SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File No. 0-3802
Western Standard Corporation
(Name of small business issuer in its charter)
Wyoming 83-0184378
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
205 South Broadway
Riverton, Wyoming 82501
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: (307)856-9288
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered pursuant to Section 12(g) of the Exchange
Act:
Common Stock, $.05 par value
(Titles of Class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will
be contained, to the best of registrant's knowledge in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10KSB or any amendment to this Form 10KSB. [X]
Issuer's revenues for the fiscal year ended December 31, 1995 were
$9,425,008.
As of March 15, 1996, there were 9,965,015 shares of the
registrant's common stock outstanding. The aggregate market value
of the voting stock held by non-affiliates of the registrant was
$352,902, based upon the average of the bid and asked prices of the
common stock on March 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
Page 1 of 85 pages. The exhibit index begins on page 56 .
PART I.
Item 1. Description of Business.
Business Development
Western Standard Corporation ("WSC") was incorporated under
Wyoming law on February 24, 1955. WSC and its subsidiaries hold
interests in and to mineral, oil and gas, and recreational real
estate properties and the Snow King Ski Area (the "Ski Area"), the
Snow King Hotel (the "Hotel"), and the Snow King Complex (the
"Complex") in Jackson, Wyoming. WSC's primary business activity is
its operation of the Hotel, the Ski Area, and the Complex through
its subsidiary, Snow King Resort, Inc. ("SKRI").
The Snow King Complex is managed by Snow King Resort
Management, Inc. ("SKRMI") pursuant to a management agreement with
SKRI providing for a management fee equal to 2% of gross revenues.
SKRMI is entirely owned and controlled by Manuel B. Lopez and
Stanford E. Clark, officers and directors of WSC.
On March 13, 1992, WSC completed a restructuring (the
"Restructuring") of its interests in the Ski Area and the Hotel
which entailed, among other things: (i) the transfer by Snow King,
Incorporated (SKI) of substantially all of its assets, subject to
substantially all of its liabilities, to SKRI in exchange for 9,500
shares of Class B Common Stock of SKRI; (ii) the transfer by WSC of
its 50% interest in Snow King Partnership (SKP) to SKRI in exchange
for 2,500 shares of Class B Common Stock of SKRI and a $500,000
face amount promissory note of WSC (the "WSC Note"); (iii) the
purchase by SKRI from JH-AHRC of the other 50% ownership interest
in SKP, the Hotel, and the WSC Note for $6,350,000 in cash; (iv)
the borrowing by SKRI of $5,000,000 from ORIX USA Corporation to
finance its acquisition of assets from JH-AHRC (the "Orix Loan");
and (v) the sale, in a private offering, of 800 shares of Class A
Common Stock of SKRI and $2,072,000 face amount of convertible
subordinated debentures (the "Debentures") of SKRI, for total gross
proceeds of $2,184,000, to finance the acquisition of assets from
JH-AHRC, to pay various fees and costs associated with the
Restructuring, and to provide working capital (the "Offering").
All of the above described elements of the
Restructuring closed on March 13, 1992. Later in 1992, SKI was
liquidated and dissolved and all of its assets transferred to WSC.
SKRI
SKRI is a Wyoming corporation formed on December 28, 1990, by
WSC to serve as the vehicle to accomplish the Restructuring. The
officers and directors of SKRI are as follows:
(a) Manuel B. Lopez, President and Director
(b) Stanford E. Clark, Treasurer and Director
(c) James Peck, Director
Max Chapman, Director
Clarene Law, Director
Joe Byron, Director
Peter Wold, Director
Creed Law, Secretary
(a) Mr. Lopez is also Vice President and a Director of Western
Standard Corporation.
(b) Mr. Clark is also President and a Director of Western
Standard Corporation.
(c) Mr. Peck is also a Director of Western Standard
Corporation.
The principal executive offices of SKRI are located at 400 East
Snow King Avenue, Jackson Hole, Wyoming, 83001, telephone number
(307) 733-5200.
The beginning capital structure of SKRI is as follows:
Common Stock. The articles of incorporation of SKRI authorize
two classes of common stock, Class A Common Stock and Class B
Common Stock. The preferences, limitations and relative rights of
both classes of common stock are equivalent in all respects, with
the exception of voting rights with respect to the election of
directors. The holders of Class A Common Stock are entitled to
elect three directors of SKRI while the holders of Class B Common
Stock are entitled to elect four directors. There are currently
12,000 shares of Class B Common Stock, outstanding, all of which
are owned by WSC. Initially, there were 2,150 shares of Class A
Common Stock outstanding, all of which is owned by the investors
who purchased shares in the Offering. (See pages 5 & 6 for
additional sale of shares.)
Preferred Stock. The articles of incorporation of SKRI
authorize one class of preferred stock, Class A Preferred Stock.
Each share of Class A Preferred Stock is entitled to a cumulative
dividend preference of $7.00 per share per year, has no voting
rights, and is entitled to a liquidation dividend preference of
$140.00 per share. After payment of the above described dividend
preferences, the Class A Preferred Stock shall participate equally
in any dividends declared.
Convertible Subordinated Debentures. Each Convertible
Subordinated Debenture, which debentures were issued in
denominations of $20,720 face amount each, is convertible into 148
shares of Class A Preferred Stock, bears interest at the rate of
10.5% per annum (payable annually and with unpaid interest accruing
at the rate of 12% per annum in the event of any failure to make an
interest payment when due), is subordinated to the Orix Loan with
respect to the payment of principal and interest, the funding of
certain reserve accounts, and the payment of management fees for
operation of the Hotel, matures on January 31, 2007, and is subject
to the right of SKRI to call all or a portion of the debentures as
follows: (i) on or after January 31, 1994, but prior to January
30, 1995, for 130% of the face amount plus accrued but unpaid
interest; (ii) on or after January 31, 1995, but prior to January
30, 1996, for 125% of the face amount plus accrued but unpaid
interest; (iii) on or after January 31, 1996, but prior to January
30, 1997, for 115% of the face amount plus accrued but unpaid
interest; (iv) on or after January 31, 1997, but prior to January
30, 1998, for 110% of the face amount plus accrued but unpaid
interest; and (v) on or after January 31, 1998, for 105% of the
face amount plus accrued but unpaid interest.
All of these debentures were converted to Class A preferred
stock in 1994. (Also, see page 4.)
Elements of the Restructuring
Transfer of SKI Assets. SKI transferred substantially all its
assets, subject to substantially all its liabilities, to SKRI in
exchange for 9,500 shares of the Class B Common Stock of SKRI
valued at $1,330,000 ($140 per share). These shares of Class B
Common Stock represented approximately 74.2% of the outstanding
common equity of SKRI at the time the Restructuring was completed.
The assets of SKI which were transferred to SKRI consisted
primarily of all of SKI's rights to operate the Hotel and all
personal property of SKI, including cash, accounts receivable,
furnishings, equipment, and inventory.
Purchase of the Hotel, JH-AHRC's SKP Interest, and the WSC
Note. SKRI purchased the Hotel, JH-AHRC's SKP Interest and the WSC
Note from AHRC in exchange for $6,350,000 in cash. The purchase
price was funded by the proceeds of the Orix Loan ($5,000,000), and
by a substantial portion of the proceeds of the Offering
($1,350,000).
The Hotel consists of a 204 room hotel with a convention
center and related facilities situated on 8.29 acres of land. The
WSC Note was in the principal face amount of $500,000, bore
interest at the rate of 12% per annum, provided for the payment of
interest in monthly installments, provided for the repayment of
principal, in full on May 1, 1992, and was secured by WSC's 50%
interest in SKP.
The assets of SKP consisted primarily of 44.82 acres of
private land and 27.2 contiguous acres of leased land from the Town
of Jackson, all at the base of the Ski Area; 30-year National
Forest Service Special Use Permits with respect to the Ski Area; a
warming hut building with service facilities at the base of the Ski
Area; a warming hut and snack shop at the summit of the Ski Area;
two double chair lifts; an Alpine Slide and ski service equipment
and vehicles.
The Loan. SKRI borrowed $5,000,000 from Orix USA Corporation
in order to finance the acquisition by SKRI of the Ski Area and the
Hotel. The terms of the Orix Loan call for repayment over a term
of five years with monthly installments of principal (based on a
15-year amortization schedule) and interest on the unpaid principal
balance at the variable rate of LIBOR (London Interbank Offered
Rates) plus 3.5% per annum (adjusted every six months), and for the
loan to be secured by a first lien on essentially all the assets of
SKRI and the personal guarantees of Manuel B. Lopez and his wife,
Deborah, to the extent of $1,000,000 of the amount borrowed. The
outstanding principal balance of the Orix Loan is due and payable
March 13, 1997.
The loan agreement provides, among other things, for the
establishment of certain reserve accounts, the achievement of
certain operating performance targets, restrictions on borrowing,
asset transfers or encumbrances, restrictions on ownership changes,
restrictions on distributions to shareholders, and subordination of
payments of principal and interest on the Debentures and payment of
management fees.
As a condition to the making of the Orix Loan, WSC has placed
all its shares of Class B Common Stock of SKRI into a voting trust,
granting to Manuel B. Lopez the sole right to vote such shares for
the duration of the voting trust. The initial term of the voting
trust is ten years (expiring March 12, 2002), and may be extended
for subsequent ten-year periods by the consent of WSC and Mr.
Lopez.
Transfer of WSC's SKP Interest. WSC transferred its 50%
ownership interest in SKP to SKRI in exchange for 2,500 shares of
the Class B Common Stock of SKRI valued at $350,000 ($140 per
share) and the WSC Note, which was valued at face amount
($500,000). These shares of Class B Common Stock represented
approximately 19.5% of the outstanding common equity of SKRI at the
time the Restructuring was completed. The assets of SKP are
described above.
The Offering. SKRI sold, in a private offering, 800 shares of
Class A Common Stock of SKRI for $140 per share ($112,000 in the
aggregate), and $2,072,000 face amount of Debentures for 100% of
the face amount. The total amount of funds raised in the private
offering, before expenses of the offering, was $2,184,000. Manuel
B. Lopez and his wife, Deborah, purchased 10% of the securities
sold in the Offering. Margaret Peck, the largest shareholder of
WSC (26.8%), also purchased 10% of the securities sold in the
Offering.
Valuation of the assets and partnership interest acquired from
JH-AHRC were established through arm's-length negotiation. The
partnership interest transferred from WSC was valued at the same
amount as the partnership interest purchased from JH-AHRC.
Valuation of the assets transferred from SKI were established
primarily through a valuation by SKRI of SKI's right to operate the
Hotel. The offering price of the common equity of SKRI was set
arbitrarily and did not necessarily bear any relation to the
assets, net worth or earnings of SKRI.
As part of the Restructuring, SKRI entered into a new
operating agreement with SKRMI pursuant to which SKRMI manages the
Hotel. The operating agreement provides for the payment to SKRMI
of a management fee equal to 2% of the gross revenues of the
Hotel.
Payment of principal and interest on the Debentures is subordinated
to payment of the management fee. Payment of the management fee is
subordinated to the payment of principal and interest on the Orix
Loan.
In April, 1992, SKRI granted an option to purchase 3,000
shares of Class B Common Stock for a period of ten years at a price
of $140 per share to Mr. Lopez and his wife.
In March, 1993, the SKRI debenture holders purchased an
additional 1,350 shares of Class A Common Stock at a price of $140
per share.
In 1994, the debenture holders purchased 1,550 shares of Class
A stock at $140.00 per share. In 1994, all outstanding convertible
debentures were converted into 14,800 shares of Class A preferred
stock at $140.00 per share. At December 31, 1994, 3,700 shares of
Class A, 12,000 shares of Class B, and 14,800 shares of Class A
preferred nonvoting stock, were issued and outstanding. The
issuance of the Class A preferred nonvoting stock did not reduce
Western Standard's voting power in Snow King Resort, Inc., although
preferred Class A nonvoting stock has certain preferred claims on
Snow King Resort, Inc.'s assets in case of dissolution.
As a result of the Restructuring, SKRI now owns all of the
assets comprising the Ski Area and the Hotel. WSC now owns
approximately 76.43% of the outstanding voting stock of SKRI. SKRI
intends to operate the Ski Area and the Hotel in the same manner as
they have been operated over the last several years.
Each shareholder in Snow King Center, Inc. has signed an
option to exchange all of his shares for Snow King Resort, Inc.
shares at the basis of ten Center shares for one Resort share. If
all of these options are exercised, 98 shares of Snow King Resort,
Inc. Class A stock will be issued.
For a description of WSC's mineral, oil and gas, and other
recreational real estate properties, see "- Properties." WSC's oil
and gas properties are operated by others.
Competitive Conditions
Locally, the Ski Area and the Hotel are faced with intense
competition from a newer, bigger, more prestigious and nationally
recognized ski resort, which is in close proximity to its
operations. Such ski resort, known as Teton Village, is owned and
operated by a company with greater financial resources than WSC and
SKRI. Nationally, the ski resort industry is extremely competitive
and many of WSC's and SKRI's competitors have more experience and
greater financial resources than does WSC and SKRI.
Oil and gas exploration and production is a highly competitive
business. If WSC were to engage in active oil and gas operations,
it would compete with a number of other companies, including major
oil companies and other independent operators, virtually all having
more experience and greater financial resources. WSC does not hold
a significant competitive position in the oil and gas industry.
Likewise, WSC's recreational land activities are faced with
keen competition from much larger more financially capable
companies. WSC's competitive position in this area of activity is
insignificant.
Oil and Gas Customers
WSC believes there is a ready market for its share of oil and
gas produced by operators of properties in which it has an
interest. However, WSC has no control over worldwide factors
affecting supply and demand for oil and gas which influence oil and
gas prices. Eighty-Eight Oil Company purchased approximately all
of WSC's share of oil production during 1995. GPM Gas Corporation
and KN Energy purchased the gas.
Patents, Licenses, Franchises and Concessions
SKRI owns a Resort liquor license which is subject to renewal
each year. It has been renewed through 1996.
The Ski Area is operated primarily on land owned by the United
States which SKRI is permitted to use pursuant to a special use
permit expiring October 31, 2011. The permit is non-transferrable
and is terminable upon 30 days written notice to SKRI if a
determination is made by the Secretary of Agriculture or any
official of the Forest Service that the public interest requires
such termination. SKRI is required to pay an annual fee for the
permits which is based upon revenues generated by the Ski Area.
Environmental Impact
WSC's holding and/or development of its oil and gas and
SKRI's
recreational properties requires compliance with various
requirements concerning environmental quality; and such compliance
may necessitate significant capital outlays, may materially affect
potential future earnings of WSC, or may cause material changes in
WSC's business. WSC believes that it is in substantial compliance
with all applicable environmental laws, rules, and regulations.
Number of Persons Employed
During 1995, WSC, including its subsidiaries, because of the
seasonality of its business, had between 197 and 296 employees,
including its officers.
Seasonality
The activities of the Hotel and the Ski Area are seasonal in
nature and are highly dependent on the number of tourists visiting
the area and the number of conventions and tour groups booked.
Tourism reaches peaks from May through September and, for skiing,
from December through March.
Financial Information About Industry Segments
WSC includes in its financial reporting two segments, an oil
and gas segment and a Snow King Hotel segment. The financial
information relating to segments may be found in the Consolidated
Financial Statements, and Schedules A and B thereto included in
this Annual Report on 10KSB as Item 7.
Item 2. Description of Property.
RECREATION AREA PROPERTIES
Teton County, Wyoming
The assets and the properties herein referred to as the Hotel
and the Ski Area consist of the following:
(1) 8.29 acres on which the 204 room hotel with a convention
center and related facilities are located.
(2) 43.5 acres and Town of Jackson leases on 27.2 contiguous
acres. A lease on the ski shelter and part of the 27.2
acres expires May 31, 2023. The lease on the balance
(the larger portion, including the Ice Rink) of the 27.2
acres also expires May 31, 2023. During 1992, the Town
and SKRI agreed to demolish the ski shelter and replace
it with a larger structure having both a ski shelter and
a skating rink. These structures have been completed
an are in use. The skating rink is leased by a new
entity; see Item 12. "Certain Relationships and Related
Transactions."
(3) A 30-year Forest Service Term Special Use Permit on
369.51 acres on the adjoining Snow King Mountain, which
expires October 31, 2011.
(4) A warming hut at the base of Snow King Mountain.
(5) A double chair ski lift on Snow King Mountain constructed
and put into use in 1981.
(6) A double chair lift reaching from the base of Snow King
Mountain to approximately 1/2 the distance to the top of
the mountain. This lift was acquired July 14, 1986 and
is known as the Rafferty Lift.
(7) In 1994, a triple chair lift was installed that extends
approximately half way to the top of Snow King mountain.
This opens up additional intermediate skiing areas. The
cost of the new chair lift, additional lights for night
skiing, water lines, pump, and additional snow making
equipment installed, totalled $1,683,997.
(8) Mountain grooming and communications equipment.
(9) A warming hut and snack shop at the summit of Snow King
Mountain.
(10) The Alphorn Motel in Jackson, Wyoming, consisting of 17
units, a large lodge room, and a small cabin, located on
six lots of land at the base of Snow King Mountain
adjacent to the ski lift. It is currently listed for
sale at $1,300,000.00.
(11) Alpine Slide.
All of the above properties are subject to the lien of Orix as
security for the Orix Loan.
During 1992, SKRI transferred 1.3 acres of land to the town of
Jackson for a location on which to construct an indoor skating
rink.
Fremont County, Wyoming
WSC, through its wholly-owned subsidiary, Western Recreation
Corporation, owns 120 acres of lakeside property adjacent to and
underlying Ocean Lake, 14 miles west of Riverton, Wyoming, of which
approximately 80 acres are above the high water line. Several
building sites are located on this property. Some of this land is
rented out as farmland. This property is currently for sale.
MINERAL AND OIL AND GAS PROPERTIES
The following is a brief description of the mineral and oil
and gas properties in which WSC held an interest as of December 31,
1995:
<TABLE>
<S> <C> <C> <C> <C>
Mining Claims
Number Approximate Wyoming
Name Mineral of claims Acreage County
Such Claim No. 7 Uranium 1 20 Carbon
WSC owns a 5% net profit interest in Patented Such Claim No. 7.
Non-Producing Oil and Gas Interests
Leases
on Which Approxi-
Royalties are mate WSC's County Date Leases
Held Acreage Interest and State Expire
Treasure Unit 320 2.0%* Sweetwater Held by
Lease w-28853 Wyoming production
in Unit
Daly Lease, 400 12.5%** Campbell Held by
Kitty Field Wyoming production
in Unit
* Overriding royalty interest.
** Working interest.
</TABLE>
Producing Oil and Gas Properties
WSC is not the operator of any of the oil and gas properties
described below from which it received income during 1995. WSC
does not know of any planned exploration in 1996 on any of the oil
and gas properties operated by others in which it has interest.
WSC does not plan active exploration of any of its oil and gas
properties during 1996.
To the best of WSC's knowledge, the underlying leases are in
good standing. Reference is made to Schedule A included with the
Consolidated Financial Statements for detailed information
concerning WSC's oil and gas operations for its three fiscal years
ended December 31, 1995.
