to Textron
Financial Corporation dated September 28, 1998 in the original stated principal
amount (as amended) of $12,000,000 . The reference to the "Construction Project
Advance Promissory Note from Grantor to Green Tree Financial Servicing
Corporation dated September 28, 1998 in the original stated principal amount of
$15,000,000" is hereby deleted. The Existing Deed of Trust, as modified herein,
is hereby ratified and confirmed by Grantor, and every provision, covenant,
grant, condition, obligation, right and power contained in and under the
Existing Deed of Trust, as herein modified, shall continue in full force and
effect, affected by this Agreement only to the extent of the amendments and
modifications expressly set forth herein.
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to the"Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Grantor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement, neither the Existing
Deed of Trust nor the Existing Assignment of Rent has been modified or otherwise
amended.
4. Miscellaneous.
<PAGE>
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
GRAND SUMMIT RESORT PROPERTIES, INC.
By________________________________
Name:
Its:
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 20th day of
April, 1999 by _________, _________ of Grand Summit Resort Properties, Inc., a
Maine corporation, on behalf of such corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
TEXTRON FINANCIAL CORPORATION, as
Administrative Agent
By________________________________
Name:
Its:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this day of April,
1999, by ______________, the _______________ of Textron Financial Corporation, a
Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A
<PAGE>
Exhibit A-6 - [PG NUMBER]
Exhibit A-6
MODIFICATION AGREEMENT No. 1
(Canyons)
THIS MODIFICATION AGREEMENT No. 1 (this "Agreement"), is made as of the
5th day of April, 1999, by and between GRAND SUMMIT RESORT PROPERTIES, INC., a
Maine corporation ("Trustor"), whose address is P.O. Box 450, Sunday River Road,
Bethel, ME 04217 for the benefit of TEXTRON FINANCIAL CORPORATION, a Delaware
corporation, as Administrative Agent under that certain Deed of Trust,
Assignment of Rents, Security Agreement and Financing Statement, having a
mailing address of 333 East River Drive, Suite 305, East Hartford,
Connecticut06108.
R E C I T A L S :
WHEREAS, Trustor executed and delivered to Administrative Agent that
certain Deed of Trust, Assignment of Rents, Security Agreement and Financing
Statement, dated as of September 1, 1998, which was recorded December 31, 1998,
in Book 1217 at Page 184 in the Office of the Recorder of Summit County, Utah
(said Deed of Trust, Assignment of Rents, Security Agreement and Financing
Statement being referred to in this Agreement as the "Existing Deed of Trust");
and
WHEREAS, Trustor executed and delivered to Administrative Agent that
certain Assignment of Rents and Leases, dated as of September 1, 1998, which was
recorded December 31, 1998, in Book 1217 at Page 200 in the Office of the
Recorder of Summit County, Utah (said Assignment of Leases and Rents being
referred to in this Agreement as the "Existing Assignment of Rents") in respect
of the premises described on Exhibit A attached hereto; and
WHEREAS, Trustor, Administrative Agent and the Lenders (as defined in
the Existing Deed of Trust) are, contemporaneously herewith, entering into that
certain First Amendment Agreement to Loan and Security Agreement, dated as of
April 5, 1999, pursuant to which Trustor and Lenders are effecting certain
changes in and to that certain Loan and Security Agreement dated as of September
1, 1998 and referred to in the Existing Deed of Trust as the "LSA;" and
WHEREAS, Trustor and Grantee desire to amend the Existing Deed of Trust
and the Existing Assignment of Rents to reflect the aforesaid changes.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing recitals, of the
covenants and agreements hereinafter stated, and for other good and valuable
consideration received to the mutual satisfaction of the parties hereto, the
undersigned hereby agree as follows:
<PAGE>
Exhibit A-6 - [PG NUMBER]