As a result of WSC's difficult financial position stemming
from its working capital deficit, operating losses and lack of
liquidity, and the fact that WSC holds small non-operating
interests in its oil and gas properties, it has not engaged an
independent petroleum engineering firm to render a report on its
oil and gas reserves. Further, WSC has no staff or expertise
enabling it to internally estimate its oil and gas reserves. The
financial statement carrying value of the properties is nominal and
it has recovered its entire investment. WSC has not engaged in
active oil and gas operations during the past three years and does
not expect to do so during 1996. The Consolidated Financial
Statements do, however, contain a considerable amount of
information concerning WSC's oil and gas segment and the results of
its operations during the past three years. The following further
describes WSC's oil and gas properties:
Kaye Field
WSC owns a 20.348% working interest (15.26% net revenue
interest) in two producing wells located on 308 gross (62.67) net
acres in Section 5, T36N, R67W, Converse County, Wyoming.
Central Hilight Unit
WSC owns a 1.0827% royalty interest in Tract #47 of the
Central Hilight Unit located in Campbell County, Wyoming, which
currently produces from the Muddy Formation. Tract #47 has been
assigned a 6.268% interest in the Central Hilight Unit, which
converts to a 0.0006787 interest to WSC. The Unit was formed by
the Wyoming Oil and Gas Commission, effective November 1, 1971, and
placed under a water flood program.
Grady Unit
Effective September 1, 1971, the date these properties were
unitized, WSC purchased a 5.027% working interest (2.721% net
revenue interest) in the Grady Unit, which consists of
approximately 9,440 gross (472 net) acres located in T45N and T46N,
R71W, Campbell County, Wyoming. In 1993, WSC's working interest
was reduced to 0.029644. This provides additional revenue to WSC.
Payne Field
WSC has a 1% OR in the Payne Field which consists of 320 gross
acres, 35.2 net acres, in Campbell County, Wyoming. The NBC #1
well in the Payne Field is producing.
Exploratory and Development Wells Drilled
WSC did not participate in the drilling of any wells during
the last three fiscal years.
Production, Productive Wells and Reserves
Two of WSC's significant oil and gas properties are subject to
complex unitization agreements involving a large number of wells
with varying ownership interest making any attempt to estimate its
reserves difficult, relatively expensive, and subject to error.
Moreover, WSC is not certain that operators would open their
technical files to any engineer employed by WSC.
Miscellaneous
WSC is not obligated to provide quantities of oil or gas in
the future under existing contracts or agreements.
WSC has not filed any reports containing oil or gas reserve
estimates with any federal or foreign governmental authority or
agency within the past 12 months.
Item 3. Legal Proceedings.
During 1992, the Ski Area and Hotel were audited by the
Wyoming Sales Tax Department for the period September, 1989 through
September, 1992. The Department asserts sales and use tax
liabilities due for the audit period of $85,238, plus penalties and
interest. SKRI disputed the audit findings to the extent of
$53,636, plus associated penalties and interest. The undisputed
amounts had been recorded as a liability on the financial
statements.
This assessment was settled in August, 1994 by the application
of payments made under protest in the amount of $19,551.49 and an
additional final payment in the amount of $24,297.72. All
penalties were waived.
The wrongful termination suit filed by a former employee was
settled in 1994 by the payment of $10,000 to the former employee by
our insurance carrier.
At December 31, 1995, SKRI was involved in three lawsuits that
are expected to be covered by insurance; one of which was settled
in 1996. All other law suits have been settled by our insurance
carrier. WSC is not a party to any lawsuit or legal proceedings,
and none are contemplated or threatened against it.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 1995.
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
WSC's common stock, $0.05 par value, is sporadically traded
over the counter. Trading in WSC's common stock is reported by the
National Daily Quotation Service ("pink sheets") and the National
Association of Securities Dealers, Inc. Non-NASDAQ OTC Bulletin
Board. Quotations shown below reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
<TABLE>
<S> <C> <C>
Bid Prices
Low High
1995
First Quarter .0625 .0625
Second Quarter .0625 .0625
Third Quarter .0625 .0625
Fourth Quarter .0625 .0625
1994
First Quarter .125 .375
Second Quarter .0625 .125
Third Quarter .0625 .0625
Fourth Quarter .0625 .125
</TABLE>
As of December 31, 1995, there were approximately 3,554
holders of record of WSC's common stock.
WSC has not paid any dividends on its common stock and does
not expect to do so in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Management recommends that the discussion below be read in
conjunction with the Financial Statements and Notes thereto
included in this Annual Report on Form 10KSB as Item 7.
Liquidity and Capital Resources
As explained in detail in Item 1 of this Annual Report on Form
10KSB, Western Standard Corporation completed a restructuring of
its interests in the entire Snow King Complex in Jackson Hole,
Wyoming, in March, 1992. This has placed all of the assets of Snow
King, Incorporated and Snow King Partnership in a new company, Snow
King Resort, Inc.
Western Standard Corporation's note payable to Americana
Hotels and Realty Corporation in the amount of $500,000 due in May,
1992, has been retired as part of the restructuring. The $98,000
owed to two Western Standard Corporation corporate officers for
unpaid salaries, was paid in full in 1991 with cash and corporate
stock. This leaves the parent company, Western Standard
Corporation, virtually debt free with the exception of $90,000 owed
to a corporate officer as part of a fee for devising and
implementing the restructuring.
Approximately eighty acres of land near Ocean Lake, west of
Riverton, Wyoming, are rented for agricultural purposes until they
can be sold or put to another use. Approximately forty acres are
below the high water line.
A new management agreement between Snow King Resort
Management, Inc. and Snow King Resort, Inc. pertaining to the
management of Snow King Resort, Inc. reduced management fees from
3% of gross revenues previously paid by Snow King, Incorporated
(with a portion of the fee going to Western Standard Corporation)
to 2% of gross revenues with no management fees going to Western
Standard Corporation after March 13, 1992. This reduced expenses
for Snow King Resort, Inc. and decreased revenues for Western
Standard Corporation. During 1992, Western Standard Corporation
received $9,867 in management fees, down from $53,636 in 1991.
It is believed that oil and gas revenues, rent, a small amount
of interest and limited cash reserves, will make it possible for
Western Standard Corporation to meet its expenses in 1996.
Snow King Resort, Inc. had paid its $5,000,000 loan from ORIX
USA and Jackson State Bank down to $3,863,000 by September 13,
1994. On that date, it borrowed an additional amount of $1,387,000
from these same two lenders increasing the balance of the loan to
$5,250,000 with the original loan being amended. Monthly payments
on the loan are to be computed on a fifteen (15) year amortization
schedule based upon an assumed interest rate for calculation of
such principal payments, at 9% per annum.
Use of the additional funding of $1,387,000 is for the
purchase and installation of a triple chair lift, four new snow
making machines, water lines, electric light coverage for
additional night skiing areas, and related expenses for an
estimated total of $1,248,000. Cost overruns increased the total
to $1,683,997. Principal and interest payments on loans are
current.
Revenues from the operations of Snow King Resort, Inc., a
$600,000 line of credit from a Jackson, Wyoming bank, and limited
additional borrowings are expected to be sufficient to allow Snow
King Resort, Inc. to meet its principal, interest and other
operating expenses during 1996.
Snow King Resort, Inc. obtained a construction loan in the
amount of $360,000 to aid in the construction of two condominiums
located near the Snow King Hotel. One has been sold for $325,000.
The second condominium was sold in March, 1995, for $315,000 less
closing costs. The balance of the construction loan was paid from
the proceeds of the sale of the second condominium. Mr. Lopez had
personally guaranteed the loan.
Results of Operations
1995 vs. 1994
Overall - 1995 ended with a net loss of $143,424 compared to
a net loss of $43,266 in 1994.
Major items contributing to the 1995 loss were:
1. Operating income of the Oil and Gas Segment increased from
$22,845 in 1994 to $24,917 in 1995.
2. Operating income of the Snow King Resort segment decreased
from $518,987 in 1994 to $504,250 in 1995. Revenues increased from
$7,910,708 in 1994 to $8,518,936 in 1995. Operating expenses
increased from $7,391,721 to $8,014,686 in 1995, caused mainly from
various operating costs and depreciation charges.
3. Other revenue decreased from $41,248 in 1994 to $21,096 in
1995. This decrease was from increased interest expenses, and
decreased gain on sale of assets.
Oil and Gas Segment
Please refer to item 1. above.
Snow King Resort Segment
Room revenues increased from $4,048,224 in 1994 to $4,153,055
in 1995. The average room rate increased from $86.14 in 1994 to
$89.87 in 1995.
Food and beverage revenues increased from $1,868,886 in 1994
to $1,876,746 in 1995. This increase was mainly due to more
banquets, more people eating and drinking in the Hotel, and price
adjustments.
Alpine Slide revenues increased from $380,651 in 1994 to
$401,898 in 1995. This increase is attributed to more people
riding the slide and an increase in price.
Revenues from skiing increased from $495,520 in 1994 to
$562,591 in 1995.
Rental of condominiums owned by others provided revenues of
$1,174,208 in 1994 compared to $1,602,211 in 1995. More
condominiums were available and more people desired to stay in
condominiums in 1995.
Telephone revenue increased from $71,666 in 1994 to $84,694 in
1995.
Administrative expenses increased from $528,901 in 1994 to
$586,581 in 1995. Labor costs, credit card discounts, donations,
telephone, office supplies, postage, security, and taxes all had
substantial increases.
Marketing expenses decreased from $426,950 in 1994 to $398,802
in 1995. Personnel and advertising costs increased while operating
expenses decreased.
Maintenance costs decreased from $356,030 in 1994 to $344,688
in 1995.
Room expenses increased from $1,240,237 in 1994 to $1,343,372
in 1995. Labor costs, guest supplies, linens and data processing
increased. However, fewer rooms were rented in 1995 than in 1994.
Energy costs decreased from $355,682 in 1994 to $319,342 in
1995.
Property taxes and insurance decreased from $191,112 in 1994
to $161,329 in 1995.
Interest payments increased from $569,052 in 1994 to $689,403
in 1995.
Management fees based on gross revenues increased from
$163,314 in 1994 to $182,200 in 1995.
Condominium expenses increased from $960,264 in 1994 to
$1,366,016 in 1995. More condominiums were rented in 1995.
Depreciation increased from $509,100 in 1994 to $615,981 in
1995.
Amortized loan fees in 1994 were $61,300 and $69,250 in 1995.
Bad debt expenses decreased from $8,065 in 1994 to $3,931 in
1995.
1994 vs. 1993
Overall - 1994 ended with a net loss of $43,266 compared to a
net profit of $38,860 in 1993.
Major items contributing to the 1994 loss were:
1. Operating income of the Oil and Gas Segment increased from
$7,531 in 1993 to $22,845 in 1994. Revenues decreased from $56,532
in 1993 to $49,411 in 1994. Production costs decreased from
$47,985 in 1993 to $26,566 in 1994.
2. Operating income of the Snow King Resort segment decreased
from $678,790 in 1993 to $518,987 in 1994. Revenues increased from
$7,087,976 in 1993 to $7,910,708 in 1994. Operating expenses
increased from $6,409,186 to $7,391,721 in 1994, caused mainly from
various operating costs and depreciation charges.
3. Other revenue increased from $10,882 in 1993 to $41,248 in
1994. This gain was from decreased interest and rental expenses,
and increased gain on sale of assets.
Oil and Gas Segment
Please refer to item 1. above.
Snow King Resort Segment
Room revenues increased from $3,895,192 in 1993 to $4,048,224
in 1994. This increase was due to an increase in occupancy from
66.4% in 1993 to 63.1% in 1994 and an increase in the average room
rate from $78.82 in 1993 to $86.14 in 1994.
Food and beverage revenues increased from $1,717,195 in 1993
to $1,868,886 in 1994. This increase was mainly due to more
banquets, more people eating and drinking in the Hotel, and price
adjustments.
Alpine Slide revenues increased from $344,656 in 1993 to
$380,651 in 1994. This increase is attributed to more people
riding the slide and an increase in price.
Revenues from skiing increased from $486,447 in 1993 to
$495,520 in 1994. More people skiing and taking part in scheduled
snow activities, along with more snow making and night lights,
accounted for the increase. Costs of operating the ski area
increased from $570,322 in 1993 to $576,340 in 1994.
Rental of condominiums owned by others provided revenues of
$463,620 in 1993 compared to $1,174,208 in 1994. More people were
available and more people desired to stay in condominiums in 1994.
Administrative expenses increased from $494,464 in 1993 to
$528,901 in 1994. Labor costs, credit card discounts, donations,
telephone, office supplies, postage, security, and taxes all had
substantial increases.
Marketing expenses increased from $390,059 in 1993 to $426,950
in 1994. Personnel and advertising costs increased while operating
expenses decreased.
Maintenance costs increased from $336,304 in 1993 to $356,830
in 1994.
Room expenses increased from $1,098,404 in 1993 to $1,240,237
in 1994. Labor costs, guest supplies, linens and data processing
increased while uniforms and desk supplies decreased. 2,424 fewer
rooms were rented in 1994 than in 1993. Average daily rate in 1993
was $78.82 and $86.14 in 1994.
Energy costs increased from $243,747 in 1993 to $355,682 in
1994. Electric power, water and sewer costs increased.
Property taxes increased from $82,243 in 1993 to $85,381 in
1994.
Interest payments decreased from $579,177 in 1993 to $569,052
in 1994.
Management fees based on gross revenues increased from
$141,678 in 1993 to $163,314 in 1994.
Condominium expenses increased from $375,066 in 1993 to
$960,264 in 1994. More condominiums were rented in 1994.
Depreciation increased from $432,576 in 1993 to $509,100 in
1994.
Amortized loan fees in 1993 were $52,196 and $61,300 in 1994.
Net profit from game machines, guest laundry, etc. increased
from $62,822 in 1993 to $130,750 in 1994.
Bad debt expenses decreased from $10,762 in 1993 to $8,065 in
1994.
Impact of Inflation
For the two most recent fiscal years inflation and changing
prices have not had a detrimental impact on revenues or net
income.
WSC has generally been able to raise its prices to counteract cost
increases without adversely affecting demand for its products and
services.
<TABLE>
<S> <C>
Item 7. Financial Statements.
Independent Auditor's Report F-1 to F-2
Financial Statements:
Consolidated Balance Sheets F-3
Consolidated Statements of Shareholders' Equity F-4
Consolidated Statements of Operations F-5
Consolidated Statements of Cash Flow F-6 to F-7
Summary Schedule of Oil and Gas Segment -
Schedule A F-8
Summary Schedule of Snow King Hotel Segment -
Schedule B F-9
Supplemental Schedules:
Schedule of Property, Equipment and Intangible
Assets (1993) - Schedule C F-10
Schedule of Accumulated Depreciation, Depletion
and Amortization (1993) - Schedule C-1 F-11
Schedule of Property, Equipment and Intangible
Assets (1992) - Schedule D F-12
Schedule of Accumulated Depreciation, Depletion
and Amortization (1992) - Schedule D-1 F-13
Schedule of Property, Equipment and Intangible
Assets (1991) - Schedule E F-14
Schedule of Accumulated Depreciation, Depletion
and Amortization (1991) - Schedule E-1 F-15
Notes to Consolidated Financial Statements F-16 to F-27
CLIFFORD H. MOORE AND COMPANY
Certified Public Accountants
205 South Broadway
Riverton, Wyoming 82501
1-307-856-9214
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
and Stockholders of
Western Standard Corporation
We have audited the accompanying consolidated balance sheets
of Western Standard Corporation and Subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of
shareholders' equity, operations, cash flows, and related summary
schedules of oil and gas, and Snow King Hotel segments for the
years ended December 31, 1995, 1994 and 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The Company has not presented oil and gas reserve quantities
and changes in those reserve quantities that the Financial
Accounting Standards Board (FASB) has determined in FASB Statement
Number 19 (Financial Accounting and Reporting by Oil and Gas
Producing Companies) is necessary to supplement, although not
required to be part of, the basic financial statements. The
Company has also not presented certain information required by
Regulation S-X (210. 4-10) of the Securities and Exchange
Commission regarding certain disclosures for oil and gas producing
activities.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Western Standard Corporation and Subsidiaries as of December 31,
1995 and 1994, and the results of their operations and cash flows
for the years ended December 31, 1995, 1994 and 1993, in conformity
with generally accepted accounting principles.
F-1
Western Standard Corporation
Page 2
Our examinations were made for the purpose of expressing an
opinion on the basic financial statements taken as a whole. The
supplemental schedules listed in the index of financial statements
are presented for purposes of complying with the Securities and
Exchange Commission's rules and regulations under the Securities
Exchange Act of 1934 and are not otherwise a required part of the
basic financial statements. The supplemental schedules have been
subjected to the auditing procedures applied in the examinations of
the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
/s/ Clifford H. Moore and Company, CPAs
March 8, 1996
Riverton, Wyoming
F-2
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
CURRENT ASSETS:
Cash $ 185,699 $ 184,708
Accounts receivable (net of
allowance for doubtful accounts
of $8,233 in 1995; $10,815 in
1994) 261,771 222,575
Inventories 55,267 53,211
Prepaid expenses 165,301 193,585
Total current assets $ 668,038 $ 654,079
PROPERTY AND EQUIPMENT:
At cost net of accumulated
depreciation of $2,767,955 and
$2,151,553 in 1995 and 1994,
respectively (Schedules C and D) $ 8,756,780 $ 8,864,873
OTHER ASSETS:
Restricted cash (Note 4) $ 2,155 $ 2,107
Account receivable - Snow King
Resort Center, Inc. (Note 8) 1,040,983 920,299
Leasehold interest (Note 9) 38,875 40,293
Other receivables - officer (Note 8) 10,062 9,434
Other (Note 3) 89,874 438,329
Total other assets $ 1,181,949 $ 1,410,462
TOTAL ASSETS $ 10,606,767 $ 10,929,414
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 831,960 $ 1,284,064
Accrued expenses 329,784 412,544
Advance deposits 532,878 425,474
Current maturity of debt (Note 4) 1,517,427 1,045,518
Total current liabilities $ 3,212,049 $ 3,167,600
LONG-TERM LIABILITIES:
Long-term debt (Note 4) $ 5,025,137 $ 5,339,135
Convertible debentures (Note 5) -0- -0-
Fee payable - officer (Note 8) 90,000 90,000
Total long-term liabilities $ 5,115,137 $ 5,429,135
MINORITY INTEREST IN SUBSIDIARY $ 2,523,523 $ 2,433,197
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $.05 par value,
10,000,000 shares authorized,
9,965,015 and 9,965,015 shares
issued and outstanding at
December 31, 1995 and 1994,
respectively $ 401,201 $ 401,201
Capital in excess of par value 3,334,801 3,334,801
Accumulated deficit ( 3,979,944) ( 3,836,520)
Total shareholders' (deficit) ($ 243,942) ($ 100,518)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 10,606,767 $ 10,929,414
The accompanying notes to financial statements
are an integral part of these statements.
F-3
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Total
Shares Capital Capital in share-
out- stock excess of Accumulated holders
standing common par value deficit equity
BALANCE,
12/31/92 9,965,015 $401,201 $3,334,801 ($ 3,832,114)($ 96,112)
1993 net
income -0- -0- -0- 38,860 38,860
BALANCE,
12/31/93 9,965,015 $401,201 $3,334,801 ($ 3,793,254)($ 57,252)
1994 net
loss -0- -0- -0- ( 43,266)( 43,266)
BALANCE,
12/31/94 9,965,015 $401,201 $3,334,801 ($ 3,836,520)($ 100,518)
1995 net
loss -0- -0- -0- ( 143,424)( 143,424)
BALANCE,
12/31/95 9,965,015 $401,201 $3,334,801 ($ 3,979,944)($ 243,942)
The accompanying notes to financial statements
are an integral part of these statements.