1. Modification to the Existing Deed of Trust.
Each reference in the Existing Deed of Trust to "$145,000,000" shall be
deemed to be a reference to the"Maximum Outstanding Loan Limit. The "Maximum
Outstanding Loan Limit" shall mean, at any time,(a) if no Mezzanine Debt (as
defined in the LSA) is required, $105,000,000 or (b) if Mezzanine Debt is
required, the lesser of (i) $145,000,000 and (ii) the remainder of (y)
$153,000,000 minus (z) the amount of Mezzanine Debt originally raised and funded
by either GSRP or the GSRP SPV(as defined in the LSA). The reference in the
Existing Deed of Trust to the "Construction Project Advance Promissory Note from
Trustor to Textron Financial Corporation dated September 28, 1998 in the
original stated principal amount of $15,000,000" is hereby amended to read as
follows: "Construction Project Advance Promissory Note from Trustor to Textron
Financial Corporation dated September 28, 1998 in the original stated principal
amount (as amended) of $40,000,000 . The reference to the "Construction Project
Advance Promissory Note from Trustor to Green Tree Financial Servicing
Corporation dated September 28, 1998 in the original stated principal amount of
$15,000,000" is hereby amended to read as follows: "Construction Project Advance
Promissory Note from Trustor to Green Tree Financial Servicing Corporation dated
September 28, 1998 in the original stated principal amount (as amended) of
$30,000,000. The Existing Deed of Trust, as modified herein, is hereby ratified
and confirmed by Trustor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Deed of Trust,
as herein modified, shall continue in full force and effect, affected by this
Agreement only to the extent of the amendments and modifications expressly set
forth herein.
2. Modification to the Existing Assignment of Rents.
Each reference in the Existing Assignment of Rents to "$145,000,000"
shall be deemed to be a reference to the "Maximum Outstanding Loan Limit." The
Existing Assignment of Rents, as modified herein, is hereby ratified and
confirmed by Trustor, and every provision, covenant, grant, condition,
obligation, right and power contained in and under the Existing Assignment of
Rents, as herein modified, shall continue in full force and effect, affected by
this Agreement only to the extent of the amendments and modifications expressly
set forth herein.
3. Continued Force and Effect.
Except as expressly provided in this Agreement, neither the Existing
Deed of Trust nor the Existing Assignment of Rent has been modified or otherwise
amended.
4. Miscellaneous.
<PAGE>
The Recitals set forth at the beginning of this Agreement are
incorporated in and made a part of this Agreement by this reference. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed to be an original, and all of which, taken together, shall be
deemed to be one and the same Agreement. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the obligations of such parties hereunder are and at all times shall be
deemed to be for the exclusive benefit of such parties and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
and nothing set forth herein shall be deemed to be for the benefit of any other
person. Nothing set forth in this paragraph shall be deemed or construed to
create, recognize or allow any assignment or transfer of rights not otherwise
provided for in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
GRAND SUMMIT RESORT PROPERTIES, INC.
By________________________________
Name:
Its:
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 20th day of
April, 1999 by _________, _________ of Grand Summit Resort Properties, Inc., a
Maine corporation, on behalf of such corporation.
Before me,
-----------------------------------
Notary Public/Attorney at Law
Print Name:_________________________
My commission expires:______________
<PAGE>
TEXTRON FINANCIAL CORPORATION, as
Administrative Agent
By________________________________
Name:
Its:
STATE OF CONNECTICUT )
) ss.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this day of April,
1999, by ______________, the _______________ of Textron Financial Corporation, a
Delaware corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit A
ATL/602784.1
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT ("Agreement") is made as of the 8th day of
March, 1999, between AMERICAN SKIING COMPANY RESORT PROPERTIES, INC., a Maine
corporation ("Borrower") and BANKBOSTON, N.A., as agent ("Agent");
WITNESSETH:
IN CONSIDERATION of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Agent and Borrower hereby covenant and agree as
follows:
1. Definitions:
"Existing Deed of Trust" means that certain Combination Deed of Trust,
Security Agreement and Fixture Financing Statement by Grand Summit Resort
Properties, Inc. ("Grand Summit") in favor of Textron Financial Corporation
("Textron") as transferred and assigned to Agent by that certain Transfer and
Assignment of Documents and Instruments as of even date (the "Transfer"), being
recorded in Official Record Book ____, Page ___, Routt County, Colorado, as
amended.
"Exit Fee" means the fee earned and payable in accordance with that
certain Fee and Expense Letter dated as of even date from Borrower.
"Forbearance Period" means the period of time beginning on even date to
and through 5:00 p.m., Eastern Standard Time, April 16, 1999.
"Guarantor" means Grand Summit.