F-4
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
OPERATING INCOME - OIL AND GAS
SEGMENT (Schedule A) $ 24,917 $ 22,845 $ 7,531
OPERATING INCOME - SNOW KING
HOTEL SEGMENT (Schedule B) 504,250 518,987 678,790
$ 529,167 $ 541,832 $ 686,321
OTHER REVENUE:
Rentals $ 500 $ 500 $ 1,260
Interest 4,307 2,699 9,622
Other -0- 644 -0-
Gain on assets sold 16,289 37,405 -0-
$ 21,096 $ 41,248 $ 10,882
$ 550,263 $ 583,080 $ 697,203
OTHER COSTS:
General and administrative $ 43,736 $ 45,489 $ 49,935
Depreciation 421 911 2,379
$ 44,157 $ 46,400 $ 52,314
Interest 689,403 599,056 593,532
$ 733,560 $ 645,456 $ 645,846
NET INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAX ($ 183,297)($ 62,376) $ 51,357
Provision for income tax -0- -0- ( 7,839)
NET INCOME (LOSS) ($ 183,297)($ 62,376) $ 43,518
Minority interest in (income)
loss of subsidiary 39,873 19,110 ( 12,497)
Extraordinary item - income
tax benefit of net
operating loss carryover -0- -0- 7,839
NET INCOME (LOSS) ($ 143,424)($ 43,266) $ 38,860
INCOME (LOSS) PER COMMON SHARE
(Computed on the weighted
average number of shares
outstanding for the year) ($ .0144)($ .0043) $ .0039
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 9,965,015 9,965,015 9,965,015
The accompanying notes to financial statements
are an integral part of these statements.
F-5
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
INCREASE (DECREASE) IN CASH:
Cash flows from operating
activities:
Cash received from
customers $ 8,529,701 $ 7,943,889 $ 7,165,906
Cash paid to suppliers
and employees ( 7,798,179)( 6,461,150)( 5,767,791)
Interest received 4,307 3,716 9,622
Interest paid ( 689,403)( 599,056)( 593,532)
Net cash provided by
operations $ 46,426 $ 887,399 $ 814,205
Cash flows from investing
activities:
(Payments to) decrease
in restricted cash
capital expenditure
account ($ 48)($ 328) $ 250,935
Sales of assets 315,000 426,261 -0-
Repayment of officer loan -0- 6,866 -0-
Loans to officer -0- -0- ( 16,300)
Capital expenditures ( 508,309)( 2,118,795)( 308,527)
Investment in Snow King
Center ( 120,684)( 407,779)( 504,594)
Condominium construction
costs ( 13,305)( 450,009)( 88,205)
Net cash provided
(used) by investing
activities ($ 327,346)($ 2,543,784)($ 666,691)
Cash flows from financing
activities:
Borrowing from banks and
leasing companies $ 1,081,132 $ 2,991,648 $ 676,453
Stock issued for cash 130,200 86,800 189,000
Principal payments to
banks, officers, and
leasing companies ( 923,221)( 1,280,986)( 1,095,386)
Payment of loan fees ( 6,200)( 33,000)( 3,700)
Decrease in debt service
account -0- -0- 40,522
Net cash provided
(used) by financing
activities $ 281,911 $ 1,764,462 ($ 193,111)
Net increase (decrease)
in cash $ 991 $ 108,077 ($ 45,597)
Cash at beginning of year 184,708 76,631 122,228
Cash at end of year $ 185,699 $ 184,708 $ 76,631
(Continued on page F-7)
F-6
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Cash consists of cash on hand and cash in unrestricted bank
accounts. The Company has no short term cash investments.
The cash flow statement for 1994 has been revised to reflect
the construction and sale of the condominium as an investing
activity.
1995 1994 1993
RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income (loss) ($ 143,424)($ 43,266) $ 38,860
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation and amortization 687,070 574,889 529,224
Increase (decrease) in
advance deposits 107,404 106,574 ( 101,628)
(Increase) decrease in
accounts receivable ( 39,196) 34,593 ( 10,553)
(Increase) decrease in
prepaid expenses 28,284 ( 119,071)( 19,419)
Decrease (increase) in
inventories ( 2,056)( 3,777)( 5,978)
Decrease in other assets -0- -0- 30,690
(Decrease) increase in
accounts payable and
accrued expenses ( 534,865) 502,793 340,512
Gain on assets ( 16,290) ( 37,405) -0-
Condominium gain -0- ( 54,461) -0-
Payment of sales expenses -0- ( 54,360) -0-
Accrued interest - officer
note ( 628) -0- -0-
Allocation of minority
interest in subsidiary
income or loss ( 39,873)( 19,110) 12,497
Net cash provided by
operations $ 46,426 $ 887,399 $ 814,205
The debenture holders exchanged $2,072,000 of debentures for
14,800 shares of Class A preferred stock in 1994. No cash was
received or expended in this transaction.
The accompanying notes to financial statements
are an integral part of these statements.
F-7
Schedule A
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
SUMMARY SCHEDULES OF OIL AND GAS SEGMENT
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
REVENUE - oil and gas interests
(Note 9) $ 50,090 $ 49,411 $ 56,532
PRODUCTION COSTS ( 25,173) ( 26,566) ( 47,985)
Revenue, net of
production cost $ 24,917 $ 22,845 $ 8,547
OTHER COSTS:
Amortization of intangible
development costs -0- -0- 1,016
OPERATING INCOME - oil and gas $ 24,917 $ 22,845 $ 7,531
IDENTIFIABLE ASSETS (at net book
value) $ 38,716 $ 38,716 $ 38,716
CAPITAL EXPENDITURES $ -0- $ -0- $ -0-
The accompanying notes to financial statements
are an integral part of these statements.
F-8
Schedule B
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
SUMMARY SCHEDULE OF SNOW KING HOTEL SEGMENT
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
REVENUE $ 8,518,936 $ 7,910,708 $ 7,087,976
COSTS:
Operating $ 7,324,106 $ 6,809,678 $ 5,924,791
Amortization 70,668 63,545 -0-
Depreciation 615,981 510,433 473,633
Provision for
doubtful accounts 3,931 8,065 10,762
$ 8,014,686 $ 7,391,721 $ 6,409,186
OPERATING INCOME -
Snow King Segment $ 504,250 $ 518,987 $ 678,790
IDENTIFIABLE ASSETS
(at net book value) $ 10,486,455 $ 10,920,983 $ 8,451,541
CAPITAL EXPENDITURES $ 508,309 $ 2,118,795 $ 308,527
The accompanying notes to financial statements
are an integral part of these statements.
F-9
Schedule D
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
Balance at Balance at
beginning Additions Retire- end
Classification of period at cost ments of period
PROPERTY AND
EQUIPMENT:
Land $1,296,286 $ -0- $25,903 $ 1,270,383
Land improvements 36,194 -0- 36,194 -0-
Mineral claims
and leases 500 -0- -0- 500
Producing oil and
gas interests 323,562 -0- -0- 323,562
Machinery and
equipment 135,569 -0- -0- 135,569
Buildings (Ocean
Lake) 24,450 -0- 24,450 -0-
Hotel building
improvements 4,768,290 1,752,578 -0- 6,520,868
Hotel furniture
and fixtures 2,399,326 366,218 -0- 2,765,544
$8,984,177 $2,118,796 $86,547 $11,016,426
Property and equipment $11,016,426
Accumulated depreciation (Schedule D-1) ( 2,151,553)
Property and equipment net of accumulated
depreciation $ 8,864,873
Amortizable Assets:
Costs of acquiring
ski shelter
lease $ 42,538 $ -0- $ -0- $ 42,538
Accumulated
amortization ( 2,245)
Net $ 40,293
Prepaid loan fees $ 264,683 $ 33,000 $ -0- $ 297,683
Accumulated
amortization ( 152,644)
Net $ 145,039
The accompanying notes to financial statements
are an integral part of these statements.
F-12
Schedule D-1
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
Depreciation
and amorti-
zation
Balance at charged to Balance at
beginning costs and Retire- end
Description of period expenses ments of period
PROPERTY AND
EQUIPMENT:
Producing oil
and gas
interests $ 294,024 $ -0- $ -0- $ 294,024
Machinery and
equipment 150,923 911 27,667 124,167
Buildings
(Ocean Lake) 24,449 -0- 24,449 -0-
Hotel building
improvements 344,227 191,811 -0- 536,038
Hotel furniture
& fixtures 878,702 318,622 -0- 1,197,324
$ 1,692,325 $ 511,344 $ 52,116 $ 2,151,553
AMORTIZATION:
Leasehold
interest $ -0- $ 2,245 $ -0- $ 2,245
Loan fees $ 91,344 $ 61,300 $ -0- $ 152,644
The accompanying notes to financial statements
are an integral part of these statements.
F-13
Schedule C
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
Balance at Balance at
beginning Additions Retire- end
Classification of period at cost ments of period
PROPERTY AND
EQUIPMENT:
Land $ 1,270,383 $ 42,243 $ -0- $ 1,312,626
Mineral claims
and leases 500 -0- -0- 500
Producing oil
and gas
interests 323,562 -0- -0- 323,562
Machinery and
equipment 135,569 -0- -0- 135,569
Hotel building
improvements 6,520,868 277,297 -0- 6,798,165
Hotel furniture
and fixtures 2,765,544 188,769 -0- 2,954,313
$ 11,016,426 $ 508,309 $ -0- $ 11,524,735
Property and equipment $ 11,524,735
Accumulated depreciation (Schedule C-1) ( 2,767,955)
Property and equipment net of accumulated
depreciation $ 8,756,780
Amortizable Assets:
Costs of acquiring
ski shelter
lease $ 42,538 $ -0- $ -0- $ 42,538
Accumulated
amortization ( 3,663)
Net $ 38,875
Prepaid loan fees $ 297,683 $ 6,200 $ -0- $ 303,883
Accumulated
amortization ( 221,894)
Net $ 81,989
The accompanying notes to financial statements
are an integral part of these statements.
F-10
Schedule C-1
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
Depreciation
and amorti-
zation
Balance at charged to Balance at
beginning costs and Retire- end
Description of period expenses ments of period
PROPERTY AND
EQUIPMENT:
Producing oil
and gas
interests $ 294,024 $ -0- $ -0- $ 294,024
Machinery and
equipment 124,167 421 -0- 124,588
Hotel building
improvements 536,038 234,247 -0- 770,285
Hotel furniture
and fixtures 1,197,324 381,734 -0- 1,579,058
$ 2,151,553 $ 616,402 $ -0- $ 2,767,955
AMORTIZATION:
Leasehold
interest $ 2,245 $ 1,418 $ -0- $ 3,663
Loan fees $ 152,644 $ 69,250 $ -0- $ 221,894
The accompanying notes to financial statements
are an integral part of these statements.
F-11
Schedule E
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1993
Balance at Balance at
beginning Additions Retire- end
Classification of period at cost ments of period
PROPERTY AND
EQUIPMENT:
Land $ 1,296,286 $ -0- $ -0- $ 1,296,286
Land
improvements 36,194 -0- -0- 36,194
Mineral claims
and leases 500 -0- -0- 500
Producing oil
and gas
interests 346,444 -0- 22,882 323,562
Machinery and
equipment 135,569 -0- -0- 135,569
Buildings (Ocean
Lake) 24,450 -0- -0- 24,450
Hotel building &
improvements 4,682,291 85,999 -0- 4,768,290
Hotel furniture
& fixtures 2,176,798 222,528 -0- 2,399,326
$ 8,698,532 $ 308,527 $ 22,882 $ 8,984,177
Property and equipment $ 8,984,177
Accumulated depreciation (Schedule E-1) 1,692,325
Property and equipment net of accumulated
depreciation $ 7,291,852
Amortizable Assets:
Costs of
acquiring ski
shelter lease $ 42,538 $ -0- $ -0- $ 42,538
Prepaid loan
fees $ 260,983 $ 3,700 $ -0- $ 264,683
The accompanying notes to financial statements
are an integral part of these statements.
F-14
Schedule E-1
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1993
Depreciation
and amorti-
zation
Balance at charged to Balance at
beginning costs and Retire- end
Description of period expenses ments of period
PROPERTY AND
EQUIPMENT:
Producing oil
and gas
interests $ 315,890 $ 1,016 $ 22,882 $ 294,024
Machinery and
equipment 148,544 2,379 -0- 150,923
Buildings
(Ocean Lake) 24,449 -0- -0- 24,449
Hotel building
& improvements 169,744 174,483 -0- 344,227
Hotel furniture
and fixtures 579,552 299,150 -0- 878,702
$ 1,238,179 $ 477,028 $ 22,882 $ 1,692,325
AMORTIZATION:
Leasehold
interest $ -0- $ -0- $ -0- $ -0-
Loan costs $ 39,147 $ 52,197 $ -0- $ 91,344
The accompanying notes to financial statements
are an integral part of these statements.
F-15
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1: HISTORY OF THE COMPANY:
The Company was incorporated under the laws of the State of
Wyoming in 1955. It acquired oil, gas and mineral properties which
were assigned to other operators with the Company retaining a
royalty position in the properties so assigned.
In 1971 and 1972, the Company acquired real estate, including
the Snow King ski area in Jackson, Wyoming, land and improvements
adjacent to Ocean Lake, Fremont County, Wyoming, and producing oil
and natural gas interests. Construction of a hotel-convention
center began in Jackson during 1973. The complex was operational
in early 1976 and was completed in 1977.
In 1981, 50% of the Snow King area and the convention center
was sold to Pick-Jackson Corp. and the remaining 50% was
transferred to two partnerships.
On March 13, 1992, the Snow King Resort was reacquired by a
subsidiary of Western Standard Corporation.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fixed Assets:
The company capitalizes those additions and betterments which
increase the useful lives of its assets and expenses repair and
maintenance items.
When items are disposed of, their cost is removed from the
accounts along with the accumulated depreciation and the resulting
gain or loss is reflected in the income statement.
Oil and Gas Revenue:
Oil and gas revenue and expenditures are accounted for using
the successful efforts method. This method of accounting for oil
and gas properties capitalizes only those costs directly associated
with proven reserves.
Depreciation, Depletion and Amortization:
Depreciation, depletion and amortization on oil and gas
properties are computed using the straight-line method. Other
depreciable assets are depreciated by the straight-line method over
the estimated useful lives of the
assets as follows: equipment, 3 to 10 years; buildings and
improvements, 10 to 30 years; the hotel building, 37.5 years; and
the new chair lift, 40 years.
F-16
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Continued:
Inventories:
Food and beverage inventories at the hotel are carried at cost,
computed on a first-in, first-out basis.
Affiliates:
The consolidated financial statements include the accounts of
Western Standard Corporation and its wholly owned subsidiary,
Western Recreation Corporation. Western Standard owned 84.8% of
its subsidiary, Snow King Resort, Inc. in 1993, and 76.43% in 1994
and 1995. Snow King Resort, Inc.'s transactions are included in
the consolidated financial statements. All significant
intercompany transactions and accounts have been eliminated.
Snow King Resort, Inc. acquired fixed assets and operating
assets and liabilities in several transactions closing on March 13,
1992.
Substantially all the assets and liabilities of Snow King,
Incorporated were acquired for 9,500 shares of Class B stock of
Snow King Resort, Inc. These assets and liabilities were recorded
at Snow King, Incorporated's book value on Snow King Resort, Inc.'s
books because they were acquired from a related corporation. These
assets and liabilities consisted of cash, accounts receivable,
other assets, fixed assets and accumulated depreciation, accounts
payable, advance deposits, other liabilities, leases payable and
notes payable. Snow King, Incorporated was subsequently
liquidated.
Snow King Resort, Inc. issued 2,500 shares of Class B stock to
Western Standard for Western Standard's 50% interest in the assets
of Snow King Partnership. These assets consist of land, buildings
and ski lifts. No value was assigned to these assets because they
were acquired at Western Standard's basis of zero.
Snow King Resort, Inc. borrowed $5,000,000 from ORIX USA and
Jackson State Bank, issued $2,072,000 in convertible debentures,
and sold $112,000 in Class A stock to outside investors in order to
purchase the hotel building, land, and furniture and fixtures from
the owner, Americana Hotels Realty Corporation (AHRC) for the total
purchase price of $6,000,000. Snow King Resort, Inc. paid $350,000
to AHRC for its remaining 50% interest in Snow King Partnership's
assets.
As a condition of the making of the ORIX loan, Western Standard
Corporation and Snow King, Incorporated have placed all their
shares of Class B common stock of Snow King Resort, Inc. into a
voting trust, granting to Manuel B. Lopez the sole right to vote
such shares for the duration of the voting trust. The initial term
of the voting trust is ten years, and may be extended for
F-17
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Continued:
subsequent ten-year periods by the consent of Western Standard
Corporation and Mr. Lopez.
Accrued Vacation:
Accrued expenses include accrued vacation liability of $77,411
and $76,770 at December 31, 1995 and 1994, respectively, for the
employees of Snow King Resort, Inc.
NOTE 3: OTHER ASSETS:
Other assets include:
1995 1994
Investment in stock (Snow King Resort
Center and other) $ 6,722 $ 6,722
Prepaid loan fees, net of amortization 81,989 145,039
Condominium construction -0- 285,405
Incorporation costs 1,163 1,163
$ 89,874 $ 438,329
F-18
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 4: LONG AND SHORT TERM DEBT:
Inte- Portion due
1995: rest within Long term
Creditors Security rate Balance one year portion
Leases:
Sulcus
Hospitality
monthly Restaurant
pymt. $1,351 computers 15.4% $ 51,933 $ 10,545 $ 41,388
Nautilus
Internat'l.
monthly Exercise
pymt. $365 Equipment 12% 7,926 3,626 4,300
ORIX tele.
lease,
monthly Telephone
pymt. $3,062 equip. 10% 127,732 25,580 102,152
Sulcus
Hospitality,
monthly Add'l.
pymt. $141 equip. 12.9% 5,175 1,236 3,939
Wyoming.com
LLC, monthly Internet
pymt. $127 equipment 6.1% 3,769 1,212 2,557
ORIX tele.
lease,
monthly Add'l.
pymt. $455 equip. 9% 18,411 3,729 14,682
Xerox Corp.,
monthly
pymt. $346 Copier 15.4% 11,734 2,498 9,236
Total leases $ 226,680 $ 48,426 $ 178,254
Notes Payable:
ORIX/Jackson
State Bank, Land,
monthly bldgs.,
pymt. approx. furn. & LIBOR
$53,000 fixt. + 3.5% $5,030,601 $ 194,121 $4,836,480
Jackson State Life JSB
Bank, due ins. on base
11/10/95 officer +1.5% 600,000 600,000 -0-
Jackson State 1988
Bank Ford van 9% 1,910 1,910 -0-
F-19
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 4: LONG AND SHORT TERM DEBT: Continued:
Inte- Portion due
1995: rest within Long term
Creditors Security rate Balance one year portion
Notes Payable:- Continued
AFCO Insurance
financing 9.76% 134,623 134,623 -0-
GMAC, monthly 93 Chev
pymt. $541 truck 7.9% 15,750 5,347 10,403
Jackson Share- JSB
State holder base
Bank guarantees +1.5% 370,000 370,000 -0-
Shareholders 9% 150,000 150,000 -0-
Stanford E. Clark 9% 13,000 13,000 -0-
Total notes payable $6,315,884 $1,469,001 $4,846,883
TOTAL LONG AND SHORT
TERM DEBT $6,542,564 $1,517,427 $5,025,137
1994:
Leases:
Telerent
Leasing, 213
pymt. $1,791 TV's 13.23% $ 15,282 $ 15,282 $ -0-
Phoenix
Leasing, Energy
monthly Mgmt.
pymt. $1,904 Sys. 15.02% 3,927 3,927 -0-
Xerox Corp.,
monthly pymt.
$313 Copier 21.11% 1,566 1,566 -0-
Xerox Corp.,
monthly pymt.
$91 Copier 20.20% 369 369 -0-
Intermountain
Coach Leasing, 1991
monthly Ford
pymt. $601 Van 10.25% 4,866 4,866 -0-
Sulcus
Hospitality,
monthly pymt. Rest.
$1,351 computers 15.4% 55,198 6,555 48,643
F-20
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 4: LONG AND SHORT TERM DEBT: Continued:
Inte- Portion due
1994: rest within Long term
Creditors Security rate Balance one year portion
Leases: - Continued
Nautilus
Internat'l.,
monthly pymt. Exercise
$149 equipment 12% 4,473 1,317 3,156
ORIX tele.
lease, monthly Tele.
pymt. $2,769 equip. 10% 130,000 21,046 108,954
Total leases $ 215,681 $ 54,928 $ 160,753
Notes Payable:
ORIX/Jackson
State Bank, Land,
monthly pymt. bldgs.,
approx. furn. LIBOR
$53,000 & fixt. +3.5% $5,208,065 $ 177,464 $5,030,601
Jackson State Life JSB
Bank, due ins. on rate
11/10/95 officer +1.5% 550,462 550,462 -0-
Jackson State 1988
Bank Ford Van 9% 5,160 3,184 1,976
AFCO Insurance
financing 9.76% 139,158 139,158 -0-
GMAC, monthly 93 Chev
pymt. $541 truck 7.9% 20,691 5,032 15,659
Bank of
Jackson Hole,
monthly pymt. Condo. Float-
$1,484 constr. ing 133,436 3,290 130,146
Shareholders 9% 112,000 112,000 -0-
Total notes payable $6,168,972 $ 990,590 $5,178,382
TOTAL LONG AND SHORT
TERM DEBT $6,384,653 $1,045,518 $5,339,135
F-21
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 4: LONG AND SHORT TERM DEBT: Continued:
Snow King Resort, Inc. is required to make
monthly deposits
equalling three percent of sales to a capital expenditure account
for replacements and improvements. The balance of this account was
$2,155 and $2,107 at December 31, 1995 and 1994, respectively.
Debt maturities over the next five years are as follows; no
interest or extra principal payments are included on the ORIX loan
(see Note 11 for lease maturities):
1996 $ 1,469,001
1997 4,842,265
1998 4,618
1999 -0-
2000 -0-
$ 6,315,884
Manuel B. and Deborah Lopez, are guarantors on the ORIX debt
to the extent of one million dollars.
The loan agreement restricts payment of dividends or other
payments to shareholders during the loan term. The assets of Snow
King Resort, Inc. are thus unavailable for use by its parent for
loans or dividends. During 1995, Snow King Resort, Inc. advanced
$120,684 to Snow King Resort Center, Inc. The September, 1994 loan
modification agreement allows only $100,000 in annual center
subsidy. Negotiations are in process to refinance this loan in
1996.
The balance of the loan is due March 13, 1997.
Short term borrowings information:
1995 1994
Balance at end of year $ 1,282,623 $ 801,620
Range of interest rates 7.82% - 10% 6.53% - 10%
Maximum outstanding $ 1,282,623 $ 801,620
Average outstanding, computed by
weighted average of end of month
balances $ 958,833 $ 439,782
Weighted average interest rate
computed by weighted average
interest due, divided by average
note balance 10.0% 8.1%
Loans included in this computation were the Jackson State Bank
line of credit, AFCO Insurance financing, the loans from
shareholders, and the Jackson State Bank short term loan.
F-22
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 5: DEBENTURES OF SNOW KING RESORT, INC.:
Convertible Subordinated Debentures. The convertible
debentures were converted into 14,800 shares of preferred stock in
Snow King Resort, Inc. in 1994.
Accrued unpaid interest of $-0- for 1995 and $108,780 for 1994,
were included in accrued expenses.
NOTE 6: STOCK OPTION AND STOCK BONUS PLAN:
During 1972, the Board of Directors approved a Stock Bonus Plan
of indefinite term whereby certain officers and key employees are
granted shares of the Company's common stock for services rendered
during the year, based on their salaries and in some cases their
length of service with the Company.
Under this Plan, shares have been granted. No stock bonuses
were issued in 1995 or 1994. The Plan provides that, at the
discretion of the Executive Committee of the Board of Directors, a
cash bonus in the approximate amount of the income tax related to
the stock bonus may be paid to such employees. No such cash
bonuses have been paid as of December 31, 1995.
Snow King Resort, Inc. has granted an option to purchase up to
3,000 shares of Class B common stock to Manuel and Deborah Lopez.
The option price has been set at $140 per share. The option was
not exercised in 1995 or 1994.
NOTE 7: FEDERAL INCOME TAXES:
Western Standard Corporation and its subsidiaries filed
consolidated income tax returns in 1993 and prior years. The group
had unused consolidated net operating loss carryforwards for
federal income tax purposes of approximately $1,745,476 at December
31, 1993, which began to expire in 1994. Snow King Resort, Inc.
succeeded to the net operating loss of Snow King, Incorporated of
approximately $990,000. Snow King Resort, Inc. also acquired the
investment credit and jobs credit carryovers of Snow King,
Incorporated. Investment credit carryovers of $7,836, at December
31, 1995 will begin to expire in 1995, if not used. The net
operating loss carryovers from Snow King, Incorporated have limited
deductibility of approximately $86,000 per year.
Since Western Standard's ownership in Snow King Resort, Inc.
dropped below 80%, a separate income tax return for Snow King
Resort, Inc. will be filed for 1995.
Western Standard's income tax returns through 1976 were
examined by the Internal Revenue Service in 1978, and were accepted
as filed.
The tax provision for 1993 is offset by the carryover of net
F-23
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 7: FEDERAL INCOME TAXES: Continued:
operating losses from prior years, resulting in no 1993 liability
for income taxes. The federal tax return loss for 1995 is
approximately $14,000, for Western Standard and Western Recreation;
and approximately $186,000 loss for Snow King Resort, Inc. The
federal tax return loss differs from net financial loss because of
depreciation differences and timing differences in deductions.
NOTE 8: RELATED PARTY TRANSACTIONS:
The hotel is managed by a corporation, Snow King Resort
Management, Inc., which is controlled by two officers and directors
of Western Standard. The hotel pays a management fee of 2% of
sales to Snow King Resort Management, Inc. At December 31, 1995,
Snow King Resort, Inc. owed the management company $26,855 in
management fees.
At December 31, 1992, an officer owed the corporation $31,602,
of which $11,602 was paid in January, 1993. The remaining $20,000
was converted to a note payable to Western Standard which carries
an interest rate of 6.5%. This note has a balance of $10,062 at
December 31, 1995.
Western Standard agreed to pay a fee of $100,000 to the officer
for structuring the Snow King Resort, Inc. asset purchase. $10,000
of this fee was paid in 1992, and the remaining $90,000 is shown as
a noncurrent liability on the financial statements.
The shareholders of Snow King Resort, Inc. formed a related
corporation, Snow King Resort Center, Inc., to operate and lease
the Town of Jackson's skating rink facility. The facility can be
used to house conventions, exhibitions, and large banquets. The
facility will be operated in conjunction with the Resort. Western
Standard owns 49% of Snow King Resort Center, Inc. Since Western
Standard does not own a controlling interest in Snow King Resort
Center, Inc., that corporation's transactions are not included in
these consolidated statements. During 1993, Snow King Resort, Inc.
advanced $512,520 to Snow King Resort Center, Inc. for equipment
purchases and operations. During 1994, Snow King Resort, Inc.
advanced $407,779 to Snow King Resort Center, Inc. During 1995,
Snow King Resort, Inc. advanced $120,684 to Snow King Resort
Center, Inc.
Western Standard's oil and gas revenues are dominated by one
buyer, 88 Oil. This buyer purchased the following amounts of oil
and gas in the following years:
1991 $ 98,465
1992 $ 72,581
1993 $ 47,008
1994 $ 39,628
1995 $ 37,621
F-24
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 9: LEASEHOLD INTEREST:
Snow King Resort, Inc. acquired the leases of Snow King,
Incorporated on March 13, 1992. One lease was with the Town of
Jackson for the ski shelter. The Town wished to demolish the old
ski shelter and replace it with a larger structure housing both a
ski shelter and a large skating rink. Snow King Resort, Inc. paid
costs of demolition and excavation in the amount of $21,414. Snow
King Resort, Inc. transferred 1.3 acres of land costing $21,124 to
the Town on which to build the facility. These items were
capitalized as leasehold costs. The lease agreement was dated
April 22, 1994. The lease calls for monthly payments of $2,800,
and supplemental rent based on gross revenues generated by the
facility. Leasehold costs are being amortized over the 30 year
term of the lease.
NOTE 10: OIL AND GAS DISCLOSURES:
Western Standard's percentage royalty ownership in its oil
production wells is very small. The production from the producing
wells is nominal and has now exceeded their original reserve
estimates. Management believes that the cost of obtaining the
information for oil and gas disclosure exceeds the benefits.
Therefore, the reserve information for the required oil and gas
disclosure is not available. Western Standard is not the operator
of any of the producing wells or properties and has no control over
any of them.
All of Western Standard's oil and gas properties are located
in central Wyoming. No costs related to exploration and
development of these properties have been incurred over the past
three years. The capitalized costs for the last three years is
nil.
NOTE 11: LEASES:
Snow King Resort, Inc. has several lease agreements to acquire
assets for the hotel. All of these agreements have been classified
as capital leases. The leases have terms of 36 to 60 months. The
following costs of equipment are included in fixed assets in
accordance with these leases in 1995 and 1994:
1995 1994
PRIOR YEAR LEASES PAID OFF:
Television sets $ 66,680 $ 66,680
Energy Management System 84,000 84,000
Rebate received on Energy Mgmt. Sys. ( 59,357) ( 59,357)
1991 Ford Van 26,282 26,282
1982 Thomas Bus 30,706 30,706
Xerox Copiers 14,846 14,846
$ 163,157 $ 163,157
Accumulated depreciation ( 113,143) ( 93,631)
Net assets $ 50,014 $ 69,526
F-25
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 11: LEASES: Continued:
ONGOING LEASES:
Squirrel restaurant computers $ 65,929 $ 60,578
Nautilus exercise equipment 10,994 4,473
ORIX telephone system 166,095 130,000
Internet equipment 4,180 -0-
Xerox copier 14,360 -0-
$ 261,558 $ 195,051
Accumulated depreciation ( 37,378) -0-
Net assets $ 224,180 $ 195,051
Presented below is a schedule by years of future minimum lease
payments under the capital leases with the principal amount net
minimum lease payments as of December 31, 1995.
Year ended December 31, 1996 $ 66,987
1997 66,987
1998 62,467
1999 59,541
2000 10,685
Total minimum lease payments $ 266,667
Amount representing interest ( 39,987)
Principal amount of minimum
lease payments $ 226,680
Current portion of principal amount $ 48,426
Long term portion of principal amount $ 178,254
NOTE 12: CONTINGENT LIABILITIES:
Snow King Resort, Inc. overfunded Snow King Resort Center, Inc.
during 1995, in violation of its loan agreement. The overfunding
of $20,000 could cause ORIX, the lender, to declare the loan in
default, due, and payable immediately. Management has discussed
the situation with the lender. A representative of ORIX has stated
that the overfunding will not create a default or other problems
for the Resort.
The Resort was audited by the Forest Service in 1995. The
Forest Service, in a draft report, proposed additional fees due of
$106,888, for use of Forest Service lands. The Resort has
protested these additional fees. Negotiations are in process.
Management expects that the final total fees will be much less than
this amount. Due to the uncertainty of the eventual liability,
nothing has been accrued in these financial statements.
One lawsuit has been brought for an accident on Resort
property. This action is being handled by the Resort's insurance
company. No estimate of possible losses on this suit is
ascertainable at this time.
F-26
WESTERN STANDARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 12: CONTINGENT LIABILITIES: Continued:
The Resort has guaranteed payment of Snow King Resort Center,
Inc.'s payment of additional rent on the ice skating rink to the
Town of Jackson. These payments are $2,155 per month.
NOTE 13: LIQUIDITY:
At December 31, 1995 and 1994, Snow King Resort, Inc. had
negative working capital which caused difficulties in paying its
current operating obligations. The cash flow shortfalls arose in
part because of seasonal fluctuations in sales. Other factors
contributing to the cash flow problems were cost overruns in
constructing the new chair lift, cash advances to Snow King Resort
Center, Inc., and purchases of fixed assets. These expenditures
used cash that was unavailable for payment of trade creditors.
Some trade creditors have demanded payment upon delivery of goods.
The possible effect of these conditions is that trade creditors
may no longer extend credit to the Resort, adversely affecting
operations. New vendors must be found to replace those who will
not carry the Resort account.
Management borrowed $400,000 to pay the most pressing vendor
bills. Management sold the remaining condominium.
Collection of the $1,040,983 advanced to the Snow King Resort
Center, Inc. over the last three years is dependent on future
profitable operation of that facility. It is doubtful that the
amount receivable will be collectible in the next year.
F-27
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
WSC has not experienced a change in its independent accountants
during the two most recent fiscal years, or had disagreements with
them.
PART III.
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
Information concerning each director and executive officer of
WSC, including business experience for at least the past five
years, is as follows:
Stanford E. Clark, age 78, currently President, Treasurer,
Comptroller and a director, has been President, Vice President,
Treasurer, Comptroller and a Director of WSC from 1957 through 1969
and from 1974 to present. He has also been Vice President and a
Director of Snow King Resort Management, Inc. since 1986 and
Treasurer and a Director of Snow King Resort, Inc. since February,
1992.
Manuel B. Lopez, age 52, currently Vice President and a
director, has been a Vice President and Director of WSC since
1979.
He is also an owner of management companies, manager of Snow King
Complex, President and a Director of Snow King Resort Management,
Inc. since 1986, and President and a Director of Snow King Resort,
Inc. since February, 1992.
Richard G. Roylance, age 80, currently Secretary and a
director, has been Secretary and Director of WSC since 1969. He
was formerly a maintenance manager and is presently a part-time
employee of the maintenance department of the Snow King Inn.
James M. Peck, age 32, currently a director, has been a
director of WSC since January 1, 1988. Prior to such time, he was
primarily a student and had no other business experience. Mr. Peck
also owns and operates a miniature golf course in Jackson,
Wyoming.He recently acquired a company that provides float trips on
the Snake River near Jackson. He has been a Director and employee
of SKRI since February, 1992.
No family relationships exist between or among any of the
directors and executive officers. No director serves as a director
of any other company with a class of equity securities registered
under the Securities Exchange Act of 1934 or a company registered
as an investment company under the Investment Company Act of 1940.
No director, officer, or beneficial owner of more than ten
percent of the outstanding shares of WSC common stock failed to
file on a timely basis, as disclosed in Forms 3, 4, and 5, and any
amendments thereto, reports required by Section 16(a) of the
Securities and Exchange Act of 1934 during the fiscal year ended
December 31, 1995, or prior fiscal years, which are required to be
disclosed herein.
Item 10. Executive Compensation.
The following table sets forth cash compensation paid by WSC,
its subsidiaries and associated companies to its executive
officers; one of which received in excess of $100,000 during the
year ended December 31, 1995:
</TABLE>
<TABLE>
Summary Compensation Table
<S> <C> <C> <C> <C>
Other All
Name and Fiscal Annual Annual Other
Principal Position Year Salary Compensation Compensation
Stanford E. Clark 1995 $28,800 $44,942 (1)
Chief Executive
Officer 1994 $28,800 $56,686 (1)
Manuel B. Lopez 1995 $34,364 $9,761 (2) $246,217 (3)
Vice President of
WSC and Chief
Executive Officer
of SKRI 1994 $34,515 $7,546 (2) $194,734 (4)
_______________
</TABLE>
(1) Amounts paid to Mr. Clark by SKRMI from fees paid to SKRMI
by SKRI.
(2) Incidental fringe benefits.
(3) Includes (i) $105,758 paid to Mr. Lopez from fees paid to
SKRMI by SKRI; (ii) $12,000 paid to Mr. Lopez by SKRI for
guaranteeing the ORIX Loan; and (iii) $128,459 in fees and
commissions paid to Mr. Lopez by SKRMI.
(4) Includes (i) $95,951 paid to Mr. Lopez from fees paid to
SKRMI by SKRI; (ii) $12,000 paid to Mr. Lopez by SKRI for
guaranteeing the ORIX loan; and (iii) $86,783 in fees and
commissions paid to Mr. Lopez by SKRMI.
The Company pays directors $50 per meeting attended or $600
per year, whichever is greater. Directors are also reimbursed for
reasonable out-of-pocket expenses incurred in connection with their
duties.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
<TABLE>
As of March 15, 1996, the only persons known by WSC to own
beneficially more than 5% of the issued and outstanding common
stock of WSC were:
<S> <C> <C> <C>
Amount and Nature Percent
Name and Address of Beneficial Ownership
of
of Beneficial Owner Direct (1) Indirect Class
Margaret Peck 2,672,182 1,200(2) 26.8%
1002 West Park
Riverton, Wyoming 82501
Stanford E. Clark 1,817,118 29,900(3) 18.5%
2205 West Main
Riverton, Wyoming 82501
Manuel B. Lopez 2,184,054 -- 21.9%
P.O. Box 928
Jackson, Wyoming 83001
_______________
</TABLE>
(1) Represents shares over which the named individuals have sole
voting and investment powers.
(2) These shares are owned of record by Mrs. Peck as custodian
for her children. She may be deemed to have shared voting
and/or investment power over the shares.
(3) These shares are owned by the Merrial K. Clark Living Trust
of which Mr. Clark is the Trustee. He may be deemed to have
shared voting and/or investment power over the shares.
The following sets forth information as of March 15, 1996,
concerning each director's and executive officer's ownership of
common stock (WSC's only class of voting securities), on an
individual basis and ownership by all directors and executive
officers of WSC as a group:
<TABLE>
<S> <C> <C> <C>
Amount and Nature of Percent
Beneficial Ownership of
Name Direct Indirect Class
Stanford E. Clark 1,817,118 29,900
(1) 18.5%
Manuel B. Lopez 2,184,054 -- 21.9%
Richard G. Roylance 267,199 300(2) 2.7%
James M. Peck 20,000 -- .2%
Directors and Executive 4,288,371 30,200 43.3%
Officers as a Group
(4 persons)
_______________
</TABLE>
(1) These shares are owned by the Merrial K. Clark Living Trust
of which Mr. Clark is the Trustee. He may be deemed to have
shared voting and/or investment power over the shares.
(2) Owned by Mr. Roylance as custodian for his son, and he may be
deemed to have shared voting and/or investment power over the
shares.
WSC is not aware of any arrangement which may result in a
change in control.
Item 12. Certain Relationships and Related Transactions.
The following describes each significant transaction or series
of similar transactions since January 1, 1991, or currently
proposed transaction, to which WSC was or is a party in which any
director or officer or affiliate of such person had or has a direct
or indirect interest.
Stanford E. Clark, President and a director of WSC, and Manuel
B. Lopez, Vice President and a director of WSC, control and
collectively own all of the outstanding capital stock of SKRMI.