"Guaranty" means that certain Unconditional Guaranty of Payment and
Performance of even date by Guarantor in favor of Agent.
All terms not otherwise defined herein shall have the meaning set forth
in the Amended and Restated Credit Agreement dated as of January 8, 1999 between
Borrower and Agent ("Credit Agreement").
2. Acknowledgment of Default: Borrower hereby acknowledges and agrees
that an Event of Default has occurred under the Credit Agreement including,
without limitation, the breach of the representation and warranty set forth at
Section 5.28 and the covenants set forth at Sections 6.12 and 9.19 of the Credit
Agreement. The breach of the foregoing representation and warranty and covenants
are hereby referred to as the "Existing Event of Default."
<PAGE>
-3-
ATL/602784.1
3. Cure of Existing Event of Default: Borrower agrees to diligently
pursue the cure of the Existing Event of Default during the Forbearance Period.
Borrower acknowledges and recognizes that the cure of the Existing Event of
Default shall mean the closing of financial facilities in an amount and
conditions sufficient to cause the warranty set forth at Section 5.28 to be true
and correct in all respects and the Borrower to be in compliance with the
covenants at Sections 6.12 and 9.19. Said differently, Borrower shall obtain and
close construction loans sufficient when combined with the proceeds of the Loan
as provided in the Budget for the project entitled Grand Summit at Steamboat
("Grand Summit Project") in accordance with the plans and specifications
previously approved by Textron with respect to the Permitted Construction Loan
in favor of Textron and to repay the [$3,000,000] advance of even date by Agent
to Borrower for disbursement to Grand Summit. The foregoing [$3,000,000] amount,
when repaid, shall be deposited directly in the General Cash Collateral Account.
4. Forbearance: Agent hereby agrees to forbear from commencing
foreclosure proceedings under the Security Agreements during the Forbearance
Period provided that Borrower complies with the following conditions:
(a) No additional Default or Event of Default exists or occurs;
(b) Borrower utilizes its absolute best efforts to cure the
Existing Event of Default and communicates and cooperates
with the Agent in all respects;
(c) The Guaranty remains in full force and effect;
(d) The Guaranty and the Lender Obligations are secured by the
Existing Deed of Trust;
(e) Neither the Guarantor nor the Borrower experiences any
"financial difficulties" as referenced in Section 12.1(e) of
the Credit Agreement;
(f) All of the documents described in the Transfer are provided
to Agent on or before March 10, 1999;
(g) Neither the Guarantor or the Borrower asserts any claim,
counterclaim, or allegation against the Agent.
In the event of the occurrence of any of the foregoing events, the
provisions of this Section 4 of the Forbearance Agreement, but not the other
sections, shall automatically no longer be of full force and effect. Upon such
occurrence, however, the remaining provisions of this Agreement shall continue
to remain in full force and effect.
5. Exit Fee: Borrower hereby agrees to pay to BankBoston, N.A. in its
individual capacity ("BKB") the Exit Fee upon the sooner to occur of: (i) the
payment of the Outstanding Amount; (ii) the occurrence of an Event of Default;
or (iii) the maturity date of the Lender Obligations. Borrower hereby agrees
that the Exit Fee has been earned by BKB on even date and that Borrower has
received good and adequate consideration for such agreement in that the Borrower
has received certain financial accommodations on even date by BKB in favor of
the Borrower. The Exit Fee shall be secured by the Lender Agreements; shall be
payable exclusively to BKB and not to any other Lender; and shall be subordinate
to the payment of the principal and interest of the Notes as provided in the
Credit Agreement. Accordingly, in the event of the payment of the Notes and all
other Lenders Obligations, the Lender Agreements shall remain in full force and
effect to secure the payment of the Exit Fee and shall benefit BKB exclusively.
6. Steamboat Mortgage: Grand Summit has on even date modified the
Existing Deed of Trust to cause the Existing Deed of Trust to secure the
Outstanding Amount. Accordingly, all references in the Credit Agreement to the
Security Agreements and the Lender Agreements shall include the Existing Deed of
Trust and all other collateral documents conveyed to the Agent on even date in
connection therewith.