SKRMI presently manages the Hotel and Ski Area pursuant to a
management agreement with SKRI providing for a management fee equal
to 2% of gross revenues. Prior to March, 1992, SKRMI managed the
Hotel and Ski Area pursuant to a management agreement with SKI
providing for a management fee equal to 3% of gross revenues.
Since commencement of the term of such management agreement with
SKI in 1987, SKRMI paid approximately 30% of the management fee to
WSC. During 1991, SKI paid $182,822 in management fees to SKRMI of
which $53,636 was in turn paid by SKRMI to WSC. In addition, in
December, 1991, SKI paid SKRMI an additional $24,000 in condominium
sign up fees for privately owned condominiums which are managed by
SKRMI. During 1992, SKI and SKRI paid $132,343 in management fees
to SKRMI, of which $9,867 was in turn paid by SKRMI to WSC. In
1993, SKRI paid $133,112.80 in management fees to SKRMI. In 1994,
SKRI paid $152,637.42 in management fees to SKRMI. In 1995, SKRI
paid $148,700.68 in management fees pertaining to SKRI and
$130,458.75 pertaining to condominiums and Snow King Resort Center
for a total of $279,159.43 to SKRMI.
WSC was indebted to Messrs. Clark and Lopez for accrued but
unpaid salaries from prior years totalling, as of December 31,
1990, $98,000. These obligations were evidenced by promissory
notes payable to Mr. Clark in the amount of $40,000 and Mr. Lopez
in the amount of $58,000. The notes bore interest at the rate of
11% per annum, were unsecured, and were due December 31, 1991. On
September 20, 1991, these promissory notes were paid in full,
partly in cash, and partly in common stock of WSC, valued by the
Board of Directors at $.02 per share. As a result, Mr. Clark
received 800,800 shares, valued at $16,016 in the aggregate, and
Mr. Lopez received 1,456,200 shares, valued at $29,124 in the
aggregate. Also on such date, Margaret Peck, the largest
shareholder of WSC, purchased 843,000 shares of WSC common stock
for $16,860 in cash ($.02 per share).
Mr. Lopez was indebted to SKI as of December 31, 1991, in the
principal amount of $77,762, plus $9,947 in accrued interest. this
obligation was evidenced by a promissory note which bore interest
at the rate of 12% per annum, was unsecured, and was due July 22,
1991. This obligation arose as a result of cash borrowings by Mr.
Lopez during 1990 of $36,736, the $28,405 remaining balance of a
previous note of a corporation owned by Mr. Lopez, and accrued
interest on the outstanding balance. The $28,405 amount
represented amounts owed to SKI as a result of package tours sold
by the corporation owned by Mr. Lopez during the winters of 1987
and 1988 for which payment was never received by SKI. During 1990,
Mr. Lopez agreed to assume this liability. The outstanding
principal balance and all accrued interest on this obligation was
paid in full by Mr. Lopez in March, 1992.
During 1992, Mr. Lopez borrowed $31,602 from SKRI. Of this
amount, $11,602 was repaid by Mr. Lopez and the remaining $20,000
was repaid by WSC, all in January, 1993. Upon payment of the
$20,000 by WSC, Mr. Lopez executed a note in the amount of $20,000
payable to WSC due October 16, 1993, and bearing interest at the
rate of 6.5% per annum. At December 31, 1993, $15,000 remained
unpaid along with $1,300 unpaid interest. In February, 1994, WSC
received a principal payment of $7,500. At December 31, 1995,
there remained a balance due in the amount of $10,062.01, including
interest. The balance of this note was extended to June 30, 1996.
In November, 1995, Mr. Lopez loaned $30,000 to SKRI. This
note bears interest at the rate of 9% per annum and matures March
31, 1996.
On December 28, 1995, Mr. Lopez borrowed $15,000 from WSC.
This unsecured note bears interest at the rate of 9% per annum and
matures March 31, 1996.
In connection with the Restructuring, Manuel Lopez (along with
his wife, Deborah), and Margaret Peck each purchased 10% of the
securities sold in the Offering. Also in connection with the
Restructuring, Manuel Lopez and his wife personally guaranteed
$1,000,000 of the Loan and, pursuant to the terms of a voting
trust, Mr. Lopez has the sole right to vote the shares of SKRI
owned by WSC for a period of at least ten years. As compensation
for personally guaranteeing the Loan, Mr. Lopez and his wife
receive $1,000 per month for so long as the guarantee is in
effect.
In addition, in April, 1992, SKRI granted to Mr. Lopez and his wife
an option to purchase 3,000 shares of Class B Common Stock for a
period of ten years at a price of $140 per share.
In March, 1992, SKI paid SKRMI $75,000 as a cash bonus to be
paid to Mr. Lopez. This Bonus was granted to Mr. Lopez by SKRMI in
1990 and was ratified by SKI in 1991, and was originally to be paid
on July 5, 1990.
On April 5, 1991, SKP entered into a lease agreement with Wind
River Ventures ("Wind River"), a corporation owned and controlled
by James M. Peck, a director and employee of WSC, providing for the
lease of property later owned by SKRI to Wind River, for the
purpose of conducting a miniature golf course business (the
"Business") on such property. The initial term of the lease is
from April 1, 1991 through March 31, 1997. Subject to certain
conditions, Wind River has the option of extending the lease for up
to an additional nine years. The lease provides for the payment of
rent to SKRI equal to a specified percentage of the gross revenues
of the Business, starting at 2% for the first three years, 3% for
the fourth year, 4% for the fifth year, 5% for the sixth year, 8%
for years seven and eight, 10% for the ninth year, 12% for the
tenth year, and 15% for years 11 through 15. In addition, the
lease provides for the payment to SKRI of an additional 3% of gross
revenues to partially defray United States Forest Service fees.
On March 10, 1992, WSC granted Mr. Lopez a bonus of $100,000
in recognition of his efforts in successfully completing the
Restructuring. The bonus is payable in two increments, $10,000,
which was paid in 1992 and $90,000 in the future, if and when WSC
is in a position to pay him such amount in a lump sum. The unpaid
portions of the bonus will not accrue interest.
Mr. Lopez is a cosigner on the $600,000 line of credit of SKRI
at Jackson State Bank. As such, he is personally liable for the
outstanding amount of such line of credit. As of March 15, 1996,
the outstanding principal amount of such line of credit was
$600,000. During the past several years, Messrs. Clark and Lopez
have each been personally liable for certain of SKI's borrowings.
Mr. Lopez has also personally guaranteed a construction loan
pertaining to the construction of two condominiums by SKRI.
In March 1993, additional shares of Class A Common Stock in
SKRI were offered for sale to the investors in SKRI at $140.00 per
share. Mr. Lopez and Margaret Peck each purchased 135 shares. A
total of 1,350 shares were sold at $140.00 per share for a total of
$189,000.00, in this offering.
In 1992, the shareholders of SKRI formed a new corporation,
Snow King Resort Center, Inc. ("SKRC"), to lease and operate the
new skating rink being built by the town of Jackson on land leased
by SKRI. WSC owns 49.0% of the outstanding common equity of SKRC.
Also, see auditor's Notes number 7 and 8.
In 1992, the shareholders of SKRI, other than WSC, formed a
new limited liability company, SK Land Limited Liability Company
(SKLLC), to acquire and develop approximately five acres of land
adjacent to the Hotel (the "Project"). SKLLC has agreed to grant
an option to SKRI to acquire the Project at SKLLC's cost. WSC
declined to participate in the Project.
<TABLE>
<S> <C>
Item 13. Exhibits.
(a) Exhibits:
The following exhibits are filed herewith or incorporated by
reference to previously filed documents:
(3) Articles of Incorporation and Bylaws (A)
(4) Instruments defining the rights of
security holders, including indentures (B)
(9) Voting trust agreement (C)
(10) Material contracts (D)
(11) Statement re: computation of per share earnings (E)
(13) Annual or quarterly reports, Form 10-Q None
(16) Letter on change in Certifying Accountant None
(18) Letter re: change in accounting principles None
(19) Previously unfiled documents None
(22) Subsidiaries of the Registrant (F)
(23) Published report regarding matters
submitted to vote None
(24) Consents of experts and counsel None
(25) Power of Attorney None
(28) Additional exhibits (G)
(29) Information from reports furnished to
State Insurance authorities None
_______________
</TABLE>
(A) Filed as Exhibits 90.3.1 and 90.3.2 to the Registrant's
Annual Report on From 10-K for the year ended December 31,
1990, and hereby incorporated by reference thereto.
(B) A copy of the form of Convertible Subordinated Debentures
of Snow King Resort, Inc. was filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K, dated March 13, 1992,
and is hereby incorporated by reference thereto. Copies of
the following documents were filed as exhibits to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991, and are hereby incorporated by
reference thereto.
Exhibit
91.4.1
Secured Promissory Note of Snow King
Resort, Inc., dated March 13, 1992,
payable to Orix USA Corporation
91.4.2 Loan agreement, dated March 11, 1992, by
and between Snow King Resort, Inc. and
Orix USA Corporation
91.4.3 Mortgage, Security Agreement, Assignment
of Leases and Rents and Fixture Filing,
dated March 13, 1992, by Snow King Resort,
Inc. to Orix USA Corporation
91.4.4 Guaranty of Manuel B. Lopez and Deborah W.
Lopez, dated March 13, 1992
91.4.5 Assignment of Leases and Rents, dated
March 13, 1992, by and between Snow King
Resort, Inc. and Orix USA Corporation
91.4.6 Assignment Agreement (Interest Rate Cap
Agreement) Industrial Bank of Japan, dated
March 13, 1992, by and between Snow King
Resort, Inc. and Orix USA Corporation
91.4.7 Assignment of Accounts, Income and Receipts
and Security Agreement, dated March 13, 1992,
by and between Snow King Resort, Inc. and
Orix USA Corporation
91.4.8 Agreement with Respect to Assignment of
Interest - Forest Service Permits, dated
March 12, 1992, by and between Snow King
Resort, Inc. and Orix USA Corporation
91.4x Assignment in Trust - Forest Service Permit,
dated March 12, 1992, by and between Snow
King Resort, Inc. and Orix USA Corporation
91.4.10 Assignment, Subordination, and Attornment
Agreement (Resort Operating Agreement),
dated March 13, 1992, by and among Orix USA
Corporation, Snow King Resort, Inc., and
Snow King Resort Management, Inc.
91.4.11 Assignment of Town Leases, dated March 13,
1992, by and between Snow King Resort, Inc.
and Orix USA Corporation
91.4.12 Unsecured Environmental Indemnity, dated
March 5, 1992, by Snow King Resort, Inc.
in favor of Orix USA Corporation
91.4.13 Letter Agreement, dated March 11, 1992, by
and among Orix USA Corporation, Snow King
Resort, Inc., and The Industrial Bank of
Japan, Limited
91.4.14 Interest Rate and Currency Exchange Agree-
ment, dated March 11, 1992, by and between
Snow King Resort, Inc. and the Industrial
Bank of Japan Limited
91.4.15 Collateral Assignment, dated March 12,
1992, by Snow King Resort, Inc. to Orix
USA Corporation
(C) A copy of the Voting Trust Agreement, dated March 12, 1992, by
and among the Registrant, Snow King, Incorporated, and Manuel
B. Lopez, as Trustee, was filed as Exhibit 91.9.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991, and is hereby incorporated by reference
thereto.
(D) The following material contracts are incorporated herein by
reference thereto.
Exhibit
- Lease Agreement, dated August 9, 1990, by
between Snow King, Incorporated and Telerent
Leasing Corporation (filed as Exhibit 90.10.3
to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990, and
hereby incorporated by reference thereto)
- Snow King Resort Operating Agreement, dated
March 12, 1992, by and between Snow King Resort,
Inc. and Snow King Resort Management, Inc. (filed
as Exhibit 91.10.1 to the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1991, and hereby incorporated by reference thereto).
- Purchase and Sale Agreement, dated December 31,
1991, by and between Jackson Hole-AHRC Corporation,
Americana Hotels and Realty Corporation, Snow
King, Incorporated, Snow King Partnership, Snow
King Resort, Inc., the Registrant and Snow King
Resort Management, Inc. (filed as Exhibit 2.1
to the Registrant's Current Report on Form 8-K,
dated March 13, 1992, and hereby incorporated
by reference thereto)
- Purchase and Sale Agreement of SKI Leasehold
Interest and Assets, dated December 31, 1991,
by and between Snow King Resort, Inc., Snow
King, Incorporated, and Snow King Resort
Management, Inc. (filed as Exhibit 2.2 to the
Registrant's Current Report on Form 8-K, dated
March 13, 1992 and hereby incorporated by
reference thereto)
- Purchase and Sale Agreement of WSC
Partnership Interest, dated December 31, 1991, by
and between Snow King Resort, Inc., the Registrant,
and Snow King Resort Management, Inc. (filed
as Exhibit 2.3 to the Registrant's Current
Report on Form 8-K, dated March 13, 1992, and
hereby incorporated by reference thereto).
- Amendment No. 1 to Agreement of Lease, dated
December 31, 1991, by and between Jackson
Hole-AHRC Corporation and Snow King,
Incorporated (filed as Exhibit 91.10.2 to
the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991, and
hereby incorporated by reference thereto).
- Amendment No. 1 to Mortgage, dated December 31,
1991, by and between Snow King Partnership and
Americana Hotels and Realty Corporation (filed
as Exhibit 91.10.3 to the Registrant's Annual
Report on Form 10-K for the year ended
December 31, 1991, and hereby incorporated
by reference thereto).
- Amendment No. 1 to Collateral Assignment,
dated December 31, 1991, by and between the
Registrant and Americana Hotels and Realty
Corporation (filed as Exhibit 91.10.4 to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991, and hereby
incorporated by reference thereto).
- Allonge to Secured Promissory Note, dated
December 1991, by and between the Registrant
and Americana Hotels and Realty Corporation
(filed as Exhibit 91.10.5 to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1991, and hereby incorporated
by reference thereto).
(E) Not required, since information is ascertainable from the
Financial Statements.
(F) Filed herewith as Exhibit 92.22.1
_______________
(b) No reports on Form 8-K have been filed by the
registrant during the fourth quarter of the year
ended December 31, 1995.
Exhibit 92.22.1
SUBSIDIARIES OF WESTERN STANDARD CORPORATION
Name
State of Incorporation
Western Recreation Corporation Wyoming
Snow King Resort, Inc. Wyoming
dba Snow King Resort
(G) Exhibits 93.8.1 and 94.9.1 through 94.9.10 were attached to
filed with Form 10KSB for the year 1994. They are
incorporated herein by reference thereto.
Exhibits 94.4.11 and 94.4.12 were inadvertently not filed
with Form 10KSB for the year 1994, but are filed herewith.
Exhibit
93.8.1
Modification to loan agreement - August 30, 1993.
94.9.1 Second modification to loan agreement.
94.9.2 Modification of Secured Promissory Note.
94.9.3 Modification of Assignment of Town Lease.
94.9.4 Modification of Mortgage, Security Agreement,
Assignment of Leases and Rents, and Fixture
Filing.
94.9.5 Consent of Guarantor
94.9.6 Consents.
94.9.7 Letter from Hanna and Van Atta to Teton Land
Title Company.
94.9.8 Assignment of Ice Skating Rink Lease
94.9.9 Agreement Regarding Collateral Assignments of
Ice Skating Rink Lease.
94.9.10 Estoppel Certificates.
94.4.11 Lease Agreement - Ski Shelter, Ski Lift and
Mountain Tract
94.4.12 Lease Agreement - Ice Rink Tract
[/TABLE]
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WESTERN STANDARD CORPORATION
Date: March 29, 1996 By:/s/ Stanford E. Clark
Stanford E. Clark, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date: March 29, 1996 /s/ Stanford E. Clark
Stanford E. Clark
President, Treasurer (Principal
Executive, Financial and
Accounting Officer) Comptroller
and Director
Date: March 29, 1996 /s/ Manuel B. Lopez
Manuel B. Lopez
Vice President and Director
Date: March 29, 1996 /s/ Richard G. Roylance
Richard G. Roylance
Secretary and Director
Date: NOT AVAILABLE - OUT OF STATE
James M. Peck
Director
EXHIBIT 94.4.11
LEASE AGREEMENT
(Commercial)
SKI SHELTER, SKI LIFT AND MOUNTAIN TRACT
THIS LEASE AGREEMENT is made and entered into to be effective
as of the 22nd day of April, 1994, by and between the TOWN OF
JACKSON, a Municipal Corporation of the State of Wyoming, of P.O.
Box 1687, Jackson, Wyoming, 83001 ("Landlord"), and SNOW KING
RESORT, INC., a Wyoming Corporation, of P.O. Box SKI, Jackson,
Wyoming, 83001 ("Tenant") (the "Lease").
WITNESSETH:
WHEREAS, Landlord is the owner of those certain parcels of
real property and improvements described generally as the Ski
Shelter Tract, the Ski Lift Tract and the Mountain Tract, all as
more particularly described as follows: See Exhibits "H", "I" and
"J" attached hereto and by this reference made a part hereof (the
"Leased Premises"), reserving unto the Landlord the right to
exclude the cemetery access roadway which shall be for mutual use
by Landlord and Tenant; and
WHEREAS, the parties hereto desire to enter into a written
lease agreement providing the terms, covenants and conditions for
the occupancy of the Leased Premises by Tenant; and
WHEREAS, the parties agree that any and all prior leases
between the parties concerning this property are revoked and are
superseded by this document.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, undertakings and benefits to the parties, the parties
agree as follows:
1. Lease of Leased Premises. Landlord agrees to lease to
Tenant and Tenant agrees to lease from Landlord the Leased Premised
according to the terms and conditions of this Lease.
2. Term of Lease. The term of the lease shall be for a term
of thirty (30) years, commencing on the 1st day of June, 1993, and
terminating on the 31st day of May, 2023, unless sooner terminated
or extended under the provisions of the Lease.
3. Rent and Payment. Tenant covenants and agrees to pay
Landlord, during the term of the Lease, as follows:
(a) Base Rent. The base rent for the Lease Agreement
shall be Ten Thousand Eight Hundred Dollars
($10,800.00) per annum payable in twelve (12)
equal monthly installments on the first day of
each month of each year of the term hereof.
(b) Supplemental Rent. Based on Gross Revenue in
accordance with the schedule attached hereto as
Exhibit "K" and by this reference made a part
hereof. Gross Revenue shall include not only
those revenues listed on Exhibit "K" but any and
all revenues derived from the facilities or use of
facilities constructed or based upon the leased
premises after deducting therefrom only sales and
use or like taxes. Tenant shall keep accurate and
complete accounting records kept in accordance
with applicable accounting standards. Tenant
shall provide to Landlord an accounting for all
Gross Revenues within ninety (90) days of the
close of each calendar year during the term of
this Lease or within ninety (90) days following
the termination of this Lease, whichever date is
earlier. At the time of delivery of the annual
accounting, Tenant shall also tender any and all
supplemental rent due and owing as evidenced by
the accounting provided. Landlord shall be
entitled to, at Landlord's expense, have conducted
or conduct an audit of Tenant's books and records
to determine the accuracy of the accounting
provided by Tenant. In the event such audit shall
reveal additional supplemental rent due, Tenant
shall immediately pay such supplemental rent but
Tenant shall have the option of requesting, at
Tenant's expense, an independent third party audit
to confirm the amount due. In the event the audit
shall reveal supplemental rent underpayment of
greater than five percent (5%) of the total
supplemental rent paid for that year, all audits
shall be conducted at the expense of Tenant. This
requirement for payment of supplemental rent shall
survive the termination of the Lease for the
purposes of collecting supplemental rent due and
owing through the date of termination of this
Lease.
(c) Additional Rent. In addition to the rent required
of Tenant under subparagraphs (a) and (b), the
Tenant shall be required to pay the principal sum
of One Hundred and Fifty Three Thousand Two
Hundred and Thirty Three Dollars ($153,233.00)
plus interest on said principal amount at a base
rate of eight and one half percent (8 1/2%) per
annum, based upon an amortization schedule
attached hereto as Exhibit "L", which monthly
payments shall commence November 1, 1993, and
shall continue on a monthly basis for the
following 120 months. Tenant has a right of
prepayment on this principal balance at any time
without penalty.
In addition to the rent required of Tenant, Tenant
shall be jointly and severally responsible with
Snow King Resort Center, Inc. (the Tenant for the
Ice Rink premises) for paying, in regular monthly
installments, 1/120th monthly, of the total amount
of additional rent for the Ice Skating Rink.
The additional rental payments due under this
Lease Agreement shall terminate with the 120th
monthly rental installment and thereafter the
rental installments shall revert to those rentals
reserved in paragraphs 33(a) and (b) of this
Lease.
Rent payments shall commence in accordance with the foregoing
schedule and shall continue each month thereafter, and shall be
made payable to Landlord as follows: Town of Jackson, Wyoming,
P.O. Box 1687, Jackson, Wyoming, 83001 until directed otherwise.
4. Late Rent Charges. In the event the monthly rent payments
are not paid within ten (10) days of the due date, a late charge of
two percent (2%) of the delinquent payment shall be paid by
Tenant.
Additionally, said late rent payments shall automatically accrue
interest at an interest rate of eighteen percent (18%) from the due
date, which accrual of interest shall continue until the rent
payment, together with accrued interest, is paid. Such interest
shall begin to accrue automatically on all delinquent rent payments
(not paid within the ten (10) day grace period) and shall be
payable on demand without notice to Tenant.
5. Use of The Leased Premises. The use of the Leased
Premises shall be restricted to Ski Area, ski shelter, restroom,
meeting and food and beverage services amenities and uses only.
Approval of additional uses will not be unreasonably withheld.
Furthermore, the Leased Premises shall be used and occupied by
Tenant in a careful, safe and proper manner and Tenant shall pay on
demand for any damage to the Leased Premises caused by the misuse
of same by it, its agents, employees, licensees and invitees.
Tenant shall use the Lease Premises only for purposes not
prohibited by the laws, regulations, covenants and ordinances of
the United States, the State of Wyoming, Teton County and the Town
of Jackson. Tenant shall not use or keep any substance or material
in or about the Leased Premises which may vitiate or endanger the
validity of the insurance on the Leased Premises or increase the
hazard of the risk.
Landlord agrees that Tenant may allow the use of the parking
area for float trip pickups and drop offs by float trip businesses,
hereinafter referred to as "operators."
The Tenant agrees to the following conditions for all float
trip pick ups and drop offs:
a. Landlord shall approve of the number of operators
allowed each season and the number of times each
day any one operator may use the parking lot.
b. Each operator shall be assigned a specific site in
the parking lot for all of its pick ups and drop
offs, each site to be approved by Landlord.
c. River trip operators' buses, vans or other
vehicles, picking up river trip clients or
returning them from river trips, will be present
in the parking area only for the time necessary to
gather or disembark those clients, and will be
returned to the operator's private staging and
storage area between river trips, or when
otherwise not actively engaged in meeting,
loading, or unloading, river trip clients. River
trip operators and Tenant (Snow King, Inc.)
recognize that the Landlord, Town of Jackson,
places high priority on the availability of public
parking, and has the authority, and at all times
may institute policies with operators, drivers
and/or Tenant enforcing courtesy and consideration
in their conduct toward parking lot users,
maintaining availability of vacant parking spaces,
ensuring access into and out of parking areas and
requiring no undue blockage of either spaces or
vehicles.
d. River trip buses will occupy space in the assigned
parking area for no more than 20 minutes for any
river trip departure or return.
Tenant shall have the right, so long as Tenant has a valid
license from the Town of Jackson, to sell alcoholic and/or malt
beverages in specific locations from within and upon the Leased
Premises in accordance with all conditions which apply to any
license, adherence with applicable laws of the State of Wyoming and
ordinances of the Town of Jackson as they may exist from time to
time. Tenant is authorized to sublease the premises pursuant to
Section 13, below.
There will be the following restrictions associated with the
dispensing of liquor:
a. The licensee will not be allowed to sell package
liquor to the public for off premises consumption.
b. During standard operating functions, which would
be ice skating, and operation as a ski shelter,
the applicant will be allowed to sell beer and
wine only.
c. Full liquor service be allowed at banquets,
parties, conventions, or special events only.
d. The licensee will not operate as a bar or lounge
at any time.
e. Applicant and Council agree to attach the above
conditions on this lease for the reason that this
facility will allow minors in both the ski shelter
area and the ice rink area.
6. Acceptance of Leased Premises. Taking possession of the
Leased Premises by Tenant shall be conclusive evidence as against
the Tenant that such premises are in good and satisfactory
condition when possession of same was taken. Tenant has inspected
the Leased Premises and accepts the same in "as is" condition
subject only to completion of construction and "punch list" items,
if any.
7. Subordinate to Mortgage. This Lease shall be and is
hereby made subordinate to any mortgages or other security
instruments which may now or hereafter encumber the Leased
Premises, and to all renewals, modifications, consolidations,
replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination need be
required by any mortgagee or security holder. Tenant shall, at
Landlord's request, promptly execute any appropriate estoppel
certificate, subordination agreement or instrument that Landlord
may reasonably request in this regard.
8. Taxes and Assessments. Landlord shall pay all real estate
taxes, real estate assessments, and any and all other governmental
charges, assessments or taxes payable in respect to the Leased
Premises or any part thereof during the term of this Lease. Tenant
shall be liable for taxes levied against its personal property,
trade fixtures and other property placed by Tenant in, on or about
the Leased Premises.
9. Utilities. Tenant shall pay for the use of all the water,
sewage, electrical, gas, telephone, cable television, garbage and
other utility services to or used by and in connection with the
Leased Premises. Tenant shall establish and maintain all utilities
accounts in its name.
10. Repair and Maintenance. Tenant acknowledges that the
Leased Premises are in good repair and working order. Tenant
shall, at its sole expense, except for all Warranty work for new
construction or equipment, which shall be assigned or accrue to the
benefit of Tenant, maintain the interior and exterior of the Leased
Premises (including, without limitation, all electrical, plumbing
and mechanical systems) in as good order and repair as it was at
the date of the commencement of this Lease, reasonable wear and
tear excepted. Tenant shall not knowingly commit or willingly
permit to be committed any act or thing contrary to the rules and
regulations of any federal, state, municipal or quasi-governmental
authority. If the Landlord determines, in its sole discretion,
that the facility is not being properly maintained, it shall give
notice to Tenant in writing to repair and/or maintain the
premises.
The tenant shall have 48 hours in which to correct any minor
deficiencies (small repairs or cleaning inadequacies) and thirty
(30) days for larger repairs. If the repairs and maintenance are
not performed to Landlord's satisfaction within the required time
period, Landlord may employ another person or entity to repair
and/or maintain all or any part of the premises and the Tenant
shall be responsible for the payment of all expenses and costs
related to said repair and maintenance, which if not paid, shall be
deemed a default pursuant to Section 19, below.
Landlord shall maintain at its expense, the parking surface of
the parking lots when it determines, in its sole discretion, that
such lot surfaces need to be repaired or replaced.
Tenant shall permit Landlord, or its representatives, to
inspect upon reasonable notice the Leased Premises and to make
improvements to the Leased Premises as Landlord may now or
hereafter deem to be necessary and/or appropriate for the Leased
Premises. All such improvements shall be done, so far as
practicable, to avoid interference with Tenant's occupancy and use
of the Leased Premises, provided that Tenant shall not be entitled
to compensation for unavoidable interference with its occupancy and
use.
11. Alterations. Landlord shall have the right at any time to
enter the Leased Premises to make such additions, repairs or
alterations as it may deem necessary or property for the safety,
improvement or preservation of the Leased Premises.
Tenant shall make no alterations in or additions to the Leased
Premises without first obtaining the written consent of the
Landlord, and all additions or improvements made by Tenant shall be
deemed a part of the Leased Premises and permanent structure
thereon and shall remain upon and be surrendered with the Leased
Premises at the termination of this Lease by lapse of time or
otherwise.
12. Insurance. Landlord shall maintain fire and extended
"all-risk" coverage insurance upon the Leased Premises, which shall
include the Ski Shelter facility and the Ice Rink facility. Such
insurance shall be maintained with an insurance company authorized
to do business in Wyoming in an amount not less than Three Million
Five Hundred Thousand Dollars ($3,500,000.00) during the term of
the Lease for both premises.
Tenant shall maintain at its expense fire and extended
coverage insurance on all of its personal property, including trade
fixtures and on all additions and improvements made by Tenant not
required to be insured by Landlord.
Tenant shall, at Tenant's expense, maintain a policy or
policies of comprehensive general liability insurance with the
premiums thereon fully paid on or before due date, issued by and
binding upon an insurance company with a Best Rating Guide A plus
Class 15 Rating, such insurance to afford minimum protection of not
less than a single limit of One Million Dollars ($1,000,000.00) in
respect to personal injury and/or death to one or more persons and
for property damage. The insurance policy shall name Landlord as
an additional insured and shall cover all risks incident to
Tenant's use of the Leased Premises and business in connection
therewith.
Tenant shall furnish Landlord with certificates and copies of
all insurance policies to be maintained by Tenant with evidence of
payment of the premiums thereon. All such insurance policies shall
contain a clause or endorsement to the effect that they may not be
terminated or materially amended during the term of this Lease
except after fifteen (15) days written notice thereof to Landlord.
13. Assignment, Sublease and Mortgage by Tenant. Tenant shall
not assign or create a security interest in, pledge or encumber
this Lease or the Leased Premises, in whole or in part, or sublet
the whole or permit the use of the whole or any part thereof by any
sub-tenant, licensee or concessionaire, unless Tenant first obtains
Landlord's written consent, which consent will not be unreasonably
withheld. In the event of any such assignment, subletting,
licensing or granting of a concession, Tenant shall never-the-less
remain liable for the performance of all the terms, conditions and
covenants of this Lease (including, without limitation, the
covenant to pay rent).
Tenant is authorized to sublease specific portions of the
premises to Snow King Resort Center, Inc., the tenant of the Ice
Rink Building and operation adjacent to the premises, with specific
authorization to sell alcoholic and/or malt beverages. Any such
sublease shall require approval of the Landlord in writing and
shall require that the sublessee have a valid liquor license and
that all operations of the sublessees shall be strictly in
accordance with all applicable rules, regulations, ordinances, and
statutes of the Town of Jackson and the State of Wyoming as they
may exist from time to time.
14. Required Subleases. Notwithstanding the provisions of
paragraph 15 and in recognition of contributions made by the public
and public entities towards the construction of the ski shelter
contemplated by this Lease Agreement, Tenant shall be required as
a condition of this Lease to offer subleases which have been
approved in writing by Landlord as follows:
(a) Girl Scouts. Tenant shall offer a sublease to the
Girl Scouts of America, Teton County organization,
for utilization of that portion of the Ski Shelter
constructed upon the leased premises designated
"Girl Scout Area" on the construction or schematic
plans for the Ski Shelter. The lease shall be for
such amount as is designed to allow Tenant to
recoup only its minimal operating costs such as
pro rata allocation of utilities, insurance,
costs for the operation of the building. The
sublease may provide for utilization of the
premises subject to the sublease by Tenant at
periods when that portion of the premises is not
utilized by Subtenant and the rental rate
established shall recognize that right.
(b) Jackson Hole Ski Club. For the purpose of
maintaining and providing an opportunity to
improve, the utilization of the Snow King Ski Area
for the benefit of Landlord and Tenant, Tenant
shall offer a sub-lease to the Jackson Hole Ski
Club, or its successor organization, for the
utilization of that portion of the Ski Shelter
constructed upon the Lease Premises designated
"Jackson Hole Ski Club Area" on the construction
or schematic plans for the Ski Shelter. The lease
shall be renewable annually so long as the general
purpose of utilization of the Snow King Ski Area
for the benefit of the Town of Jackson is
maintained. The lease shall be for such amount as
is designated to allow Tenant to re-coup its minimal
operating costs such as prorata allocation of
utilities, insurance, maintenance, janitorial
duties, snow removal and similar costs, as well as
re-couping the amount paid or to be paid by Tenant
to Landlord for interior finish of the Ski Club
Area. Tenant may impose reasonable restrictions
upon sub-lessee with respect to parking, building,
access and building security as Tenant deems
appropriate. The sub-lease may be nonexclusive as
to portions of the Ski Club Area and may provide
for utilization of the premises subject to the
sub-lease by Tenant, or others when that portion
of the premises is not being utilized on a full-
time basis by sub-lessee. The Jackson Hole Ski
Club shall have first priority in all scheduling
for this leased space.
Other than as stated above, the Tenant shall not sublease any
portion of the property, whether the interior or the exterior of
the property, including the erection of temporary structures,
without the written approval of the Landlord, which approval shall
not be unreasonably withheld. Any approved sublessees must have a
valid liquor license prior to the sale of any alcoholic or malt
beverage.
15. Signs. Tenant shall have the right to erect and maintain
signs in, on or about the Leased Premises, provided, that same
shall comply with governing laws, regulations, covenants and
ordinances of the United States, State of Wyoming, County of Teton
and the Town of Jackson. All such signs must, however, be approved
in advance in writing by the Landlord.
16. Tenant's Covenants. Tenant covenants that it shall:
(a) Comply with all laws, orders, regulations, rules
ordinances and covenants of any state or federal
statute or local ordinance or regulation
applicable to Tenant and/or its use of the Leased
Premises.
(b) Give to Landlord prompt written notice of any
accident, fire or damage occurring on or to the
Leased Premises.
(c) Keep the Leased Premises sufficiently heated to
prevent freezing of pipes, waterlines and
fixtures.
(d) Keep the Leased Premises orderly, clean, sanitary
and free from objectionable odors and insects,
vermin, pets, pests and nuisances.
(e) Do all things reasonably possible to prevent
filing of any mechanics' or other liens against
the Leased Premises or any part thereof by reason
of work, labor, services or materials furnished or
claimed to have been furnished to Tenant, or
anyone holding the Leased Premises or any part
thereof, through or under Tenant. If any such
lien shall be filed against the Leased Premises,
Tenant shall either cause the same to be
discharged of record within twenty (20) days after
the date of the filing of same, or if the Tenant,
in Tenant's discretion and in good faith,
determines the lien should be contested, Tenant
shall furnish such security as may be necessary or
required to prevent any foreclosure against
Tenant's or Landlord's interest in the Leased
Premises. If Tenant shall fail to discharge such
lien within such period, or fail to furnish
adequate security, then in addition to any other
right of remedy of Landlord, Landlord may but
shall not be obligated to discharge the lien
either by paying the amount claimed to be due or
by procuring the discharge of such lien by
obtaining security or in any other manner
available to Landlord. Nothing herein contained
shall imply any consent or agreement on the part
of Landlord to subject Landlord's interest in the
Leased Premises to liability under any mechanics'
or other lien law.
(f) Repay Landlord, as additional rent, on demand, all
sums disbursed or deposited by Landlord pursuant
to the provisions of this section, including
Landlord's costs, expenses and reasonable
attorneys' fees incurred by Landlord in connection
therewith.
(g) Permit no one other than employees, agents,
servants and business invitees to remain in or
loiter upon the Leased Premises.
(h) Comply with all reasonable rules and regulations
that may be established, from time to time, by
Landlord. Tenant covenants that it shall not do
or suffer to be done anything objectionable to the
fire insurance companies, whereby the fire
insurance or any other insurance now in force or
hereafter to be placed on the Leased Premises or
any part thereof shall become void or suspended,
or be rated as a more hazardous risk than at the
date when Tenant receives possession hereunder.
In the event of breach of this covenant, in
addition to all other remedies of Landlord, Tenant
shall pay to Landlord as additional rent any
increase in insurance premiums.
(i) The Landlord has the authority to prohibit parking
that interferes with safe and appropriate use of
the Center and retains the right to sign and
enforce parking regulations for public safety,
access and appropriate use. The Tenant is
required to direct and control all public parking
to conform to the regulations and requirements of
the Landlord.
17. Landlord's Covenants of Quiet Enjoyment. The Landlord
covenants that the Tenant, upon paying the rentals and performing
the covenants upon its part to be performed herein, shall
peacefully and quietly have, hold and enjoy the Leased Premises
during the term hereof.
18. Damage or Destruction to Lease Premises. If the Leased
Premises shall be damaged by fire, the elements, unavoidable
accident or other casualty, without the fault or negligence of
Tenant, or Tenant's servants, employees, agents, visitors,
licensees, invitees or sub-tenants, and the Leased Premises are not
thereby rendered untenantable in whole or in part, Landlord shall,
at its expense, cause such damage to be repaired, and the rent
shall not be abated. If, by reason of such occurrence, the Leased
Premises shall be rendered untenantable only in part, Landlord
shall promptly cause the damage to be repaired and the rent, during
such period of repair, shall be abated proportionately to the
portion of the Leased Premises rendered untenantable. If, by
reason of such occurrence, the Leased Premises shall be rendered
wholly untenantable, Landlord shall cause such damage to be
repaired and the rent, during such period of repair, shall be
abated in whole. There shall be no extension of the term of this
Lease by reason of such abatement. Notwithstanding the foregoing
provisions, if the Leased Premises shall be rendered wholly
untenantable by reason of such occurrence and the Leased Premises
cannot be repaired within six (6) months from the date such damage
occurs, Landlord or Tenant shall, at their option, have the right
to declare the balance of the term of this Lease to be null and
void.
If any such damage or destruction occurring to the Leased
Premises, whether partial or complete, shall occur as the result of
the fault or any negligence of Tenant or Tenant's servants,
employees, agents, business invitees, licensees or sub-tenants,
there shall be no apportionment or abatement of rent during the
term of this Lease.
19. Default by Tenant. The Tenant agrees to observe and
perform the conditions and covenants set forth in this Lease, and
further agrees that if default be made in the payment of any rent
and such payment default continues for ten (10) days following the
due date for such payment, or if Tenant shall fail to observe or
perform any of the other conditions or covenants and such other
default shall continue for more than thirty (30) days after written
notice of such default, then and in that event, and as often as the
same may happen, it shall be lawful for Landlord, at its election,
with or without previous notice, to terminate this Lease or to
re-enter and repossess itself of the Leased Premises without
termination, with or without legal proceeding, using such force as
may be necessary, and to remove therefrom any personal property
belonging to Tenant without prejudice to any claim for rent or for
breach of the covenants hereof, or without being guilty of any
manner of trespass or forcible entry and detainer. The foregoing
described rights shall be non-exclusive and shall be in addition to
any and all of the rights and remedies Landlord may have pursuant
to governing law.
20. Payment After Termination. No payments of money by Tenant
to Landlord after the termination of this Lease, in any manner or
after the giving of any notice by Landlord to Tenant shall
reinstate, continue or extend the term of this Lease or affect any
notice given to Tenant prior to the payment of such money.