7. Warranty. Borrower warrants and represents to Agent that the AIA
Construction Contract provided to Agent of even date regarding the Grand Summit
Project is complete and accurate in all respects, including but not limited to,
the costs to complete the Grand Summit Project. Borrower further warrants and
represents that no reason exists which may prevent the immediate and continuous
development of the Grand Summit Project.
8. Amendment of Credit Agreement: This Agreement shall amend any
contrary terms and conditions of the Credit Agreement.
9. Release: Borrower hereby releases BKB from all claims,
counterclaims, causes of action or liability whatsoever.
10. Bankruptcy Relief. Agent is and shall be entitled to relief from
the automatic stay pursuant to U.S.C. Sec. 362(d) to pursue all of its rights
and remedies under the Credit Agreement, Lender Agreements and this Agreement
and relevant state law. Borrower shall consent to and shall no oppose relief
from the automatic stay without condition to permit Agent to pursue all of its
rights and remedies under the Credit Agreement, Lender Agreements and this
Agreement and relevant state law.
11. Third Party Beneficiaries: Borrower hereby agrees that any Lender
that may enter into the Credit Agreement from time to time shall automatically
be a beneficiary of this Agreement without the execution of any further
documents by Borrower.
12. Further Assurances. At any time and from time to time, upon request
of Agent, Borrower shall make, execute and deliver or cause to be made, executed
and delivered to Agent any and all documents, including but not limited to,
modifications to the Credit Agreement, which documents may, in the reasonable
opinion of Agent, be necessary or desirable in order to effectuate, complete,
evidence, or perfect (a) the obligations of Borrower under this Agreement, and
(b) the lien and security interests described herein.
13. Time of Essence: Time is of the essence in this Agreement.
14. Governing Law: This Agreement shall be governed by the laws of the
State of Georgia.
15. Counterparts: This Agreement may be executed in multiple
counterparts.
IN WITNESS WHEREOF, the undersigned Borrower has caused this instrument
to be executed by its duly authorized corporate officer and its seal to be
affixed hereto as of the day and year first above written.
AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
By: /s/ Christopher E. Howard
-----------------------------------------
Christopher Howard
Senior Vice President
<PAGE>
IN WITNESS WHEREOF, the undersigned Agent has caused this instrument to
be executed by its duly authorized officer as of the day and year first above
written.
BANKBOSTON, N.A., as Agent
By: /s/ Paul F. DiVito
------------------------------------------
Paul F. Divito
Managing Director
AMENDED AND RESTATED FORBEARANCE AGREEMENT
THIS AMENDED AND RESTATED FORBEARANCE AGREEMENT ("Agreement") is made
as of the 20th day of April, 1999, between AMERICAN SKIING COMPANY RESORT
PROPERTIES, INC., a Maine corporation ("Borrower") and BANKBOSTON, N.A., as
agent ("Agent");
WITNESSETH:
IN CONSIDERATION of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Agent and Borrower hereby covenant and agree as
follows:
1. Definitions:
"Advance(s)" means any disbursement of any proceeds of the Loan.
"BkB" means BankBoston, N.A. in its individual capacity and not as
Agent.
"Borrower Subsidiary" means Grand Summit Resort Properties, Inc., a
Maine corporation, any other subsidiary of the Borrower or any subsidiary of
Grand Summit Resort Properties, Inc.
"Canyons Condominium" means the condominium project under construction
at The Canyons affected by the Permitted Construction Loan entered into with
Keybank, N.A. dated as of December 18, 1998, including all amendments and
modifications thereto.
"Canyons Condominium Amount" means the amount designated on the Revised
Budget to be funded with respect to the Canyons Condominium.
"Canyons Grand Summit Project" means as defined in Section 3.
"Consultant" means as defined in Section 8.
"First Amendment" means the First Amendment Agreement Re: Loan And
Security Agreement among Grand Summit, Textron and Green Tree and the Lenders
listed therein, dated as of April 5, 1999, a copy of which is annexed hereto as
Exhibit "A".
" Full Syndication of the Textron Loan" means the occurrence of the
Full Syndication Date as defined in the First Amendment.
<PAGE>
"Grand Summit " means Grand Summit Resort Properties, Inc., a Maine
corporation.
"Green Tree" means Green Tree Financial Servicing Corporation.
"March 8 Forbearance Agreement" means the Forbearance Agreement dated
March 8, 1999 between Agent and Borrower.
"Potential Events of Default" means as defined in Section 2.
"Projects" means as defined in Section 3.
"Revised Budget" means the budget for the Projects and for the
operations of the Borrower attached hereto as Exhibit "B" and made a part
hereof.
"Steamboat Project Advance Commitment" means the commitment by Textron
to advance not less than $12,000,000 during the Syndication Period under the
Textron Loan with respect to the funding of the cost of improvements and other
matters set forth on the Revised Budget with respect to the Steamboat Grand
Summit Project, all in accordance with the terms and conditions of the First
Amendment.
"Steamboat Grand Summit Project" means as defined in Section 3.
"Syndication Period" means the period commencing with even date and
continuing to and through the earliest of: (i) July 6 1999; (ii) the termination
of the Forbearance provided in Section 4 hereof; or (iii) the occurrence of the
Full Syndication Date (as such term is defined in the First Amendment).
"Textron" means Textron Financial Corporation.
"Textron Loan" means the existing $145,000,000.00 credit facility
provided by Textron and Green Tree in favor of Borrower Subsidiary with respect
to the financing of the Projects dated as of September 1, 1998, including all
amendments and modifications thereto.
All terms not otherwise defined herein shall have the meaning set
forth in the Amended and Restated Credit Agreement dated as of January 8, 1999
between Borrower and Agent (as amended or modified, the "Credit Agreement").
<PAGE>
2. Acknowledgment of Default: Borrower hereby acknowledges and agrees that
certain Defaults exist including, without limitation, the breach of the
representation and warranty set forth at Section 5.28 and the covenants set
forth at Sections 6.12 8.1 and 9.19 of the Credit Agreement. The breach of the
foregoing representation and warranty and covenants are hereby referred to as
the "Potential Events of Default."
3. Cure of Potential Events of Default: Borrower agrees to diligently pursue the
cure of the Potential Events of Default during the Syndication Period. Borrower
acknowledges and recognizes that the cure of the Potential Events of Default
shall mean the closing of financial facilities in an amount and having
conditions sufficient to cause the warranty set forth at Section 5.28 to be true
and correct in all respects and the Borrower to be in compliance with the
covenants at Sections 6.12 and 9.19. Said differently, during the Syndication
Period, Borrower shall diligently pursue obtaining and closing construction and
mezzanine loans sufficient, when combined with the proceeds of the Loan, (i) to
fund the Revised Budget in its entirety and to fiend the completion of the
project generally referred to as Grand Summit at Steamboat, Steamboat, Colorado
("Steamboat Grand Summit Project") and the project referred to as the Grand
Summit at the Canyons, Park City, Utah ("Canyons Grand Summit Project," and with
the Steamboat Grand Summit Project, collectively the "Projects") in accordance
with the plans and specifications previously approved by Textron as agent with
respect to the Permitted Construction Loan for such Projects and (ii) to repay
the $3,044,713 Advance made on or about March 8, 1999 by Agent to Borrower for
disbursement to Grand Summit. The foregoing $3,044,713 amount may, at the sole
option of BkB, rather than being applied immediately to the repayment of said
Advance, be deposited directly in the General Cash Collateral Account.
4. Forbearance: During the Syndication Period, Agent agrees to forebear from (i)
declaring an Event of Default, (ii) accelerating the Maturity of the Loan, (iii)
foreclosing on the Collateral or (iv) exercising any offset rights under Section
12.2 of the Credit Agreement; provided that such forbearance shall automatically
terminate if any of the following occurs:
(a) (i) the declaration of a Default or an Event of Default
under the Textron Loan; or (ii) the failure to fund at least eighty-five (85)
percent of a requested advance of the Steamboat Project Advance Commitment by
the tenth (10th ) day of the month following the month in which a request for
funding was made unless approved by Agent; or (iii) the giving of notice to
either Grand Summit or the Agent that a funding of less than eight-five (85)
percent of a requested advance will occur or that no further advances will occur
under the Steamboat Project Advance Commitment.
(b) The Borrower or any Borrower Subsidiary is involved in any
"financial difficulties" as set forth in Section 12.1(e) of the Credit
Agreement;
<PAGE>
(c) The Borrower or any Borrower Subsidiary asserts any claim,
action, cause of action, counterclaim, or allegation in litigation or
arbitration against the Agent; or
(d) Borrower breaches any term, provision or condition of this
Agreement.