21. Abandonment of Leased Premises. If Tenant shall abandon
or vacate the Leased Premises before the end of the term of this
Lease, or if Landlord re-enters the Leased Premises without
termination, the Landlord may, at its option and without notice to
Tenant, enter the Leased Premises, and re-let the same, or any part
thereof, as it may see fit, without thereby voiding or terminating
this Lease, and, for the purpose of such re-letting, Landlord is
authorized to make any repairs, changes, alterations or additions
in or to the Leased Premises, as may, in the sole discretion of
Landlord, be necessary or desirable for the purpose of such
re-letting, and if a sufficient sum shall not be realized from such
re-letting each month to equal the monthly rental under the
provisions of this Lease, then Tenant agrees to pay such
deficiency.
22. Indemnification. Tenant shall indemnify Landlord and save
it harmless from and against any and all claims, actions, damages,
liability and expense in connection with loss of life, personal
injury or damage to property occurring in or about, or arising out
of or from the Leased Premises and adjacent sidewalks and loading
areas, or the occupancy or use of the Leased Premises by Tenant or
its sub-tenants, or occasioned wholly or in part by any act or
omission of Tenant, its agents, licensees, business invitees,
concessionaires, contractors, customers, employees or sub-tenants.
In case Landlord shall be made a party to any litigation
commenced by or against Tenant, its agents, licensees, business
invitees, concessionaires, contractors, customers, employees or
sub-tenants, Tenant shall protect and hold Landlord harmless and
shall pay all costs, expenses and reasonable attorneys' fees
incurred or paid by Landlord in connection with such litigation.
23. Attorneys' Fees. In the event either party shall find it
necessary to obtain the services of any attorney to enforce any of
the covenants and conditions of this Lease, the prevailing party
shall be entitled to reimbursement for all costs and expenses,
including reasonable attorneys' fees, whether or not litigation is
commenced.
24. Trade Fixtures. Trade fixtures installed by Tenant in the
Leased Premises shall remain the property of the Tenant and shall
be removed at any time by it on or before the termination of this
Lease by lapse of time or otherwise. Any damage caused to the
Leased Premises that is the result of such removal shall be
repaired by Tenant at its expense. Any such trade fixtures not
removed at or prior to the termination shall become the property of
Landlord. Lighting fixtures, whether or not installed by Tenant,
shall not be removable at the expiration or earlier termination of
this lease, and shall become the sole property of Landlord.
25. Landlord's Access. Landlord and its agents, employees or
other representatives may enter the Leased Premises at any time for
the purpose of (a) inspecting the Leased Premises to ascertain
Tenant's compliance with the terms and conditions of this Lease,
(b) in order to make repairs, additions or alterations as the
Landlord deeds necessary, (c) to post notices of non-responsibility
under mechanics' lien law, (d) to exhibit the Leased Premises for
sale, lease or mortgage financing, or (e) for any other reasonable
purposes.
26. Notices. Any notices required or permitted to be given or
served by either party to the other shall be deemed to have been
duly given or served there if in writing and forwarded by certified
mail, postage prepaid, return receipt requested, to the respective
addresses set forth below. Such notices shall be deemed given upon
mailing of sale.
Tenant: Snow King Resort, Inc.
P.O. Box SKI
Jackson, Wyoming 83001
Landlord: Town of Jackson
P.O. Box 1687
Jackson, Wyoming 83001
27. Amendment or Modification. Tenant acknowledges and agrees
that it has not relied upon any statement, representation,
agreement or warranty, except such as are expressly stated herein,
and that no amendment or modification of this Lease shall be valid
or binding unless expressed in writing and executed by the parties
hereto in the same manner as the execution of this Lease.
28. Memorandum of Lease. The parties may execute a short-form
memorandum of this Lease in recordable form which may, at either
parties' option, be placed of record in the Teton County real
estate records.
29. No Partnership. No partnership or joint venture is
created by this Lease. The Landlord and Tenant shall be construed
to be that relationship of landlord and tenant only.
30. Miscellaneous. Time is of the essence.
No waiver of any breach of one or more of the conditions or
covenants in this Lease by Landlord shall be deemed to imply or
constitute a waiver of any succeeding or other breach hereunder.
This Lease and its provisions shall be construed and enforced
in accordance with and pursuant to governing Wyoming law.
The headings used in this Lease are for convenience only and
are not be used in its construction.
Whenever used, the singular shall include the plural, the
plural the singular and the use of any gender shall include all
genders.
If there is more than one person comprising the Tenant, the
covenants, agreements, undertakings and obligations hereunder shall
be the joint and several obligations of all such persons.
This Lease may be executed in multiple counterparts, each of
which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease to be effective as of the day and year first above written.
LANDLORD:
TOWN OF JACKSON, a Municipal
Corporation
By: /s/ Jeff L. Crabtree,
Mayor
ATTEST:
By: /s/ Roxanne, Town Clerk
TENANT:
SNOW KING RESORT, INC., a
Wyoming Corporation
By: /s/ Manuel Lopez,
President
ATTEST:
By: /s/ Creed Law, Secretary
EXHIBIT 94.4.12
LEASE AGREEMENT
(Commercial)
ICE RINK TRACT
THIS LEASE AGREEMENT is made and entered into to be effective
as of the 22nd day of April, 1994, by and between the TOWN of
JACKSON, a Municipal Corporation of the State of Wyoming, P.O. Box
1687, Jackson, Wyoming, 83001 ("Landlord"), and SNOW KING RESORT
CENTER, INC., a Wyoming Corporation, of P.O. Box SKI, Jackson,
Wyoming, 83001 ("Tenant")
WITNESSETH:
WHEREAS, Landlord is the owner of that certain parcel of real
property and improvements described generally as the Ice Rink
Tract, as more particularly described on Exhibit "A" attached
hereto and by this reference made a part hereof (the "Leased
Premises"), reserving unto the Landlord the right to exclude the
cemetery access roadway which shall be for mutual use by Landlord
and Tenant and Snow King Resort, Inc., as the "SKI Shelter Tenant;"
and
WHEREAS, the parties hereto desire to enter into a written
lease agreement providing the terms, covenants and conditions for
the occupancy of the Leased Premises by Tenant; and
WHEREAS, the parties agree that any other leases between the
parties concerning this property are revoked and are superseded by
this document.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, undertakings and benefits to the parties, the parties
agree as follows:
1. Lease of Leased Premises. Landlord agrees to lease to
Tenant and Tenant agrees to lease from Landlord the Leased
Premises, including that part of the improvements thereon outlined
in red on Exhibit "B" attached hereto, according to the terms and
conditions of this Lease.
2. Term of Lease. The term of the Lease shall be for a term
of thirty (30) years, commencing June 1, 1993 and terminating May
31, 2023 unless sooner terminated or extended under the provisions
of the Lease.
3. Rent and Payment. Tenant covenants and agrees to pay
Landlord, during the term of the Lease, as follows:
(a) Base Rent. Tenant shall pay on the first day of
each month commencing February 1, 1994, for five
monthly payments (through June 30, 1994), the sum
of Thirty Three Thousand Two Hundred and Fifty Six
Dollars ($33,256.00) each month.
Thereafter, Tenant shall pay on the first day of
each month commencing on July 1, 1994, a sum equal
to principal and interest payments required to
amortize and retire over a thirty (30) year period
a loan from Wyoming Farm Loan Board in an initial
principal amount not to exceed One Million Six
Hundred Sixty-Three Thousand Five Hundred Dollars
($1,664,500.00) with an interest rate of eight and
one-half percent (8 1/2%) per annum but not to exceed
Twelve Thousand Seven Hundred Ninety-One Dollars
($12,791.00) per month or such lesser amount as
shall be required from time to time to amortize
the loan obtained for the purpose of building the
indoor ice skating facility on the Ice Rink Tract
as described above. In the event the Town, in its
sole discretion, refinances this loan and obtains
a lower rate of interest, the Tenant shall be
allowed to have its rate of interest lowered to
the same.
Tenant shall have the right to pay the principal
balance on the loan from the Wyoming Farm Loan
Board (in the initial amount of One Million Six
Hundred and Sixty Three Thousand Five Hundred
Dollars ($1,663,500.00) as evidenced on the loan
amortization schedule attached hereto as Exhibit
"C", at any time during the term of this lease
without penalty of any kind. If Tenant exercises
this option of prepayment, the base rent shall be
reduced to One Hundred Dollars ($100.00) per
month, commencing the month after payment in full
has been made.
(b) Supplemental Rent. Based on Gross Revenue in
accordance with the schedule attached hereto as
Exhibit "D" and by this reference made a part
hereof. Gross Revenue shall include not only
those revenues listed on Exhibit "D" but any and
all revenues derived from the facilities or use of
facilities constructed or based upon the leased
premises after deducting therefrom only sales and
use or like taxes. Tenant shall keep accurate and
complete accounting records kept in accordance
with applicable accounting standards. Tenant
shall provide to Landlord an accounting for all
Gross Revenues within ninety (90) days of the
close of each calendar year during the term of
this Lease or within ninety (90) days following
the termination of this Lease, whichever date is
later. At the time of delivery of the annual
accounting, Tenant shall also tender any and all
supplemental rent due and owing as evidenced by
the accounting provided. Landlord shall be
entitled to, at Landlord's expense, have conducted
or conduct an audit of Tenant's books and records
to determine the accuracy of the accounting
provided by Tenant. In the event such audit shall
reveal additional supplemental rent due, Tenant
shall immediately pay such supplemental rent but
Tenant shall have the option of requesting, at
Tenant's expense, an independent third party audit
to confirm the amount due. In the event the audit
shall reveal supplemental rent underpayment of
greater than five percent (5%) of the total
supplemental rent paid for that year, all audits
shall be conducted at the expense of Tenant. This
requirement for payment of supplemental rent shall
survive the termination of the Lease for the
purposes of collecting supplemental rent due and
owing through the date of termination of this
Lease.
(c) Additional Rent. In addition to the rent required
of Tenant under subparagraphs (a) and (b), Tenant
shall be required to pay the sum of Sixty Four
Thousand Seventy Five Dollars ($64,075.00), which
the Landlord acknowledges has previously been paid
by Tenant. In addition, the Tenant shall be
required to pay the principal sum of One Hundred
and Seventy Three thousand Eight Hundred and Forty
Three Dollars ($173,843.00) plus interest on said
principal amount at a base rate of eight and one
half percent (8 1/2%) per annum, based upon an
amortization schedule attached hereto as Exhibit
"E:, which monthly payment shall commence June 1,
1993 and continue for the following one hundred
and twenty months. Tenant has a right of
prepayment on this principal balance at any time
without penalty.
In addition to the rent required of Tenant, Tenant
shall be jointly and severally responsible with
Snow King Resort, Inc. (the Tenant for the Ski
Shelter premises) for paying, in regular monthly
installments, 1/120th monthly, of the total amount
of additional rent for the Ski Shelter building
and premises.
The additional rental payments due under this
Lease Agreement shall terminate with the 120th
monthly rental installment and thereafter the
rental installments shall revert to those rentals
reserved in paragraphs 33(a) and (b) of this
Lease.
Rent payments shall commence in accordance with the foregoing
schedule and shall continue each month thereafter, and shall be
made payable to Landlord as follows: Town of Jackson, Wyoming,
P.O. Box 1687, Jackson, Wyoming, 83001, until directed otherwise.
4. Security For Rental Payments. The Tenant shall provide
the following security for the rental payments described in Section
3(a), (b) and (c):
(a) SK Land, a Wyoming Limited Liability Company, hereinafter
referred to as "SK Land", will be a guarantor of all rental
payments. SK Land shall submit a financial statement to the
Landlord at the time of the execution of this Agreement. The
parties acknowledge that SK Land is purchasing real property
legally described in Exhibit "F", and commonly known as the "Love
Property" under a real estate contract. This property is
hereinafter referred to as the "Love Property". SK Land agrees to
promptly pay when due all indebtedness on this real estate
contract, and pay the remaining indebtedness thereon on or before
February 1, 1995. On or before February 1, 1995, Tenant, at its
option, shall do either of the following, described as (1) or (2):
(1) SK Land shall utilize the Love Property as
collateral for the obligations of this lease, with
Landlord as Mortgagee and with the amount being
mortgaged equal to one (1) year's lease base rental
payments, excluding only supplemental rent. Landlord
agrees it may take a second position behind any bank on
this mortgage. SK Land agrees to this encumbrance on
the Love Property, on or before February 1, 1995.
(2) Tenant shall provide to Landlord an irrevocable
Letter of Credit which may be drawn on a bank in Teton
County, Wyoming, in an amount equal to one (1) year's
lease base rental payments, excluding only supplemental
rent. Draws on the Letter of Credit shall be
conditioned upon Tenant's failure to pay rental
payments within ten (10) days of written notice of
default. Landlord shall be entitled to draw on the
Letter of Credit to make rental payments not paid
within the applicable cure period and the Letter of
Credit shall be renewed and increased after any such
draw to the original principal amount of the letter.
This letter of Credit shall be renewed annually not
less than thirty (30) days prior to each anniversary
date of the initial commencement date of the term of
this lease until all terms in condition (c) of this
section are in full compliance.
(b) In the event of default, pursuant to Section 19, Tenant
agrees that Landlord shall retain as its sole and separate
property, any and all fixtures Tenant has placed and/or installed
in the Ice Rink facility, including but not limited to all assets
listed on Exhibit "G".
(c) On or before September 15, 1996, Snow King Resort, Inc.,
a Wyoming corporation, shall, at the Tenant's option, either become
the guarantor of all Tenant's obligations as defined in this lease
or shall, by assignment, become the Tenant of this lease, and be
responsible, with Snow King Resort Center, Inc., for all the
obligations of the Tenant as described herein. Snow King Resort,
Inc. hereby agrees to become a guarantor of all Tenants obligations
or to accept an assignment of lease and to become responsible for
Tenant's obligations under this lease on or before September 15,
1996. At such time, SK Land shall be released from further
liability in regard to this lease.
5. Late Rent Charges. In the event the monthly rent payments
are not paid within ten (10) days of the due date, a late charge of
two percent (2%) of the delinquent payment shall be paid by
Tenant.
Additionally, said late rent payments shall automatically accrue
interest at an interest rate of eighteen percent (18%) from the due
date, which accrual of interest shall continue until the rent
payment, together with accrued interest, is paid. Such interest
shall begin to accrue automatically on all delinquent rent payments
(not paid within ten (10) day grace period) and shall be payable on
demand without notice to Tenant.
6. Use of the Leased Premises. The use of the Leased
Premises shall be restricted to skating activities, conventions,
exhibit hall and food and beverage services only and other events
if approved by the Landlord. Any nonskating event with a projected
attendance of 500 or more is deemed a special event, requiring the
Tenant to obtain a special event plan as prepared by the Landlord.
The Tenant will present the special event plan to the Police
Department and the Fire Marshall. Both of these departments need
to respond within five (5) working days to the Tenant as to whether
the plan is approved or denied or if there are measures needed to
mitigate any impacts. If the Landlord has not responded within
five (5) days, the event is deemed approved as presented. If
either the Police Department or Fire Marshall denies the event
within the five day period, it is deemed denied. Tenant must
submit seating plans or other arrangements of the room with the
special event plan. The events known as the Fireman's Ball,
Christmas Bazaar, Halloween Party, the Snow King Hill Climb and New
Year's Eve Party are deemed approved, subject to review by the
Police and Fire Marshall for conformance with their rules and
regulations. Tenant shall use and allow the use of the Leased
Premises only for the purposes not prohibited by the laws,
regulations, covenants and ordinances of the United States, State
of Wyoming, Teton County and the Town of Jackson.
Tenant shall have the right, so long as Tenant has a valid
license from the Town of Jackson, to sell alcoholic and/or malt
beverages in specific locations from within and upon the Leased
Premises in accordance with all conditions which apply to any
license, and must adhere with all applicable laws of the State of
Wyoming and ordinances of the Town of Jackson as they may exist
from time to time.
Tenant is authorized to sublease specific portions of the Ice
Rink building to Snow King Resort, Inc., with specific
authorization to sell alcoholic and/or malt beverages. Any such
sublease shall require approval of the Landlord in writing and
shall require that the sublessee have a valid liquor license and
that all operations of the sublessee shall be strictly in
accordance with all applicable rules, regulations, ordinances and
statutes of the Town of Jackson and the State of Wyoming as they
may exist from time to time.
There will be the following restrictions associated with the
dispensing of liquor:
(a) The licensee will not be allowed to sell package
liquor to the public for off premises consumption.
(b) During standard operating functions, which would
be ice skating, and operation as a ski shelter,
the applicant will be allowed to sell beer and
wine only.
(c) Full liquor service be allowed at banquets,
parties, conventions, or special events only.
(d) The licensee will not operate as a bar or lounge
at any time.
(e) Applicant and Council agree to attach the above
conditions on this lease for the reason that this
facility will allow minors in both the ski shelter
area and the ice rink area.
Tenant acknowledges that the indoor ice skating rink facility
is part of a winter sports complex, including a ski shelter
facility. Tenant shall share the use of all common entry ways,
hallways, walkways, parking areas and driveways on a square footage
prorata basis with Snow King Resort, Inc., as tenant of the Ski
Shelter facility. All costs of maintenance, utilities and other
such expenses for common area or jointly used spaces shall be
shared on a prorata square footage basis between Tenant hereunder
and the tenants from time to time occupying the remainder of the
winter sports complex.
7. Acceptance of Leased Premises. Taking possession of the
Leased Premises by Tenant shall be conclusive evidence as against
the Tenant that such premises are in good and satisfactory
condition when possession of same was taken. Tenant has inspected
the Leased Premises and accepts the same in "as is" condition
subject only to completion of construction and "punch list" items,
if any.
8. Subordinate to Mortgage. This Lease shall be and is
hereby made subordinate to any mortgages or other security
instruments which may now or hereafter encumber the Leased
Premises, and to all renewals, modifications, consolidations,
replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination need be
required by any mortgagee or security holder. Tenant shall, at
Landlord's request, promptly execute any appropriate estoppel
certificate, subordination agreement or instrument that Landlord
may reasonably request in this regard.
9. Taxes and Assessments. Landlord shall pay all real estate
taxes, real estate assessments, and any and all other governmental
charges, assessments or taxes payable in respect to the Leased
Premises or any part thereof during the term of this Lease. Tenant
shall be liable for taxes levied against its personal property,
trade fixtures and other property placed by Tenant in, on or about
the Leased Premises.
10. Utilities. Tenant shall pay for the use of all the water,
sewage, electrical, gas, telephone, cable television, garbage and
other utility services to or used by and in connection with the
Leased Premises, which charges shall be reasonably apportioned
between Tenant and Snow King Resort, Inc. as Tenant for the Ski
Shelter Improvements depicted on Exhibit "B". Tenant shall
establish and maintain all utilities accounts in its name.
11. Repair and Maintenance. Tenant acknowledges that the
Leased Premises are in good repair and working order. Tenant
shall, at its sole expense, except for all Warranty work for new
construction or equipment, which shall be assigned or accrue to the
benefit of Tenant, maintain the interior and exterior of the Leased
Premises (including, without limitation, all electrical, plumbing
and mechanical systems) in as good order and repair as it was at
the date of the commencement of this Lease, reasonable wear and
tear excepted. Tenant shall not knowingly commit or willingly
permit to be committed any act or thing contrary to the rules and
regulations of any federal, state, municipal or quasi-governmental
authority. If the Landlord determines, in its sole discretion,
that the facility is not being properly maintained, it shall give
notice to Tenant in writing to repair and/or maintain the
premises.