5. Revised Budget and Disbursement Procedures. Borrower and Lender hereby agree
that disbursements with respect to the remaining proceeds of the Loan shall be
governed by the Revised Budget. Furthermore, Borrower agrees that all
disbursements of the Steamboat Project Advance Commitment shall also be governed
by the Revised Budget. Borrower agrees not to and shall cause all Borrower
Subsidiaries not to modify the Revised Budget or any other term or condition of
the Textron Loan Documents without the prior consent of the Agent.
From and after even date, all Advances shall be made pursuant to such
disbursement procedures as the Agent may designate. Agent hereby designates the
following conditions precedent to Advances of the Loan which must be satisfied
and which shall apply solely during the Syndication Period:
1. This Agreement shall be in full force and effect;
2. The forbearance provided in Section 4 hereof shall be in effect and
shall not have been terminated;
3. Borrower shall have submitted to the Agent evidence satisfactory to
the Agent which establishes:
(a) the categories of the Revised Budget are, and will
continue to be after the Advance, sufficient to fund
the purposes for which they are established; and
(b) previous Advances of the Loan have been paid to the
payees for the purposes for which the Advances were
made.
4. The draw request is on a form established by the Agent for the draw
request:
5. The conditions precedent to advances with respect to the Steamboat
Project Advance Commitment set forth on Schedule I to the First Amendment are
applicable to advances being made thereunder. Nothing contained herein shall
preclude Textron from waiving any such conditions precedent.
<PAGE>
The disbursement procedures shall include but shall not be limited to
the disbursement of all Advances to such title insurance company as the Agent
may designate with the requirement that the disbursements be made directly to
the identified payee for such disbursement.
The Borrower shall not be entitled to receive any Advance during the
pendency of any of the following: (i) the forbearance provided in Section 4
hereof is not in full force and effect for any reason or (ii) eighty five (85)
percent of any requested advance of the Steamboat Project Advance Commitment is
not funded on or before the last day of the month in which it is requested.
Furthermore, the Borrower shall not be entitled to receive any Advance of the
Canyons Condominium Amount until the Agent has determined (which determination
may require written assurance in form and substance acceptable to the Agent)
that the Permitted Construction Loan with respect to the Canyons Condominium is
in full force and effect and the lender thereunder will immediately fund the
proceeds of such Permitted Construction Loan simultaneously with the proposed
advance by Agent.
6. Cash and Proceeds Procedure: Borrower agrees that during the Syndication
Period and thereafter if a Default exists all of the following shall be governed
by Section 12.3.2 of the Credit Agreement:
(a) All cash receipts of the Borrower other than Advances of any loan,
(b) All proceeds of any lease in which the Borrower is the lessor
including any operating lease with American Ski; and
(c) All Net Proceeds from the sale of any real or personal property of
the Borrower.
Borrower acknowledges and agrees that: (i) the provisions of Section 4
hereof do not limit or otherwise waive performance of the provisions of Section
12.3.2 of the Credit Agreement and (ii) the provisions of Section 12.3.2 shall
govern in all respects during the Syndication Period and thereafter if a Default
exists.
<PAGE>
Borrower and Agent hereby acknowledge that the following cash proceeds
of Grand Summit are subject to a cash collateral agreement with Textron and,
therefore, shall be subject to the terms of this section only upon the release
of such funds by Textron: (i) all proceeds of the Textron Loan; (ii) cash
proceeds of Grand Summit of the Projects which are collateral for the Textron
Loan; and (iii) all proceeds from the sale of consumer receivables to Textron or
an affiliate thereof by Grand Summit arising from the factoring of contracts by
Grand Summit with respect to the Projects. Borrower hereby warrants that the
liquidity covenant in the Textron Loan requires $2,000,000.00 of cash or cash
equivalents to be retained at Grand Summit as a condition precedent to
distribution or payment of cash or cash equivalents to the Borrower. All amounts
over and above the amounts described above shall continue to be characterized as
Subsidiary Available Cash and be subject to the provisions of the Credit
Agreement with respect thereto.
7. Third Party Financial Consultant: Borrower agrees that the Agent shall have
the right to the immediate engagement of a financial consultant (the
"Consultant") on behalf of the Agent at the Agent's choice and discretion, to
advise Agent with respect to the Borrower, the Projects, the administration of
the Credit Agreement and such other matters as the Agent may from time to time
determine to be appropriate. The scope of the engagement of the Consultant shall
include but shall not be limited to: (i) review of the cost to complete the
Projects and the adequacy of the funds in the Revised Budget and other funds
committed for the construction of the improvements; (ii) periodic review of
categories in the Revised Budget and variances therefrom; (iii) monthly
compliance review of financial covenants in the Credit Agreement; and (iv) cash
flow analysis of the Borrower. The Agent shall also have the right to retain
such inspecting agents as it may deem appropriate to monitor Advances with
respect to the Projects. All fees and out of pocket expenses of the Consultant
and any inspecting agent which may also be engaged by or on behalf of the Agent
shall be promptly paid by the Borrower, and otherwise shall be recoverable costs
and expenses in accordance with Section 16.5 of the Credit Agreement. Borrower
agrees to provide the Consultant and any inspecting agent full and complete
access to the Borrower, the Borrower Subsidiary, the Projects, the officers and
employees of same and all financial and construction related information of
same.
8. Warranty: Borrower warrants and represents to Agent that the
warranty set forth at Section 7 of the March 8 Forbearance -----------------
Agreement remains true and correct as of even date.
9. Amendment of Credit Agreement: This Agreement shall amend any contrary terms
and conditions of the Credit Agreement.
10. Release: As a condition precedent to the effectiveness of this
Agreement,Borrower, Borrower Subsidiary and American Skiing Company shall
execute and deliver to the Agent on even date a general release of all claims.
actions, causes of actions, counterclaims and liabilities whatsoever in form and
substance satisfactory to the Agent.
<PAGE>
11. Bankruptcy Relief: Agent is and shall be entitled to relief from the
automatic stay pursuant to 11 U. S.C. ss. 362(d) to pursue all of its rights and
remedies under the Credit Agreement, Lender Agreements and this Agreement and
relevant state law. Borrower shall consent to and shall not oppose relief from
the automatic stay without condition to permit Agent to pursue all of its rights
and remedies under the Credit Agreement, Lender Agreements and this Agreement
and relevant state law.
12. Third Party Beneficiaries: Borrower hereby agrees that any Lender that may
enter into the Credit Agreement from time to time shall automatically be a
beneficiary of this Agreement without the execution of any further documents by
Borrower.
13. Further Assurances: At any time and from time to time, upon request of
Agent, Borrower shall make, execute and deliver or cause to be made, executed
and delivered to Agent any and all documents, including but not limited to,
modifications to the Credit Agreement, which documents may, in the reasonable
opinion of Agent, be necessary or desirable in order to effectuate, complete,
evidence, or perfect (a) the obligations of Borrower under this Agreement, and
(b) the lien and security interests described herein.
14. Time of Essence: Time is of the essence in this Agreement.
15. Governing Laws: This Agreement shall be governed by the laws of the State of
Georgia.
16. Counterparts: This Agreement may be executed in multiple counterparts.
17. Amendment and Restatement: This Agreement amends and restates but does not
terminate the March 8 Forbearance Agreement. ----------------------------------
18. Loan Documents: This Agreement and the March 8 Forbearance Agreement shall
be considered a Loan Document for all purposes and when taken together with the
other Loan Documents reflects the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
19. Effectiveness: This Agreement shall not be effective until the First
Amendment becomes effective.
<PAGE>
IN WITNESS WHEREOF, the undersigned Borrower has caused this instrument
to be executed by its duly authorized corporate officer and its seal to be
affixed hereto as of the day and year first above written.
AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
By: /s/ Christopher E. Howard
----------------------------------------
Christopher Howard
Executive Vice President
<PAGE>
IN WITNESS WHEREOF, the undersigned Agent has caused this instrument to
be executed by its duly authorized officer as of the day and year first above
written.
BANKBOSTON, N.A. as Agent
By: /s/ Paul F. DiVito
-----------------------------------------
Paul F. Divito
Managing Director
SIGNATURE PAGE TO THE AMENDED AND RESTATED FORBEARANCE AGREEMENT