The tenant shall have 48 hours in which to correct any minor
deficiencies (small repairs or cleaning inadequacies) and thirty
(30) days for larger repairs. If the repairs and maintenance are
not performed to Landlord's satisfaction within the required time
period, Landlord may employ another person or entity to repair
and/or maintain all or any part of the premises and the Tenant
shall be responsible for the payment of all expenses and costs
related to said repair and maintenance, which if not paid, shall be
deemed a default pursuant to Section 20, below.
Tenant shall permit Landlord, or its representatives, to
inspect upon reasonable notice the Leased Premises and to make
improvements to the Leased Premises as Landlord may now or
hereafter deem to be necessary and/or appropriate for the Leased
Premises. All such improvements shall be done, so far as
practicable, to avoid interference with Tenant's occupancy and use
of the Leased Premises, provided that Tenant shall not be entitled
to compensation for unavoidable interference with its occupancy and
use.
11. Alterations. Landlord shall have the right at any time to
enter the Leased Premises to make such additions, repairs or
alterations as it may deem necessary or property for the safety,
improvement or preservation of the Leased Premises.
Tenant shall make no alterations in or additions to the Leased
Premises without first obtaining the written consent of the
Landlord, and all additions or improvements made by Tenant shall be
deemed a part of the Leased Premises and permanent structure
thereon and shall remain upon and be surrendered with the Leased
Premises at the termination of this Lease by lapse of time or
otherwise.
13. Insurance. Landlord shall maintain fire and extended
"all-risk" coverage insurance upon the Leased Premises, which shall
include the Ski Shelter facility and the Ice Rink facility. Such
insurance shall be maintained with an insurance company authorized
to do business in Wyoming in an amount not less than Three Million
Five Hundred Thousand Dollars ($3,500,000.00) during the term of
the Lease for both premises.
Tenant shall maintain at its expense fire and extended
coverage insurance on all of its personal property, including trade
fixtures and on all additions and improvements made by Tenant not
required to be insured by Landlord.
Tenant shall, at Tenant's expense, maintain a policy or
policies of comprehensive general liability insurance with the
premiums thereon fully paid on or before due date, issued by and
binding upon an insurance company with a Best Rating Guide A plus
Class 15 Rating, such insurance to afford minimum protection of not
less than a single limit of One Million Dollars ($1,000,000.00) in
respect to personal injury and/or death to one or more persons and
for property damage. The insurance policy shall name Landlord as
an additional insured and shall cover all risks incident to
Tenant's use of the Leased Premises and business in connection
therewith.
Tenant shall furnish Landlord with certificates and copies of
all insurance policies to be maintained by Tenant with evidence of
payment of the premiums thereon. All such insurance policies shall
contain a clause or endorsement to the effect that they may not be
terminated or materially amended during the term of this Lease
except after fifteen (15) days written notice thereof to Landlord.
14. Assignment, Sublease and Mortgage by Tenant. Tenant shall
not assign or create a security interest in, pledge or encumber
this Lease or the Leased Premises, in whole or in part, or sublet
the whole or permit the use of the whole or any part thereof by any
sub-tenant, licensee or concessionaire, unless Tenant first obtains
Landlord's written consent, which consent will not be unreasonably
withheld. In the event of any such assignment, subletting,
licensing or granting of a concession, Tenant shall never-the-less
remain liable for the performance of all the terms, conditions and
covenants of this Lease (including, without limitation, the
covenant to pay rent).
15. Required Subleases. Notwithstanding the provisions of
paragraph 15 and in recognition of contributions made by the public
and public entities towards the construction of the Winter Sports
Complex contemplated by this Lease Agreement, Tenant shall be
required as a condition of this Lease to offer subleases which have
been approved in writing by Landlord as follows:
(a) Jackson Youth Skating, Inc. Tenant shall make
available to and offer to Jackson Youth Skating,
Inc. (JYS) or its successor non-profit corporation
or organization a sublease for the purpose of
making available to the youth of the Town of
Jackson and Teton County the ice skating facility
contemplated to be a part of the winter sports
complex which is the subject of this lease,
including the following terms and conditions.
i)
The sublease shall require that for each year
of the sublease, Landlord will maintain high
quality ice from October 22 through March 22
("the Skating Season") whether or not
Subtenant exercises its right as specified
below with the dates being subject to
adjustment on agreement between Landlord,
Tenant and Subtenant.
ii) During each Skating Season, JYS shall agree
to pay not less than Twenty Thousand Dollars
($20,000.00) for ice time during that Skating
Season and JYS shall have the priority right
to use of the ice time during the periods
from 4:00 p.m. to 8:00 p.m. on each weekday
during the Skating Season and from 9:00 a.m.
to 12:00 p.m. on each Saturday and Sunday
during the Skating Season provided that on
ninety (90) days notice to JYS, Tenant shall
have the right during the Skating Season to
eliminate the availability of ice time on
four (4) weekend days specified in writing by
Tenant provided that Tenant shall then grant
to JYS the option of rescheduling its time on
such weekend days to other weekend days of
JYS's choice at times designated by JYS
between 9:00 a.m. and 8:00 p.m.
iii) JYS shall notify Tenant of the times it
elects to reserve for a season by the latter
of 1) the proceeding October 1; and 2) twenty
(20) days after JYS's notification by Tenant
in writing of the need for JYS to make its
election, provided in turn that if JYS fails
to make a timely designation, Tenant will
notify JYS in writing of that failure and JYS
shall then have another ten (10) days in
which to make the designation.
iv) Payments for ice time to be made by JYS shall
be made at the end of each month for which
ice time is reserved. All ice time reserved
by JYS shall be paid for regardless of use
unless alternate use is arranged in advance
by JYS.
v) The ice time rental payable by JYS shall not
exceed eighty percent (80%) of the reasonable
public rate established by Tenant, taking
into consideration the scheduling and amount
of ice time in question and the demand for
comparable ice time in Jackson Hole. In the
event Tenant and JYS fail to agree on the
base rate or rates payable by JYS by the 15th
day of July preceding the season in question,
Landlord shall designate an arbitrator to
make a binding decision with respect to the
rate to be charged.
vi) The provision with regard to rental for ice
time may be amended at any time by agreement
between Tenant and Subtenant for "current" or
"next" season provided that Landlord shall be
given notice in advance of the proposed
amendment and shall have thirty (30) days
from the date of receipt of notice in which
to reject the proposed amendment.
vii) All additional subleases for skating
facilities or uses shall require the granting
to bona fide members of JYS of a twenty
percent (20%) discount on such items as skate
sharpening, skate rentals and purchases of
skating-related items.
viii)JYS shall have the right to sell or lease
advertising on the boards surrounding the
hockey rink, the ice, the Zamboni and on the
scoreboard/clock. The net proceeds from all
such rental charges shall be used to pay
rental for ice time. The Landlord and/or
Tenant, in Landlord's discretion, may have
its logos or other signs in locations through
the complex without compensation to JYS.
ix) The sublease may include such other terms and
conditions as the parties specifically,
including Landlord, shall mutually agree.
Other than as stated above, Tenant shall not sublease any
portion of the property, whether the interior or the exterior of
the property, including the erection of temporary structures,
without the written approval of the Landlord, which approval will
not be unreasonably withheld. Any approved sublessee must have a
valid liquor license prior to the sale of any alcoholic or malt
beverage.
16. Signs. Tenant shall have the right to erect and maintain
signs in, on or about the Leased Premises, provided, that same
shall comply with governing laws, regulations, covenants and
ordinances of the United States, State of Wyoming, County of Teton
and the Town of Jackson. All such signs must, however, be approved
in advance in writing by the Landlord.
17. Tenant's Covenants. Tenant covenants that it shall:
(a) During each skating season, Tenant shall provide
skating to the public for one public session two
week days per week between the hours of 8:00 p.m.
and 10:00 p.m., with an option for a third night
based upon demand determined by the Landlord.
Tenant shall have the right at any time to
increase public skating. During each skating
season, Tenant shall provide at least three (3)
hours skating to the public each Saturday and
Sunday during the 1:00 p.m. to 10:00 p.m. time
period each day except for the four weekend days
as defined in Section 15(a)(ii). In addition to
said four weekends, the public skating may be
eliminated due to the Christmas bazaar weekend,
the Halloween party weekend and the Firemen's Ball
weekend. To accommodate the needs of the
Landlord, the Tenant will add three additional
week days or weekends to the skating season to
accommodate for these three additional events.
This requirement may be excused in the sole
discretion of the Landlord. Tenant shall cause to
be published a dependable schedule for public
skating at the beginning of each skating season.
(b) The Landlord has the authority to prohibit parking
that interferes with safe and appropriate use of
the Center and retains the right to sign and
enforce parking regulations for public safety,
access and appropriate use. The Tenant is
required to direct and control all public parking
to conform to the regulations and requirements of
the Landlord.
(c) Comply with all laws, orders, regulations, rules
ordinances and covenants of any state or federal
statute or local ordinance or regulation
applicable to Tenant and/or its use of the Leased
Premises.
(d) Give to Landlord prompt written notice of any
accident, fire or damage occurring on or to the
Leased Premises.
(e) Keep the Leased Premises sufficiently heated to
prevent freezing of pipes, waterlines and
fixtures.
(f) Keep the Leased Premises orderly, clean, sanitary
and free from objectionable odors and insects,
vermin, pets, pests and nuisances.
(g) Do all things reasonably possible to prevent
filing of any mechanics' or other liens against
the Leased Premises or any part thereof by reason
of work, labor, services or materials furnished or
claimed to have been furnished to Tenant, or
anyone holding the Leased Premises or any part
thereof, through or under Tenant. If any such
lien shall be filed against the Leased Premises,
Tenant shall either cause the same to be
discharged of record within twenty (20) days after
the date of the filing of same, or if the Tenant,
in Tenant's discretion and in good faith,
determines the lien should be contested, Tenant
shall furnish such security as may be necessary or
required to prevent any foreclosure against
Tenant's or Landlord's interest in the Leased
Premises. If Tenant shall fail to discharge such
lien within such period, or fail to furnish
adequate security, then in addition to any other
right of remedy of Landlord, Landlord may but
shall not be obligated to discharge the lien
either by paying the amount claimed to be due or
by procuring the discharge of such lien by
obtaining security or in any other manner
available to Landlord. Nothing herein contained
shall imply any consent or agreement on the part
of Landlord to subject Landlord's interest in the
Leased Premises to liability under any mechanics'
or other lien law.
(h) Repay Landlord, as additional rent, on demand, all
sums disbursed or deposited by Landlord pursuant
to the provisions of this section, including
Landlord's costs, expenses and reasonable
attorneys' fees incurred by Landlord in connection
therewith.
(i) Permit no one other than employees, agents,
servants and business invitees to remain in or
loiter upon the Leased Premises.
(j) Comply with all reasonable rules and regulations
that may be established, from time to time, by
Landlord. Tenant covenants that it shall not do
or suffer to be done anything objectionable to the
fire insurance companies, whereby the fire
insurance or any other insurance now in force or
hereafter to be placed on the Leased Premises or
any part thereof shall become void or suspended,
or be rated as a more hazardous risk than at the
date when Tenant receives possession hereunder.
In the event of breach of this covenant, in
addition to all other remedies of Landlord, Tenant
shall pay to Landlord as additional rent any
increase in insurance premiums.
18. Landlord's Covenants of Quiet Enjoyment. The Landlord
covenants that the Tenant, upon paying the rentals and performing
the covenants upon its part to be performed herein, shall
peacefully and quietly have, hold and enjoy the Lease Premises
during the term hereof.
19. Damage or Destruction to Leased Premises. If the Leased
Premises shall be damaged by fire, the elements, unavoidable
accident or other casualty, without the fault or negligence of
Tenant, or Tenant's servants, employees, agents, visitors,
licensees, invitees or sub-tenants, and the Leased Premises are not
thereby rendered untenantable in whole or in part, Landlord shall,
at its expense, cause such damage to be repaired, and the rent
shall not be abated. If, by reason of such occurrence, the Leased
Premises shall be rendered untenantable only in part, Landlord
shall promptly cause the damage to be repaired and the rent, during
such period of repair, shall be abated proportionately to the
portion of the Leased Premises rendered untenantable. If, by
reason of such occurrence, the Leased Premises shall be rendered
wholly untenantable, Landlord shall cause such damage to be
repaired and the rent, during such period of repair, shall be
abated in whole. There shall be no extension of the term of this
Lease by reason of such abatement. Notwithstanding the foregoing
provisions, if the Leased Premises shall be rendered wholly
untenable by reason of such occurrence and the Leased Premises
cannot be repaired within six (6) months from the date such damage
occurs, Landlord and Tenant shall, at their option, have the right
to declare the balance of the term of this Lease to be null and
void.
If any such damage or destruction occurring to the Leased
Premises, whether partial or complete, shall occur as the result of
the fault or any negligence of Tenant or Tenant's servants,
employees, agents, business invitees, licensees or sub-tenants,
there shall be no apportionment or abatement of rent during the
term of this Lease.
20. Default by Tenant. The Tenant agrees to observe and
perform the conditions and covenants set forth in this Lease, and
further agrees that if default be made in the payment of any rent
and such payment default continues for ten (10) days following the
due date for such payment, or if Tenant shall fail to observe or
perform any of the other conditions or covenants and such other
default shall continue for more than thirty (30) days after written
notice of such default, then and in that event, and as often as the
same may happen, it shall be lawful for Landlord, at its election,
with or without previous notice, to terminate this Lease or to
re-enter and repossess itself of the Leased Premises without
termination, with or without legal proceeding, using such force as
may be necessary, and to remove therefrom any personal property
belonging to Tenant without prejudice to any claim for rent or for
breach of the covenants hereof, or without being guilty of any
manner of trespass or forcible entry and detainer. The foregoing
described rights shall be non-exclusive and shall be in addition to
any and all of the rights and remedies Landlord may have pursuant
to governing law.
21. Payment After Termination. No payments of money by Tenant
to Landlord after the termination of this Lease, in any manner or
after the giving of any notice by Landlord to Tenant shall
reinstate, continue or extend the term of this Lease or affect any
notice given to Tenant prior to the payment of such money.
22. Abandonment of Leased Premises. If Tenant shall abandon
or vacate the Leased Premises before the end of the term of this
Lease, or if Landlord re-enters the Leased Premises without
termination, the Landlord may, at its option and without notice to
Tenant, enter the Leased Premises, and re-let the same, or any part
thereof, as it may see fit, without thereby voiding or terminating
this Lease, and, for the purpose of such re-letting, Landlord is
authorized to make any repairs, changes, alterations or additions
in or to the Leased Premises, as may, in the sole discretion of
Landlord, be necessary or desirable for the purpose of such
re-letting, and if a sufficient sum shall not be realized from such
re-letting each month to equal the monthly rental under the
provisions of this Lease, then Tenant agrees to pay such
deficiency.
23. Indemnification. Tenant shall indemnify Landlord and save
it harmless from and against any and all claims, actions, damages,
liability and expense in connection with loss of life, personal
injury or damage to property occurring in or about, or arising out
of or from the Leased Premises and adjacent sidewalks and loading
areas, or the occupancy or use of the Leased Premises by Tenant or
its sub-tenants, or occasioned wholly or in part by any act or
omission of Tenant, its agents, licensees, business invitees,
concessionaires, contractors, customers, employees or sub-tenants.
In case Landlord shall be made a party to any litigation
commenced by or against Tenant, its agents, licensees, business
invitees, concessionaires, contractors, customers, employees or
sub-tenants, Tenant shall protect and hold Landlord harmless and
shall pay all costs, expenses and reasonable attorneys' fees
incurred or paid by Landlord in connection with such litigation.
24. Attorneys' Fees. In the event either party shall find it
necessary to obtain the services of any attorney to enforce any of
the covenants and conditions of this Lease, the prevailing party
shall be entitled to reimbursement for all costs and expenses,
including reasonable attorneys' fees, whether or not litigation is
commenced.
25. Trade Fixtures. Trade fixtures installed by Tenant in the
Leased Premises shall remain the property of the Tenant and shall
be removed at any time by it on or before the termination of this
Lease by lapse of time or otherwise. Any damage caused to the
Leased Premises that is the result of such removal shall be
repaired by Tenant at its expense. Any such trade fixtures not
removed at or prior to the termination shall become the property of
Landlord. Lighting fixtures, whether or not installed by Tenant,
shall not be removable at the expiration or earlier termination of
this lease, and shall become the sole property of Landlord.
26. Landlord's Access. Landlord and its agents, employees or
other representatives may enter the Leased Premises at any
reasonable time after reasonable notice for the purpose of (a)
inspecting the Leased Premises to ascertain Tenant's compliance
with the terms and conditions of this Lease, (b) in order to make
repairs, additions or alterations as the Landlord deeds necessary,
(c) to post notices of non-responsibility under mechanics' lien
law, (d) to exhibit the Leased Premises for sale, lease or mortgage
financing, or (e) for any other reasonable purposes.
27. Notices. Any notices required or permitted to be given or
served by either party to the other shall be deemed to have been
duly given or served there if in writing and forwarded by certified
mail, postage prepaid, return receipt requested, to the respective
addresses set forth below. Such notices shall be deemed given upon
mailing of sale.
Tenant: Snow King Resort, Inc.
P.O. Box SKI
Jackson, Wyoming 83001
Landlord: Town of Jackson
P.O. Box 1687
Jackson, Wyoming 83001
28. Amendment or Modification. Tenant acknowledges and agrees
that it has not relied upon any statement, representation,
agreement or warranty, except such as are expressly stated herein,
and that no amendment or modification of this Lease shall be valid
or binding unless expressed in writing and executed by the parties
hereto in the same manner as the execution of this Lease.
29. Memorandum of Lease. The parties may execute a short-form
memorandum of this Lease in recordable form which may, at either
parties' option, be placed of record in the Teton County real
estate records.
30. No Partnership. No partnership or joint venture is
created by this Lease. The Landlord and Tenant shall be construed
to be that relationship of landlord and tenant only.
31. Miscellaneous. Time is of the essence.
No waiver of any breach of one or more of the conditions or
covenants in this Lease by Landlord shall be deemed to imply or
constitute a waiver of any succeeding or other breach hereunder.
This Lease and its provisions shall be construed and enforced
in accordance with and pursuant to governing Wyoming law.
The headings used in this Lease are for convenience only and
are not be used in its construction.
Whenever used, the singular shall include the plural, the
plural the singular and the use of any gender shall include all
genders.
If there is more than one person comprising the Tenant, the
covenants, agreements, undertakings and obligations hereunder shall
be the joint and several obligations of all such persons.
This Lease may be executed in multiple counterparts, each of
which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease to be effective as of the day and year first above written.
LANDLORD:
TOWN OF JACKSON, a Municipal
Corporation
By: /s/ Jeff L. Crabtree,
Mayor
ATTEST:
By: /s/ Roxanne, Town Clerk
TENANT:
SNOW KING RESORT CENTER, INC.,
a Wyoming Corporation
By: /s/ Manuel Lopez, President
ATTEST:
By: /s/ Creed Law, Secretary
SK LAND LIMITED LIABILITY CO.
By: /s/ Manuel Lopez,
Managing Partner
ATTEST:
By: /s/ Creed Law, Secretary
SNOW KING RESORT, INC.
By: /s/ Manuel Lopez, President
ATTEST:
By: /s/ Creed Law, Secretary
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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<RECEIVABLES> 253538
<ALLOWANCES> 8233
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